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HomeMy WebLinkAbout05/17/16 Minutes - Regular MeetingCITY OF DIAMOND BAR CITY COUNCIL STUDY SESSION MAY 17, 2016 STUDY SESSION: M/Lyons called the Study Session to order at 5:00 p.m. in Room CC -8, South Coast Air Quality Management District/Government Center, 21865 Copley Drive, Diamond Bar, CA 91765. Present: Council Members Carol Herrera, Ruth Low, Steve Tye; Mayor Pro Tem Jimmy Lin, and Mayor Nancy Lyons Staff Present: James DeStefano, City Manager; David DeBerry, City Attorney; Ryan McLean, Deputy City Manager; Bob Rose, Community Services Director; David Liu, Public Works Director; Greg Gubman, Community Development Director; Dianna Honeywell, Finance Director; Marsha Roa, Public Information Manager; Kimberly Young, Senior Civil Engineer; Ken Desforges, IS Director; Anthony Santos, Senior Management Analyst; Anthony Jordan, Parks Maintenance Superintendent; Christy Murphey, Recreation Superintendent; Amy Haug, Human Resources Manager; Mandy Jiang, Intern; and Tommye Cribbins, City Clerk. ® INTRODUCTION OF DRAFT FISCAL YEAR 2016-17 BUDGET — Discussion and Action. CM/DeStefano reported that the City is ending the current fiscal year and it has been a very good year for the community in terms of projects that were created and completed. The City has received a good amount of revenue this year, some in the form of one time fees for the Lennar Site D project and taxation increases due to the improving economy. With the proposed budget changes the City will exit this fiscal year with a healthy addition to the reserves which continues to remain high. Moving forward, staff looks to similar increases across the board for TOT, sales tax and property taxes. While there will not be the same bump in development projects because Willow Heights is ending, the new project at the end of Larkstone Drive is moving forward in the new year. In addition, there are a variety of projects staff talks about within the budget for the next fiscal year including commencement of the General Plan update project. Staff hopes to work through as much of the budget as possible in anticipation of Council consideration and adoption at the June 7 meeting. FD/Honeywell provided an overview of what the budget entails on an annual basis. Each year the budget process begins in February shortly after the mid -year budget adjustments and it is at that time the departments and City Manager's office examine what has been accomplished to -date and what is left to be accomplished for the remainder of the year. This process helps highlight what needs to be budgeted for the following budget year. Each department prepares its annual budget and its annual "request for funds" in order to complete their departmental goals which are aligned with the Council's adopted Goals which for Fiscal Year 2016-17 were adopted on April 5, 2016. When all departments have completed their MAY 17, 2016 PAGE 2 CC STUDY SESSION budgets the Finance Department consolidates the information and then meets with CM/DeStefano and DCM/McLean and someone from each department to discuss the line items which result in the document before the City Council for consideration. The budget document before City Council this evening is a working document prepared by management as a proposal that management believes is an effective and appropriate use of the City's resources it anticipates receiving during the next fiscal year. The document is open to questions, suggestions and concerns and is the next step toward final adoption. This year the City's management shows more of a global look at the organization and it was determined that consolidation of the maintenance function would be cost -beneficial and would provide favorable service delivery to the residents of Diamond Bar. For Fiscal Year 2015-16, the City received one-time funds from Willow Heights in the amount of nearly $900,000 and it is recommended that these funds be set aside for a "rainy day" fund which would be used to replenish the special revenue funds and the internal funds which have been depleted over the past few years. Setting aside monies in these funds helps to offset leaner years going forward when resources may not be as available as they are at this time. Further, it is recommended that the remaining $240,000 be set aside for the General Fund update process to fully fund that project at $1 million, the estimated amount to complete the project. It is also recommended that funds be set aside in the Traffic Mitigation Fund, the Equipment Maintenance and Replacement Fund, the Building Maintenance Fund and the newly created Technology Reserve Fund. M/Lyons asked what the Equipment Maintenance and Replacement Fund and Building Maintenance Fund would be used for. FD/Honeywell responded that it would be funding for future projects. There are no projects slated at this time; however, there are always expenditures that come up in those categories such as computer replacement (hardware software) and maintenance of the City Hall building. This year staff proposed creation of a new fund during the current fiscal year in order to begin setting aside funds for anticipated technology needs and improvements. Over the next several years it is anticipated that the City will replace aging software including outdated finance software and money will be set aside each year in anticipation of these future expenditures. For Fiscal Year 2016-17, overall the level of resources is lower than last year primarily due to receipt of a significant amount of revenue from the Willow Heights project. This coming year will be more of a normal revenue year for Diamond Bar. Property Tax revenue is scheduled to grow by MAY 17, 2016 PAGE 3 CC STUDY SESSION about 4 percent and it may go higher once the final numbers are received for Willow Heights. Sales Tax revenue will be slightly lower due to having received one-time adjustments during the current fiscal year because of the unwinding of the "triple -flip" and other adjustments received in the current fiscal year including the fact that fuel prices remain low. For Fiscal Year 2016-17 staff is recommending the sale of $600,000 at a 25 percent discount) of Prop A funds for General Fund dollars to provide spending flexibility. C/Tye asked for the dollar amount associated with "Other Taxes and Fees". FD/Honeywell responded that the amount is being reduced by about $620,000 and the total figure is $7.3 million. C/Low asked when the City expected to see revenue from The Millennium project. CM/DeStefano said he would not "bank" on projected revenue at this point because it took them 10 years to get their Final Map recorded. Millennium is talking about building 48 homes and they will need to grade the site which will probably take a year and will probably not commence until sometime next year. Grading fees would likely go to Engineering in calendar year 2017 (FY 2017-18) and then there is all of the infrastructure that will have to be built into the graded site so the homes will likely