Regular City Council Meeting - February 20, 2024
View Agenda - Watch Entire Meeting
Land Acknowledgement
The land that Eureka rests on is known in the Wiyot language as Jaroujiji. Past actions by local, State and Federal governments removed the Wiyot and other indigenous peoples from the land and threatened to destroy their cultural practices. The City of Eureka acknowledge the Wiyot community, their elders both past and present, as well as future generations. This acknowledgement demonstrates the City’s commitment to dismantle the ongoing legacies of settler colonialism.
Report Out of Closed Session
No report out of closed session.
Roll Call
Mayor Bergel presiding; Councilmember Castellano, Councilmember Moulton, Councilmember Fernandez, Councilmember Bauer, and Councilmember Contreras-DeLoach present in chambers.
A. Mayor’s Announcements - Watch
Presentation from Florence Parks of Big Brothers Big Sisters of the North Coast (BBBS)
BBBS is a mentoring organization, pairing youth with mentors in the community. Youth from the ages of 6-16 are eligible to enroll in the program to be matched with a mentor. BBBS has about 25 youth on the wait list, waiting to be paired with a mentor. BBBS is looking for people to serve as mentors, in a variety of ways. Has seen an increase in children enrolled in the program over the years, with a lot of the children coming from single-parent households. BBBS offers support networks for mentors, to aid in providing support for the youth they are matched with, and monthly support for the families of the youth in their first year, and quarterly after that first year. Bowl for Kids Sake is the largest fundraising event of the year, where BBBS raises most of their funding. Bowl for Kids Sake will be on Saturday, March 2 at Harbor Lanes, and people can support by sponsoring teams or donating funds, volunteering as mentors, donating items for silent auctions, serving on a board or committee.
Councilmember Bauer commented that it was a testament to Big Brothers Big Sisters to congratulate them on their 120th anniversary
Five people shared public comment. One speaker spoke in support of the housing initiative that will appear on the November ballot. One speaker shared that they are arranging listening sessions at Jefferson Community Center on March 16 and March 21 to help engage the public and elected leadership, and invited Council to attend. One speaker shared an article about homelessness in Sacramento. One speaker shared about difficulty using a wheelchair in Old Town, and being unable to navigate in some places. The speaker noted the difficulty for people using mobility aids, and asked for the City to address the issues. A speaker shared about issues with police recruitment, and asked for funds from Measure H to be used for police recruitment.
F.1. Approve City Council regular minutes of February 6, 2024 meeting as submitted
F.3. Humboldt Transit Authority Letter of Support
Humboldt Transit Authority Letter of Support
Resolution Approving the Destruction of Certain Records
F.5. Solar Renewable Energy Improvements – Award
Motion to Council
Council voted to approve the Consent Calendar as written, motion passed unanimously.
H. Ordinances & Resolutions - Watch
H.1. FY2023-24 Mid-Year Budget Review - Watch
Resolution - Mid-year Budget Adjustments
Attachment A - Mid-Year Adjustments - Line-Item Detail
Attachment A.1 - Mid-Year Adjustments - Line-Item Notes
Attachment B - Mid-Year Adjustments - Totals by Fund
Attachment C - Mid Year Adjustments - Position Changes
Presented by Finance Director Millar.
Typically, just after the midway point of the fiscal year, departments come together and review their budgets, with the Finance department taking the lead. This is an opportunity for departments to add or take away from their budgets, and for the Finance department to review the City's largest expense, salaries and benefits, and to update those line items in the budget.
Reviewing the General Fund; the budget for the 2023-2024 fiscal year was adopted June 20, 2023. At that time it was estimated to be a balanced budget, with a small surplus. A note about the presentation, revenues are expressed as negative numbers in parentheses, when there is a net negative, that is a good thing.
The budget was adjusted earlier in the fiscal year, at the November 21, 2023 meeting where Council approved appropriation of necessary funds from the General Fund to acquire the land for the new City Corporation Yard. Approximately $1.4 million was appropriated to purchase land adjacent to Oceanview Cemetary. When that is added to the budget, it creates a large deficit. It is unusual for the General Fund to purchase land. This is a fairly large project and this is just the beginning, and it is possible that when the corp yard is financed, the City may reimburse the General Fund for the purchase.
