City of Santa Monica
California

Staff Report
2180

Adoption of the First Year and Approval of the Second Year of the Fiscal Year (FY) 2017-19 Biennial Budget, Adoption of the Second Year of the FY 2016-18 Biennial Capital Improvement Program Budget

Information

Department:Finance Department, Budget DivisionSponsors:Director Donna Peter, Director Susan Cline
Category:09. Public Hearings

Recommended Action

Recommended Action

Staff recommends that the City Council, Housing Authority and Parking Authority:

1.     Adopt a Resolution of the City Council of the City of Santa Monica adopting the first year and approving the second year of the FY 2017-19 Biennial Budget and adopting the second year of the FY 2016-18 Biennial Capital Improvement Program Budget at Attachment A, as amended by Attachment D;

2.     Adopt a Resolution of the Housing Authority of the City of Santa Monica adopting the first year and approving the second year of the FY 2017-19 Biennial Budget and adopting the second year of the FY 2016-18 Biennial Capital Improvement Program Budget at Attachment B, as amended by Attachment D; and

3.     Adopt a Resolution of the Parking Authority of the City of Santa Monica adopting the first year and approving the second year of the FY 2017-19 Biennial Budget and adopting the second year of the FY 2016-18 Biennial Capital Improvement Program Budget at Attachment C, as amended by Attachment D.

 

Staff also recommends that the City Council:

1.     Adopt a Resolution of the City of Santa Monica revising the City’s Master Fee Schedule to establish and revise certain permit and user fees and charges in the Planning and Community Development, Public Works, Fire, Community and Cultural Services, Finance, and Records and Election Services Departments and for the Santa Monica Public Library and City Manager’s Office (Attachment E);

2.     Adopt a Resolution of the City of Santa Monica setting forth the administrative citation schedule of fines for certain violations of the Santa Monica Municipal Code, setting civil penalties for parking violations and for the late payment of penalties, setting fines for Police and Fire Department responses to excessive false alarms, and setting fines for the Santa Monica Public Library (Attachment F);

3.     Adopt a Resolution of the City of Santa Monica establishing parking rates and permit fees for all City facilities and resources (Attachment G);

4.     Adopt a Resolution of the City of Santa Monica establishing new classifications and adopting salary rates for various listed positions (Attachment H) and approve the position and classification changes (Attachment I);

5.     Adopt a Resolution of the City of Santa Monica establishing the Gann appropriations limit for FY 2017-18 (Attachment J);

6.     Approve the Proposed FY 2017-18 Human Services Grants Program (HSGP), incorporating the proposed funding levels (Attachment K);

7.     Approve the Proposed FY 2017-18 Organizational Support Program (OSP) Grants for Arts and Culture Nonprofits, incorporating the proposed funding levels (Attachment L); and

8.     Accept Continuum of Care Program Grant funds from the U.S. Department of Housing and Urban Development (HUD) in the amounts of $478,782 and $2,786,792 to serve the homeless and disabled populations with housing subsidies.

Staff Report Body

Executive Summary

This report presents information and requests actions necessary to adopt the first year of the FY 2017-19 biennial budget following the public hearings on the budget last month, including the second year of the FY 2016-18 Biennial Capital Improvement Program (CIP) Budget, for the City of Santa Monica, the Santa Monica Housing Authority and Santa Monica Parking Authority. It also requests that Council approve the operating budget plan for the second year of the Biennial Budget. Since the City Charter requires Council to adopt a budget annually, staff will submit the FY 201819 budget plan to Council for formal adoption, with any necessary revisions, in June 2018.

 

The City released its Proposed Budget for FY 2017-19 on May 16, 2017 and Council heard from individual departments and gave direction on specific priority areas at the Budget Study Sessions on May 23 and 24, 2017, resulting in the adjustments to the Proposed Budget recommended in this report. The Proposed Budget as revised is $774.9 million in FY 2017-18 and $802.8 million in FY 2018-19.

 

This report also includes actions necessary to revise certain fees, fines and parking rates and responds to Council queries and requests from the public hearings.

 

In this report, staff recommends continued funding to most Human Service Grants Program and Organizational Support Program grantee organizations at the FY 2016-17 funding levels, plus a 2.2% cost of living adjustment, and the acceptance of federal Continuum of Care Program renewal grant funds.

 

Background

On January 24, 2017 (Attachment M), Council reviewed and commented on the FY 2017-22 Five-Year Financial Forecast and directed staff to develop a fiscally sustainable budget.