be constructed in the next two, three, four and five years after that as the homes are likely to be sold on an individual lot basis. The project could easily take 10 -years to be built out, much of which will be determined by when it starts and what the market conditions are as they progress. Each home will definitely be a multi-million dollar home and the City will realize its portion of the Building and Safety plan check and inspection fees. Planning received all of its fees during the past couple of years. M/Lyons stated that the City has received $750,000 in Quimby (park) funds. CM/DeStefano stated that anticipated revenue will show up in the budget for the grading. After that revenue will trickle in over a few years unless there is an explosion in need for that caliber of home where a dozen a year will be built rather than three or four. FD/Honeywell said that FY 2016-17 is the first year the City will receive property tax money for Willow Heights as the project is sold out during the current fiscal year. CM/DeStefano reported that the Larkstone Drive Lennar project will be built toward the end of the year 2017 and staff expects that those homes will MAY 17, 2016 PAGE 4 CC STUDY SESSION blow out similar to Willow Heights during 2017-2018 with revenue coming to the City late 2018 into 2019 fiscal years. FD/Honeywell anticipated appropriations would be $8 million from the General Fund. The Cost of Living and Benefit Allotment increases are factored into this budget. Staff is proposing a 1Yz percent Cost of Living increase for all "benefited" employees with a $50 Benefit Allotment increase. The CPI from March to March came in at 1.34 percent rounded to 1.5. Employee salary and benefits are the largest expense the City has and for Fiscal Year 2016-17 the total will be $7.8 million with $7 million being funded by the General Fund. FD/Honeywell then spoke about proposed personnel changes incorporated into the proposed budget. The City Manager regularly reviews departmental operations and staffing structures of the City to make sure that services are being delivered to residents in the most efficient and cost-effective manner as possible. In looking at the structure this year, CM/DeStefano identified changes to the organizational structure to meet these goals. There is a proposed realignment of all park and facilities maintenance and Capital Improvement Project duties being moved from Community Services to Public Works to be under the supervision of the Public Works Director which is typical of most municipal organizations. With the increased responsibilities of this position, it is recommended that the Public Works Director's salary be adjusted to range at the 58E of the salary schedule. With the maintenance and CIP responsibilities transferred to Public Works, the overall scope of Community Services has changed to focus primarily on Parks and Recreation. So it is proposed that the Community Services Department's name be changed to Parks and Recreation. As a result of the change in responsibilities, the Community Services Director position classification will be retitled "Parks and Recreation Director" with a salary range being adjusted to 51 E. Since the maintenance function will be centralized in one department Senior Street Maintenance Workers and Senior Facility Maintenance Workers will be streamlined to "Senior Maintenance Worker' positions with the range remaining in 10E which will allow for greater flexibility for staffing service responsibilities. It is further proposed that the Deputy City Manager be reclassified to "Assistant City Manager" in order to reflect the additional duties that position is assuming during this transition. In addition, the Assistant City Manager will oversee the IS Director, the HR Manager, the Assistant to the City Manager, the City Clerk, Public Information Manager and the Public Safety Program. This position will also supervise the Parks and Recreation MAY 17, 2016 PAGE 5 CC STUDY SESSION Department during the transition stage following the retirement of CSD/Rose. It is proposed that the salary range for the Assistant City Manager be adjusted to 59E to more accurately reflect the current labor market condition. For the past few years the position of Assistant to the City Manager has been unfunded and staff proposes this year that this position be fully funded in FY 2016-17 in order to ensure proper oversight of programs and personnel. Accordingly, the Assistant to the City Manager will supervise the City's Management Analysis series and provide technical and management support to both the Assistant City Manager and City Manager. Due to the additional duties assumed by the Assistant City Manager, it is proposed that the City's Risk Management function be transferred to the HR Division which is very common in most municipal organizations. With this increase in responsibility for the Human Resources Manager it is proposed that the position be retitled to the "Human Resources and Risk Manager" and that the salary be adjusted to range 44E. In summary, all of the proposed personnel changes coupled with the temporary vacancies that will occur, there is an estimated savings during FY 2016-17 of $38,400. Going forward, when those vacancies are filled, it will result in a General Fund impact of about $73,000. M/Lyons said it appeared to her that one staff member would be added which would cost the City about $73,000 full time along with other changes. CM/DeStefano pointed out that the Assistant to the City Manager position costs the City more than $73,000 with benefits, etc. added in, so this analysis has more to do with a snapshot in time that the first year after the dust settles there will be a net increase of about $73,000. Some positions are being graded up and some are being graded down, a senior department head position will retire at a higher salary than what the new department head will be paid, etc. C/Low said that the COL is recommended at 1.5 percent and wanted to know the total percentage of increase in the total compensation package for 2016-17 compared to 2015-16. FD/Honeywell responded that the percentage increase is about $118,600 and that she believed it to be slightly more than 1.5 percent but would get an accurate figure for the Council. C/Low said it would be helpful to have a percentage comparison between the proposed and prior two years. FD/Honeywell continued that with the additional retirements anticipated for the near future, the personnel changes are the first in a series. It is MAY 17, 2016 PAGE 6 CC STUDY SESSION expected that over the next 12-24 months there will be additional changes which will be brought to the City Council as they occur. M/Lyons asked how retirements affect the total compensation number. FD/Honeywell responded that when there are vacancies there are salary savings (lower total compensation). M/Lyons asked if new hires are paid lower salaries than those retiring. FD/Honeywell said that typically, that is the situation. CM/DeStefano said that in terms of the