Title
Adoption of Resolution Amending the Fiscal Year (FY) 2024-25 Budget;
Adoption of Resolution Approving Workforce Changes for FY 2024-25; and
Recommendation to Reaffirm and Adopt a Revised City of Alameda Purchasing Policy. (Finance 10024056)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
This report provides a review and update to the Fiscal Year (FY) 2024-25 Operating Budget through June 30, 2025. Budget adjustments are proposed for the General Fund, special revenue funds, capital projects fund, debt service fund, internal service funds, enterprise fund, and trust/fiduciary funds. The proposed adjustments would increase the General Fund revenue projection by $860,673, from $139.9 million to $140.9 million, and increase the General Fund operating expense budget by $559,554. Overall, the General Fund revenue adjustments exceed expense adjustments by $293,534.
For non-General Fund programs, staff project an increase in revenues of $382,994 excluding transfers in, and propose an additional $2,638,820 in expense appropriations, excluding transfers out.
Further, staff recommends to add one position, upgrade one permanent and one limited term position to permanent higher classifications, and downgrade one classification position to a lower classification. Overall, these workforce changes keep the overall position count neutral.
Finally, staff recommends adoption of an updated version of the City’s Purchasing Policy to reflect recent changes in state law.
BACKGROUND
The City Council adopted the Biennial Budget for FYs 2023-24 and 2024-25 on June 20, 2023. This report updates the FY 2024-25 financial projections for the General Fund and proposes current year budget adjustments for various City of Alameda (City) funds to reflect and respond to the City’s current financial condition, address urgent and unforeseen needs, and incorporate technical corrections.
The list of budget adjustments to the General Fund and other funds is attached as Exhibit 1, the updated General Fund Budget Summary is attached as Exhibit 2, and the updated All Funds Summary is attached as Exhibit 3.
DISCUSSION
I. General Fund Revenues
General Fund revenues in FY 2024-25 are projected to increase by $860,673 to a total of $140.8 million. Staff recommend the following changes to General Fund revenue forecast:
A1-A6. Non-Department General Fund Revenue Update
Property Taxes - Increase $1,688,849
Based on updated projections from the City’s property tax consultant, HdL, secured property tax is expected to come in slightly higher due to growth in assessed values. In addition, Successor Recognized Obligation Payment Schedule (ROPS) Residual Tax and AB 1290 Property Tax are also coming in higher than expected, at $658,382 and $811,666, respectively.
Sales Tax and Transaction & Use Tax - Decrease $977,176
Based on updated projections from the City’s sales and use tax consultant, HdL, that identified the loss of one major contributor to the sales tax base as well as decreases across all major industries, these taxes are coming in lower than expected.
Gas Franchise - Increase $70,000
Technical correction to match actual billing according to the gas franchise agreement.
Investment and Property Income - Increase $1,600,000
Technical correction to interest income to match actual interest occurring for the General Fund.
Intergovernmental Revenue - Decrease $837,000
Technical correction as CARES Team grant was received in FY 2023-24.
Miscellaneous Mid-Year Adjustments - Decrease $684,000
Technical corrections in service fees, permits, and other miscellaneous revenues.
A7. Transfer-In $84,580 Thousand State Controller’s Office Grant
The Police Department received one-time funding Senate Bill (SB)90 State Mandated costs from the State Controller’s office. This bill mandates reimbursements to local government agencies for state-mandated costs that they incur.
II. General Fund Operating Expenses
The following General Fund expense budget adjustments total an increase in requested appropriations of $559,554, of which $507,685 are for one-time operational needs and the other $51,869 are for ongoing operational needs and the upgrade of one position.
C1, D26. Recreation & Parks - Upgrade Parks Maintenance Foreperson to Parks Maintenance Supervisor and Downgrade Equipment Operator to Gardener - $2,529
The requested personnel changes were a part of a re-organization to the parks operation to better align with the department’s needs. The Parks Maintenance Supervisor upgrade will support long-term planning and large-scale park projects. The downgrade to the Gardener presents cost savings as well as supports enhanced park maintenance. Because the Park Maintenance Supervisor is overseeing all park systems, the ongoing additional salary costs for this upgrade will be split equally between the General Fund (100) and the Alameda Point Services CFD (Fund 281).
