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HomeMy WebLinkAboutC - Budget Workshop FY 16-17FY 16/17 Budget Study Workshop June 13, 2016 Page 1 BUDGET REVIEW WORKSHOP C TO: HONORABLE MAYOR/CHAIRMAN AND CITY COUNCIL/BOARD MEMBERS FROM: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER DATE: JUNE 13, 2016 SUBJECT: FISCAL YEAR 2016/17 CITY, AZUSA PUBLIC FINANCING AUTHORITY, AND SUCCESSOR AGENCY PRELIMINARY OPERATING AND CAPITAL IMPROVEMENT PLAN BUDGET REVIEW SUMMARY: The City’s annual budget is an important policy document. It serves as an annual financial plan, identifying the spending priorities for the organization. The budget is used to balance available resources with community needs, as determined by the City Council. It also serves as a tool for communicating the City’s financial strategies and for ensuring accountability. The City’s operating budget is a plan for one specified fiscal year. The fiscal year for this budget begins on July 1, 2016 and ends on June 30, 2017. Staff is presenting the preliminary draft operating budget for Fiscal Year 2016/17 (“FY 2016/17”) to allow the City Council and members of the public to review and provide input on the expenditure requests prior to the budget being finalized. BUDGET DEVELOPMENT: Per the Azusa Municipal Code, the City Manager is responsible for the development of a proposed budget for consideration by the City Council. The budget development process begins in February with a mid-year update of the current year budget and the General Fund revenue forecast, which establishes a general framework under which to develop budget guidelines for the upcoming fiscal year. The primary goals in developing the operating budget have been to ensure public safety, maintain the City’s sizeable infrastructure, and maintain core services to residents and businesses in the face of dwindling revenues. The City’s budget was developed utilizing Zero-Based Budgeting (“ZBB”). ZBB is an approach to budgeting in which each budgeted year’s activities are evaluated in a self- contained fashion, with little or no weight given to the precedents of past years. ZBB is contrasted to incremental budgeting, in which the budget justification is focused on the difference between the current year and the proposed budget year. In addition to using a ZBB approach to budgeting, the City Manager has developed the following fiscal policies to guide each department in the preparation of the Annual Operating Budget. APPROVED CITY COUNCIL SPECIAL MEETING 6/13/2016 FY 16/17 Budget Study Workshop June 13, 2016 Page 2 • Do not use “one-time money” for ongoing operations. • Budget decisions will be made as a whole in context, with no special requests considered in isolation. • The perception of funding actions, as well as the fiscal impact, will be considered before expenditures are made. • Make strategic use of volunteers, partnerships and collaborations, including with other public agencies, to meet community needs and/or provide services. • The Annual Operating Budget shall be prepared such that current revenues plus net operating transfers will be sufficient to support current expenditures. • Review options for consolidation of functions that reduce operational costs and improve efficiency. • Expenditures from all operating funds shall not exceed the budgeted appropriations (as amended) for these funds. • When capital projects are considered, all associated costs should be identified in order to properly assess future financial impacts. • Any