proposed increase in compensation staff is specifically proposing a 1.5 percent increase over salaries that employees received in the current fiscal year which includes a $50 benefit allotment increase for all benefited employees over the amount they currently receive. The allotment benefit is also afforded the City Council Members. PERS has increased their rates by 1 percent so although the City does not have the totality of those increases in tonight's presentation staff can get that figure to Council Members. With the shifting of duties and responsibilities, known and anticipated retirements, known and anticipated recruitments, the shifting of duties and responsibilities was outlined in the budget report with some receiving a slight increase and other positions anticipated to be vacant that will be filled at a decrease over the current incumbent's salary. For example, CSD/Rose is retiring. He has been with the City for many years and is at top step. Based on his current level of duties and responsibilities he would be paid more today than a new incoming Parks and Rec Director. And whether that is someone in-house or from the outside is yet to be determined. But at a bare minimum, that person will have fewer duties and responsibilities and the competitive range for that position in the municipal marketplace is less than what CSD/Rose is currently making. This is an example of how changes may occur. There is an anticipated retirement in the parks department and that position may not be replaced with the same title or salary range. What is also likely to occur is that even if the City fills the position at the same title within the same salary range, the new person coming in will earn less than the employee who has been with the City for a dozen years. Thus, the totality of all of those changes that affect the overall salary and benefits budget each and every year. C/Low asked if the retirement benefit money effect the budget or does it come from PERS. CM/DeStefano said that it comes from PERS. C/Low asked if the City had to continue funding retirement benefits. MAY 17, 2016 PAGE 7 CC STUDY SESSION CM/DeStefano responded "no." There is annual contribution the City makes on behalf of every employee which is made to PERS and is put into the PERS pool during employment so that when folks retire they receive their retirement benefits from that pool. FD/Honeywell stated that a few months back the City Council approved an "exceptional performance" pay program which is proposed in this budget at a value of $90,000. CM/DeStefano asked HRM/Haug to remind Council about why staff was looking at a very high percentage of exceptional employees, many of whom are at top step in their salary range and this is an attempt to find a program/reward for that exceptional, ongoing and continuous performance to help encourage them. In addition, it is hoped that this program will serve to incentivize individuals to achieve the goal of receiving additional compensation. HRM/Haug stated that there are a variety of internal and external factors that went into this request. Internally, approximately 88 percent of the full time employees are at their top step (10 percent working toward top step). Historically, the City has had low turnover although that trend is changing. The City anticipates that about 10 percent of the workforce will turn over in the next 12-24 months based on known and anticipated retirements. Succession planning is something that was brought forward to the City Council during the Goals and Objectives discussion. In preparing to professionalize the workforce and while preparing them for this transition there will be vacancies which has led to some of tonight's recommendations. The policy framework for the Performance Pay Program was approved a few months ago when the City Council adopted a comprehensive update to the Personnel Rules & Regulations. In concept, Performance Pay Programs are designed to afford exceptional high performing employees. Coupled with the fact that the City has a large majority of its employees at top step there is the need to find ways to incentivize those high performing to continue to perform at that high level, staff brought forward the Performance Pay Program. Externally, trends are that employment is very low and competition for talent is very high so the objective is to make sure that the City remains attractive to its current workforce as well as, those individuals the City may recruit in the future. The Performance Pay Program is a performance management tool that allows for those objectives and has to be approved by the City Manager for those employees that are exhibiting exceptional performance. The goal of the program is to motivate, retain and reward high performing full-time employees that have been at top step for about a year. Eligible employees may receive up to 10 percent of the annual salary and in the policy it states that the funding for the program would be subject to City Council approval. As a result, included within the FY 2016-17 draft budget a line item in the Human Resources Department for "Performance Pay" which reflects the MAY 17, 2016 PAGE 8 CC STUDY SESSION $90,000. Staff believes that collectively, that amount will be sufficient to reward the exceptional performing employees. FD/Honeywell explained the Law Enforcement budget. Staff was notified by the Sheriffs Department that the increase to the FY 2016-17 rates would be 3.7 percent for the contract fees for a total budget of $6.5 million and the City will also be paying 9.5 percent toward the liability trust fund which is quite a bit higher than in past years which has been 6 percent for the past three years or so. This will offset the cost for an increased amount of claims. The overall increase to the Law Enforcement budget is $372,000 over the current year's projected costs. CM/DeStefano told C/Low that this is another example where the City pays for insurance by being a part of a pool — the Joint Powers Insurance Authority (JPIA) for everything but public safety and the County's Liability Trust Fund pool for safety. The incidents that generate the claims and possible awards do not necessarily come from Diamond Bar but the City pays into that pool so that when claims do occur and are settled, that settlement comes from the pool. There are times when that pool level is too low and it needs to be raised based on anticipated claims and payouts and the City is now in that time period for the next three or four years and the City has been told that it will be at a much higher rate than it was because of anticipated significant claims and payouts that will deplete the resources in the Trust Fund pool. While paying the amounts it does, Diamond Bar is still in a far better position than cities that have their own public safety departments and pay into their own separate pools or self - insure. Even though there are spikes in the rate it is still a much better profile for the City with an extremely high level of service than what many other cities