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Approved Minutes - 2009-04-28 OF LAKE osw,CO /W CITY OF LAKE OSWEGO CITIZENS' BUDGET COMMITTEE MINUTES April 28, 2009 Proposed FY 2009-2010 Budget OREGO$ Chair Ron Smith called the meeting to order on April 28, 2009 at 6:30 p.m. in the Santiam Room of the West End Building, 4101 Kruse Way, Lake Oswego, Oregon. Members present: Jack Hoffman, Mayor Ron Smith, Chair Donna Jordan, Council President Katherine Shallenberger, Vice Chair Kristen Johnson Kelly Calabria Sally Moncrieff Jeff Gudman Mary Olson Daniel Williams Bill Tierney Members excused: Roger Hennagin and Frank Bearden Staff present: Alex McIntyre, City Manager Darin Rouhier, Finance Director Jordan Wheeler, Management Analyst David Donaldson, Assistant City Manager Kim Gilmer, Parks & Recreation Director Denise Frisbee, Planning & Building Department Director Dan Duncan, Police Chief Guy Graham, Public Works Director Joel Komarek, Project Director, LOIS Jerry Knippel, Special Projects Director Ericka Rooney, Assistant City Engineer Bill Baars, Library Director Ed Wilson, Fire Chief Carol Bryck, Assistant Finance Director Kam Frederickson, Budget & Financial Analyst Gary Evans, Assistant Parks & Recreation Director Jeff Munro, Parks Maintenance Superintendent Natalie Strom, Natural Area Coordinator Tom Mueller, Golf Course Manager Ann Adrian, ACC Manager Kathy Kern-Schilling, Events Supervisor Jackie Rose, Library Youth Services Manager Donna Ainslie, Library Circulation Manager Jane Carr, Library Reference/Adult Services Manager Cyndie Glazer, Coordinator of Library Volunteer Services Megan Phelan, Human Resources Director Linda Dickhous, Administrative Support City of Lake Oswego Citizens' Budget Committee Page 1 of 13 Minutes of April 28, 2009 I. Approval of Minutes Jordan moved to approve the Minutes of May 27, 2008. Calabria seconded the motion and it passed by unanimous vote. Gudman moved to approve the Minutes of April 13, 2009. Jordan seconded the motion and discussion followed. Gudman clarified that he had been emphasizing that charging accrued leave to the individual departments was reasonable, and Rouhier and McIntyre had confirmed it would be charged to individual departments as a cost of doing business. The motion then passed by unanimous voice vote of those members present. Smith asked if there were any remaining unanswered questions from the last meeting. Gudman said that his estimate that the City's total PERS liability was $100 million had been off by $5 million because it was actually $95 million. II. Department Presentations Parks & Recreation Department Kim Gilmer, Parks & Recreation Department Director, explained her budget division by division. She said of the 58 FTEs, 16 were temporary, seasonal, positions, such as instructors and lifeguards. The part-time Natural Resources Coordinator position had been transferred from the Planning & Building Department. The department had applied for a state grant for trails. More programs had been added that offset their costs with the revenue they produced. They were tagging on a small fee on every program and that would generate about $10,000. They had reduced expenditures by $75,000. Part of that was achieved by closing the swim park on Ridgeway Road, which would save $21,000. One of the three field overseeding cycles would be eliminated to save about $16,000. $28,000 was to be shifted from the Parks Fund to the Percent for Art Fund to fund the Arts Council. Moncrieff asked if the swim park was only being closed for this summer. Gilmer said the department would reevaluate all the programs they offered. The decision to close the swim park had been based on its relatively lower use. She confirmed for Olson that the school district's swim park would stay open. Jordan recalled that sewer work would be going on near that swim park this summer. Moncrieff asked if they had looked into a "stress management" method of watering fields. Jeff Munro, Parks Maintenance Superintendent, confirmed they were looking into water reduction, but the fields took so much abuse they had to be watered. Hoffman observed the grass fields were ten years old and asked if a field replacement reserve would be created. Gilmer said they had not done that yet and she believed that proper maintenance would extend their life for quite a long time. Munro explained there were some places with poor drainage that had to be replanted. Hoffman asked if we would be placing a reserve for artificial turf fields and Gilmer advised that they should consider that. Kim relayed that years ago the City had considered a reserve, but eliminated it after the School District needed cut theirs. She confirmed for Hoffman that athletic field users were charged for using the fields and that generated about $94,000 per year. She said they could charge more, but it would never recover the City's investment. Jordan recalled seeing reseeding that had been torn up immediately when it rained. Munro agreed that the schedule for overseeding and top dressing was weather dependent. Tierney said he did not see a footnote to support the increase in headcount or the explanation for the 16% increase in total Materials and Services. Gilmer would provide that information to the Committee. City of Lake Oswego Citizens' Budget Committee Page 2 of 13 Minutes of April 28, 2009 Gilmer explained the department had historically asked for a supplemental budget when they added new parks and facilities to maintain, but this year they tried to budget for them. Smith