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HomeMy WebLinkAboutCC Minutes - 09/25/02 Work Session MINUTES Eugene City Council Work Session Sloat Room-The Atrium Building September 25, 2002 12:45 p.m. COUNCILORS PRESENT: David Kelly, Gary Pap~, Nancy Nathanson, Scott Meisner, Pat Fart, Betty Taylor, Gary Rayor, Bonny Bettman. CITY COUNCIL WORK SESSION The council's work session was preceded by a tour of the new library. Mayor James D. Torrey called the meeting to order. A.WORK SESSION: Library Financing Plan Update City Manager pro tem Jim Carlson introduced the topic, noting that Sue Cutsogeorge of the Central Services Department was present for the agenda item. Mr. Fart left the meeting room. Ms. Cutsogeorge said the current budget for the library was about $36.3 million. Part of the financing plan included the issuance of bonds for the construction costs related to the fourth floor, which was intended to house Finance and Information Services staffs on an interim basis. Staff was now recommending that the City not incur debt to pay those costs, but to use interest earnings and Urban Renewal Fund moneys instead. If the City used the cash it had on hand rather than issued bonds, it would save about $100,000. Staff recommended that the library budget be reduce by that amount. Ms. Cutsogeorge said that the recommendation would free up money in the General Fund that would have gone to pay the bonds for the library. Staff recommended that money be dedicated to capital purposes by adding it to the Facilities Reserve for future downtown space planning projects. Ms. Cutsogeorge said that staff was also asking the council to approve a plan to cover unanticipated cash flow shortfalls during the next few months. She characterized those shortfalls as temporary differences between when the City had to pay money out and when it expected money to come in. Ms. Cutsogeorge called attention to the suggested motion before the council and indicated that staff would return at the time of adoption of Supplemental Budget #1 for implementation of the proposed budget actions. MINUTES--Eugene City Council September 25, 2002 Page 1 Work Session Mr. Carlson noted that the City always planned to use urban renewal moneys to pay for the fourth floor, but had planned to do so when paying off the remaining debt when the district was closed. Because the City had a better understanding of its needs, it had the available cash resources to pay for the bulk of fourth floor construction costs. Mayor Torrey called for council comments and questions. Ms. Taylor said that the item seemed completely uncontroversial and she endorsed the staff recommendation. Ms. Bettman said she agreed with the concept underlying the recommendation. She was concerned that the staff was proposing to reallocate $365,000 through the suggested motion rather than have the funding go through the budget process. She said the council would then have no control over the money, and there were several high-priority items, including service reductions, that the council had discussed funding. She said she would move to amend the motion by deleting the element that directed staff to prepare a request in Supplemental Budget #1 to move $365,000 from nondepartmental transfers to departmental operating budgets and reserves. Mr. Rayor determined from City Attorney Glenn Klein that the City would differentiate between what urban renewal dollars would be used for and what they would not. To the extent that urban renewal dollars were being used for the construction of the fourth floor, that would occur whether the library or Information Services were to be housed there. Urban renewal dollars could not be used for fixtures, for example, needed to serve Information Services, given the council's action to reserve urban renewal funds for the library. Responding to a question from Mr. Rayor, Mr. Carlson clarified that under the staff proposal, $365,000 would go to capital accumulation, not bond payments. He said that staff was proposing about $275,000 go to the General Fund to implement the Downtown Space Plan. Mr. Kelly commended the Agenda Item Summary for its clarity. He indicated acceptance of the cash flow proposal, but shared the concerns expressed by Ms. Bettman. He suggested that alternatively, the money be put aside in a newly named reserve pending a council discussion about its use. He wanted further discussion of the recommended split as he was unsure of its origin. Mr. Kelly said that there was nothing in the materials before the council to indicate where the $90,000 would go. He suggested the council discuss restoring some of the budget cuts it made for fiscal year 2003. Mr. Kelly expressed concern that the staff recommendation would result in the depletion of urban renewal funds that might be used to implement the Downtown Plan. Moving the funding to the library foreclosed that option. He acknowledged that the money was now