San Bruno Proposed Budget - Open Meeting May 29 2019

Article Source: City of San Bruno CA

City Manager’s Proposed FY2019-20 Operating and Capital Improvement Program Budget

City Manager Jovan D. Grogan and staff will present the City Manager’s Proposed Operating and Capital Improvement Program Budget for City Council consideration at a Special City Council meeting scheduled for May 29, 2019 at 10:00 a.m. at the San Bruno Recreation Center. The meeting is expected to run through 5:00 p.m. and a subsequent meeting will be scheduled on June 11, if necessary.

Meeting Agenda (May 29, 2019)
City Manager's Proposed Fiscal Year 2019-20 Operating and Capital Improvement Program Budget

Below are part of the background:

May 24, 2019

Honorable Mayor and Members of the City Council:

It is my privilege to transmit the Proposed Fiscal Year (FY) 201 9-20 Operating and Capital Improvements Program (CIP) Budgets for your review, consideration and action to approve.

It’s an exciting time to be in San Bruno! Opportunities and challenges abound. Since being appointed as City Manager nearly a year ago, I have witnessed the community’s passion to seize opportunities and work through challenges with a single purpose that can best be described as an unspoken commitment to leave our city better – and more beautiful – than we found it.

The City of San Bruno’s top priority continues to be providing our residents and businesses with high-quality services as well as identify ways to enhance infrastructure maintenance and expand the services that the community expects and deserves.

As you know, the City has embarked on a fiscal sustainability effort as part of our FY201 9-20 budgeting process and to inform future planning. In March 2019, the City conducted a Community Priorities Survey to ask residents about whether they are satisfied with the services we provide and obtain input on community priorities. Some of the priorities identified by our community included:

• Increasing pothole and other street hazard repair;
• Increasing ongoing street maintenance programs;
• Maintaining neighborhood police patrols;
• Attracting and maintaining local businesses;
• Maintaining city parks and playgrounds; and
• Maintaining and repairing park structures for children and youth.
• Implementation of the Transit Corridor Vision to Revitalize Downtown and Commercial Corridor;
• Assure Rehabilitation & Replacement of Critical Community Facilities and Infrastructure;
• Grow City Revenues to Assure On-Going Fiscal Stability and Economic Vitality;
• Continue to Strengthen Community Connections and Engagement;
• Protect and Improve Community Aesthetics and Safety;
• Continue Proactive Planning for the Future of San Bruno; and
• Organizational Health and Employee Success.

Enhancing services and programs to meet these priorities is a challenge that we must face head on.

On the positive side, the City continues to benefit from a strong local and regional economy. Development activity and interest from the private sector to invest in the City’s transit corridor and commercial areas remains high. And, prudent financial planning and the fact that the proposed FY201 9-20 budget calls for the thresholds in the City’s reserve policy funds to be met, means that the City has time to develop budgetary solutions and put corrective actions in place.

The proposed FY2019-20 budget is based on the philosophy of living within our means, while also recognizing that there are some improvements to City services and organizational enhancements that are critical to continuing to provide high-quality services to the community and maintain City assets in a safe manner. The Proposed FY2019-20 General Fund operating budget includes a budgetary deficit of $376,377. This is down from the budgetary deficit in the amended budget from the current fiscal year of $2,085,776. This is largely the result of increasing in the City’s major revenue sources (property tax, sales tax, and permit revenue), combined with limiting growth in expenditures (which includes no assumption for cost-of-living adjustments (COLAs) for the labor contracts that expire at the end of 2019). A summary of the proposed General Fund budget and enhancements are discussed later in this transmittal letter.

Through the proposed budget, the City will be able to maintain core service levels as well as make modest enhancements in a few notable areas (e.g. development permit processing, parks and facilities management staffing, weekend library services, and fleet maintenance). However, the proposed budget reflects tough choices to not enhance needed services due to financial constraints in both the operating and capital budgets. There remaining millions of dollars’ worth of deferred capital improvements and maintenance, and the City is not able to meet the needs and service priorities of the community in several areas –most notably regarding annual roadway rehabilitation and pothole repairs. There is currently a $6 million funding gap the City’s annual roadway maintenance program.