are paying. C/Low asked if during contract negotiations the City had a ceiling as to how much the City's portion of the liability fund would be. CM/DeStefano said it is principally whatever they dictate. However, there are regular arguments, discussions and negotiations. The Liability Trust Fund works with the Joint Powers Insurance Authority and there are claims committees, City Managers and Council Members who have served on those committees in the cities' interests. There is no cap. There have been years when the Liability Trust Fund increases have been zero and there have been years where it was 1, 2 or 3 percent. But it is a constant discussion at the City Manager level and at the City Council level with the County because it always is an argument over what went wrong, who was at fault and was it something the cities or the county should be responsible for because they hire, train, supervise and evaluate all of those safety employees. There was a robust discussion when the City was told in February that it was looking at an enormous increase in the Liability Trust Fund. MAY 17, 2016 PAGE 9 CC STUDY SESSION C/Low said she sees no downward trend. CM/DeStefano said this figure is anticipated for the next several years and perhaps as jury decisions start to level out and nationwide issues that have impacted jury decisions level out the trend may decline. Juries have been far less sympathetic and are going after agencies and it is a problem that has contributed to the high dollar wave. On the 3.7 percent, the Sheriff's Department went through the recessionary five-year without a single increase. C/Low felt that after salaries, law enforcement was one of the City's biggest budgetary items over which the City has little control. She gets the 3.7 percent increase but the liability fund is something else again and questions whether the Sheriff is holding his people accountable. It does not seem right to her when this department is playing by the rules that Diamond Bar should have to pay for those who do not follow by the rules. CM/DeStefano said it is the downside of being in the pool when the incident does not happen in this jurisdiction or under this authority and Diamond Bar is participating in paying for it. The upside is that this is an outstanding service model with the results in this community being way above par over any other jurisdiction. Diamond Bar's statistics are lower than any other jurisdiction including Walnut which has a lot to do with the policing program and the types of individuals in command and on the street. Even though these numbers hurt, it is the best buy available. There is no place else that Diamond Bar gets the level of service and strength of that service for the price it pays. MPT/Lin was told by the Mayor of Alhambra that his city which is about the same size as Diamond Bar has its own police force and their budget is $20 million a year. From a cost standpoint $7 million is a good buy. He asked if the County was self-insured. CM/DeStefano said they both self-insured and purchase insurance from other entities and so does the JPIA. FD/Honeywell said the Parks Maintenance budget is now found within the Public Works budget. Staff decided to do away with the division called General Government for general services such as photocopying, postage which were put into the actual departments so they can each be accountable for monies/expenditures. C/Tye said he wanted to make sure there was not a "use it or lose it" mentality at the end of the fiscal year because each department now had this amount of money to spend. MAY 17, 2016 PAGE 10 CC STUDY SESSION FD/Honeywell said that typically, departments are encouraged to spend their budgets to do the projects that need to be done. However, if they go over what was estimated the Finance Department will know that too because they are required to go through a procurement process of getting bids, etc. so that it is known how much money is supposed to be spent on a project or service. FD/Honeywell said she has a book which she uses to track how much has been spent or saved on a bid or quote and knows how much should be in the account for each department. CM/DeStefano said that the City Council approves the budget based on his recommendation as forwarded through staff. Sometimes the numbers are off. Sometimes things break that staff did not anticipate would break. Sometimes projects do not get done. Sometimes staff is based on what we believe will be done for which more resources may be needed. These numbers are looked at on a continuing basis. Toward the end of the budget year, usually at mid -year which is done in February, staff looks at what was designated and where are those projects and how will staff use its remaining resources? Are we at 120 percent of where we should be or are we at 80 percent at that time of year. He encourages his department heads/division managers to spend money they have not already spent come April, May, June because he would prefer that they purchase something in the current fiscal year that is already budgeted, booked and set aside to make it easier to plan for the next fiscal year. If they roll things over and then have to buy new things it can be more difficult. Sometimes that nudging moves projects along and Council will see a lot of things tend to get done in May, June or July because of the way they were processed. Based on staffs budgeting model it is a "use it or lose it" type budget because if the money is not spent by June 30 and the City is entering a new budget year it's a complete start over. C/Tye said he did not want to see projects done just because there is money. He would prefer to give the money back to the General Government Fund or the General Fund. CM/DeStefano further stated that the budget recommended and approved includes the work program for each department, sometimes physical work and sometimes policy work. If the projects are not getting done coming to the end of the year management wants to know,why they are not getting done and what happened. The City does not spend money just because we have it. Council has enough faith in staff to know that when something goes awry or takes longer than it should it can have a collateral impact on something else. Sometimes there are project dollars the City gets that have specific deadlines on them and the City is loath to miss that deadline because of the penalties. In November the City applied for money for Stardust Park that Supervisor Knabe offered. The City was not sure it would get the money but it did ($300,000) which then allowed the City to move $300,000 to other sources. The award was received three or four MAY 17, 2016 PAGE 11 CC STUDY SESSION weeks ago and there is a deadline. The City has to build and complete that park by December 31, 2016. So now, a project the City was more in control of is somewhat dictating the CIP schedule because it is now becoming the highest priority so as not to lose $300,000. MPT/Lin asked how the traffic fine system works. FD/Honeywell