asked what the December 2008 supplemental budget included and Gilmer said it was for a long-range study of the golf and tennis programs and some money for Park Fund expenditures, including Cooks Butte. • Adult Community Center Ann Adrian, ACC Manager, reported the Center had experienced a 17% increase in home delivered meals last year and it was continuing to grow. More part-time staff was being used to prepare meals. Gudman asked if it was more cost effective for the department to do it or contract it out. Gilmer said her research led her to conclude using another nonprofit group might cost the same or more, and she added that the department's program offered better meals. • Management Services Gilmer said the increase in salaries and benefits was because the Natural Resources Manger position had been moved to this division from the Planning department and an increase in other part-time. Materials & Services expenditures were up because the cost of the online registration system was going up and the software was being upgraded. Copying and printing costs reflected the cost of producing a new parks brochure. Professional & Technical expenses would rise because of new software and bank service charges for credit card charges. That expense went up as the number of participants went up. Gudman pointed out that a footnote said software upgrades were in Repairs & Maintenance, not Professional & Technical Services. Gilmer explained the first category included the cost of repairing office computers and the Professional & Technical category reflected the cost of software, upgrades and support related to the online registration system. Gudman asked how much that was and Gilmer said it was a $60,000 increase and that there had not been an increase in many years. Calabria asked if the department could raise their fees to pay for that. Gilmer stated that they do raise fees and the Master Fee Schedule required them to cover 100% of the direct cost of adult programs and that did not include overhead. Tierney advised that online registration was more like a direct charge and Olson noted that it only applied to classes, not to the rest of the department's programs. Jordan suggested considering offering users a direct deposit option to save money on credit card charging costs. Gilmer explained for Olson that her department had shared printers with the Finance Department until they moved to the WEB and now they shared printers with LOIS. Williams asked Gilmer to provide more specific details related to the $221,113 contingency. Rouhier said this contingency and ending fund balance would be rolled into one big, amalgamated, contingency in the new General Fund reserves. But until then it was tracked both ways and shown as if it were still in a separate Parks Fund. Tierney said he was still trying to reconcile the cost of wages with the increase in FTEs. Gilmer explained that the department was now budgeting for 1.3 temporary part-time workers to work in the office and clean. They had them last year, too, but past budgets had not accurately reflected that. Tierney said if the headcount was about the same, why did the budget increase about $100,000? He figured that about half of it was for the Natural Resource Manager position. Gilmer said the salaries budget also reflected anticipated step increases. Rouhier clarified that the contingency fund was strictly for COLA increases and the associated increases in benefits driven by pay (FICA and PERS etc.), which increased whenever someone's pay was City of Lake Oswego Citizens' Budget Committee Page 3 of 13 Minutes of April 28, 2009 raised. COLA was dependent on the outcome of future labor negotiations. He said step increases were already reflected in the budget because they happened when an employee passed certain milestones in their career and not because of any management decision. He acknowledged there could be other reasons for the change in the amount of salaried budgeted, such as a change of the mix of positions in the department. Tierney asked how many steps there were? Gilmer said there could be 5 or 6, depending on the position. Rouhier advised they were typically 5% apart. Rouhier handed out a one-page summary of changes in FTEs for all departments. It broke down all the FTE changes that occurred since the adopted budget for 2007-09. He pointed out that it showed and explained Gilmer's changes. Calabria asked how the decision had been made to move the department to the WEB. Gilmer recalled the City Council had asked them to move there. Their offices in City Hall had been very crowded. Shallenberger noted that the increase in Materials & Services in many departments reflected the fuel and repairs costs being moved there from the Transfers category and asked for a summary sheet that reconciled transfers between departments, such as the transfers for fuel. She asked if there was some way to capture all the costs related to the WEB, including the cost of moving the department there, in a one-page summary. Johnson explained there were non-quantifiable reasons to use the WEB. It increased the productivity of the department when they had enough room to work in and it put an empty building to use. Hoffman questioned how asking the staff to justify something that happened two years ago was relevant to the current process. Smith anticipated the Committee would discuss FTEs and contingencies and "Katherine's summaries" later in the process. • Sports & Fitness Programs Gilmer said they were adding more programs, but the FTEs