C2. Finance - Annual Contribution to Retirement Enhancement Plan - $44,340
The City has an additional small pension plan called the Retirement Enhancement Plan to which the City must make contributions. This annual ongoing cost needs to increase 3% every year.
C3. Public Works - Overtime addition - $5,000
The streetlight repair program needs an allocation for overtime because staff now operate an on-call program and are responding to after hour calls.
C4. Public Works - Streetlight repair costs, anti-vandalism park equipment, and Emergency Operations Center (EOC) mechanical room equipment upgrade - $62,000
These one-time costs are to address unexpected costs to keep City streetlights and parks safe. The EOC mechanical room also needs a facilities upgrade to ensure cooler temperatures for its Uninterrupted Power Source.
C5. Public Works - Sandbag filling machine - $54,000
The proposed sandbag machine will require only three people to operate and produce 1,200 sandbags per hour, a more than tenfold efficiency as compared to the current operation with staff filling sandbags manually.
C6-C7. PBT - Professional Development and supplies for disaster response - $40,000
Staff is requesting this addition to cover necessary safety certifications for disaster response, including CalOES safety assessment program certification ($15,000). These funds will also be used for one-time disaster response toolkits to go in all building inspection vehicles ($25,000).
C8. PBT - Code Enforcement Abatement Reserve - $50,000
The request will establish a reserve with set aside funds that the City can use to remedy code violations that require timely resolution for the protection of public health and safety and where the property owner(s) are unable to or cannot afford to take corrective action. Cost incurred through the use of the Code Enforcement Abatement Fund may be recovered through fines and/or property liens in order to replenish the fund.
C9. Community Development - Professional Services for Cell Tower Lease Negotiations - $30,000
Cell tower leases generate additional revenue for the City. This request will support the re-negotiation of leases for several cell towers that are about to expire.
C10. Recreation & Parks - Software fee for OpenGov workorder system - $103,005
The City uses this software for its park maintenance efforts.
C11. Recreation & Parks - One-time increase in services for storm damage and anti-vandalism costs - $80,000
This one-time request is for unexpected costs related to the storm damage from the recent storm, which has gone beyond their current budget. It also covers unexpected costs incurred to deal with a rise in vandalism.
C12, A6. Public Works - Streetlight repair - Net $0
The City acquired a check from a private party for costs due to their damage of a specific streetlight while driving.
C13, A7. Police - State Controller Office funds for SB-90 State Mandated Costs - Net $0
The State Controller’s Office provided the City with $84,580 for SB-90 state mandated costs. This is a budget neutral request.
III. Non-General Fund Programs
In addition to the General Fund amendments discussed above, the following adjustments are proposed for programs outside of the General Fund. These adjustments are included in the list of budget adjustments presented on Exhibit 1.
D1-D2. Fund 209 PBT - one-time costs for ACCELA permit system and permit review consultants
PBT requests one-time funding for two different one-time costs: (1) PBT is requesting $8,776 to match the amount of the 2nd contract amendment for the ACCELA permit system, as the original budgeted amount was insufficient; and (2) PBT is requesting $150,000 for consultants to provide express permit review to expedite routine housing related building permits. This one-time budget request is needed to match the amount contractually encumbered for these consultant services. Totals to $158,776.
D3. Fund 209 PBT - Delete Permit Tech III and Admin Tech I to Add Senior Management Analyst
The new position will supervise a four-person administrative team, which includes one Executive Assistant, one Administrative Services Coordinator, and one IT Systems Analyst. This position will also oversee key special projects, such as developing business procedures and protocols for mobile devices in the Permit Center, deploying a self-service kiosk, developing a records archiving system to comply with AB 2234 (copyright law for building plans), assisting with grant writing and administration, and providing other critical administrative and strategic support to the Department. This personnel change will result in total cost savings of $14,046.
D4. Fund 210 Library - Summer reading program
The City received $135,000 from the Friends of the Library Association and will use this donation to fund its summer reading program. Total cost is net $0.
