At the Feb. 8 Yucaipa City Council meeting, Interim Director of Finance and Administrative Services Ryan Blackerby addressed the council regarding the city’s 2020-2021 mid-year general fund budget review. The city continues to maintain its strong financial condition even with the challenges that were brought on by the economic conditions due to COVID-19 pandemic and rising public safety costs.
In recent years, the city had moved to a more “short-term” focus in its investment portfolio, said Blackerby. A shorter-term focus is generally considered safer than longer-term investing as it involves less market/interest rate risk but typically generates lower rates of return over a long run. In addition, short term return rates were actually higher than long term rates for a period of time. However, the economic climate has changed and a shift back to a strategy with greater focus on longer-term investing was recommended by staff for the city to consider in order to possibly generate a higher total return in a managed account with a one to three or one to five year focus.
During the beginning of the pandemic there was a sharp decline in economic activity and as the lockdown was partially lifted, the economy started to rebound but experts state that there is still a long way to recovery.
Blackerby said that the staff believes that due to the economic conditions, now is a good opportunity to re-evaluate the city’s investment strategy.
General fund revenues:
Building and Safety
Blackerby said, “It is important to mention building and safety revenue, this is because the number of permits this year processed through the first six months of the fiscal year, have more than doubled compared to the same time in the previous fiscal year. Because of this, at the end of December, building and safety revenues have already achieved 90% of the revenue budgeted for the entire fiscal year. Staff is recommending an increase in building and safety revenues in the amount of $495,000 to accommodate this new projection.”
The Community Services Department has been impacted significantly by the coronavirus pandemic. Department revenues are based on fees for services and revenues are down significantly. The fiscal year-to-date department-wide revenues are at approximately 8% of the originally budgeted amounts as of the end of December. Staff is projecting operating revenues to be approximately $1,388,500 less than the current budgeted amounts. However, the department is receiving approximately $100,000 from CARES Act funding to offset the administrative and other COVID eligible expenditures.
Blackerby said, “It is also important to note that included in the expenses for the year are costs related to administering the CARES Act grant programs, as well as the required 50% match for the Coronavirus Relief Fund round three projects funded through the county.”
General fund expenses
Staff recommended the expense account for the building and safety division be increased by the amount of $321,750 for professional services to accommodate the costs associated with the provision of these services, given the doubling of building activity and paid for by the associated increase in revenues. Staff also recommended a budget adjustment to increase professional services expenses in the amount of $17,300 due to required activities related to the Valley View MHP (mobile home park) MNOI (maintenance of net operating income) special rent application and hearing, required notifications to the residents and notification to all MHP residents regarding AB-2782 and to ensure adequate funds are available for the remainder of the fiscal year.
MOU salary increases
The Memorandum of Understanding (MOU) with the general unit approved by council on June 8, 2020, included a retroactive raise to city staff of 2.7% if a certain condition was met. One condition being the revenue losses related to COVID-19 be reimbursed through state/federal funding which staff believes that this satisfies the intent of the MOU language.
“Staff is recommending the MOU specified raise, with an estimated budget impact of $161,000. The amount of $157,000 for this purpose was previously anticipated and tracked as part of the general fund budget relief that was freed up by the CARES Act revenue,” said Blackerby.
Fire and police services
The proposed purchase was presented in the FY 20/21 adopted budget for a battalion chief response vehicle but was deferred earlier. It is now necessary and will come from the fire fund in the amount of $100,000. Staff is recommending a budget amendment to allow for this purchase.
Adding a position dedicated to traffic enforcement and other police activities will promote public safety with a goal of reducing collisions and providing more resources on the city streets. A budget amendment increase in the amount of $88,000 in FY 20/21 is required and the full annual amount of $211,000 will be incorporated in to next year’s proposed budget. Staff is also recommending the allocation of $150,000 from the general fund for cameras and the associated costs to cover ingress/egress ALPR (automated license plate readers) cameras at selected locations in the Yucaipa area.
Administrative Services Department
The city contracts with M.V. Cheng & Associates to fill staffing needs in transitionary periods. The accounting manager and senior accountant positions are vacant. Also the city has received two administrative services department staff member’s resignations, putting the department in an additional urgent need of staffing. Staff is recommending an increase in the contract with M.V. Cheng & Associates in the amount not to exceed $190,000 to accommodate these needs and corresponding budget adjustments as needed. This will not impact the budget as the funds would come from salary savings associated with the vacant positions.
The Information Systems Strategic Plan (ISSP) recommended three full-time employees to provide services to the city with possibly the need for an IS analyst. The COVID pandemic changed the way the city does business. Remote work, teleconferencing, cloud-based systems, etc. have placed a high demand on the city’s Information Services Division. Staff recommended the addition of a network and support specialist for the FY 20/21 in the amount of $42,177. The annual estimated cost for this position is $101,225 which would be incorporated into future budgets.
Blackerby talked about the five Development Impact Fee (DIF) funds of drainage facilities, traffic facilities, public facilities, fire facilities and park facilities.
On June 22, council adopted a resolution which provided an interim loan agreement which provided that each of the DIF funds repay the general fund 50% of their DIF fee revenues over the next 10 years to pay off their individual portions of the overall $22,370,194 loan. The loan was adopted at the end of the FY19/20 so amounts were not originally budgeted to make the first payment in FY 19/20 as stated in the loan agreement. In addition, it was thought the rate of development in Yucaipa used in the initial loan agreement may have been too aggressive.
Consequently, staff recommended a budget amendment in FY 19/20 to allow for repayment of 50% of DIF revenues, the adoption of a new loan agreement to replace the prior loan agreement and a budget amendment in FY 20/21 to allow the repayment of the DIF loans in this Fiscal Year as per the new agreement.
