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HomeMy WebLinkAboutItem a - Proposed Operating Budget for Fiscal Years 2020-22, and Proposed Capital Improvement and Equipment Plan for Fiscal Years 2020-25 DATE: June 2, 2020 TO: Honorable Mayor and City Council FROM: Dominic Lazzaretto, City Manager By: Michael Bruckner, Deputy City Manager SUBJECT: REPORT, DISCUSSION, AND DIRECTION REGARDING THE PROPOSED OPERATING BUDGET FOR FISCAL YEARS 2020-22, AND PROPOSED CAPITAL IMPROVEMENT AND EQUIPMENT PLAN FOR FISCAL YEARS 2020-25 Recommendation: Provide Direction SUMMARY At the May 19, 2020, Budget Study Session, the City Council requested an additional Study Session regarding several items. These include the future of Law Day, Vacant Home Registry fees, reimbursements for Police Response/Investigations, and Documentary Transfer Taxes. A detailed discussion of each item is provided below. In addition, the City has pursued various assistance programs for small businesses in Arcadia as a result of the COVID-19 pandemic, and these programs could be discussed through the budget process. It is recommended that the City Council provide direction on how to proceed with each item. DISCUSSION Law Day At the May 19 meeting, the City Council discussed the cost and value of the Law Day event, and whether the City should continue to support the event. It was represented that the Arcadia Chinese Association (“ACA”) may be interested in being the sole sponsor of the event. Staff contacted the ACA to discuss the City Council’s proposal of transferring the administration of the event to the ACA along with the costs of supporting the event. The ACA has indicated that they would like to continue the event at their cost. This will save the City approximately $2,000 in costs. In addition to the savings, the City’s revenue may increase slightly if the City opted to charge the ACA for use of the facilities. It is recommended that the City Council transition Law Day to the ACA, but direct staff not to charge for the event space, as this is a non-profit local organization putting on a program of general community benefit. Fiscal Year 2020-22 Operating Budget June 2, 2020 Page 2 of 6 Vacant Home Registry Several years ago, following a major construction boom of new homes throughout Arcadia, concerns developed over homes that were unoccupied. Many newly built, or newly purchased, homes did not appear lived in and were not being occupied in a traditional sense. To attempt to avoid landscaping maintenance problems, watering issues, safety concerns, and other general neighborhood upkeep problems, the City developed an Unoccupied Home Registry process. The primary goal of this program was to ensure that each home had several contacts, including a local contact that the City could reach if security, safety, or maintenance issues developed. In order to encourage early participation in the process, the initial fee for the registry was set at no cost. It was geared to provide a neighborhood safety tool in the event something happened at a home when the occupants or owner were not there. Through staff observation and resident reporting, hundreds of addresses were reviewed. The majority did, in fact, have someone occupying the residence. Often, these occupants were not traditional full-time occupants; they were often part-time occupants, caretakers, and the like. In any event, over time a total of 129 homes have been registered on the list. The instance of code violations and maintenance issues on these registered homes is extremely low. Most homes are not posing any problem for the neighborhood, other than the fact that they are not occupied full-time. Charging a fee to be on the list was considered by the staff and was researched at the time. There are not many similar programs in the area, but based on research at the time (2018), the following examples of cost were found: • City of Temple City - Mandatory annual fee of $147 ($35 registration and $112 inspection) • City of Palm Springs - $37.39 annual fee • City of Hamilton, Ontario, Canada - $1,115 (initial admin fee $291 and yearly inspection $729.20 plus HST $94.80) • Wilmington, Delaware - Fee structure based on the total number of years the property has been vacant. For example, first year is $500, second year is $1,000. • York, Pennsylvania - Registration fee $65, inspection fee $130, subsequent re- inspections $65 Subsequent to this, as part of their work evaluating the City’s finances, the Citizens Financial Advisory Committee (“CFAC”) recommended that the City evaluate a new fee for this program. The CFAC recommended a base fee of $500 per home to join the list and an annual maintenance fee of $100. To cover staff time and expenses, these fees appear reasonable. Administrative and Code Services Staff do spend time on this program to maintain the registry and inspect the homes. Regardless of