In general, the City of San Bruno’s fiscal condition is stable, but not sustainable. The backlog of deferred maintenance to public infrastructure and future growth in employee costs (both direct compensation and long-term post-employment liabilities) will continue to significantly impact the health of the City’s General Fund. In addition, funding the needed and State-mandated improvements to the City’s stormwater system cannot be accomplished within existing resources and remains a significant financial challenge. The City’s current parcel assessment for the stormwater system does not cover the system’s annual operating and capital improvement cost. The stormwater fund is projected to have an approximately $800,000 deficit in the proposed FY2019-20 budget and the projected FY2020-21 budget and beyond is projected to run a deficit beginning and approximately $350,000 and into several million dollars by FY2023-24. This, of course, cannot happen, and the General Fund will need to provide additional financial support to the stormwater fund, additional revenues will need to be generated, and/or stormwater related operating expenses will be reduced and capital projects will be deferred.

In addition, a constantly changing statewide legislative and regulatory environment continues to add unfunded mandates and significant costs to the City’s operations.

There are 4 bargaining units whose contracts expire on December 31, 2019. These units represent employees from all levels of the organization and comprise about 2/3’s of the City’s workforce. As noted above, the FY201 9-20 budget does not include salary increase for these 4 bargaining units, beyond the contract expiration. The Police and Fire bargaining units’ MOUs will expire in December 2020 and a 3% negotiated salary increase through December 31, 2020 is included in the FY2019-20 budget.

New in this year’s proposed budget is a long-range forecast for all of the City’s major funds. In recent years, a long-range forecast was only prepared for the Capital Improvement Program (CIP) Budget. The long-range forecasts and their projects are discussed later in this transmittal letter.

OVERVIEW

The proposed budgets reflect the City Council’s ongoing conservative fiscal policies and the priorities identified through the City Council’s goal setting and budget/revenue policy discussions. The Proposed Operating Budget for all General Fund Departments and for the City’s Enterprise Funds outlines important initiatives included in the coming year’s work program and a financial plan to accomplish key City objectives. The Budget provides a comprehensive overview of the City’s organization, operations, anticipated revenues and projected expenditures to support operations and projects. It is intended to serve as a strategic tool to communicate, implement and monitor the City Council’s direction and priorities for delivery of programs and services.

The Capital Improvements Program Budget outlines an aggressive work program and funding strategy that is intended to assure necessary repair and improvement to the City’s facilities and infrastructure that support the delivery of all City programs and services. This year, a specific focus was applied to budgeting for projects that will be started and/or completed in the coming fiscal year. This allows for a more accurate projection of expenditures and is also an illustration of the fact that staff plans to allocate time to make progress on current/open projects that were funded in prior years.

As in previous years, the budget proposes some changes and enhancements to improve operational efficiency and to effectively address operational challenges and certain areas of community priority. A complete list of proposed and recommended program and service enhancements for FY201 9-20 is presented in the attachment to this letter.

Each departmental section of the Operating Budget outlines specific work program objectives and goals that support the City’s overarching priorities established by the City Council to move the community forward in several important directions. These priorities were most recently discussed and approved by the City Council during the City Council’s April 9, 2019 Strategic Planning and Goal Setting Session and include:

With these initiatives continuing in place, the coming year’s work program expressed through the Operating and Capital Improvements Program Budgets, builds upon the progress achieved in prior years and is focused on an organizational commitment for delivery of services consistent with community needs and expectations and a shared vision for the community’s future and vitality.

Over the past year, the City made major steps forward in all areas of the City’s operation that directly address the City Council’s established long term objectives. These accomplishments set the foundation for continuing City progress. Some of these accomplishments have game changing potential for the community. Just a few of the many accomplishments the City has achieved in the past year are listed below.

