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HomeMy WebLinkAboutMinutes - November 24, 2014 - CC, Special MeetingCITY OF AZUSA MINUTES OF THE SPECIAL/ADJOURNED MEETING OF THE CITY COUNCIL ' MONDAY, NOVEMBER 24, 2014 — 7:25 P.M. The City Council, of the City of Azusa, met in Special/Adjourned Session following the Utility Board Meeting, at the above date and time in the Azusa Light & Water Conference Room, located at 729 N. Azusa Avenue, Azusa, California. A copy of the Notice of said Special/Adjourned Meeting was delivered to the Mayor and Councilmembers on October 14, 2014, between 4:00 p.m. and 5:00 p.m., by Administrative Technician Juarez and Senior Office Specialist Bautista, and e-mailed by Deputy City Clerk Hernandez. Mayor Rocha called the meeting to order at 7:25 P.M. Call to Order ROLL CALL: Roll call was taken by City Clerk Cornejo. Councilmember Carrillo joined the meeting Roll Call at 7:30 P.M. after roll call. PRESENT: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA ABSENT: COUNCILMEMBERS: NONE ALSO PRESENT Elected Officials: City Clerk Cornejo. Staff Members: Interim City Manager Penman, City Attorney Martinez, City Attorney Ferre, Finance ' Director Paragas, Interim Human Resources Director St. Peter, Police Captain Chavez, Administration and Financial Services Manager Johnson, Senior Administrative Technician Cawte, Assistant Director of Resource Management Lehr, Assistant Director Customer Care Solutions Kalscheuer, Assistant/Deputy City Clerk Hernandez. PUBLIC PARTICIPATION Present Also Present Public Part Mr. Jorge V. Rosales addressed the Scheduled Item stating that the loan had been unofficially transferred J. Rosales to the general fund, and the adoption of the item was a formality; he believed that some of the interfund Comments loans were made possible due to the City Councilmembers also sitting as the Utility Boardmembers, and the L&W fund had been funding the General Fund to keep it in black; he expressed concern on the re- payment of the loan as no payments will be made for at least the first 4 years of the 7 year term loan; in addition, payments to the loan will be made only if the General Fund reaches a reserve of 10% above expenses. SCHEDULEDITEM Sched Items APPROVAL OF $4 MILLION LOAN FROM THE WATER FUND TO THE GENERAL FUND AND Water Interfund BUDGET AMENDMENT FOR FUND TRANSFER TO THE LIABILITY FUND. Loan to General Fund The following discussion and question/answer session was conducted regarding the item: ' Q. Mayor Pro -tem Gonzales: is it possible to pay the loan sooner? A. Finance Director Paragas: included in the staff report is the payment schedule which the Finance Department will follow; staff is unaware on how the State Controller and the Department of Finance (DOF) will rule on the pending Former Redevelopment properties and assets, if the decisions are made in the City's favor, the loan can be paid sooner; the 7 year estimated plan gives an opportunity to build the required 10% above expenses reserve, if staff cannot reach that reserve and is not able to meet the payments as scheduled, Council will be notified; the items presented formalizes the loan, makes it transparent to the residents, and lets them know about the deficit in the general fund, which has been addressed for the past 2 years during budget sessions; the deficit was initially $6.4 million, and it has been reduced to $3.3 million; the departments have undergone several budget cuts, but more cuts need to be made; with Council's guidance, staff has been on the right path to slowly eradicating the deficit. Question Answer Session Q. Councilmember Alvarez: once this loan has been paid, is there a plan to pay back previous outstanding loans? Have there been loans in the past that have been forgiven? A. Finance Director Paragas: at the time when the general fund had a deficit, cash advances were made from the water fund, payments have been made, and the $4 million is the balance of the cash advances; there have been no forgiven loans, they all have been paid. Councilmember Macias stated that the loans were made due to a cash flow deficit, not a budget deficit as a whole. Q. Councilmember Alvarez: loans made in the past, such as this, have