whether these fees are reasonable, some of those on the list would likely not re-register if they needed to pay. It is viewed as a positive by many of those on the list, in that there is a direct connection to a management company or owner if something occurs at the house. As mentioned, when contacted, the majority of owners of properties that did appear to be unoccupied provided evidence that the homes were not vacant. Based on the CFAC recommendation, however, if everyone on the list registered, it would result in a one-time amount of $64,500. The annual fee would result in $12,900 to the City. If the City Council wished to review a higher fee, a full cost study could be completed to determine a true cost. Fiscal Year 2020-22 Operating Budget June 2, 2020 Page 3 of 6 It is recommended that this cost be reviewed and brought forward as part of the ongoing citywide User Fee Study. DUI Impound Fees The Police Department currently collects a $550 fee for vehicles that are impounded in connection to an arrest for Driving Under the Influence (“DUI”). The $550 fee is based upon a time and motion fee study that considers the following: • Officer’s time to impound a vehicle and complete the CHP paperwork • A Record Technician’s time to enter the impounded vehicle into the state’s computer database • Time to enter the vehicle information into the Department’s Records Management System • File the paperwork in our records storage area • The time needed to release the vehicle to the registered owner • Removing the vehicle’s information from the state’s computer database The City’s fee for DUI Impounds was compared with six surrounding police departments and Arcadia’s fee is the highest amount. Although the City is currently reviewing all fees, current impound fees were last reviewed in 2006 (City Resolution 6513). Based on our rates being the highest in the region, it would not be recommended to increase the Vehicle Impound rates for DUI cases. In FY 2018-19, the Police Department received approximately $84,000 in revenue from all vehicle impounds, which includes Department fees for impounded vehicle releases and franchise fees collected from our contract tow service. The Police Department also bills for responses to DUI-related traffic collisions for the past 25 years, which is a practice authorized by Government Code §53150-53159. The DUI Collision billing laws allow the City to bill for costs to include: • Fully burdened hourly rate of responding Police & Fire departments personnel o Including time spent investigating the case • Costs of Police & Fire vehicles used to respond to the collision scene • Time spent related to removal of a vehicle • Arrest and detention of the responsible DUI suspect • Travel time to/from the collision scene • Booking time at a jail facility • Administration of chemical testing (jail or medical facility) • Report writing Currently, the Police Department completes the billing requests for these responses on behalf of both the Police and Fire Departments. Once completed, the authorizations for billing are submitted to the Administrative Services Department (“ASD”) for processing. For FY 2018-19, the City billed $23,700, but ASD received no payments and referred the unpaid billings to a third party collections service. For FY 2018-19, ASD received $400 from the collections agency. In this current Fiscal Year, the City has billed approximately $39,000 and collected $4,600, which includes $300 from the collections agency. Fiscal Year 2020-22 Operating Budget June 2, 2020 Page 4 of 6 Marijuana Grow Houses The Police Department researched the possibility of pursuing a method of billing for responses to marijuana related investigations. The Department consulted with representatives from the Los Angeles County District Attorney’s Office (“DA”) regarding their familiarity with cities or counties receiving reimbursements for law enforcement responses to these types of investigations. The District Attorney’s Office does not seek financial reimbursements on behalf of a City for expenditures related to emergency responses or investigations. The DA’s office considers this a civil matter, which is something their office will not pursue on the City’s behalf. The Police Department consulted with the City Attorney to determine what processes could be implemented at the Police Department to address how the City could practically receive revenue or reimbursements for handling these incidents. Options discussed with the City Attorney included pursuing a civil action and creating a local code or ordinance to penalize those whose illegal operation necessitates an emergency response from the City. After further discussion and weighing the options, a civil action would most likely prove to be more costly of an endeavor than the amount of any judgement levied and potentially received by the City. The pursuit of a local ordinance