Reviewing the revenues, taxes make up the largest category of revenue. Estimating that revenue from taxes will go down by approximately $161k. Foreseeing a downward adjustment in sales tax collected onsite, as projected by consulting firm HdL Companies. Revenues from use taxes applied in store and when purchasing online projected to increase. These revenues also included revenues from expired taxes, from sales tax being paid late and should not be relied upon in future years. Receive another tax as a part of the property taxes remitted from the County of Humboldt, is adjusted by the state based on sales tax revenues, and HdL also projected this to drop in the current fiscal year. TOT (Transient Occupancy Tax) included in this is a specific type of TOT remittance, this is specific to vacation rentals that are not permitted, this is part of a project started over the past year to bring these rentals into compliance and collect back taxes.
Sales tax trends are important to understand when reviewing the General Fund. Sales taxes are about 65% of the total General Fund revenue and make up a significant portion of the revenue. Saw a peak in revenues in 2021-2022, saw a decrease of approximately $600k. When the 2023-2024 budget was adopted, expected the sales tax revenue to be about $340k less than the peak in 2021-2022. At this time, expecting those revenues to be approximately $600k less than two years ago. Sales tax does fluctuate, is correlated with the overall economy. The economy is doing well at the national level, but the City's revenues aren't keeping up. Expect it to increase slightly in the next fiscal year, but overall it's been relatively low, and seeing some decreases sometimes.
Licenses, permits and franchises are expected to increase revenue over what was determined in the budget, and this is coming from the three franchises that pay fees to the City. The franchises are gas and electric from PG&E, seeing an increase in that due to their increase in rates, seeing a reduction in revenues from cable television due to fewer cable subscribers, and an increase in garbage franchise fees, also due to their increase in rates.
Intergovernmental revenues will see an increase, due in part to a change in what revenue that comes from the County, and the remainder of this line item is from grants. Most grants that the City receives are reimbursable grants, where the City spends the money and then bills the state or the federal government for reimbursement. The increase here is for receiving some of those reimbursement checks. In the current year, have received a combined $240k for Homeless Housing, Assistance and Prevention (HHAP) and Local Early Action Planning (LEAP) that are part of the Community Access Project for Eureka (CAPE) program, and reimbursement from the SB2 (California Senate Bill 2, 2017) grant for the Waterfront Specific Plan.
Revenue from City charges for services expects to increase by approximately $200k. This includes revenue from Zoo admissions and Engineering reviews. Zoo admissions exceeded $1.5 million last fiscal year, and based on that are increasing the current year estimate. Last year was the first year where the City received 100% of the Zoo membership revenues, so was hard to base this year's numbers off of last year's numbers; expected $300k in revenues. Engineering reviews are fees paid to the Engineering division, based on current year trends, expect those fees to come in at half of what was predicted, at approximately $25k.
The bottom line shows about a 1.3% increase or approximately $500k increase over the original 2023-2024 budget.
In General Fund expenditures, the largest expense is Personnel, or salaries and benefits. Showing a minimal increase in expenditures, which is from a decrease in expense in salaries and benefits not including worker's compensation, and an increase in worker's compensation costs and department requested overtime and temporary worker salaries. In the fiscal year through January, have seen salary savings of about $240k, and expect to see some savings in the remainder of the year, but unable to predict what positions will be filled versus unfilled. Worker's compensation is technically a benefit, but due to an overage in the last year and for the purposes of building a contingency for it in the City's risk management fund, these line items have been increased by about $127k in General Fund costs. There have been more department requests for overtime and temp salaries. When the cost savings and the increased costs are added together, get a very low increase in cost.
Material and Supplies and Outside Services are line items that are managed by the departments themselves, and during the mid-year review requests changes to their budgets, with a total of roughly $600k from all of the departments. Based on Director Millar's analysis, do not think that the entirety of the requested increases will actually be used. Did not see significant increases in one item, just saw a lot of increases across the board.
Cost Allocation is calculated by the Finance department. Departments don't typically control these costs, they typically follow metrics like number of employees and square footage. This makes up three line items changes, liability insurance, general government and general administration. Liability insurance, like worker's comp, has continued to increase over the years. Had an overage due to deductibles in the last fiscal year, and are building out a contingency to build a reserve in that fund. General government and general administration; that's the City Manager's office, Finance, Human Resources, the City Attorney's office; projected to go over budget in that fund, and is mainly the result of adding an additional employee and increasing the line items to cover the projected overages.
Capital Outlay increase is a project that utilizes funds from the American Rescue Plan Act (ARPA) monies, the City has a contract with a local theater group who will put on live events, and the $62.5k reflects that contact. Those funds will be reimbursed from the ARPA funds.