stayed the same. The 2.2 temporaries were positions such as instructors, league managers, and skate park staff. • Cultural & Specialized Programs Events was expanding and that one full time employee was moved here, who dealt with downtown and other events. Gilmer said what was not described in the budget was that $20,000 for Professional & Technical Services was going to be used to hire part-time employees and instructors at a lower cost this year. The small tools budget was lower because $28,000 for the Arts Council had been shifted to the Percent for Art Fund for their use. • Maintenance FTEs had been increased because money from the Professional & Technical budget had been moved to be used to pay for part-time workers. The department found it was less expensive and they got more consistent service in key positions when they hired temporary part-time workers than when they contracted work. Moncrieff said she had read in the Oregonian that Youth Corps workers were helping in natural areas. Natalie Strom, Natural Area Coordinator, said Youth Corps was not the same organization as AmeriCorps. She had also read the article but had not explored that possibility yet. Gilmer explained for Olson that the cost of repairs and maintenance of Luscher Farm was in the Special Events budget, not this budget. $54,000 of the Repairs & Maintenance item was a shift here of the motor pool transfer for fuel and $32,000 of it reflected a 14% projected increase in the cost of electricity and natural gas. There would be additional utility expenses connected with operating Hazelia Field. City of Lake Oswego Citizens' Budget Committee Page 4 of 13 Minutes of April 28, 2009 Williams asked if the department was finding the 14% assumption to be realistic. Munro reported that lights and water rates for Hazelia Field had jumped from $0.83 cents to $2.05. Olson wanted more specifics on rates because the increases would affect all departments. • Acquisition, Development & Pathways This budget included the cost of the boat dock and design of Rosemont Trail. When Gudman asked for it, Gilmer pointed out the Parks & Recreation Capital Projects listed on page 152. McIntyre said the staff would provide a report covering the entire CIP program and it might make sense to wait until then to discuss these projects. Olson asked what City's share of the Boat Dock was. Gilmer explained that cost would be reimbursed from a grant related to development of Foothills Park. Rouhier explained the City would pay out cash for it, and then be reimbursed, so both the revenue and the expense had to be reflected in the budget, but net cost to the City was zero. Gilmer pointed out that the grant revenue offset is shown as Intergovernmental revenue. • Adult Community Center This budget accounted for adding more temporary workers to help with the Meals Network program. The revenue coming in would not completely offset the cost, so fundraising would be expanded. Gudman noticed that Repairs and Maintenance had jumped from $42,000 to $94,000. Gilmer said $12,000 of that was motor pool transfers and the part of the increase was due to increased electric and gas costs, but she would check out the remaining increase. Tierney observed that fuel cost transfers were only half of the transfers to other funds. He asked what other costs would be transferred. Gilmer said there were transfers to the General Fund for administration, insurance and self insurance; to the Parks & Recreation budget to pay for bank charges, brochures, and general administrative expenses; and there were transfers to maintenance for electronics. Tierney wanted more information on what was in transfers and that was a general question he had for all department budgets. McIntyre said the staff would bring back information to explain the transfers. Gudman observed the minutes of the last meeting indicated a theme came up that Committee members wanted to get a handle on totals across the City for various categories. He asked for a total of year-to-year, on both the revenue and expenditure sides of major inflows and outflows. • Golf Course The department was doing a study of the Golf and Tennis programs. The 2008-09 budget reflected that they were trying to streamline them and find ways to generate enough revenue to cover the operating costs. There was no café revenue because the café operation had been contracted out after the division calculated it was not worth doing it themselves. Gilmer said this budget had "aggressive" revenue numbers. Revenue from classes was anticipated to grow, even in the current economic downturn, because they were seeing an increase in registrations and hoped it would continue. The shift in fuel costs had significantly increased the Repairs & Maintenance Services budget. That budget also reflected the fact that the Golf Course had a lot of old equipment, including expensive mowers, which they might need to replace. Special Pay reflected what golf pros got for instruction. It was a separate line item from the one that reflected the base pay they got for working in the pro shop. Gilmer confirmed to Olson that the department hoped the Golf Course would pay for itself. City of Lake Oswego Citizens' Budget Committee Page 5 of 13 Minutes of April 28, 2009 Tom Mueller, Golf Course Manager, said he thought that if the mowers did not break down the program could end up with a balanced budget. Gilmer said the study would take a look at golf operations. She confirmed for Olson that the food vendor paid a rental fee, but that was not a