fully dedicated to the library by council action taken in 1998, but suggested that the decision could be revisited by the council. Mr. Kelly noted the element of the staff recommendation suggesting that funding be directed to the Facilities Reserve. He suggested that alternatively, the council could leave the funding in the Urban Renewal Fund, and determine where to allocate it later, such as for a new city hall. MINUTES--Eugene City Council September 25, 2002 Page 2 Work Session Mr. Klein indicated that the council was not completely free to revise the 1998 decision directing urban renewal money to the library. There were implications raised by State statutes as well as Ballot Measure 47/50. He said that when the council discussed the downtown financing tools at a future work session, staff would lay out those limitations. Mr. Kelly expressed appreciation for the information, but added not having those facts made it difficult for the council to make a decision. Mr. Pap~ commended City staff and the Library Foundation for the work done on the library. He also thanked Mr. Meisner for his continuing focus on the library. Mr. Pap~ clarified the financial details of the proposal with Ms. Cutsogeorge and Mr. Carlson. Mr. Fart returned to the meeting room. Mr. Pap~ questioned whether the City would actually realize the full $365,000 to reallocate as Ms. Bettman desired. Mr. Meisner expressed appreciation for the proposal before the council, which he found fiscally sound and straightforward. He did not support reallocating the savings to be realized this year. He preferred to see what happened with the service prioritization effort. He supported the suggested motion. Speaking to Mr. Kelly's comments, Ms. Nathanson suggested that the proposal before the council assumed no change in the council's 1998 decision. She noted her own vote against the decision to allocate all urban renewal funding to the library because she had anticipated other needs for the money in the future and did not want to preclude that possibility. However, she was prepared to support the suggested motion, which she interpreted as accelerating the accumulation of reserves for City downtown space. Mr. Fart also supported the staff recommendation. He commended the City's stewardship of the library project. He said that the project was under budget and ahead of schedule. Mayor Torrey asked if the City had exhausted all outside funds, such as the pledge of the Library Foundation. Mr. Meisner said that the foundation was within one percent of its original $5.5 million goal. He noted the lag between the time moneys were pledged and received. He said that the foundation was soliciting additional contributions with the purpose of establishing an ongoing library endowment. Ms. Bettman did not share Mr. Kelly's concerns about retaining the money for downtown purposes. She said that the council would review the idea of another urban renewal district soon. Her concerns regarded the use of the funds. Staff had identified $365,000 to be freed up on an annual basis, and made an arbitrary decision that $275,000 would be directed toward the capital reserve, and $90,000 would go into the General Fund. She said that circumvented the budget process. Ms. Bettman asked if staff had determined what department would receive the $90,000. In response, Ms. Cutsogeorge noted that the Budget Committee would hear an updated General Fund forecast in November 2002, and she anticipated the money would be needed to maintain existing service levels. MINUTES--Eugene City Council September 25, 2002 Page 3 Work Session Ms. Bettman objected to placing the $275,000 in the downtown capital reserves because the City intended to spend it on a building that would be located at 2nd Avenue and Roosevelt Boulevard. She said that the reserve was not really a downtown facility reserve, merely a reserve that, depending on what projects staff favored or were "trendy at the time," could be spent anywhere. She said that the council needed to discuss its priorities for spending the money in question. Ms. Taylor shared Ms. Bettman's concerns. She said that she was happy with the savings to be realized by the proposal but she had assumed that the council would to able to discuss its future use. She indicated her intent to support an amendment to the suggested motion should Ms. Bettman offer one. In response to a question from Ms. Taylor, Mr. Carlson clarified that staff was not proposing to spend any of the money in question. The staff recommendation was consistent with the action taken by the Budget Committee on the capital component of the budget earlier in the year. Mr. Kelly determined from Mr. Meisner that he was not willing to restore the service reductions made in the fiscal year 2003 budget. Mr. Kelly suggested that one approach might be to place the $365,000 be placed in reserve for further discussion during Supplemental Budget #1. Mr. Kelly