Debt servicing increased after needing to make the first lease payment on a new fire apparatus, a ladder truck, that the City does not yet have possession of, and was not expecting to make that lease payment until the ladder truck had been delivered. This increase is to accommodate that payment. There is a reserve account with the Joint Powers Authority (JPA), and are currently waiting on financials to see if that payment can be taken from that JPA reserve fund instead of the general fund.
The total increase is approximately $1.1m in expenditures, but Director Millar does expect the actual expenditures to be a lot less when the fiscal year closes in June.
Started the fiscal year with a balanced budget. Without the land purchase, and with the adjustments, there is a $500k deficit, but that is expected to be much lower if not balanced at the close of the fiscal year. The budget with the land purchase shows a deficit of approximately $2m in the General Fund.
There were other funds that were adjusted as well. The Water fund was adjusted, the bulk of the adjustment was for new water meters, of approximately $1.9m. The process of acquiring the water meters has been difficult, and the first few batches were late, and now trying to speed up the process, causing all of the costs to converge on the current fiscal year. That increase was expected. The Wastewater fund saw a small increase, but still has a small surplus. Approximately $50k of that adjustment was for parts and equipment, and $50k was for increased cost allocation. Equipment Operations fund saw an increase, but should still end their year on a surplus. The increased costs are for repair parts at $85k, outside services for $60k, but also salary savings of $37k. Information Technology fund saw an increase of about $57k, $30k of which were cell phone charges, and cost allocation was $13k. General Government and Administration fund saw an increase in expenditures of $95k, $77k for personnel and $15k for cost allocation, but projected to have a surplus. Facility Maintenance fund saw an increase of $51k, $25k for building repairs and cleaning supplies and $15k for personnel and cost allocation.
Concluding with changes to personnel, to the Full Time Equivalent (FTE, expressed as decimal). There was an error on the agenda item, the position listed as Assistant/Associate Engineer should be Associate Civil Engineer. The proposed changes add 0.7 FTEs to the budgets.
Council Questions
Councilmember Castellano asked about the additional $30k in cell phone charges from the Information Technology fund. Answer: Director Millar said that this was a department request, so is harder to explain. Cell phones can be difficult to estimate, don't know from year to year who will have cell phones or how many new ones will be issued, and tend to look backwards when building the budget, and believes tend to underestimate in that category, assumption is that there was an underestimation in the number of cell phones or underestimated the cost of the bills for that line item. City Clerk Powell also added that this was the first full year of outfitting Police Department with their own cell phone, and did underestimate their monthly charges. During Covid, and had more people taking calls from home and working from home, did have a large number of cell phones deployed at that time, and believes that this is a cost that is catching up, along with the officer cell phones.
Councilmember Bauer clarified that the water meters are in an enterprise fund, that is separate from the General Fund, wanted to make that clear. Answer: Director Millar confirmed, and said that when going through the presentation, reviewed many of the City's funds but not all, just the adjustment proposed. Water revenues can only be spent on water activities, and the funds being spent on the water meters come from the water bills.
Councilmember Fernandez asked for an explanation of Measure Q. Answer: Director Millar explained that Measure Q was replaced by Measure H, and Measure Q was a half-cent sales tax with a five-year sunset. Prior to Measure Q was Measure O, and Measure O was the first of that third sales tax revenue. Every city collects Bradley-Burns revenues, that is given to every local agency. Agencies can then add district taxes. The City has had Measure D, a quarter-cent sales tax, for decades and that does not expire. The City added Measure O, that had a five-year sunset, and then the City had Measure Q, and as Measure Q was expiring, that was replaced with Measure H, and that does not have a sunset, and that is a 1.25% tax, versus 0.5%.
Councilmember Fernandez asked about the prediction that there would be a smaller deficit at the close of the fiscal year. Answer: Director Millar expanded on that, does expect some more salary savings, and typically departments like to ensure that don't go over budget by adding more cushion than what they might use. Tends to review what has been spent to date, and use that as a pro-rata figure. Expects 75-50% of what was requested to be spent. Based on those factors, would expect the deficit to be much less than $500k.
Councilmember Fernandez asked how this might impact negotiations going forward. Answer: Director Millar does not think that the 2023-2024 results have an impact on those negotiations, and cannot predict what those contracts will look like. There is room to be more disciplined when it comes to the budget, but not at the point where looking to save money or pull back, and if the City was faced with the concern that the City would be running deficit after deficit, that would change gears. Until sees actual results, does not feel the need to turn the ship.