explained that the item is primarily for parking violations. CM/DeStefano explained that these are primarily vehicles that are ticketed for impeding the street sweeper for which they receive a ticket. The City captures an enormous percentage of the parking fine. The City receives only about 9 percent of what a person pays for a moving violation. M/Lyons asked for clarification of the Washington Street enhancements under the CIP. PWD/Liu explained that one of the residents came to a previous City Council meeting expressing concerns about the cul-de-sac and trucks trying to go through, and in response staff came up with a design and presented a couple of options to the residents who decided they wanted certain traffic control measures and beautification measures initiated. CM/DeStefano said that the proposal includes bulbouts and an island next to the park which narrows Washington Street so that trucks will clearly identify that as the wrong way to turn. FD/Honeywell spoke about "Special Funds" which must be spent on specific projects. For example for Measure R or Prop A, the City has to use those funds specifically for traffic related projects. The funds are separated into funds in order to spend them on specifically designated projects rather than salaries and benefits. There are 15 to 18 special funds which show monies that could come from grants, Prop A, Prop C, and Parks Funds, for example. CM/DeStefano highlighted items with departments. The budget is broken into various categories, the first of which is Legislative. Overall, there is a $200,000 increase over the current Fiscal Year (Page 18) which has to do with the increase in salaries, incorporation of the new position being requested, and a bit of the realignment of the old General Government budget. Under Operating Expenses there are dashes and under the proposed 2016-17 there are dollar amounts which are the result of the realignment. That section is comprised of the City Council's budget on Page 19, The City Council's budget is effectively the same. The next category is the City Attorney (Page 21) section which is comprised of services the City receives from Mr. DeBerry and his firm. MAY 17, 2016 PAGE 12 CC STUDY SESSION Special Fees are usually related to litigation which Diamond Bar has very little and Special Legal is the City's Prosecutor and Code Enforcement services. As caseloads vary the numbers vary. Overall, the item is projected to be a few dollars under what 2015-16 would have required. Over the years, this number has stayed relatively the same. The next category is the City Manager/City Clerk's office. The differences are in new salaries, the new employee, and some of the changes as a result of the General Government. This number goes up a few thousand but in other parts of the budget it will be offset by the difference coming down. C/Low asked what FTE stands for on Page 24. CM/DeStefano explained that this is the percent of a full-time equivalent. For example, 80 percent of his "cost" is paid for out of this section of the budget. Later, under Economic Development he is designated at .20 FTE (20 percent). Cost of all of the employees are spread where it makes sense, where prudent and where the rules of those different funds permit. Other employees have portions of their salaries paid for by AB8939 or Transit dollars or other categories. All of this is done to protect the General Fund. What is seen is that a total of 5.43 employees are paid for out of the General Fund (City Manager/City Clerk). C/Herrera asked about Membership FD/Honeywell said that a portion is taken from another fund. CM/DeStefano said that the total is $25,000 or $27,000 but it has been spread over "eligible" funding sources to protect the General Fund. General Fund dollars are the City's most precious dollars and staff does everything possible to protect those funds by using eligible dollars elsewhere. MPT/Lin said that municipal governments are often accused of hiding items in different places of the budget. He asked if there was a summary sheet showing backup information. CM/DeStefano said that the City does not do a consolidated budget but it can be done very easily if the Council so desires. C/Herrera said it would be helpful if she could find the cost of the City Birthday Party and the 4th of July event. FD/Honeywell said it is no longer broken out between departments but was consolidated in the current budget year. The 4th of July event is broken down on Page 88 and totals a projected amount of $77,500; and, the City MAY 17, 2016 PAGE 13 CC STUDY SESSION Birthday Party is broken down on Page 90 and totals a projected cost of $120,000 for the six -hour event. Both of these events are very costly and provided at the cost of the City Council. In the future the City Council may wish to look at options for doing these events differently to defer some of the costs. MPT/Lin felt that sponsorships and advertising could be sold for special events. CM/DeStefano said that some cities do so. Diamond Bar has never done that because the City has always been loud and proud that it can afford to do all of this on its own. CM/DeStefano referred the Council to Page 91 which he stated is a simple example of the Candy Cane Craft Fair which is a much different "special event." The project revenue of $4,375 is typically money from vendor space rental inside the Diamond Bar Center and the total program cost is $13,170 so the City is, in this case providing a special event and subsidizing that event to the tune of $8500. Council may continue doing that or choose to modify the structure of the event or eliminate the event. Council has those choices each year as they preview the budget. MPT/Lin stated that he was told by former Council Member Wen Chang that he had paid for one of the Concerts and MPT/Lin asked if all of the Concerts in the Park were paid for by sponsors. CM/DeStefano said that was not so. Other than the Diamond Bar Community Foundation that typically pays for a portion of the final concert of the series he does not recall that anyone has paid for a Concert in the Park. CM/DeStefano asked for final comments in order to continue the item to June 7, the night of adoption. FD/Honeywell said she would revise the budget according to the Council Members' requests. C/Herrera thanked FD/Honeywell for putting special events on one page which made it much easier to discern. MPT/Lin said that the city where he worked and served in Kansas the city events were written off by businesses. If a bank wanted to kick in $20,000 it would not hurt for them to show their support for the community. The same goes for the 4th of July event and who would want to be a sponsor. M/Lyons said that Council could certainly take a look at that option. MAY 17, 2016 PAGE 14 CC STUDY SESSION Public Comments: None. ADJOURNMENT: With no further business to come before the City Council, M/Lyons adjourned the Study Session at 6:28 p.m. Tommyei ribbins, City Clerk The foregoing minutes are hereby approved this 7th day of June 2016_ / A Nancy MINUTES OF THE CITY COUNCIL REGULAR MEETING OF THE CITY OF DIAMOND BAR MAY 17, 2016 STUDY SESSION: 5:00 p.m., Room CC -8 10. Introduction of Draft Fiscal Year 2016-17 Budget — Discussion and Action. CALL TO ORDER: Mayor Lyons called the Regular City Council meeting to order at 6:37 p.m. in the South Coast Air Quality Management District/Government Center Auditorium, 21865 Copley Drive, Diamond Bar, CA. CM/DeStefano stated that during tonight's study session, staff and Council discussed the upcoming budget for Fiscal Year 2016-17. The City is in a very strong financial position ending the current fiscal year with significant new revenues going into Reserves. The City enters the new fiscal year with new projects and new priorities with significant resources for all. A second study session will be held on June 7 and if all goes well, adopt the budget. The budget is available online on the City's website. PLEDGE OF ALLEGIANCE: Mayor Lyons led the Pledge of Allegiance. INVOCATION: Captain Paul Rusin, LA County Fire Station 120 provided the invocation. ROLL CALL: Council Members Herrera, Low, Tye, Mayor Pro Tem Lin and Mayor Lyons Staff Present: James DeStefano, City Manager; David DeBerry, City Attorney; Ryan McLean, Deputy City Manager; Ken Desforges, IS Director; David Liu, Public Works Director; Bob Rose, Community Services Director; Dianna Honeywell, Finance Director; Greg Gubman, Community Development Director; Amy Haug, Human Resources Manager; Kimberly Young, Senior Civil Engineer; Anthony Santos, Senior Management Analyst; Anthony Jordan, Parks Maintenance Superintendent; Christy Murphey, Recreation Superintendent; Marsha Roa, Public Information Manager; Mandy Jiang, Intern; and Tommye Cribbins, City Clerk. APPROVAL OF AGENDA: As Presented. 1. SPECIAL PRESENTATIONS, CERTIFICATES, PROCLAMATIONS: 1.1 M/Lyons and City Council Members addressed the many accomplishments of outgoing Los Angeles County 4r' District Supervisor Don Knabe upon his retirement. M/Lyons and Council Members presented Supervisor Knabe with a Key to the City, a check in the amount of $1,500 as a contribution to his "Safe Surrender Scholarship" Program, and a bucket of Boston Baked Beans. Luigi Luciano representing Assemblywoman Ling -Ling Chang thanked Supervisor Knabe for his service to the City. MAY 17, 2016 PAGE 2 CITY COUNCIL Supervisor Knabe thanked the Council, staff and residents for the great partnership between his office and Diamond Bar over the years. RECEPTION FOR SUPERVISOR KNABE. RECESS: M/Lyons recessed the meeting at 6:56 p.m. to a Reception for Supervisor Knabe. C/Herrera left the meeting at 7:15 p.m. RECONVENE: M/Lyons reconvened the City Council meeting at 7:19 p.m. SPECIAL PRESENTATIONS, CERTIFICATES, PROCLAMATIONS — Continued. 1.2 M/Lyons and City Council Members proclaimed May 2016 as Water Awareness Month and presented the proclamation to Water District Board President Scarlett Wong and Board Members Allen L. Wu, Ed Hilden, Ted Ebenkamp and Theresa Lee. 2. CITY MANAGER REPORTS AND RECOMMENDATIONS: None. 3. PUBLIC COMMENTS: Pui-Ching Ho, Diamond Bar Library Librarian spoke about upcoming library events including a Networking Champion workshop on May 19 at 12:30 p.m. sponsored by the Diamond Bar Friends of the Library; a magic show on Saturday, May 21 at 3:00 p.m., sponsored by the Diamond Bar Friends of the Library; a Citizenship Clinic on May 25 at 5:00 p.m.; and, a special bilingual story time sharing stories and songs in Chinese and English on May 31 at 11:00 a.m. 4. RESPONSE TO PUBLIC COMMENTS: None. 5. SCHEDULE OF FUTURE EVENTS: 5.1 Planning Commission Meeting — May 24, 2016 — 7:00 p.m., Windmill Community Room, 21810 Copley Drive. 5.2 Parks and Recreation Commission Meeting - May 26, 2016 — 7:00 p.m., Windmill Community Room, 21810 Copley Drive. 5.3 Memorial Holiday — City Offices closed on Monday, May 30, 2016 in observance of the Memorial Holiday. City Offices reopen on Tuesday, May 31, 2016 at 7:30 a.m. 5.4 City Council Meeting — June 7, 2016 — 6:30 p.m., AQMD/Government Center Auditorium, 21865 Copley Drive. MAY 17, 2016 PAGE 3 CITY COUNCIL 6. CONSENT CALENDAR: MPT/Lin moved, C/Low seconded, to approve Consent Calendar Items 6.1 through 6.6, with M/Lyons requesting that Item 6.7 be pulled for separate consideration. Motion carried by the following Roll Call vote: AYES: COUNCIL MEMBERS: Low, Tye, MPT/Lin, M/Lyons NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: Herrera 6.1 WAIVE READING IN FULL OF ALL ORDINANCES AND RESOLUTIONS AND ADOPT THE CONSENT CALENDAR. 6.2 APPROVED CITY COUNCIL MINUTES — Regular Meeting of May 3, 2016. 6.3 RECEIVED AND FILED PARKS AND RECREATION COMMISSION MINUTES — Regular Meeting of March 24, 2016. 6.4 RATIFIED CHECK REGISTER — Dated April 28, 2016 through May 11, 2016 totaling $750,250.23. 6.5 APPROVED CONTRACT AMENDMENT NO. 2 WITH SIEMENS INDUSTRY, INC. (FORMERLY REPUBLIC ITS) FOR A ONE-YEAR EXTENSION FOR TRAFFIC SIGNAL MAINTENANCE SERVICES FOR FY 2016-17. 6.6 APPROPRIATED $35,155 OF PROP A FUNDS TO THE FY 2015-16 CIP BUDGET; AND AWARDED THE DESIGN AND CONSTRUCTION MANAGEMENT SERVICES CONTRACT TO ITERIS, INC. FOR THE TRAFFIC SIGNAL INFRASTRUCTURE UPGRADES PROJECT — PHASE II IN THE AMOUNT OF $77,155, PLUS A CONTINGENCY AMOUNT OF $8,000 FOR CHANGE ORDERS TO BE APPROVED BY THE CITY MANAGER, FOR A TOTAL AUTHORIZATION AMOUNT OF $85,155. ITEMS WITHDRAWN FROM CONSENT CALENDAR: 6.7 APPROVAL OF AMENDMENT NO. 6 TO THE CONTRACT WITH VALLEYCREST LANDSCAPE MAINTENANCE TO EXTEND THE TERMS OF THE CONTRACT FROM JULY 1, 2016 THROUGH JUNE 30, 2017 TO PROVIDE LANDSCAPE MAINTENANCE SERVICES AT NINE (9) CITY PARKS, THE GROUNDS OF THE DIAMOND BAR CENTER, THE FOOTBALL FIELD AND SLOPE AT LORBEER MIDDLE SCHOOL AND THE MESA TRAIL/TRAILHEAD AT SYCAMORE CANYON PARK, IN THE AMOUNT OF $373,940; AND AS -NEEDED WORK IN THE AMOUNT OF $25,000 FOR A TOTAL AUTHORIZATION NOT TO EXCEED $398,940 FOR THE 2016-17 FISCAL YEAR; AND TO ACCEPT THE CHANGE OF THE COMPANY'S NAME FROM VALLEYCREST TO MAY 17, 2016 PAGE 4 CITY COUNCIL BRIGHTVIEW LANDSCAPE SERVICES, INC. M/Lyons stated that she wanted to discuss this item which is a one-year extension of the current contract because she was unhappy with how ValleyCrest had been maintaining some of the City's fields and parks. In particular, the Lorbeer field which has not been properly maintained with little watering and overwatering; Maple Hill Park with overgrown brush, trash, graffiti and in general, bad conditions; and Heritage Park that has a number of problems. She felt that rather than giving ValleyCrest a one- year extension on all items, that perhaps staff could go out to bid for the three locations mentioned to secure another source. Perhaps these could be bid on by another source currently working for the City. C/Tye said he had seen problems at Lorbeer which to him is an ongoing aggravation. He asked CSD/Rose if ValleyCrest is attempting to mitigate the issues at Lorbeer because as he recalled, one of the problems is that the City simply overuses the field. However, he believes