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CC 05-24-95· CC-902B MINUTES Cupertino city Council Regular Adjourned M~ting May 24, 199fi PLEDGE OF ALLEGIANCE At 6:02 p.m., Dean called the meeting to order in Conference Rooms C and D. ROLL CALL Council members present: John Bautista, Don Burnett, Barbara Koppel, Lauralee Sorensen, and Wally Dean. Council members absent: None. Staffpresent: City Manager Don Brown; City Clerk Kimberly Smith; Administrative Services Director Carol Atwood; Community Development Director Bob Cowan; City Attorney Charles Kilian; Public Information Officer Donna Krey; and Public Works Director Bert Viskovich. Budget Overview The City Manager reviewed the budget message, which included a review of the past five years, a forecast of the next five years, fund balance trends, and revenues vs. expenditures. The Administrative Services Director reviewed the document format and highlighted the 1995/1996 Financial Report. She reviewed a list of assumptions upon which the budget numbers have been developed. These assumptions are: · Sales tax revenue will remain fiat - no increase or decrease projected. · A decline in the mte ofgrowth ofproperty tax from 20.6% to 15% (refleets Prop. 13growth plus turnover). · Utility Tax for PG&E will remain fiat due to competitive pricing. · Overall revenue growth will be a modest 3.3%. · Overall expenditure growth will be only 2%. · Employee compensation will track inflation. · This is the next-to-last year of debt service of $1 million for the School Playing Fields Project. She reviewed the budget document and stated that the funds look very healthy and reserves are high. The General Fund reserve has almost 100% of a year's operating expenses and there is no need to build up further reserves unless the city council wants to do so for capital improvements. She also discussed the General Fund reserve policy hand-out and showed an overhead comparing the existing policy to a goal of 100% of operating reserves. She explained that the reserves are over the current policy of 75% but under 100%. She said that this includes an approximate $6 million total debt obligation each year. · -, ~May 24, 1995 Cupertino City Council Page 2 Discussion followed regarding an appropriate policy level. The City Manager said that if 75% is chosen as an appropriate figure, any funds in the reserves over that amount would be discretionary. The Administrative Services Director said that it would be unrealistic to have enough reserve funds to service the interest on the debt. Burner calculated that the reserves - create about $1.5 in revenue. The City Manager said that the proposed policy would retain the same statement, but staff recommended changing the definition of the operating base to include debt. Bautista suggested ratcbeting up the percentage every year so they would be able to achieve the goal of 100%. The City Manager said that he did not know of any city that had a 75% reserve. All the Council members concurred with staff's recommendation for a 75% reserve policy with a goal of 100%.. New Programs Council members concurred not to pwceed with utility tax rate expansion. The Public Works Director explained that the Los Altos Garbage item will increase service (mixed paper) without cost, but some equipment would be needed. He asked that Council provide direction to staff as to whether they wanted to extend the franchise agreement. There would be no direct increase to residents, but there would be a 2% increase in payments to the General Fund by extending the franchise fee. City Council concurred to have staff continue on this and bring it back to Council. Sorensensaid she would like to have staff explore concerns regarding service to Regnart Canyon residents. The Administrative Services Director said another new program would be a Management Information System (MIS) employee, which would be a full-time position to support new computer technology, maintain existing hardware, train employees, and help with conversion to a geographic interface system (GIS) and a new finance system. She said the costs were already reflected in the budget. Discussion followed regarding whether an Economic Development Coordinator position should be added too. The Administrative Services Director estimated a cost of $100,000 for salary and benefits. Koppel said that Council must be supportive of business or it won't work. Dean said he would like to know what the return would be on the City's investment Burnett felt it wouldn't be cost-effective and the Chamber can work in that regard. Sorensen disagreed that the Chamber could talk businesses into staying in the city and she noted that comments at the economic summit indicated that the city was losing corporate and retail businesses. Koppel suggested that staff find out what other cities pay for this service. The City Manager said the figures were not available for this evening's meeting, but it was one of the topics listed in the Council goals, and that Council might wish to direct staff to take a closer look. Bantista said the goals should be specified. Would it be to increase sales tax, improve the look and feel of the community, or fill vacant space? The City Manager said that staffwill return with a recommendation in the fn~t q~arter. 