 

 

During the two budget study sessions, held on May 23 and 24 (Attachment N), staff presented the May 2017 Financial Status Update for the General Fund for Fiscal Years 2017-22, as well as the FY 2017-19 Proposed Biennial Budget and Capital Improvement Program Budget for FY 2017-18.

 

Discussion

The proposed two-year budget is balanced, with resources dedicated to maintaining the City’s core services and allocating new and repurposed funding to programs that reflect Council priorities. The Proposed Biennial Budget for the City of Santa Monica has been revised from the document presented to the public on May 16, 2017 to reflect final changes based on Council feedback and new information received. The Proposed Budget as revised is $774.9 million in FY 2017-18 and $802.8 million in FY 2018-19.

 

The May 23 and 24 Budget Study Sessions provided an opportunity for Councilmembers to ensure the Proposed Budget meets community needs. During the study sessions, Councilmembers directed staff to consider incorporating various changes to the proposed operating budget, and to provide additional information on certain items in time for the budget adoption public hearing on June 27, 2017. Requested information is included below and any relevant changes are included in the list of proposed final changes shown in Attachment D.

 

Vision Zero

Council directed staff to assign a staff member dedicated to Vision Zero, an initiative seeking to eliminate traffic fatalities and serious injuries. Staff proposes the creation of a two-year action plan that will be presented to Council for review by October 2017. Until then, staff has identified an interim staffing plan for a Vision Zero Coordinator. Staff in the Mobility Division of the Planning and Community Development Department will take on temporary assignments to allow a single coordinator to give interdepartmental leadership to all aspects of pursuing Vision Zero.

 

Rather than spending new dollars on additional staffing at this time, staff recommends that one-time funds of $500,000 be appropriated to the FY 2017-18 Proposed Budget for Vision Zero action plan projects that will occur over the next two years. Projects would include the installation of targeted physical improvements that would be complemented with other education, encouragement and enforcement efforts currently underway. Staff has developed a proposal to expend the funds based on a review of high-collision intersections, the Pedestrian Action Plan demand and crash analysis, community destinations and Council comments, as follows: 

·         Improve the Pico/Stewart crossing improvements with one curb extension and lead pedestrian interval to increase pedestrian visibility and reduce exposure ($100,000)

·         Improve either the Santa Monica Boulevard/6th Street or Broadway/5th Street intersections with two curb extensions and lead pedestrian interval to increase visibility and reduce pedestrian exposure ($180,000)

·         Install Rapid Rectangular Flashing Beacons to increase vehicle yielding at two Wilshire intersections and two school locations ($120,000)

·         Pilot bicycle and pedestrian protections on Arizona Avenue at McKinley Elementary or similar location ($80,000)

·         Install lead pedestrian intervals at 25 signalized intersections throughout Santa Monica (identified based on pedestrian volumes, crash history and adjacent community destinations) (Staff time cost)

·         Continue enforcement and education operations (Staff time cost)

 

Additional funds for capital investment in making all of Santa Monica streets safer for all users from the recently passed County Measure M and the additional local return of gas tax funds approved by Governor Brown and the State Legislature.

 

Using Data to Impact Service Delivery

Council requested assurances that staff would begin applying the City’s new Framework and performance management model to impact service delivery and budget decision-making. At its January 28, 2017 retreat (Attachment O), Council received staff’s report on a new organizational framework based on the dimensions of wellbeing and the Sustainable City Plan that would assist with creating a performance management system.   In response to Council’s direction, staff worked to better integrate sustainability and governance into the Wellbeing Framework in preparation for the FY 2017-19 budget.  This refined Framework, presented in the Proposed Budget, is built on the longstanding commitments and goals of the Sustainable City Plan and the baseline findings of the first Wellbeing Index from 2015.  Staff used the Framework to organize budget proposals, prioritize budget requests and ultimately frame the FY 201719 budget around its six outcome areas (community, place and planet, learning, health, economic opportunity and governance). 

 

This fall, the next version of the Wellbeing Index will be released. Over the coming year, findings from the next Index and goals from the Sustainable City Plan will be integrated into the Framework.  This will establish meaningful goals and metrics to track the impact of City work efforts, including Council Strategic Goals.   Staff will engage a range of community partners to address issues of most concern to the community.  This summer there will be staff training on the next steps to launch the City’s new performance management process, SaMoStat, beginning with its application to the Council’s Strategic Goals. The first SaMoStat meeting will be held in July, focusing on our regional efforts to reduce homelessness.