there are areas in which ValleyCrest could do a better job and if they know what the City's expectations are they could better address those issues. He recalled that when he served on the Parks and Recreation Commission that Commissioners and staff would walk a park once a month and felt that ValleyCrest needs to know what the City's expectations are, and that they need to look at the City's parks as if they were their parks, which he gets the feeling that sometimes that does not happen. However, he did not know that it warranted splitting out three locations because he was not sure the City could find a source that would do three parks. MPT/Lin asked CM/DeStefano what kind of contract the City has with ValleyCrest with respect to the City's obligation to continue with amendments or whether it can terminate the contract at -will. CM/DeStefano stated that staff is recommending a one-year contract extension for the purpose of continuing the ongoing work ValleyCrest provides and staff was planning, as part of the rebidding process, to go out to bid at the end of the next Fiscal Year. With respect to the contract, absent this extension the City would be at the end of the contract. The contract provisions include a 30 -day termination clause. If the contract were to be extended and decided differently down the road, with a 30 -day notice the contract with this particular provider could be terminated. The City has similar clauses in all of its contractor relationships and professional services relationships. MPT/Lin said he noticed that the contract ends on June 30 and if the procurement process were to begin at this point would the City be able to find a new contractor by June 30. MAY 17, 2016 PAGE 5 CITY COUNCIL CM/DeStefano responded that it would be very challenging because there are only two Council meetings in June and absent a special meeting of the City Council this would have to be concluded and ready for a City Council decision during the meeting of June 21. These are three substantial pieces of the 9 to 12 areas maintained by ValleyCrest and it may be better to extend the contract and allow for time to work through this process. An option might be to allow staff to work with ValleyCrest to deal with the deficiencies that have been identified and in doing so, postpone the action of the City Council on the entire package to June 7 or June 21. A third option would be for specific direction from the Council to have staff seek bids from current providers in other parts of the City for the three areas of concern. C/Low asked if the contract extension included any increases in fees from the previous contract. CM/DeStefano responded yes. Within the staff report is identified that the only increase being requested was a CPI (1.34%). C/Low asked if it was possible to renew the contract for six months rather than a 12 -month period. CM/DeStefano responded "yes." C/Low suggested the City Council delay action on this item until the June 7 City Council meeting and in the interim, staff explore some of the options with the contractor, either to negotiate fees for a shorter period, notify them of the deficiencies giving them an opportunity to explain and recommend mitigation for the deficiencies so that the City Council can come back to either renew or not renew or proceed with a partial contract. M/Lyons suggested the City Council bring the matter back on June 7 and go out to bid sooner rather than waiting another year. The City could give ValleyCrest a couple of months to see if they could perform better and if they are unable to do so, go out to bid sooner. CM/DeStefano said that in this event, staff would use the time between now and June 7 to work with the contractor to ensure that the expectation levels have been met if not exceeded and bring the information back to the City Council so that on June 7 the Council could make its determination as to whether it wished to provide an extension and if so, what length of time the City Council might be willing to give that extension. If this item is moved to June 7 the Council will have pretty much determined that it will give ValleyCrest an extension of time for some period because staff has not been provided with direction to seek other bids and there would not be enough time to do so properly between June 7 and June 21, the last Council meeting of June. MAY 17. 2016 PAGE 6 CITY COUNCIL M/Lyons asked how many landscape providers contract with the City CM/DeStefano responded "three (3)". M/Lyons asked if the other two contracts come up this year as well. CSD/Rose explained that the three contractors are ValleyCrest, Excel and Emerald. Emerald is an annual renewable as of July 1 which is within the City Manager's authority because it is under $40,000. Excel's last contract was a two-year contract with no CPI increase and that contract goes through June 30, 2017. It is because of this timeframe that staff intended to take all contracts out to bid at one time when all three contracts expire June 30, 2017 with this proposed extension for ValleyCrest. All contracts have a 15-30 day cancellation clause. M/Lyons said she would hate to have ValleyCrest have another year on these three properties that she believes have not been maintained satisfactorily. CSD/Rose said that staff recently updated its specifications and standards for the parks which will be used to go out to bid so that any entity that provides this type of service can submit a proposal so that staff can evaluate and substantiate and then bring a recommendation back to the City Council. Normally, such an RFP process takes about three months and staff tries to give itself six months to give the current contractor time to wind down their work, the new contractor has to learn and accept the project areas in their current condition so that when the contract goes into effect they can hit the ground running. C/Low suggested that the City Council direct staff to talk with ValleyCrest, inform them of the Council's observations and give them a chance to propose ways to rectify those concerns or explain why they cannot do so and come back on June 7 to decide whether to grant ValleyCrest a three- month or six-month extension depending on their response. M/Lyons felt that option would work and asked staff if that proposal would work for them. M/Lyons asked if a motion was needed to continue the item. CM/DeStefano responded affirmatively. C/Tye said he was glad to hear that the City had standards that ValleyCrest was expected to be held accountable for but the City also has a process and this seems to be jumping the gun on this process. Perhaps it is appropriate to give them a three or six month extension, but to get the right people with only three vendors in town, he believes the City should MAY 17, 2016 PAGE 7 CITY COUNCIL follow the process. He believes the results he has seen in various places are disappointing to be sure but he does not believe they are so egregious that the City should not let the process work itself out. However, he would also