necessary reduction in permanent positions will be accomplished first through attrition and retirements, with layoffs used only as a last resort. • Each enterprise fund should reflect the true cost of operation, including direct and indirect costs of services provided by the General Fund. • The use of reserves does not provide a viable solution to the revenue/expenditure gap. • Once adopted, the annual budget should be amended only when urgency requires, and then by identifying specific funding sources for these new priorities. Establishing the base budget involves taking the final budget from the previous year, reducing it for any one-time expenditures, and adjusting for contractual obligations in accordance with established labor agreements and other long-term contracts. Adjustments are also made for other anticipated increases in specified line items (e.g. insurance costs). The base budget is then provided to each department. Departments review their base budget and prepare augmentation requests to fund current service levels consistent with the fiscal policies referenced above and the Council’s adopted goals and objectives for the coming year. Departmental budgets are then submitted to the City Manager for review and individual meetings to discuss their budget requests for the coming fiscal year. Following these meetings a draft preliminary budget is prepared. Once the draft preliminary budget is prepared it is presented to the City Council to solicit input and obtain further direction before the budget is finalized for adoption. The proposed budget is scheduled to be adopted on June 20, 2016. GENERAL FUND BUDGET HIGHLIGHTS: Below are highlights from the Proposed FY 2016/17 General Fund Budget: • The Budget is balanced with a projected surplus of $1.2 million (excluding one-time revenues). • Tax revenues are tracking slightly higher than last fiscal year. Property tax revenues are projected to increase by 3.0% over estimated actual revenues. Sales and use taxes are projected to increase by 2.5%. • One-time revenues of $2.0M for sale of property related to Metro Gold-line. FY 16/17 Budget Study Workshop June 13, 2016 Page 3 • Best practice of budgeting for attrition/vacant position savings (-$417,140). • Includes the impacts of recent labor negotiation ($33,315). • Includes proposed personnel changes ($349,925). • LA County Fire contract increase of 4.1% ($178,683) mandated by agreement. • The uncommitted reserve fund balance is expected to increase to $5,209,200 by the end of FY 2016/17. This includes one-time revenues of $2.0 million and the projected $1.2 million surplus at fiscal year-end. DISCUSSION: The General Fund is the primary revenue source and operating fund for most of the services provided to the community, such as public safety, economic development, library services, recreation and park maintenance. Revenues Taxes continue provide the majority of General Fund revenues. Property and sales taxes comprise 38.6%, or $15.6 million of the $40.5 million in resources provided to the General Fund. As a result of higher tax revenues and one-time revenues related to property sales, FY 16/17 revenues are projected to be higher than the current FY 15/16 revised budget by $3.4 million or 9.3%. For more detail on the sources of General Fund revenues, see Table 1 below. Table 1 – General Fund Revenues Expenditures The FY 2016/17 budget includes $37.2 million in recommended expenditures. Personnel costs, which include salaries and benefits, represent 60.2% ($22.4 