Ø Over the past nine months, key department staff have formed an internal advisory committee to work with the architecture firm (Group 4) in progressing the new Recreation and Aquatics Center (RAC) Project through schematic design and development of construction drawings. The new facilities will replace Veterans Memorial

Recreation Center and the adjacent community swimming pool that have served generations of San Bruno residents for over six decades. The San Bruno Community Foundation has pledged $50 million in restitution funding to turn the community’s vision into reality over the next three years. Two members of the City Council, Planning Commission, Park and Recreation Commission and San Bruno Community Foundation have met monthly over the past several months to review progress and advise in key decisions on the design of the new facility.

Ø By the middle of 2019, the City expects to finally complete full replacement of all underground water, sewer and stormwater pipelines as well as all sidewalks, streets and streetlights throughout the entire Crestmoor 2 neighborhood. More than eight years after the 2010 PG&E gas pipeline explosion, this is an important milestone for the neighborhood that has been almost continuously “under construction” since the disaster in 2010. Perhaps the most exciting part of the rebuild project is replacement of the former Earl/Glenview Park with a beautiful, expanded park designed by neighborhood residents and containing amenities for all ages which had its grand opening in October 2018. While San Bruno will never forget the tragedy and the precious lives that were lost, full completion of the neighborhood rebuild will be another important step forward toward full neighborhood and community recovery.

Ø At the southern gateway to downtown, 83 new, modern apartments are finishing construction and had its first tenant occupancy in May 2019. The coming year will see another modern transit-oriented residential and commercial project begin construction directly across the street from Caltrain at 111 San Bruno Ave. to anchor the northern gateway to downtown. These projects, along with redevelopment of the Mills Plaza property between El Camino Real and Linden Ave. will begin transformation of the community’s commercial corridor and downtown consistent with the City’s adopted Transit Corridor Plan.

Ø As part of the City’s ongoing aggressive water and sewer infrastructure replacement and improvement program, the City completed full replacement of the underground water and sewer mainlines throughout the City. These projects were delivered on time and within budget and were completed with minimal disruption to business activity in the downtown and other areas throughout the City and will assure reliable service to an area previously impacted by service failures due to aged, damaged and deteriorating underground pipelines.

Ø In the Bayhill Office Park, work on a new Bayhill Specific Plan to outline a new vision for the area is ongoing and expected to be completed in early 2020. As the planning process proceeds, renovation of existing buildings to accommodate growth of YouTube’s workforce, construction of the new headquarters for the SF Police Credit Union and façade improvements in the Bayhill Shopping Center are beginning transformation of the area.

Ø Installation of a new state-of-the-art Fiber to the Home (FTTH) network at the Shelter Creek, Peninsula Place and Crystal Springs Terrance apartment multi-family complexes has shown positive results with a 68% subscriber penetration. FTTH offers a strong, reliable network and data speeds of up to 1 gigabyte available to over 2,400 residences in San Bruno. During the coming year the City Council will need to determine whether to continue this initiative or to pursue an alternative strategy for the future of San Bruno Cable.

Ø The Cable department completed a major upgrade to the core Internet equipment by replacing routers throughout the system. A new rate card was implemented to offer competitive pricing for priority Internet, television and telephone packages. And staff have been working diligently to renegotiate many of the department’s long-standing contracts to reduce operating expenses and run a leaner operation.

Ø On May 1, 2019, the City’s comprehensive Development Impact Fee (DIF) program took effect. This program requires residential and commercial developers to pay an impact fee that will be used to improve and expand infrastructure throughout the City. Impact fees will be a core revenue source to help fund infrastructure projects in the years to come.

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Attend the meeting and ask YOUR questions and better understand the funding problems.

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FULL Council Agenda Packet WITH Staff Reports can be viewed and downloaded from:

https://sanbruno.ca.gov/gov/elected_officials/city_council_minutes_n_agendas.htm

This document should be available late Thursday or Friday before the Tuesday Council Meeting

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Robert Riechel

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