'May 24, 1995 Cupertino City Council Page 3 Bautista asked about adding a construction tax to the new programs list. The City Manager said the possibility had been discussed earlier, but when all taxes and fees are added up, including park fees, Cupert'mo is very high. The Community Development Director said the city is in the top 10% of residential, but he did not have data on commercial development. The City Manager said staff would bring that back as a follow-up item. The remainder of the proposed new programs were decided upon as follows: Council concurred to raise Planning Comnaissioner payments from $25 per meeting to $50 per meeting ($2,750) With the exception of Dean, Council concurred to provide funding for Joint Venture Silicon Valley in 1995/1996 ($$,000). Council concurred to provide for an assessment of property tax to the water fund ($29,755). Council concurred to provide a reserve for upgrade/replacement of City Channel Equipment ($15,000). Council concurred to provide for participation in the County's HaTardous Materials Program, the first of a three-year commitment ($3,325). Council concurred to provide for a rate increase of 50 cents par round at Blackberry Farm Golf Course ($40,000). Council concurred not to expand the utility tax to include refuse, cable, and water. Council concurred to provide for a Management Information Services position ($40,000) Council directed staff to return with more information on possible fee increases associated with contract negotiations with Los Altos Garbage; an Economic Development plan; and a construction tax. Review of Depa~i,,,ental Bu{lgets The Fine Arts Commission budget was reviewed out of order to accommodate the members of the public waiting to speak. The City Clerk reviewed the Fine Arts Commission budget. She explained that the grant funds and special event funds would be used for grants to the Euphrat Museum of Art, the Free Shakespeare in the Park Program, and grants to other artists. The Fine Arts Commission has already agreed to provide the Shakespeare group with $3,000 in the current fiscal year. Frank Jelinch, representing the Board of Directors of the San Jose Shakespeare Festival, said they have a commihxient of $10,000 from Hewlett-Packard and may be able to raise more, but they now have enough to put on the program. - - "19f_ay 24, ! {){):~ (]upert/no City Council Page 4 Charlie McCue, marketing director for the Shakespeare Festival groups, discussed the benefits to the city of having this production in the community. Jan Rindfleish, representing the Euphrat Museum of Art, distributed announcements of the special events that had taken place in the previous year that were in addition to their regular shows. Last year they reached 26,000 in the schools and another 15,000 attended exhibits in the community. She explained that several years ago the Fine Arts Commission grant had been $6,000, and she would like get this year's grant to that amount. She noted that they had received $20,000 last year from the Rockefeller foundation. The Council members were all in favor of the proposed Fine Arts Commission budget. The City Manager reviewed the budgets for the City Council, City Manager, City Manager contingencies, legal services, and law enforcement. The Public Infot~lmtion Officer reviewed the budgets for public television, Cupertino Scene, · community relations, and the Government Channel. She also distributed a list of special projects planned for 1995 and asked for direction. Council concurred that staff should proceed with election coverage, parade coverage, state of the city address, SWING (student week in neighborhood government), CREST (Cupertino recognizes extra steps taken) awards, and a revision to the video "Cupertino: City of Choice." Council asked staffto come back with recommendations for a business-oriented tape during discussions about the potential economic development program. The City Clerk reviewed the budgets for City Clerk, elections, and duplicating services, and highlighted the program evaluation for FAC. The Personnel Officer reviewed the Human Resources budget. The Administrative Services Director reviewed the budgets for Finance, Library Commission, and non-deparhtiental. She highlighted the program evaluation for cat licensing. Council concurred that the cat licensing program needed further evaluation and staff should bring it back for review next year. The Parks and Recreation Director reviewed the budget for Recreation Services. The Community Development Director reviewed the budget for Community Development and Housing and Services The Public Works Director reviewed the Public Works budgets. Review of Council Goals Bumett said that the Council and staff were already proceeding with steps to increase long-range fiscal stability. Dean agreed and said the new format is positive and the city is headed in that direction. ' '. ' May ~14, 1§9~ Cupertino City Council Page $ Sorensen said that a focused effort regarding a hotel in Cupertino should be added to the economic development goals. Bautista said that there should also be efforts to attract commercial business sales offices to Cupertino, such as a high-tech company sales office. Discussion followed regarding tentative dates for Diocese project hearings. The City Manager said the time line is subject to Planning Commission and City Council decisions, and that it is an organizational priority to work through the project. The Council members discussed Varian Park and agreed to eliminate the "adopt-a-park" provision, but to maintain pruning of existing trees with no planned replacement. Capital PrQjects Rating Fo~i~ Bumett reviewed a hand-out he had prepared which pwposed a method of rating pwposed capital projects, to be used as a tool to assist Council in deciding which projects are to be funded. He suggested that a study session should be held at a later time to discuss long-range CIP plans after the Stevens Creek Plan has been decided. Bautista said the proposal makes lot of sense. To achieve the goals Council can find ways to go after revenue enhancement and economic development, and make it countexpart to this plan. The City Manager said they would plan it for the next quarterly session. Progrsm l%aluatiox~.~ The City Manager asked if Council was satisfied with the fo/iimt of the program evaluations, and whether they should be done on ail parts of the budget in the coming year. After discussion, Council agreed that a cost recovery column be included in future details, but the full program evaluations are not necessary. At 10:32 p.m. Council concurred to adjourn to June 5, 5:30 p.m., for a joint meeting with the Planning Commission to discuss the Stevens Creek Specific Plan. Kimberly Smi~ City Clerk