 

Reed Park Programming

Council requested information on options to increase staff presence and activities at the newly-renovated Reed Park in order to maintain a safe, accessible and attractive open space. Staff spoke with Downtown Santa Monica, Inc. regarding extending the Ambassador Program to Reed Park but found it to be cost prohibitive. Siting Ambassadors at Reed Park, which is further from the Downtown core in which the Ambassadors operate, to provide daily hospitality services and restroom monitoring, would cost between $520,000 and $572,000 annually. Therefore, at this time staff is focused on continuing to pursue a site-specific activation strategy of recreational, cultural, and enrichment programs, events, and activities for youth, families, adults, and seniors as well as a communication and outreach campaign.  

 

As one means to increase programming in and activate Reed Park, staff will return to Council during the summer of 2017 with a proposed reduction to the current annual fee structure for fitness instruction, classes and camps operating in Reed Park and recommendations for a pilot program. Commercial fitness or athletic instruction, classes, or camps in City parks and on Santa Monica State Beach are currently subject to a Permit Fee, which was set by Council in 2013 at $100 and subject to annual CPI increases. An additional $50 Permit Fee is added if an RFP, lottery or other allocation process is required to compensate for additional staff time. In addition to the Permit Fee(s), an annual charge for use of the City parks and the Santa Monica State Beach is imposed: $1,800 for small group (not more than 2); $3,600 for medium group (not more than 10); $5,400 for large group (more than 10).  Currently, a 50% reduction in annual charge is applied for groups operating in Reed Park. Modifying the existing requirements further for Reed Park may incentivize use, potentially attracting new fitness instructors not currently under the permit system and/or entice current permitted instructors to re-locate to Reed Park.

 

Homeless Multi-disciplinary Street Team

Council noted the need to continue funding the Homeless Multi-disciplinary Street Team (HMST), one of the “jump start” projects associated with the Addressing Homelessness Strategic Goal, which began operating in September 2016. The team consists of four full-time staff and a part-time psychiatrist through a contract with The People Concern, joined by medical staff from Venice Family Clinic, and provides care on the streets, in parks, jails and hospitals to the highest utilizers of City emergency services (police, fire, hospitals). It is funded through December 2017 with $300,000 in one-time City of Santa Monica funds. Since the May 24, 2017 Budget Study Session, staff has learned that Supervisor Sheila Kuehl has agreed to provide $300,000 in discretionary funds to sustain the program through June 2018 and will consider an additional grant for the same amount for FY 2018-19 operations. City funding of $300,000 is requested to sustain the program through June 2019. The extension of the program would also allow for an assessment of “step down” interventions post-housing to determine how best to transition participants from HMST to other lower-intensity support services, thereby allowing the team to serve new individuals. Discussions are also underway to engage the business community to support this project as another on-going source of partial funding.

 

Staff is recommending that Council approve the transfer of $300,000 in General Fund “jump start” funding in FY 2018-19 to extend the program an additional year as a “proof of concept” project. This extension would result in a strong, multi-year data set upon which to evaluate the effectiveness of this intervention. As demonstrated by other evaluative tools such as the Wellbeing Index and the Youth Report Card, demonstrating social impact interventions requires consistent multi-year assessments to measure impact over time. RAND will evaluate the program, looking specifically at the effectiveness of the intervention for this highly vulnerable population and to see if the service model results in fewer contacts with local emergency services.

 

Social Safety Net

Council expressed concern that the budget proposed by the Trump Administration could have severe impacts on the members of our community with the greatest need and fewest options. While the federal budget is only a proposal at this point and is expected to undergo significant modification by Congress, the threat is significant.

 

A preliminary review of FY 2016-17 funding sources for the 20 Human Services Grants Program (HSGP) funded agencies indicates that they rely on $21 million in federal funding. This represents approximately 13% of the HSGP-funded agencies’ budgets. In addition, agencies report a $65 million reliance on other (state and local) government sources, portions of which could originate from federal sources, for an additional 40% of their agencies’ budgets. Staff is working with local agencies to project direct and indirect impacts of proposed safety net cuts at both the agency and community level. Staff will also coordinate with state and regional entities to avoid duplication of effort and ensure local funds are used to fill local gaps.

 

Among the programs slated for elimination are the Department of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) and HOME programs. $201K of the City’s annual $1.03 million CDBG allocation is granted to the Legal Aid Foundation of Los Angeles (LAFLA) ($80K), Westside Center for Independent Living (WCIL) ($36K), Chrysalis ($40K), and St. Joseph Center ($45K).