D5. Fund 244 Bike/Pedestrian Annual Projects - Neighborhood Greenways and Active Transportation Plan
Planned use of fund balance to cover existing FY 2024-25 Active Transportation Plan budget expenses, including expenses appropriated in FY 2024-25 instead of FY 2023-24 for implementing the Neighborhood Greenway plan. Transferring in fund balance equal to expenditures and totals to net $0.
D6-D7. Fund 260 Solid Waste - Doolittle Landfill remediation efforts and legal expenses
The City settled with the Bay Area Air Quality Management District (BAAQMD) in response to two violations at the Doolittle Landfill. The violations pertained to the flare and piping system not meeting permit and emission compliance requirements. City Council recently approved a capital investment for a flare and piping replacement project that is currently underway and should ensure compliance going forward. The settlement was an unexpected cost of $12,500 to the operating budget.
The Long-Term Flood Protection Plan for the closed Doolittle Landfill commits the City to re-establishing a bay mud and leachate monitoring program to assess how groundwater and leachate are responding to sea level rise. Installing monitoring wells will cost $30,000 in one-time expenses.
D8. Fund 262 Integrated Waste - CalRecycle grant
The City received the CalRecycle grant and needs to appropriate this revenue. It will enable funding of the Kids For The Bay education program and will fund bottle and can reduction strategies like adding water bottle refill stations at City facilities. Totals to $10,936.
D9. Fund 264 Stormwater - Technical correction to revenue
The revenue budgets needed technical correction for 2019 Water Quality and Flood Protection Fee and 1995 Operating Assessment to match the amount assessed for each revenue source. This was a reduction in their revenue budgets. Totals to $580,914.
D10. Fund 264 Stormwater - Crown Beach sand replenishment
Public Works coordinates each year with East Bay Regional Park District (EBRPD) to redistribute sand that accumulates on one end of Crown Beach due to wind and wave action. This is an annual cost for the redistribution which is managed by EBRPD. Previously, Public Works was able to fund the project through other cost savings but given current projects and constraints, this funding request is now necessary to complete the work. Totals to $75,000.
D11. Fund 265 Parking - Parking lot rehabilitation ongoing costs
Parking Lots W, C and A and Parking Lot O at Alameda Point require landscaping costs. Costs were previously funded by the Urban Forest Fund. Totals to $16,000.
D12. Fund 269 Urban Forest - Establish revenue budget
Currently there is no revenue budget, only actuals are posted to the fund. This technical correction updates the Urban Forest Fund revenue to accurately reflect AMP cost sharing for utility clearance. Totals to $169,032.
D13. Fund 269 Urban Forest - New EV truck
Purchase a new electric truck to be dedicated to the urban forest program. Totals to $65,000.
D14-D28. Fund 271 Landscape/Lighting District 84-2 Zone 4/Fund 272 Zone 5/Fund 273 Zone 6/Fund 274 Zone 7/Fund 275 Zone 8/ Fund 280 Bayport Municipal Services District /Fund 281 Alameda Point Community Facilities District 17-1/Fund 285 Marina Cove II Community Facilities District 14-1 - Technical corrections to revenue and adjusted landscaping and transportation services
The revenue budgets for these various CFDs needed technical corrections to match the engineering assessments. Some funds had their revenue budgets increased, some had it decreased. The expense budget was also adjusted for enhanced services.
D29. Fund 290 Alameda Point - Property management services
Updates the budget for property management services to cover additional cost for the 6-month amendment to LPC Property Management contract, including higher fee schedule and higher management fee due to the short-term nature of the agreement. Totals to $273,000.
D30. Fund 501 Sewer Services - Replacement of stolen equipment
Replaces stolen equipment, including camera. Totals to $18,000.
D31-32. Fund 601 Fleet Maintenance & Replacement - Machinery/Equipment Acquisition & Fire Engine Repair
The City garage requires vehicle lifts to elevate vehicles for maintenance. Heavy duty vehicles require a large lift rated for the vehicle weight. The existing large vehicle lift is over 60 years old, not reliable and requires replacement. This lift is required to work on many types of City vehicles, including fire engines. AFD Fire Engines are in need of significant repairs that can only be performed by specialized outside vendors. This one-time request covers known costs with additional budget for contingency. Totals to $505,000.