be very disappointed to find out that they had not been told yet that they are not performing to what the City considers "reasonable standards". He hopes that is not a conversation ValleyCrest will hear for the first time tomorrow. M/Lyons asked if this should be discussed further and that she did not believe that a three or six month extension was a good idea. C/Tye said he believed it was a good idea to consider it again on June 7 after the Council has heard what ValleyCrest has to say. He did not believe that if this process was going to start being reviewed in six months anyway, why put this out to bid three months earlier than the process would begin anyhow. M/Lyons said because it would be three months of getting better looking parks, she felt that all contracts should be looked at earlier because they all have 30 -day cancellation clauses. C/Tye said that he is talking about the process and would not be at all willing to throw Excel in with an early bidding process because of ValleyCrest being reviewed. CSD/Rose said it is not unusual for a contractor to have the end of their contract stopped early because of consolidating the contracts and doing a bid process. It is not like the contract is being dishonored if the City tells Excel that their contract will be terminated on January 1 so that the City can consolidate. M/Lyons said she believed the contract for this will be moving to a different area and perhaps the Council should let PWD/Liu think about this for a couple of weeks before making any decisions. If the City Council continues this item to the next meeting will there be a problem. CM/DeStefano said there would be. Respectfully, there are key individuals that have scheduled and approved vacations including a key player in this decision-making/recommendation-making process who is leaving tomorrow morning. M/Lyons said she can see that there is more to this issue than her dissatisfaction about a few parks. CM/DeStefano said he understands there is a need to get back together with ValleyCrest and to cause corrections specific to the areas that were identified as well as, the broader discussion, and that he agrees with MAY 17, 2016 PAGE 8 CITY COUNCIL C/Tye that this should not be the first time that staff has talked with them. Ideally, staff would look at somewhere between a three and six-month contract extension to allow staff to spend additional time working through this issue. He hears the Council's areas of concerns. In totality, there are three areas of concern with a dozen areas of contractor maintenance obligation. ValleyCrest is a very large company that does a very good job and he is sure they would listen very closely because they would not want to lose this contract with respect to the anticipated bidding coming forward sometime in the future. The timing is not good because this is the middle of May and there are only two Council meetings left until the end of the fiscal year and the end of this particular contract. There are options but the timing is not good and the Council may be best served by a three to six month time extension of the contract to allow staff to work out some details with the provider, at a bare minimum, while looking at other options. MPT/Lin said he is somewhat puzzled that this is the first time hearing that this company is not performing well. They have been with the City for many years and if the Council waits until June 7 to make a decision, chances are, because it is so close to the expiration of their contract, the City should most likely extend their contract for at least three months while staff continues to look for an alternative. Therefore, the best way to handle this is to simply grant ValleyCrest a three month extension of time and work out the details which should provide enough time for the City to find an alternative. C/Low said that by granting an extension with no stipulations does not serve the purpose. If the Council is dissatisfied with their service and moves ahead to continue the contract it would not cause ValleyCrest to go ahead and make the change except for the fact that they would hope to get the contract renewed. MPT/Lin said he understood and hoped that staff would communicate the Council's concerns to ValleyCrest so they know that in three months they may or may not be working for the City moving forward. MPT/Lin moved, C/Tye seconded, to grant ValleyCrest a three-month extension of the contract to September 30, 2016. C/Low asked if ValleyCrest would accept a three-month extension as opposed to a 12 -month extension. CSD/Rose said he did not anticipate that ValleyCrest would have an issue with that proposal. MAY 17, 2016 PAGE 9 CITY COUNCIL Motion carried by the following Roll Call vote: AYES: COUNCIL MEMBERS: Low, Tye, MPT/Lin, M/Lyons NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: Herrera 7. PUBLIC HEARINGS: None. 8. COUNCIL CONSIDERATION: None. • COUNCIL SUBCOMMITTEEREPORTS REPORTSICOUNCIL MEMBER COMMENTS: C/Low reported that last week she attended the SCAG Conference which was very, very interesting. The member cities gathered together to discuss planning for their communities. SCAG pools their ideas and relays those ideas to Sacramento legislators and the Governor's office. Planning items include transportation, sustainability, economic development and housing. Unfortunately, resources are taken for granted. California is in a drought and needs to conserve. She encouraged everyone to do their part in conserving water. C/Tye said that according to Water District General Manager Mike Holmes of all of the areas the water district services, Diamond Bar has done the best in conserving. Congratulations to residents for their efforts. Not only is the region in a drought, this area is a desert. Last weekend he participated in Contract Cities Annual Municipal Seminar "The Power of Cities Working Together" with 80 cities getting together to figure out what is being done right and what can be done better and how to work together to lobby Sacramento to make sure the legislators remember they all came from local communities and need to keep that in mind when considering legislation that makes no sense. It was Sam Olivito and Associates last municipal seminar after 30 plus years. MPT/Lin had nothing to report. M/Lyons thanked staff for the time and effort devoted to the budget presentation this evening. She thanked FD/Honeywell and her staff for all of their hard work. She advised residents that it is snake season and everyone should take care. There was a very large rattlesnake on her street. She said she would close tonight's meeting in honor of Supervisor Don Knabe who gave so much to this City with the library, parks and roads and that he let Diamond Bar make its own decisions. MAY 17, 2016 PAGE 10 CITY COUNCIL ADJOURNMENT: With no further business to conduct, M/Lyons adjourned the Regular City Council Meeting at 7:55 pm in h or of Don Knabe. TOMMYV- CRIBBINS, CITY CLERK The forego ng minutes are herepy approved this 7th day of June 2016. NAN YLYO S AYOR