 

The Housing Division also uses CDBG for rehabilitation of 20 existing apartments per year where low-income households earning 80% of AMI reside. The HOME Program provides assistance totaling $437,000 to 16 households, and another 10 voucher holders are currently searching for apartments. The average monthly subsidy for all participants is over $15,000. Both of these grants also provide administrative funds to reimburse the City for the costs of administering the programs.

 

HUD’s Section 8 program provides a monthly housing subsidy to 995 households that totals over $11 million. An estimated $500,000 decrease in funding is possible with passage of the Trump Administration budget. If the budget is decreased by $500,000, approximately 100 households could lose their housing subsidies.

 

While more research is needed to assess grantee needs, staff estimates that the annual impact of the current budget proposal on the City’s programs could be approximately $1.5 million. Staff will continue to monitor budget negotiations in Congress. Once a final federal budget is adopted, staff will confirm any impacts in Santa Monica, as well as potential options for addressing the local need.

 

Los Amigos Restrooms

Council requested an update on progress to improve the area surrounding the Los Amigos restrooms. Staff is working with the contractor for the Los Amigos Cistern Project to remove the infield clay recently installed and replace it with decomposed granite. There was also a hose bib near the problematic location causing ponding that has been removed. The expectation is that these efforts will be sufficient to resolve the pathway issues. However, staff will continue to monitor the situation and if there are still issues at this location, staff will also obtain a cost estimate to install a concrete path.

 

Woodlawn Cemetery

Council noted a need for increased maintenance along 17th Street adjacent to Woodlawn Cemetery. There are currently 4 public litter containers on the west side of 17th Street between Delaware and Pico. Two of these containers were added in the past six months. There is room to add two more, one in a cut out area and the other near the fire hydrant. RRR staff will deliver two additional containers for a total of six.

 

Public Landscape renovated plantings along this stretch of 17th Street in March at the request of Councilmember Vazquez. As a part of this project a new irrigation system, plant materials and landscape mulch were installed (see Attachment P). The new plantings are being established and will ultimately fill in the landscaped area.

 

Proposed Budget Revisions

Modifications to the Proposed Budget, known as final changes, are based on Council direction, new information and identified omissions. The changes increase the budget by $1.2 million in FY 2017-18 and $0.7 million in FY 2018-19.

 

In FY 2017-18, the changes primarily reflect use of one-time funds to support Vision Zero projects, staffing adjustments, and an adjustment in the Wastewater Fund to reflect updated costs for shared use of the Hyperion Treatment Plant. In FY 2018-19, the changes primarily reflect ongoing costs for adjustments made in FY 2017-18.

 

An additional information-only change will be made to the capital improvement budget to reflect staff’s upcoming recommendation that the City issue lease revenue bonds for the construction of Fire Station 1 in FY 2017-18. The change from pay as you go funding to bond funding will take advantage of an optimal bond market. Staff will return to Council to request authorization to issue a bond at an appropriate time.

 

Staff recommends that Council adopt the changes to the FY 2017-18 Proposed Budget, and approve changes to the FY 2018-19 Proposed Budget. With these changes, the budget remains balanced. Changes are itemized in Attachment D.

 

Council Discretionary Funds

Each year, Council allocates discretionary funds to assist the community in special projects or support important but otherwise unfunded priorities.

 

Traditionally, Council has supported community partners like the Business Improvement Districts, Santa Monica traditions like the Fourth of July Parade, one-time programs, and community students through science or music grants allowing Santa Monica youth to participate in special events. Allocation of the funds may occur along with Budget Adoption or throughout the year.

 

Including unprogrammed FY 2016-17 discretionary funds and FY 2017-18 discretionary funds, the Council has access to $553,762 in discretionary funds in FY 2017-18.

 