significant revenue generator. • Tennis Facility The Tennis Facility budget projected fewer FTEs. The director had been a temporary part-time employee, but he was now on contract, which increased the Professional & Technical Services budget. There was a 3/4 FTE manning the center desk and the rest of the staff was temporary, part-time, instruction staff. Resurfacing the courts and repaving the parking lot would require capital funds this year. Olson observed this budget showed this program would break even, but she recalled they usually made a little money. Gilmer confirmed that they usually did, but this was a conservative approach that showed it in balance. Tierney suggested the Committee discuss it as a policy the decision to close the swim park at a later time. He thought it was likely they could find $21,000 for it. • Percent for Art Gilmer confirmed for Gudman that the number of summer concerts would be reduced and that would save $12,000. The Jazz West concerts did not enjoy the level of attendance the others did. However, some Art in the Plaza events had been added and they produced revenue (from vendors). She also confirmed for Gudman that the City had allowed the Arts Commission to become a nonprofit organization a few years ago so they could fundraise and eventually would not need City support. But they still needed that support and they were partially funded in her department's budget. When Gudman asked what their plan was, Jordan related that the foundation had a new plan with ambitious goals and had put fundraising people in place. But they were suffering as all arts organizations were from a lack of grants and donations. Gudman asked if it was a City goal to eliminate that funding entirely? Jordan explained that Percent for Art was permanent and the City paid the Arts Council for managing the public artwork collection. Hoffman confirmed for Gudman that the City Council was working with the Arts Council to help them plan how to raise private capital. Olson observed a footnote said that the 1.5% contribution to the Percent for Art was coming from the General Fund for the West End Building (WEB) purchase. Gilmer advised the percentage was required when a building was purchased as well as when a building was constructed. Olson suggested that was another issue to be placed on "Katherine's list." McIntyre said he had been told that in 2006 the City Council had anticipated they would capture the arts funds when the building was redeveloped, but that did not happen. The only money the Percent for Art program had right now was because of the WEB acquisition. He had suggested the Arts Council should plan to raise some money. But at the current time the City owed them $300,000 and the code required it. Gudman asked if the City was "on the hook" for a building they might sell? McIntyre said yes, the code required allocating the percentage for art for a acquisition of capital. Tierney said that also raised the question whether the money should be allocated as a function of the WEB building or if there should there be a policy decision that money for the arts was an important investment. McIntyre agreed it was an investment in the community. He clarified for Olson that the City was not required to allocate a percentage of the LOIS budget to the arts because that requirement did not apply to utilities. Gudman asked if it was the prerogative of the Committee to recommend putting the $300,000 "on hold" until the City of Lake Oswego Citizens' Budget Committee Page 6 of 13 Minutes of April 28, 2009 decision had been made about the WEB? McIntyre advised that the City owed this money four years ago and had not paid it. Jordan observed that the City Council had made a commitment to economic development. Arts and parks events brought in dollars from outside the community and helped local merchants. If the Committee decided they did not want that item in the budget, the City Council could decide it was important enough to support the arts and put it back in. Hoffman understood that Gudman was basically recommending that the City Council pass an ordinance that would be retroactive and that would amend the Percent for Art program. He said both of those things were problematic. Gudman reasoned that if the City had not purchased the WEB they would not owe for art. He said that they had delayed paying for it for four years and he believed it was financially prudent to delay paying the money out until the fate of the WEB was determined because there was no link yet. Tierney pointed out it was $300,000 in resources added, and expenditures were far less than that. Smith cautioned the Committee was getting into deliberations about the budget. Williams said he hoped the Parks Department would find ways to leverage the City's investment and make the Centennial Celebration a successful interface with the citizens. Gilmer said the RFP she was fashioning asked the contractor to leverage the City's normal events to save some money and maybe schedule one, big, gala event too. Planning and Building Services Denise Frisbee, Planning & Building Department Director, reported that Building & Permit Center staff had been reduced by 3.7. The department would forego some software improvements that would have been in the Professional & Technical Services budget. She pointed out the budget document listed the goals and initiatives the department was to work on in the coming year. She said they would implement some of recommendations related to improving customer service and departmental