to assess fines against negligent property owners in these cases most likely will not net revenues commensurate with what would be expended in the City’s emergency responses. Prostitution Enforcement The Police Department has only handled one prostitution investigation and prosecution in the previous three years (2017). This type of offense in Arcadia has been limited to massage type businesses, and is further prevented because of the Police Department’s efforts to proactively inspect these types of businesses on a scheduled business. The Quality of Life Detective routinely investigates reports of possible prostitution activity at residences throughout the City, but there appear to be no opportunities to create a revenue stream from prostitution investigations for similar reasons regarding marijuana grow house investigation. Documentary Transfer Tax As a Charter City, Arcadia is allowed to levy a Documentary Transfer Tax (“DTT”) that is outside of the $1.10 per $1,000 in sale value currently levied by the County and shared equally with the City. Under the current rate, the City and County each receive $0.55 per $1,000 in sale value. If the City Council wanted to increase the DTT, it would need to adopt an ordinance approving a DTT, and then call for an election for the tax to be taken to the voters. If the election coincides with a regular election, then a simple majority is needed for approval. If a special election is called, then a super majority is need for approval. If approved by voters, the City would receive the “newly” approved City tax rate and the County would begin to receive the full $1.10 rate. Here are some examples to illustrate the distribution of tax if the rate changes: Example #1: If the City received voter approval to increase the City rate to $0.85 per $1,000. The new tax rate imposed on the seller would be: $1.95 per $1,000 Fiscal Year 2020-22 Operating Budget June 2, 2020 Page 5 of 6 • The City then receives $0.85 per $1,000 • The County receives $1.10 per $1,000 Example #2: If City received voter approval to increase the City rate to $4.50 per $1,000. The new tax rate imposed on the seller would be: $5.60 per $1,000 • The City receives $4.50 per $1,000 • The County receives $1.10 per $1,000 Example #3: If City received voter approval to decrease the City rate to $0.35 per $1,000. The new tax rate imposed on the seller would be: $1.45 per $1,000 • The City receives $0.35 per $1,000 • The County receives $1.10 per $1,000 The table below illustrates the total tax paid by the home seller based on a $1,000,000 home value. City (per $1000) County (per $1000) Total Rate (City & County) Doc Transfer Tax Paid Estimated Revenue Current Rate $0.55 $0.55 $1.10 $1,100 $384,600 Proposed @ $0.85 $0.85 $1.10 $1.95 $1,950 $594,400 Proposed @ $1.10 $1.10 $1.10 $2.20 $2,200 $769,200 Proposed @ $4.50 $4.50 $1.10 $5.60 $5,600 $3,146,700 At this time, there are only 4 cities in Los Angeles County that levy a DTT outside of the $1.10 currently levied by the County and shared with the City. These are Los Angeles ($4.50), Santa Monica ($3.00), Culver City ($4.50), and Pomona ($2.20). Given that the City recently went to the voters for a significant tax, it is not recommended at this time to seek additional funding through an increase in the Documentary Transfer Tax at this time. Assistance to Arcadia Businesses Another item that was discussed recently was potential assistance to Arcadia businesses through the establishment of grant or loan programs. A small business grant program was developed and is being implemented using Community Development Block Grant (“CDBG”) funds. The CDBG program has released approximately $180,000 to the City to date and it is expected that additional funding will be released through stimulus packages in the near future. A loan program to assist impacted businesses in Arcadia is also being explored although there is no identified funding source for such a program. It the City Council wishes to explore additional assistance for small businesses, or other segments of the community through the budget process, these issues can be discussed at the Study Session. Fiscal Year 2020-22 Operating Budget June 2, 2020 Page 6 of 6 FISCAL IMPACT Depending on the policy direction determined by the City Council, enhancing the City’s revenues for Law Day, Vacant Home Registry, Police Response/Incident Reimbursements, and the Documentary Transfer Tax could range from $77,400 to well over $3,146,700. ENVIRONMENTAL ANALYSIS The proposed actions do not constitute a project under the California Environmental Quality Act (“CEQA”), based on Section 15061(b)(3) of the CEQA Guidelines, as it can be seen with certainty that they will have no impact on the environment. Thus, these matters are exempt under CEQA. RECOMMENDATION It is recommended that the City Council provide direction on the various items listed above.