Fees/Fines/Rates

During the budget study sessions, departments presented adjusted or new fees and rates that were included in the Proposed Budget and recommended in the comprehensive fee study. Staff anticipates that implementation of the fee study recommendations would result in approximately $1.2 million in additional revenue, $0.7 million of which is in the General Fund. As part of the adoption of the FY 2017-19 Budget, staff is presenting three fee/fine/rate related resolutions to Council for adoption. The master fee resolution (Attachment E) contains user fees and rates charged by the City, primarily fees analyzed in the recent fee study as well as new regulatory fees related to the City’s water neutrality ordinance. In addition, a master fine resolution (Attachment F) is being presented that includes all fines assessed by the City in one resolution. This includes administrative citation fines, parking violation fines, library fines, and fines for excessive responses to false alarms by the Police and Fire Departments. Two new nonstandard fines for violations of the Municipal Code related to tenant harassment have been added as well as a new Library fine for overdue teen laptop rentals. Finally, a comprehensive parking rate resolution (Attachment G) includes the recommended changes to beach parking rates presented during the budget study sessions, a pilot program for employees of businesses located in the downtown area, as well as a specific bulk parking fee for the California Judicial Council for one year to allow for the Council to address budget impacts resulting from the City not renewing its parking agreement with the Council in anticipation of the multipurpose sports field. The beach parking rate increase is set to take effect on November 1, 2017. Resolutions related to enterprises or mitigation fees will continue to be separate and will be updated and presented to Council in the future as appropriate.

 

Personnel Changes

As part of the budget process, proposed employee classification and compensation changes were reviewed by the Human Resources Department and the City Manager’s Office. The resulting classification and salary changes and position list are presented in Attachments H and I.

 

Budget Resolutions

Adopting the resolutions in Attachments A, B, C would:

1.     Adopt the FY 2017-18 and approve the FY 2018-19 budget revenues at the account level, with operating expenditure appropriations for the Salaries and Wages and Supplies and Expenses (including Capital Outlay) major expenditure categories within a fund for each department, and capital improvement program budget within a fund;

2.     Authorize staff to roll over appropriations for multi-year operating grants not completed at the end of the fiscal year, unspent donations dedicated to programs, and the encumbrances for goods and services contracted for by FY 2016-17 year-end but not delivered or provided until FY 2017-18;

3.     Authorize staff to roll over appropriations for the General Fund and all other Non-General Fund unencumbered balances and unexpended encumbrances for the FY 2016-17 capital improvement program budget.

 

Gann Appropriations Limit

State law places limits on the amount of Santa Monica’s General Fund appropriations that can be made without voter approval based on a growth factor calculated on changes in Santa Monica’s population and either State per capita personal income growth or the growth in non-residential assessed valuation. This restriction was placed in effect in November 1979 with the approval of Proposition 4, commonly known as the (Paul) Gann Initiative. The City’s Gann Appropriations Limit, based on growth in non-residential assessed valuation times the annual percentage population change for the City in FY 2017-18 is $2,013,078,428.

 

A comparison of the City’s FY 2017-18 Gann Appropriations Limit as set forth in the City’s Proposed FY 2017-18 Budget follows:

 

Proposed Gann Limit-related Spending for FY 2017-18

Gann Limit

$2,013,078,428

Appropriations Subject to Limitation

256,590,386

Net (Over) Under

$1,756,488,042

 

 

FY 2017-18 appropriations subject to limitation are $1,756,488,042 less than the City’s Gann Appropriations Limit. A resolution to establish the City’s FY 2017-18 Gann Appropriations Limit is included in Attachment J.

 

Human Services Grants Program (HSGP) and Organizational Support Program (OSP) for Santa Monica’s Arts and Culture Non-Profits

The FY 2017-19 Proposed Biennial Budget includes continued funding to most grantee organizations at the FY 2016-17 funding levels, plus a 2.2% cost of living adjustment to the General Fund portion of each grant. The proposed budget also includes an enhancement to the HSGP in the amount of $173,500, which will increase grant funding for Connections for Children’s Santa Monica Early Education program. This program provides childcare subsidies to low- and moderate-income Santa Monica families with children up to kindergarten age. The increased funding will support an additional 10 program participants. Attachments K and L list the individual grantee agreements approved for funding through the FY 2015-19 Human Services Grants Program and Cultural Arts Organizational Support Program, along with the grant amounts for the FY 2017-18 Budget.

 

Acceptance of Federal Continuum of Care (CoC) Renewal Grants

The Continuum of Care (CoC) Program is a Federally-funded competitive grant program that provides a housing subsidy (supportive housing) to chronically homeless, disabled households. On June 1, 2017, the U.S. Department of Housing and Urban Development (HUD) awarded two Continuum of Care (CoC) grants in the amounts of $2,786,792 and $478,782. Staff is requesting authorization to accept the grant funds from HUD, for a one-year renewal.

 

Financial Impacts and Budget Actions

Adoption of the Proposed Budget as amended by Attachment D would formally adopt the first year and approve the second year of the City’s FY 2017-19 Biennial Budget, including the second year of the FY 2016-18 Capital Improvement Program Budget.#1