determined from Mr. Carlson that under the new space policy, failure to pass the motion meant that all services located in General Fund buildings would pay 65 cents per square foot, except for Finance, Information Services, and the Administrative Division of the Library, Recreation, and Cultural Services. Mr. Kelly suggested that placing the $275,000 in reserves brought those services into conformance with other services in downtown space paid for by General Fund dollars. Mr. Carlson agreed. Mr. Kelly, seconded by Mr. PapS, moved to direct staff to (i) fund $4.3 million of library construction expenditures by using available urban renewal funds and interest earnings in the library construction fund instead of issuing bonds; (ii) prepare a request for Supplemental Budget #1 that includes this change in funding and that reduces the overall appropriation for the library construction project by $100,000; (iii) prepare a request in Supplemental Budget #1 to move $365,000 from non-departmental transfers in part to departmental operating budgets and in part to reserve; and (iv) prepare a request for Supplemental Budget #1 authorizing the use of Urban Renewal Agency funds for up to $1.4 million to cover temporary library construction cash shortfalls until all anticipated resources have been received. Mr. Farr indicated support for the motion and said he would not support an amendment. Mr. Farr recognized the $100,000 contribution made to the library by the Confederated Tribes of the Grande Ronde. MINUTES--Eugene City Council September 25, 2002 Page 4 Work Session Ms. Nathanson also supported the motion. She said that it represented a reasonable approach based on existing policies. She said that an amendment to the motion was not necessary because the money would not be spent without City Council approval. She believed that building the City's reserves was the right thing to do because it meant that the City did not have to turn to the voters for such expenditures as equipment replacement, for example. Mr. Rayor also supported the motion. He did not want to over-fund the library simply because money was available, and wanted the City to begin to look at legal mechanisms to direct the excess money from the Urban Renewal Fund to the General Fund. He indicated he would support an amendment to place the money in reserves pending consideration of Supplemental Budget #1. Ms. Bettman, seconded by Mr. Rayor, moved to amend the motion by replacing (iii) with a new clause directing the City Manager to place the $365,000 into the General Fund Reserve for Revenue Shortfall for future action by the City Council. Mr. Meisner opposed the amendment, saying that it took the allocation of funding outside the budget process while the motion directed the manager to prepare a request for the council to discuss. If the council supported the amendment, there would be no further discussion. Mr. Carlson clarified that any budgetary action would be taken in conjunction with the supplemental budget process. Ms. Bettman and Mr. Rayor accepted a friendly amendment from Mr. Kelly to direct the manager to schedule a work session to discuss the disposition of the $365,000 shortly before council consideration of Supplemental Budget #1. Ms. Nathanson opposed the amendment, saying it meant the City Council would end up discussing the subject twice. Responding to a question from Mayor Torrey, Mr. Carlson indicated that it was his belief that the staff recommendation was appropriate and in keeping with council and Budget Committee policy. Ms. Bettman said that the council's time for discussion of the supplemental budget was generally constrained. She thought that postponing the discussion until that time would not give the council adequate time to discuss the disposition of the funding. The vote on the amendment to the motion was a 4:4 tie; Ms. Nathanson, Mr. Meisner, Mr. Farr, and Mr. Pap~ voting no, and Ms. Taylor, Mr. Kelly, Ms. Bettman, and Mr. Rayor voting yes. Mayor Torrey cast a vote in opposition to the amendment and it failed on a final vote of 5:4. Ms. Bettman said that although she supported the cost savings the proposal would realize, due to the failure of her amendment, she would be unable to support the motion. Mr. Rayor thanked the staff for the clear Agenda Item Summary. The motion passed, 6:2; Ms. Taylor and Ms. Bettman voting no. MINUTES--Eugene City Council September 25, 2002 Page 5 Work Session Mr. Fart determined from Mr. Carlson that a January work session was scheduled for the living wage issue, and that was sufficient time to incorporate any changes in the next budget. Mr. Fart indicated that he would not attempt to reintroduce the topic at this time as he believed the proposed time line would work. The meeting adjourned at 1:30 p.m. Respectfully submitted, James R. Carlson City Manager pro rem (Recorded by Kimberly Young) MINUTES--Eugene City Council September 25, 2002 Page 6 Work Session