efficiencies made in a 2008 organizational audit McIntyre had commissioned. During the questioning period, Frisbee confirmed that the Building & Permit Center suffered the biggest cuts. Tierney asked about fee revenue. She said fees were down about 60% from last year and the number of permits issued was down about the same percentage, so it was both a fee and workflow reduction. She said Planning Department fees were also down. Gudman wanted to know how many neighborhood plans had been approved so far. Frisbee said FAN, Evergreen, and Palisades were done; Glenmorrie would be ready soon; Waluga and Lake Forest were in process; and Lake Forest was pending. Gudman asked what it would cost to implement the changes in adopted plans and how long that would take? She explained the staff was studying the Palisades plan to determine that. However, the challenge was that each neighborhood plan was a little different. The Planning Commission had formed a working group to suggest a neighborhood plan template that would identify what aspects of neighborhood plans were really of Citywide concern and make the plans more consistent with each other. The department hoped to be able to estimate the cost of implementation at the time the City Council adopted a plan. Gudman wanted a general range, "best guess," estimate of the cost of implementing a plan, or an estimate of the cost of implementing the Palisades plan. Wheeler said he did not know, but he thought the study of the Palisades plan could help them understand. Frisbee said the department was working on getting better numbers, but she advised that there were aspects of the plans that did not involve hard costs. They could be implemented by code changes, Capital Improvement Program projects, and using neighborhood enhancement grants. Gudman opined that the policy should be that neighborhood plans would City of Lake Oswego Citizens' Budget Committee Page 7 of 13 Minutes of April 28, 2009 not be adopted until funding was found to pay for them. Smith cautioned that was getting into process and policy questions. Jordan suggested talking a look at what the neighborhood planning process itself cost. Frisbee said two neighborhood planners worked on the plans. How long that took varied greatly, because Palisades had changed leadership in mid-process and that plan took a long time to finish. But Glenmorrie would be done in record time because the neighborhood was cohesive and able to communicate and resolve critical issues more quickly. Olson observed that Palisades was much larger than Glenmorrie. Frisbee anticipated that the Planning Commission working group would offer better information about neighborhood plans soon. Tierney asked how confident the department was they would generate $935,000 in fees. McIntyre said he was watching the trend, and if it continued they would ramp down further. Tierney asked, as a policy issue, if Building & Permitting Services should be making money or breaking even. McIntyre explained that they had to pay for themselves on the one hand and on the other hand, the Building & Permitting Services division could only use those monies for building services. He related that reserves are created for a reason and he and Frisbee recognized that if you dipped into reserves during hard times to preserve the operation and employees you also had to have plan to glide path out of it. Tierney asked if they were being proactive. Frisbee said layoffs had already been initiated. . Tierney observed the headcount was going down and Professional & Technical Services was going up. He recalled one of the justifications was that was it paid for staff development and training. He asked if that should be cut back in these times? Frisbee said that was the only jump in her budget. Planners had continuing education requirements to fulfill and they were getting training in green building and code auditing so they could accomplish City Council goals. Structural, electrical and plumbing inspectors would be cross-trained. She clarified for Olson that the department would get professional help with the scope of the code auditing process this year and then work on finding out what was wrong with the code and fashion a strategy for streamlining it. Police Dan Duncan, Police Chief, noted two items that were not in the "What's New" section of the budget: The department had been awarded state accreditation for good policies and standards, and the staff had created a five-year strategic plan at a retreat last year. He said there were at least three officers and one supervisor on duty at any given time and the department could respond to an emergency within three minutes. He said the department had acquired two canines and had used grant money to install cameras in patrol vehicles. When Gudman asked what they were for, Duncan explained they recorded what happened when an officer stopped someone and they automatically recorded collisions. He discussed each division budget. A great deal of different types of training and ongoing training of staff was necessary. Gudman asked if the City was reimbursed when the officer certified to investigate fatal accidents involving child safety seats was called out of the area. Duncan said no, there were mutual aid agreements for that. He said his department used transfers in the same way as other departments. Tierney asked how confident he was about the revenue from LOCOM service. McIntyre said those amounts were contracted with West Linn and Milwaukee. Duncan said other revenue came from 911 taxes