D33. Fund 603 Facility Maintenance & Replacement - New EV Truck
The Public Works Facilities Maintenance is using a vehicle from ARPD for its daily operations. ARPD needs its vehicle back and so this request is for a new service truck for the Facilities Division. Totals to $65,000.
D34. Fund 606 Information Technology - Microsoft 365 license fees
Technical correction to expense budget to pay for software fees. Current budget does not cover license fees. Totals $85,000.
IV. Workforce Changes
The FY 2024-25 budget includes funding for 505 allocated full-time positions, excluding Alameda Municipal Power. The recommended workforce changes include adding one position, upgrading one permanent and one limited term position to permanent higher classifications, and downgrading one classification position to a lower classification, as shown below.
|
Dept |
Request |
+/- FTE |
Annual Cost |
Funding Source |
|
ARPD |
Upgrade Parks Maintenance Foreperson to Parks Maintenance Supervisor and Downgrade Equipment Operator to Gardener |
- |
$2,529 |
For upgrade: General Fund (50%); Alameda Point Service Community Facilities District 17-1 (50%) |
|
PBT |
Delete Permit Tech III and Admin Tech I to Add Senior Management Analyst |
-1.0 |
-$14,046 |
Fund 209 PBT |
The effective date of approved workforce changes would be March 5, 2025 pending City Council approval.
Finally, attached to this staff report for the City Council’s review is a revised and updated draft of the City’s Purchasing Policy. The City Council routinely adopts updates to the City’s Purchasing Policy. The attached draft version contains modernizing changes intended to make the policy more understandable for City staff and ensure it reflects recent changes in state law, including higher purchasing thresholds for certain types of construction projects.
ALTERNATIVES
• Authorize the budget amendments and workforce changes proposed in the staff report.
• City Council may take no action, in which case the previously adopted and revised FY 2024-25 Mid-Cycle budget and authorized positions would remain in effect.
• City Council may provide further direction on these proposed budget amendments and workforce changes.
FINANCIAL IMPACT
The proposed FY 2024-25 budget adjustments will increase the General Fund revenue projection by $860,673 in ongoing funds and increase by $88,680 in one-time funds to a total of approximately $140.9 million. The proposed expense adjustments include $559,554 in additional operating expenses, of which $507,685 are for one-time operational needs and the other $59,454 are for ongoing operational needs and the upgrade of one classification. The total General Fund expenses are $158,673,749. This includes the one-time use of residual General Fund fund balance in the amount of $16.13 million previously approved by City Council. As a reminder, City Council programed the one-time use of residual fund balance for one-time CalPERS payments ($3 million), sidewalks and roads ($2 million), homeless services ($250,000), partial funding for the aquatic center ($15 million), card access readers for City buildings ($5.2 million), and various other projects. Staff anticipates that upon adoption of this FY 2024-25 Mid-Year Budget, the Residual General Fund fund balance will be $20.89 million. It is important to note that the Residual General Fund fund balance are funds that are above and beyond the City’s required 20% General Fund reserves and 5% Economic Uncertainty funds.
The net impact of the proposed adjustments on all other funds will be an increase in the revenue projection by $382,994 excluding transfers in, and an additional $2,638,820 in expenditure authority, excluding interfund transfers.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents. This action supports the City Strategic Plan to Practice Fiscally Responsible, Equitable and Inclusive Governance.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
There are no climate impacts associated with this action; implementation of the Climate Action and Resiliency Plan continues to move ahead with available funding.
RECOMMENDATION
Adopt a Resolution amending the Fiscal Year 2024-25 Operating Budget; adopt a Resolution approving workforce changes for FY 2024-25; and reaffirm and adopt a revised City of Alameda Purchasing Policy.
Respectfully submitted,
Ross McCarthy, Acting Finance Director
By,
Ecaterina Burton, Budget Manager
Exhibits:
1. FY 2024-25 Mid-Year Budget Adjustments
2. General Fund Budget Summary
3. All Funds Summary
4. AP&P No. 5 Purchasing Policy