million) of the total expenditures. The remaining budget is comprised of operational costs, which include materials, services and supplies, capital outlays, debt service and transfers to other funds. In keeping with the Council’s highest priorities, public safety (e.g., police and fire) represents 61.2% of the General Fund budget. Overall expenditures have increased 0.02% over the FY 2015/16 revised budget. Table 2 provides further detail on the General Funds proposed expenditures by budget activity. Revenue Source Fiscal Year 15/16 Revised Budget Fiscal Year 16/17 Proposed Budget $ Change % Change % of FY 16/17 Budget Property Tax 8,927,620$ 9,847,188$ 919,568$ 10.3%24.3% Sales Tax 5,624,015 5,764,711 140,696 2.5%14.3% Utility User Tax 2,921,730 2,900,000 (21,730) -0.7%7.2% Other Taxes 8,146,115 8,496,283 350,168 4.3%21.0% Charges for Services 2,698,220 2,705,562 7,342 0.3%6.7% Cost Reimb.2,439,785 2,384,390 (55,395) -2.3%5.9% Fines & Penalties 1,160,200 1,227,050 66,850 5.8%3.0% License & Permits 2,915,230 2,964,861 49,631 1.7%7.3% Miscellaneous 466,825 2,421,900 1,955,075 418.8%6.0% Money & Property Use 1,709,345 1,740,833 31,488 1.8%4.3% Total Revenues 37,009,085$ 40,452,778$ 3,443,693$ 9.3%100.0% FY 16/17 Budget Study Workshop June 13, 2016 Page 4 Table 2 – General Fund Expenditures Capital Improvement Projects (CIP) For Fiscal Year 2016/17, Staff proposes to roll-out a 5-year CIP Plan totaling $46.0 million City- wide. Of the $46.0 million CIP plan, $32.6 million in projects are expected to be funded by non- general fund sources and $13.4 million are currently unfunded. The total proposed CIP budget for FY 2016/17 is $11.5 million City-wide, which includes $8.0 million in carryover projects. In addition to more routine capital projects, following is a short list of some of the proposed FY 16/17 projects: • Citywide street signing, striping, and curb painting • Azusa Ave street rehabilitation • Foothill Blvd/Alosta Ave traffic signal • Library auditorium renovation and restroom improvements • City Hall restroom and security improvements • Street light fixture LED retrofit A summary of the proposed City-wide budget for FY 2016/17 is attached to this report. Reserve Target One of the benchmarks used to assess the General Fund’s progress toward financial sustainability is the General Fund Reserve Policy. The proposed budget is expected to provide for an uncommitted Budget Activity Fiscal Year 15/16 Revised Budget Fiscal Year 16/17 Proposed Budget $ Change % Change % of FY 16/17 Budget City Council 127,250$ 135,525$ 8,275$ 6.5%0.5% City Clerks 435,137 629,410 194,273 44.6%1.7% City Manager 449,690 377,710 (71,980) -16.0%1.0% Neighborhood Services 197,075 177,070 (20,005) -10.2%0.5% City Attorney 250,000 250,000 - 0.0%0.7% Treasurer 202,440 203,870 1,430 0.7%0.5% Accounting 858,060 900,895 42,835 5.0%2.4% Purchasing 224,695 224,265 (430) -0.2%0.6% Printing 7,800 9,000 1,200 15.4%0.1% Citywide 2,886,290 2,512,659 (373,631) -12.9%6.7% HR-Personnel Relations 398,815 426,000 27,185 6.8%1.1% Library Services 1,041,070 1,093,270 52,200 5.0%2.9% Safety (excludes Fire Svcs)18,433,075 18,132,104 (300,971) -1.6%48.7% Economic Development 1,849,045 1,972,210 123,165 6.7%5.3% Rec & Fam Services 3,239,125 3,141,087 (98,038) -3.0%8.4% Public Works 615,880 837,950 222,070 36.1%2.3% Subtotal Expenditures 31,215,447$ 31,023,025$ (192,422)$ -0.6%83.5% Transfers Out (includes Fire Svcs)5,483,980 5,780,533 296,553 5.4%15.6% Capital Outlays 534,740 128,975 (405,765) -75.9%0.0% Personnel