and juvenile diversion. He confirmed for Tierney that the 911 tax did not apply to cell phones and he said the legislature might decide to reduce it. Tierney speculated that Intergovernmental income might be down because more people used cell phones now. When Tierney observed the budgeted figures indicated someone might be ready to retire, Duncan listed several employees who were eligible to retire. He confirmed for City of Lake Oswego Citizens' Budget Committee Page 8 of 13 Minutes of April 28, 2009 Jordan that the budget factored in the cost of veterinary service and boarding of animals the police picked up on the street, and that the Patrol budget factored in the cost of the two Police dogs. He clarified for Jordan that the department divided the City into three patrol areas, and the biggest and busiest was Lake Grove, which included Westlake and Mountain Park. He said they could create a fourth district but that would require more manpower. Gudman asked if all department positions were filled the entire year. Duncan said there had been two positions open in the last six months. Duncan explained that the department had kept those positions open until they got some guidance regarding the budget. Olson reasoned that the police dept had to fill their shifts so if they had vacancies they had to pay overtime. Duncan advised that the national average was two cops per 1,000 population, but Lake Oswego averaged 1.19. They had the lowest per capita staffing in the Metro area. Public Works Guy Graham, Public Works Director/City Engineer, said Public Works had become its own department last fall, bringing together Engineering, Maintenance Services, the Water Treatment Plant, and Facilities Maintenance. He listed the members of the management team and gave an overview of the services they provide, such as planning and geographic mapping and information services (GIS); and designing, constructing, inspecting, managing, operating and maintaining infrastructure. Some of Public Works responsibilities include maintaining wastewater lines and pump stations, streets, street lights, storm drains, water lines, reservoirs, and maintenance of City facilities. He explained the draft capital program would be presented for discussion at the May 11th meeting. Public Works plans include developing strategic asset management protocols. Jordan asked where in the budget the stimulus money was shown. Graham said it would be spent for two projects on the CIP list and he would provide the details. Williams asked how much of the Materials & Supplies budget increase would be spent for computers. McIntyre explained that projected amounts to be spent on computers had been provided by the IT Department. Gudman asked where the City streets were on the road pavement condition index. Joel Komarek said it was just under 70 CPI. Gudman asked if there was sufficient money in the budget, or a five-year budget, to get the streets from less than 70 to 70? Graham said no and he would provide further information. He added that one issue for City Council discussion relates to the current street maintenance revenue being less than what is needed. Johnson said the City Council had considered raising the Street Maintenance fee, which had not been increased for many years. They decided to increase it slightly, but not the jump that should have been made years ago. Graham advised the price of asphalt had not gone down because oil was being used for higher-grade fuels and not asphalt. Tierney observed a trend in all the budgets was an increase in Materials & Supplies and Professional & Technical Services, and often the justification was "computers." Rouhier said he would provide a citywide picture of computer expenditures. Tierney observed that Engineering - Construction Services needed an explanation of full-time salaries and the FTE count as well as more detail for Professional & Technical Services large increase. Komarek noted that this may relate to improvement projects that may require contracted services. Tierney noted that Other Purchased Services in Planning & Information Services had risen significantly to $24,000 and the related footnote attributed that to GIS applications. Komarek addressed Tierney's question about GIS. He explained GIS services were very computer intensive and the software was sophisticated and very expensive. A new version comes out every two years or so and that does not support the old version. They need to buy new software, technical support, and licenses. Tierney observed that the Facilities Management Maintenance budget had doubled and there was no footnote to explain why. Graham commented about the need for repairs on older buildings. Wheeler noted the WEB City of Lake Oswego Citizens' Budget Committee Page 9 of 13 Minutes of April 28, 2009 maintenance costs were now reflected in this budget combined with other facilities. Graham offered to provide the Committee with more details on their questions. Graham explained for Moncrieff that Systems Development Charge revenue was used for capital projects so they would not be shown in the operating budget. The CIP presentation would show that SDCs were down. III. ISSUE: Lake Oswego /Tigard Water Supply Partnership Joel Komarek, Director of the LOIS project, presented the new water project budget. Lake Oswego and the City of Tigard joined together and formed a water supply partnership in August 2008, which would expand Lake Oswego's water supply system, doubling its treatment capacity. He explained that the intergovernmental