they been accounted for? ' A. Finance Director Paragas: for the past 3 years the City has had a cash deficit, the total cash advance was $6 million, and the $4 million is the balance owed; every penny has been accounted for and re- paid; accounting wise, the City is not allowed to have cash advances in the books that are older than 12 months; however, for the past 3 years, the water fund has been supplementing the City's cash deficit, which has helped reduce it to $3.3 million; part of the shortage was because of the liability fund due to lawsuit litigations that have caused the fund to be at a deficit since September, 2014. Interim City Manager stated that the L&W interfund loan was made to the City's general fund; other pending Redevelopment loans are being handled in a different manner, such as litigation, for which staff had no control over. Q. Councilmember Alvarez: when the cash deficit issues began was it as a result of Redevelopment Issues? A. Finance Director Paragas: the economy was another factor that affected the sales and property tax, as well as the projected Target sales tax; additional expenses were due to payments made to retirees; these shortfalls resulted in City's personnel layoffs; revenue from Rosedale sales have slowly started to come in. Interim City Manager Penman stated it was a one time money loan to reduce the cash deficit, not to put it back in operating expenses. Councilmember Alvarez expressed concern that this year's budget was tight, and he did not want to ' continue borrowing from the water fund, as they are currently going through a drought. Finance Director Paragas stated that in compliance with the policy, the loan was not to be used to balance the budget, currently there was a small surplus in the budget; staff will continue to find ways to resolve the deficit and re -pay the debt; the goal was not to borrow additional money. Councilmember Macias stated that in the past 10 years, the City has won the State Award for Financial Reporting and Excellence several times; Finance Director Paragas stated that due to staffing issues, the City has not applied for the award in the past two years. City Attorney Martinez stated that the genesis of the discussion dated back to the 2013 budget meeting, when the City had budget difficulties, staff was laid off and the auditors were looking at these issues; Council directed staff to took into adopting financial policies in order to track such loans. Councilmember Macias offered a resolution entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA AUTHORIZING A LOAN FROM THE AZUSA LIGHT & WATER FOR PURPOSE OF FUNDING THE GENERAL FUND CASH RESERVE BALANCE. Moved by Councilmember Macias, seconded by Mayor Pro -tem Gonzales, to waive further reading and adopt Resolution No. 14-C81, by the following vote of the Council: 'YES: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA NOES: COUNCILMEMBERS: NONE Councilmember Macias offered a resolution entitled: A RESOLUTION OF THE CITY COUNCIL OFF THE CITY OF AZUSA APPROVING APPROPRIATION AMENDMENT FOR FISCAL YEAR 2014-2015 PURSUANT TO SECTION 2- 450 OF THE AZUSA MUNICIPAL CODE. 11/24/2014 PAGE TWO Reso 14-C81 Authorizing Loan from Water Fund Reso 14-C82 Appvg Appropriation Amendment Moved by Councilmember Macias, seconded by Mayor Pro -tem Gonzales, to waive further reading and adopt Resolution No. 14-C82, by the following vote of the Council: YES: COUNCILMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA NOES: COUNCILMEMBERS: NONE The Council recessed at 7:45 P.M. and re -convened at 7:55 P.M. CLOSED SESSION The City Council recessed to closed session at 7:56 P.M. to discuss the following adjourned item (the item was declared adjourned at the Regular Meeting of November 17, 2014): Recess Closed Sess PUBLIC EMPLOYEE APPOINTMENT Pursuant to California Government Code Section Public 54957. Employee Title: City Manager Appointment The City Council reconvened at 9:23 P.M., City Attorney Martinez announced that there was no reportable action taken in closed session. ADJOURNMENT It was consensus of the City Council to adjourn the meeting TIME OF ADJOURNMENT: 9:24 P.M. . Ww", MW A NEXT RESOLUTION NO. 14-C83. 11/24/2014 PAGE THREE Adjourn