Councilmember Castellano referred back to discussion to bring forward utility assistance programs at a Council meeting, asked if that would be able to be brought forward in the future, and when doing so, asked that it be contextualized in reference to where the City is at with the budget. Answer: Director Millar can do that, and expects that to come in the month of March. City Manager Slattery also said that he will discuss utility and rental assistance programs in his City Manager's report.
Public comment for this item
One commenter had questions about when the fiscal year for the City is, and questions about the spending on the Ocean View property, as they did not see that reflected in budget here. Mayor Bergel invited the commenter to send their questions in via email or phone, so that staff may provide answers. [Note: contact information for the Mayor and City Council may be found online here.]
Council Comments
Councilmember Contreras-DeLoach noted that there are indicators that there may be a decline in the economy, and that City is subject to volitile conditions, and asks that this be kept in mind as may need to make decisions about what to prioritize in the future.
Councilmember Fernandez responding briefly to Councilmember Contreras-DeLoach, it is sobering to see high costs, and is important to treat workers well to help stem that loss.
Councilmember Castellano responded to one question the commenter had; the City of Eureka fiscal year is July through June.
Motion to Council
Council voted to receive the report and adopt the resolution to amend the 2023-2024 Adopted Budget; motion passed unanimously.
J. Future Agenda Items - Watch
No future agenda items requested.
K. City Manager Reports - Watch
City Manager Slattery reported that at the next meeting in March, there will be a presentation by staff about the Participatory Budgeting process, staff is developing a game plan and will be presenting for discussion at that time. As Councilmember Castellano had mentioned about utility and rent assistance programs; reviewed to see if there were any funds remaining, but all previous funding had been used for rent or utility assistance. The portion that was set aside for rent assistance was not as popular as the utility assistance, so those funds were used to supplement the utility assistance funds. The CAPE program was successful in securing $40k of HHAP funds from County DHHS, and those funds will be made available through the CAPE program, and community members at 30% of the median income will be eligible for those funds, for very low income folks. Also reallocating some Permanent Local Housing Allocation (PLHA) funding, funding is non-competitive and based on the size of the City, will be reallocating for homeless prevention programming. Those funds will add to the funds available for utility assistance, and will have a higher income qualification, at 60% of the median income. HHAP funding will only be available for utility assistance, and hoping to be able to offer rent assistance with the PLHA funding. The funding in the participatory budgeting process can be used for utility and rent assistance as well.
M. Council Reports & City Related Travel Reports - Watch
Councilmember Moulton attended regular and emergency meeting of JPA, went on Access Humboldt to discuss the Jacobs Campus, attended Public Safety Town Hall via Zoom, attended informational session from I Like Eureka Housing.
Councilmember Castellano attended three Humboldt Transit Authority meetings, partly because of the hydrogen fueling station moving forward, attended Eureka Main Street meeting, attended Humboldt Waste Management Authority meeting, hosting weekly housing meeting, attended informational I Like Eureka Housing meeting, attended Live Well Humboldt meeting, attended Northern California Non-Profits meeting, and attended Workforce Development Board meeting.
Councilmember Fernandez attended State Senator Mike McGuire's swearing in as Senate Pro Tempore, attended JPA meeting as an alternate, attended Operating Engineers Local 3 Crab Feed, attended I Like Eureka Housing informational meeting, met with Eureka Police Officers Association members to discuss work conditions, and is scheduling a ride-along in the near future.
Councilmember Contreras-DeLoach attended Yurok Missing and Murdered Indigenous Peoples Conference online, attended Board of Supervisors 2x2 meeting with Supervisors Bohn and Arroyo, met with Eureka Police Officers Association, held Public Safety Town Hall (meeting is available online to view), helpful to hear from citizens and other law enforcement professionals.
Councilmember Bauer attended JPA meetings, attended multiple RCEA meetings, thanked EPD, City, and HBF staff for their response to an incident at his workplace, and helped to control pollutants from going into the bay, and will be hosting a cleanup in Cooper Gulch in late March, and a reminder to vote in the upcoming election.
Mayor Bergel attended the Town Hall, appreciate having an opportunity for dialog, attended Cal Poly President's Board meeting, attended HCAOG meeting. Mayor Bergel took a moment to say that words are powerful, appreciates the passion that people bring, and says that demonizing people for their behavior or calling them names; understand the frustration, but name calling isn't helpful in mitigating the situations, hope that people are mindful here and in the community.
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