agreement with Tigard established Lake Oswego as the managing agency. The project would be completed and serving both communities by July 2016. The budget includes addition of 3 FTEs and office set-up for this project. He plans to join the water project team after the LOIS project is finished. Tigard was to initially contribute $2.8 million and pay 57% of the annual cost through completion of the project. During the questioning period, Komarek confirmed that Tigard would pay 57% of the operating expenses such as personal services, transfers and the cost of the team's office. He clarified that the intergovernmental agreement states that both cities were to establish an oversight Committee created by elected officials. He said Johnson and Tierney were on the Lake Oswego committee that had reviewed this budget and recommended it to the City Council. Hoffman asked which City would go out for revenue bonds. Komarek said each individual City would do that. He noted that Tigard had been raising water rates for many years in anticipation of a project like this. Smith invited public comment. Citizen Input Carolyn Jones, 2818 S Poplar Way, recalled hearing that the project would provide water for the Stafford area. She questioned spending money to supply Stafford if the City Council had taken a position against developing Stafford. Komarek said that possibility had been posed for long-range planning purposes, but there would not be any infrastructure built to get water to Stafford as part of this project. Jones was concerned that the City might legally be required to serve Stafford. Hoffman explained that Metro would require a new area to find some service district to buy water from, and they would have to figure out how to get it there. John Surrett, 1685 Edgecliff Terr., said he had reservations about the agreement with Tigard because Lake Oswego did not suffer from water shortage, except for a few days in summertime when it reached the capacity of the water treatment facility, and he thought citizens were being taxed through higher water rates in order to demonstrate the City's willingness to tax itself to potential revenue bond holders. He said Tigard was getting a multi-million dollar system for a paltry sum. The tiered water rates had nothing to do with conservation. He advised the agreement could be rescinded. He said Jordan had represented at a recent LONAC meeting that the City might serve Stafford at some time in the future. Jordan recalled her comments from LONAC, where she made observations about when the Stafford area is looked at, there would be certain area service providers that it would make more logical sense to provide certain services. She commented that City would not provide wastewater services because it would need to be pumped uphill, however, water could flow downhill into the Stafford area. There is usually a logic to determining service providers, though she clarified that she had not said the City was going to do that. City of Lake Oswego Citizens' Budget Committee Page 10 of 13 Minutes of April 28, 2009 Eugene Ditler, 5034 Foothills Road, Apt D, asked if this was an elitist town and if the budget should be increased to $10,000 per person and borrow money to stimulate the economy. Johnson explained the City operated under totally different budgeting laws than the federal government did, and the City could not have a deficit. IV. ISSUE: Library District Revenue How should the City apply the new revenue brought about by the formation of the county library district? Bill Baars, Library Director, explained that the Library budget was $3.3 million, but recent passage of the measure to form a Clackamas County Library District meant County support was to increase by $900,000 this year and the new tax district would provide a future stream of funding for the library. In addition, each City was to receive a one-time allotment of$1 million capital funds for library facilities and improvements. He asked the Committee what they would do with the money. He provided a number of options, ranging from using the County funds to supplant or diminish the City general fund contribution, to establishing a library station in Lake Grove, to establishing a reserve to build a new library. Baars explained that the $900,000 will come into the Library and the question is whether the City will continue to provide the Library with additional General Fund support from property taxes. Gudman recalled a task force had previously determined that the City could not sustain two libraries. Baars explained that a library station would be a small facility to provide services to a part of the community. Gudman anticipated once such a facility was established the pressure would eventually build to make it a full second library. Gudman commented that the full additional $900,000 should not stay in the Library department and that staying flat year to year is where we should be. Tierney recalled the existing building had no more room to expand services and Baars confirmed that. Williams asked if the library had tracked where users came from. Baars reported they came for all over the City and 96% of users lived in the City. He confirmed to Olson that they shared materials with Portland and West Linn. Johnson said sustainability goals encouraged having a library within walking distance or shorter driving distance. Baars clarified that the City could ask for the $1 million in capital to build or improve a library in any one of the next five years. The County revenue could not be