Requests - 311,495 311,495 0.8% Total Expenditures 37,234,167$ 37,244,028$ 9,861$ 0.0%100.0% FY 16/17 Budget Study Workshop June 13, 2016 Page 5 reserve fund balance of $5.2 million by the end of FY 2016/17, and increase of $3.2 million over FY 15/16 projected fund balance. Due to significant one-time revenues generated by property sales and positive operating results, Staff expects to be about 1% or $0.4 million from the City’s 15% reserve target (approx. $5.6 million based on FY 16/17 proposed budget). One of the property sales contributing to the increase in fund balance is the Enterprise site. Although proceeds from the $2.3 million March 2016 sale of the Enterprise site cannot be wholly recognized in the current year due to Successor Agency statues, the City will draw down a portion of those proceeds each year ($0.6 million in FY 16/17). Each draw down will help the City in meeting its General Fund reserve target. CONCLUSION: The preliminary draft operating budget for FY 2016/17 reflects the ongoing efforts of Staff to maintain service levels while achieving long-term fiscal stability. For many programs, comparisons between the proposed budget and prior-year budgets will show significant differences due to major reductions that have occurred across the organization in staffing levels and reductions in materials, services and supplies. However, at the department level, overall spending remains very close to the prior year. Over the course of the coming fiscal year, Staff will continue to explore various methods for providing services in the most cost-effective way possible, as well as examine different opportunities to address the City’s unfunded liabilities such as retiree medical, leave bank accruals and retirement costs that continue to be major impediments to achieving fiscal sustainability. Successful negotiation of six of the City’s seven bargaining groups was a major step in contributing to the aforementioned goals. Overall, the City’s fiscal picture is good -- the budget is balanced, revenues are slowly increasing, and spending remains controlled and stable. Prepared by: Reviewed and Approved: Talika M. Johnson Louie F. Lacasella Director of Finance Management Analyst Reviewed and Approved: Troy L. Butzlaff, ICMA-CM City Manager Attachment: 1) FY 2016/17 City-wide Budget Summaries FISCAL YEAR 2016-2017 PROPOSED Budget summaries Summary of Changes to Fund Balance Expenditure Summary—General Fund Expenditure Summary—All Funds Statement of Revenues by Fund Personnel Summary—Full‐Time Personnel Allocations Personnel Requests Transfers Schedule Capital Outlay/CIP CITY OF AZUSA 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 L&W119,000$ 40,000$ 71115A 119,000$ 7,000$ 112,000$ -$ -$ -$ -$ 72,800$ 39,200$ L&W 5,900,000$ 1,100,000$ 72115A 5,900,000$ 100,000$ 1,100,000$ 1,000,000$ 1,200,000$ 1,250,000$ 1,250,000$ 5,800,000$ L&W 650,000$ 650,000$ 72115B 650,000$ -$ 650,000$ -$ -$ -$ -$ 650,000$ L&W279,950$ -$ 72115C279,950$ 79,950$ 200,000$ -$ -$ -$ -$ 200,000$ L&W4,200,000$ 200,000$ 72115D4,200,000$ -$ 200,000$ 800,000$ 1,000,000$ 1,000,000$ 1,200,000$ 4,200,000$ L&W300,000$ 300,000$ 72116A300,000$ -$ 300,000$ -$ -$ -$ -$ 300,000$ L&W850,000$ 850,000$ 72116B850,000$ -$ 850,000$ -$ -$ -$ -$ 850,000$ L&W250,000$ 250,000$ 72116C250,000$ -$ 250,000$ -$ -$ -$ -$ 250,000$ L&W150,000$ -$ New150,000$ -$ 50,000$ 50,000$ 50,000$ -$ -$ 150,000$ L&W350,000$ -$ New350,000$ -$ 150,000$ 50,000$ 50,000$ 50,000$ 50,000$ 350,000$ L&W500,000$ -$ New500,000$ -$ 100,000$ 100,000$ 