Five Winds Ranch
The Five Winds Ranch Park project continues to be developed in phases through the efforts of volunteers with “Make a Difference Day” projects, Eagle Scout projects and other similar volunteer projects until such a time as other funding may become available. Staff is recommending a contribution from the general fund of $200,000 to the project to cover costs of engineering/survey staking, clearing/grubbing, grading and utility/irrigation system expansion/modification.
Due to additional planning-related activities, including a substantial increase in the number of building permits submitted, staff recommended an unfreezing of the development services technician position and the reclassification of that position to an assistant/associate planner in the planning department. As well as reclassifying the current assistant planner position to an assistant/associate planner position, resulting in two assistant/associate planners in this department. The total expenditure budget increase for these actions is $101,000 with a total annualized cost increase for future years of $304,000 as two of these positions were previously frozen and not in the budget.
Wildwood Bike Trail
Staff recommended council approve an additional amount of $30,000 to move forward with Phase 2 at this time. This along with volunteer efforts and private donations, allows Phase 2 to be completed sooner.
Preciado said, “The project is located just east of Wildwood City Park and Wildwood Canyon Road is to the north … Phase 2 proposes to add one mile to the course and staff estimates the $30,000 cost to complete Phase 2 can be done with volunteer efforts.”
Due to a private donation, and the additional funding from the city, Phase 2 can be completed sooner and perhaps even as part of the current contract.
General Fund allocation
In FY 18/19, council approved a total of $300,000 of general fund contributions to the pavement management program. In FY 19/20 this amount was decreased to $200,000 due to economic conditions. Staff is recommending the general fund annual contribution for FY 20/21 to be increased by $100,000 for a total allocation of $300,000 to bring this funding level back to what it was two years ago.
Staff recommended an increase in the overall budget, more than the overall increase in revenues budgeted. Much of the difference is being funded from the assigned fund balance made available with the review and closing out of a number of Service Level Options by the city council in October of last year.
The available assigned fund balance as of June 30, 2019, was $4.59 million and staff tracked $1.27 million of spending during FY 19/20, which should leave approximately $3.32 million available for FY 20/21. About $1.05 million of this balance was budgeted to be spent in FY 20/21 with the First Quarter Budget Review, leaving approximately $2.27 million available at this time. The total estimated impact of additional expenses the city manager recommends coming from assigned fund balance is approximately $643,642.
During public comment, local resident and Trails and Open Space Committee Chair Kristine Mohler praised City Engineer Fermin Preciado for his leadership.
“Susie Southern, who sits on the EDAC committee … asked me to read something and it says please request the first phase for developing the campsites for dry camping to begin. Costs for phase one should be minimal compared to full hookup sites. It’s a great place for local camping and hiking for our residents and guests to the city. These two projects with the Five Winds Ranch and the mountain bike course are projects that we have worked on for years and years.”
Councilman Justin Beaver said, “I appreciate the Five Winds Ranch stuff … and moving forward as quickly as we can on adding activities for our community to use. Something as simple as grading pads for outdoor camping is important and that we can move forward on it as soon as possible.”
Beaver said he was “just thrilled that we are looking at possibly adding a sheriff deputy. I think our city, based on the last month, is hungry for more law enforcement presence.”
Mayor Pro Tem Bobby Duncan asked what the battalion chief was driving now, and expressed concern that the city still has a Station 2 and fire department budget problem.
“We have had discussions of shutting a station down which is ridiculous so what is the battalion chief driving now,” asked Duncan.
Casey answered this was a longer term commitment as we evolve towards updating the contracts with CAL FIRE. “They put it off for a year or two but we haven’t been charged for the battalion chief’s vehicle and that is the next step in their evolutionary process of the contract. And with respect to the station, it wasn’t necessarily shutting down the station but just going to a medic-squad as something like 80% of our calls are medical and not fire related calls.”
Councilman David Avila asked, “Just to tag onto mayor pro tem’s comments with respect to the fire fund, we’re pulling about $551,000 out of the fire fund, what do we have left in the fire fund?”
Blackerby answered, “It is approximately $10 million in the fire fund balance as of now but at the increasing rate of $500,000 plus a year approximately being drawn down specifically for the paramedic budget deficit.”
Councilman Jon Thorp said, “When it comes to the additional sheriff deputy, I’m going to recuse myself from that at this time since I am with the sheriff’s department, until we get further clarification on that.”
Duncan said, “I understand how expensive trucks or vehicles are, but we are in a pandemic and this is not business as usual. I am concerned about our budget and I hope everybody understands that we are in fact in a budget situation right now. We are not fat and flush like we’ve been bragging about for the last 25 years or 20 years or whatever. I’m very uncomfortable with this ... Dump the truck and keep the station open, that is what I would prefer doing but maybe that should not even be an issue.”
Avila said, “Closing a station or modifying the staffing levels is not on the table, correct?” Duncan said he understood that but the city is still in a budget crisis and everyone was acting like it was business as usual.
Casey responded to Duncan’s concerns by saying, “I think we have seen enough to give me confidence in saying that we are one of the few cities in the state that can say that we made it through last fiscal year without dipping into reserves. We have also talked about needing additional public safety. It is definitely time to move in that direction with the recent events in terms of an additional deputy sheriff and another $150,000 in cameras and ALPR. We think that is critical in moving forward,” said Casey. “With respect to the fire vehicle, I understand the concern that it has not been something that has been on the table before now, and why now, but it has been dragged out, if you will, until now. All of the service level options that are being requested today, the unfreezing of positions and meeting the city’s public safety needs are essentially being paid for from those service level options that the city council closed out last first quarter.”
Council reviewed and amended the 2020/2021 Mid-Year General Fund Budget Report. Thorp recused himself and the item passed unanimously. A motion was made on items 2, 3, 4 and 6 and was passed unanimously.