applied to any other purpose than for the library. McIntyre confirmed for Jordan that the budget showed the entire $1.8 million inflow from the County to the library. He said there was no policy backing what is currently in the budget to guide him and it needs to be further refined, so we are seeking direction on what needs to be done. Options may include earmarking the additional $900,000 in an endowment fund as reserves to be to be used to build a new library, or it might be used to pay for library services so General Funds that had been budgeted for that could be used for other purposes. Calabria suggested being cautious in this economy and not spend the $900,000, placing it back in the General Fund for things the City may need in the down economy. Also, important to go back to the community asking the voters what they intended. Shallenberger said she agreed with Calabria, but did not have enough information to make a recommendation. Smith wanted to know what the cost of the options Baars presented would be. He observed that the inflow of County dollars gave the City the opportunity to use General Fund dollars elsewhere. Olson had heard people say they had voted to support the new library district because they thought there would be a proportionate decrease in property taxes. Gudman asked McIntyre what his perspective was on one versus two Library locations. McIntyre said as City Manager, his concern would be operating and staffing two libraries. He City of Lake Oswego Citizens' Budget Committee Page 11 of 13 Minutes of April 28, 2009 explained that he had brought the matter to the Committee because he felt with their insight and overview of the entire budget they might have a perspective on how to resolve competing interests of the library and other components in the budget. Jordan recalled the library district had been created to ensure libraries were at a certain standard and Lake Oswego's library had always been at or above that standard. She did not want to see its standards lowered because they had County money. But she knew there were other things the community wanted like pathways that were unfunded and important to consider. She wondered if the $1 million coming from the County and the existing endowment funds and money Friends of the Library has set aside could be leveraged to ensure the community got the library they wanted In the near term, then use future monies for other things. Hoffman recalled the community has had discussions about the library issue for 20 years. He was uncomfortable with the Committee making a recommendation because not all the perspectives he had heard over time from different stakeholders were represented. He said keeping the money in reserves would give the community the option for economic development and to build a new library downtown. If the committee decided to spend the money they would lose some flexibility. Public Input Glen Robles, 4869 Parkview Dr., he researched this matter and held that voters clearly expected the County funds to be used to supplement what the City contributed. He said library resources helped people in tough economic times with such things as career development and complimentary internet resources. Marie Hannigan, 1179 Sunningdale Rd., said she was a member of Friends of the Library but speaking for herself. She suggested instead of a branch or station, the library could circulate a bookmobile that would serve all neighborhoods. She said the high usage showed the community demand for library services and thought they would want the County money to supplement the City contribution. She suggested splitting the County funds so some were used now and the rest were added to other endowments to pay for a future building that would meet excellence in library standards. Eugene Ditler said he believed in government control of all allocation of resources. He suggested the City hire a lobbyist so they could have six libraries. Darrell Condra, 1179 Sunningdale Rd, said he had helped build the new Tualatin library. He advised that it took years to build one and the City should start thinking about a new library now. He advised the existing building was the smallest in the state on a per capita basis. Sherry Richardson said she had experience serving on library committees. She supported the option to put the $900,000 in a reserve for a new library. The library serves all ages. She said the existing facility was so small it was embarrassing. She wanted the City to continue its current level of funding library services. Jane Carr, 5300 Parkview Drive, indicated that she agreed with the previous speakers. Nancy Shatsky, 18168 Westminster Drive, said she served on the Library board, but was speaking as a citizen. She stressed the library was much too small. She said the people who voted for the Library District wanted the City to continue with the full amount it had been contributing. City of Lake Oswego Citizens' Budget Committee Page 12 of 13 Minutes of April 28, 2009 Jackie Rose, indicated she agreed with the previous speakers. She said a good library reflects the values of the community and felt that the citizens Lake Oswego wanted the strong values of education and cultural enrichment that the Library provides. V. Adjournment Chair Smith adjourned the meeting at 10:11 p.m. Respectfully submitted, Kam Frederickson /s/ Kam Frederickson Budget & Financial Analyst APPROVED BY THE CITIZENS' BUDGET COMMITTEE: 5/11/09 City of Lake Oswego Citizens' Budget Committee Page 13 of 13 Minutes of April 28, 2009