150,000$ 150,000$ -$ 500,000$ L&W4,050,000$ -$ New4,050,000$ -$ -$ -$ 50,000$ 4,000,000$ -$ 50,000$ 4,000,000$ L&W2,050,000$ -$ New2,050,000$ -$ -$ -$ -$ 50,000$ 2,000,000$ 50,000$ 2,000,000$ L&W500,000$ -$ New500,000$ -$ 100,000$ 100,000$ 100,000$ 100,000$ 100,000$ 500,000$ L&W5,300,000$ -$ New5,300,000$ -$ 200,000$ 100,000$ 2,000,000$ 2,000,000$ 1,000,000$ 5,300,000$ L&W300,000$ -$ New300,000$ -$ 150,000$ 150,000$ -$ -$ -$ 300,000$ L&W Parking Lot at 5th & Azusa50,000$ -$ New 50,000$ -$ 50,000$ -$ -$ -$ -$ 50,000$ L&W120,000$ -$ New120,000$ -$ 60,000$ 60,000$ -$ -$ -$ 120,000$ RFS10,000$ 10,000$ None Assigned10,000$ -$ 10,000$ -$ -$ -$ -$ 10,000$ RFS20,000$ 20,000$ None Assigned20,000$ -$ 20,000$ -$ -$ -$ -$ 20,000$ RFS91,000$ 91,000$ D6166091,000$ -$ 91,000$ -$ -$ -$ -$ 91,000$ RFS5,000$ -$ New5,000$ -$ 5,000$ -$ -$ -$ -$ 5,000$ RFS80,000$ -$ New80,000$ -$ -$ -$ 80,000$ -$ -$ 80,000$ RFS250,000$ -$ New250,000$ -$ -$ -$ -$ 250,000$ -$ 250,000$ RFS250,000$ -$ New250,000$ -$ -$ -$ -$ 250,000$ -$ 250,000$ RFS250,000$ -$ New250,000$ -$ -$ -$ -$ -$ 250,000$ 250,000$ RFS250,000$ -$ New250,000$ -$ -$ -$ -$ -$ 250,000$ 250,000$ RFS200,000$ -$ New200,000$ -$ -$ -$ -$ 200,000$ -$ 200,000$ RFS200,000$ -$ New200,000$ -$ -$ -$ 200,000$ -$ -$ 200,000$ RFS200,000$ -$ New200,000$ -$ -$ -$ -$ 200,000$ -$ 200,000$ RFS55,000$ -$ New55,000$ -$ 55,000$ -$ -$ -$ -$ 55,000$ RFS60,000$ -$ New60,000$ -$ 60,000$ -$ -$ -$ -$ 45,000$ 15,000$ RFS20,000$ -$ New20,000$ -$ -$ 20,000$ -$ -$ -$ 20,000$ RFS385,000$ -$ New385,000$ -$ -$ -$ -$ -$ 385,000$ 385,000$ RFS30,000$ -$ New30,000$ -$ 30,000$ -$ -$ -$ -$ 15,000$ 15,000$ RFS30,000$ -$ New30,000$ -$ -$ -$ 30,000$ -$ -$ 10,000$ 20,000$ RFS12,000$ -$ New12,000$ -$ 12,000$ -$ -$ -$ -$ 12,000$ LIB10,000$ 10,000$ 51116A10,000$ -$ 10,000$ -$ -$ -$ -$ 10,000$ LIB100,000$ -$ New100,000$ -$ 100,000$ -$ -$ -$ -$ 100,000$ LIB40,000$ -$ New40,000$ -$ 40,000$ -$ -$ -$ -$ 40,000$ PD50,000$ -$ New50,000$ -$ -$ -$ -$ -$ 50,000$ 50,000$ PD16,000$ -$ New16,000$ -$ -$ -$ -$ -$ 16,000$ 16,000$ PD38,000$ -$ New38,000$ -$ -$ -$ -$ -$ 38,000$ 38,000$ PD63,780$ -$ New63,780$ -$ -$ -$ -$ -$ 63,780$ 63,780$ PD12,000$ -$ New12,000$ -$ 12,000$ -$ -$ -$ -$ 12,000$ PD10,000$ -$ New10,000$ -$ -$ 10,000$ -$ -$ -$ 10,000$ PD180,000$ -$ New180,000$ -$ -$ -$ -$ -$ 180,000$ 180,000$ PD20,000$ -$ New20,000$ -$ -$ 20,000$ -$ -$ -$ 20,000$ PD10,000$ -$ New10,000$ -$ -$ -$ -$ -$ 10,000$ 10,000$ PD25,000$ -$ New25,000$ -$ 25,000$ -$ -$ -$ -$ 25,000$ PW7,154,690$ 442,520$ 65316A/B7,154,690$ 6,712,170$ 442,520$ -$ -$ -$ -$ 442,520$ PW271,480$ 271,480$ 66115A271,480$ -$ 271,480$ -$ -$ -$ -$ 24,680$ 246,800$ PW126,500$ 17,800$ 66215126,500$ 108,700$ 17,800$ -$ -$ -$ -$ 17,800$ PW1,008,490$ 949,850$ 66115B/C1,008,490$ 58,630$ 949,860$ -$ -$ -$ -$ 474,930$ 474,930$ PW527,450$ 527,450$ 66113B/66116D 527,450$ -$ 527,450$ -$ -$ -$ -$ 80,000$ 87,490$ 359,960$ PW289,920$ 275,000$ 66114A289,920$ 14,920$ 275,000$ -$ -$ -$ -$ 275,000$ PW79,000$ 75,000$ 66515A79,000$ 4,000$ 75,000$ -$ -$ -$ -$ 75,000$ PW225,000$ 225,000$ 66616A225,000$ -$ 225,000$ -$ -$ -$ -$ 25,000$ 200,000$ PW1,020,000$ 1,020,000$ 1,020,000$ -$ 1,020,000$ -$ -$ -$ -$ 1,020,000$ PW660,000$ 660,000$ 66116B660,000$ -$ 660,000$ -$ -$ -$ -$ 660,000$ PW50,000$ 27,750$ 66116F50,000$ 22,250$ 27,750$ -$ -$ -$ -$ 27,750$ PW92,320$ -$ New92,320$ -$ 92,320$ -$ -$ -$ -$ 92,320$ PW350,000$ -$ New350,000$ -$ 350,000$ -$ -$ -$ -$ 132,500$ 130,000$ 87,500$ PW5,845,820$ -$ New5,845,820$ -$ 472,000$ 5,373,820$ -$ -$ -$ 5,845,820$ PW4,930,010$ -$ New4,930,010$ -$ 730,010$ 1,050,000$ 1,050,000$ 1,050,000$ 1,050,000$ 300,000$ 288,330$ 141,680$ 4,200,000$ PW100,000$ -$ New100,000$ -$ 100,000$ -$ -$ -$ -$ 100,000$ PW50,000$ -$ New50,000$ -$ 50,000$ -$ -$ -$ -$ 50,000$ PW150,000$ -$ New150,000$ -$ 150,000$ -$ -$ -$ -$ 150,000$ PW620,000$ -$ New620,000$ -$ -$ 220,000$ 200,000$ 200,000$ -$ 580,000$ 40,000$ PW23,050$ -$ New23,050$ -$ 23,050$ 23,050$ PW600,000$ -$ New600,000$ -$ 50,000$ 250,000$ 100,000$ 100,000$ 100,000$ 50,000$ 550,000$ 53,065,460$ -$ 8,012,850$ 53,065,460$ 7,107,620$ 11,501,240$ 9,353,820$ 6,260,000$ 10,850,000$ 7,992,780$ 1,639,930$ 580,000$ 375,820$ 132,500$ 1,065,000$ 313,320$ 40,000$ 13,422,800$ 6,309,200$ 37,000$ 125,000$ 115,000$ 40,000$ 8,349,490$ 13,412,780$ Parking Structure Iconic AInstallation of Flashing Beacons IrwindaleAB 939Sewer Fund 34Prop A Fund 15Pedestrian Accessiblity StudyBus Stop ImprovementsCitywide Street Signing, Striping, Curb PaintingSierra Madre Street ImprovementsFoothill Blvd/Dalton Ave Traffic SignalTraffic Management SystemPavement Management Program ImprovementsTraffic Signal Retroreflectivity Mgmt ProgramSewer System Mgmt Plan UpdateFoothill Blvd/Palm Drive Traffic SignalAlosta Avenue SubdrainCity Hall Security & ADA ImprovementsAlosta Avenue Street ImprovementsADA ImprovementsIntermodal Transit CenterSafe Routes to School - ParamountSanta Fe Depot RehabilitationFoothill Blvd/Alosta Avenue Traffic SignalAzusa Avenue Street RehabilitationGun RackGym HVACFY 2017-18 Budget RequestBuilding Exterior PaintingCarpetBuilding Interior PaintingParking Lot Asphalt - Scout HallElectric Substation Facility ImprovementsDining Room Painting - Senior CenterFencing ProjectRestroom Remodel (VPK)W-265B Transmission under Bid Dalton WashUG Line Replacements & ExtensionsBlending Pipe to Heck ReservoirWater Asset Management ToolWell Rehabilitation ProgramWater Treatment Plant ImprovementsSouth TankSecurity Fence - Scout HallSecurity CamerasFive Year Capital Improvement Program (CIP) Budget SummaryFY 2016-17 Thru 2020-21FUNDING SOURCEDept Project TitleTOTAL ESTIMATED PROJECT COSTSFY15-16 Projected Available Ending Fund BalanceCARRY OVER FROM PRIOR YEARSCARRY OVER PROJECT #sGrants/ Other UnfundedRosedale Contrib 6Budget Appropriation (Cumulative Life to Date) Thru Current Fiscal YearFY 2016-17 Budget RequestFY 2018-19 Budget RequestFY 2019-20 Budget RequestEnergy Efficiency Fund 24Water Fund 32Prop C Fund 17Measure R Fund 3Utility Mitigation Fund 13PW Endow Fund 49FY 2020-21 Budget RequestWater Main ReplacementsSGVMWD Direct Connection to WTPWater SCADA InfrastructureReservoir Rehabilitation ProgramEngineering Water Replacement PS&EWater Transmission Lining Project CypressPrior Year ExpenditureLight & Water Lobby RemodelElectric Fund 33STPL Fund 16CDBG Fund 18TotalsTodd & 10th St Electric Line Ext/EquipStreet Light Fixture LED RetrofitGreenfield Exercise Equip MPKPicnic Shelter Edwards ParkShade Shelter Park and Pool SlausonGreenfield Exercise Equip Pioneer ParkReplace Windscreen at MPK-NWADA Restroom - Gladstone Park NorthWrought Iron Fencing Pioneer ParkBallfield Lighting Pole Painting Gladstone ParkAuditorium RenovationPublic Restroom RemodelLighting ProjectResurface Athletic Courts (NPK,SPK,MPK,GPK)ADA Restroom - Gladstone Park SouthADA Restroom - Northside Park NorthADA Restroom - Northside Park SouthNew Playground Equip/Shade Cover PPKNew Playground Equip/Shade Cover MPKNew Playground Equip/Shade Cover VPKCarpet Replacement - Senior CenterRecords Security Barriers/OfficeParking Lot Gates30