A look at city worker, council member pay

A hot topic at most City Council meetings is how to cut expenses so the city can match expenditures with revenues for the new budget year beginning July 1 and not be forced to dip--or dip too deeply--into the city’s $38.8 million “available for use” reserve fund.

So far, council actions range from large--examining options for police services to trim the cost of the city’s largest annual expense, close to $12 million for public safety--to small--seeking donations from residents and businesses to help pay for July 4 fireworks.

But one area involving significant outlays--salaries and benefits for 92 city employees--won’t see further cuts for a 15-month period that began July 1, 2011, and runs through Sept. 30, 2012, according to new pay resolutions adopted at an April 3 council session.

Major cuts in employee expenses were taken in the 2009-10 fiscal year, and extended each year since, including no salary increases, pay-for-performance bonuses, vacation buybacks plus a 4.7 percent pay cut due to an eight-day furlough program.

The last increase for city workers was a “cafeteria plan” boost from $833 to $945 per month “first to pay health insurance premiums” with “any residual amount...received as cash or applied to the employee’s deferred compensation,” effective Jan. 1, 2011.

Per month salaries for six management employees range from $9,867 to $16,600, for 20 mid-management $4,472 to $11,241 and for 66 miscellaneous workers $2,602 to $6,645. Life, dental and vision premiums are city-paid.

Despite talk last summer that retirement plan changes were being negotiated, the contract is the same as in previous years, including the city paying each employee’s seven percent portion to CalPERS, with the amounts reported as compensation for tax purposes.

In a related matter, I sent my annual e-mail to Finance Director Dave Christian for an update on council member compensation. His response is more complete and detailed than information currently on the city website.

Members took a dip in pay on Feb. 1, when the state disbanded the city’s Redevelopment Agency. Losing $30 pay for agency meetings--held concurrent with council sessions--cut monthly salaries to $500 from $560. They also get a $36 monthly cell phone allowance.

The $60 drop reduces by $5.02 the monthly amount the city pays to CalPERS as a contribution for retirement. The new total is $104.85 monthly for each participant, excluding Jim Winder, already retired.

They are eligible for the same “cafeteria plan” benefit as full-time employees. Nancy Rikel and Winder take $945 monthly, with Rikel applying $459 to health and $486 to deferred compensation and Winder $945 to deferred compensation; John Anderson, Tom Lindsey and Mark Schwing take $833 in deferred compensation (all in a 401k-type plan).

Members also qualify for the city’s self-insured dental and vision benefits “as needed,” with the city paying a $9.20 monthly fee each. Based on marital and dependent status, the city also pays, monthly, $21.45 each for Anderson and Lindsey, $14.30 for Schwing and Winder and $6.77 for Rikel.

Affordable housing will impact school districts

One of many issues raised by residents—especially those with current and future school-age children—concerning the construction of low-cost, multi-family housing units is the impact on enrollment at local campuses.

The City Council, as required by a state-imposed mandate, has identified 14 sites totaling nearly 54 acres for possible low-cost housing, which, if fully developed, would add 1,027 affordable units to the city’s housing stock.

Eleven of the sites are listed in two measures on the June 5 primary ballot for voters to say “yes” or “no” on zoning increases to 10, 20 and 30 units per acre. If both pass, the allowed housing units would total 950, should developers build to the maximums.

Three of the sites, eyed for 77 units on nearly eight acres, are not on the ballot, since their potential densities don’t require a public vote under a 2006 voter-approved city ordinance

Of the 14 sites, 12 are on the city’s westside and are served by the Placentia-Yorba Linda Unified School District. If Measure I, which includes nine of the 12 sites, is approved, up to 847 westside units could be added to the areas feeding into PYLUSD campuses.

The two other sites, totaling six acres that could allow up to 180 units in Savi Ranch, are listed in a separate Measure H and are within Orange Unified School District boundaries.

A total of 404 students would be generated for the Placentia-Yorba Linda and Orange school districts, if the14 sites are developed to maximum capacity as identified by the council, according to a 64-page environmental report viewed by the council in October.

The breakdown: 28 elementary, 5 middle and 8 high school students to the Orange district from the two Savi Ranch sites and 164 elementary, 94 middle and 106 high school students to the Placentia-Yorba Linda district from the 12 westside properties.

“Various schools serving the 14 sites for multifamily residential uses are currently operating over capacity. Consequently, the addition of any student to these schools or districts would result in significant impacts to schools,” the report stated.

However, the payment of school impact fees by developers to districts will “fully mitigate the impact…on local schools from multifamily residential development,” noted the report, compiled by a team of city-hired consultants.

The fees, which include charges on all new residential and commercial development that impacts school enrollments, will be going up next month, based on the unanimous action taken by Placentia-Yorba Linda’s five elected trustees at a March 27 meeting.

Right now, the fees paid by developers for new construction are $2.97 per square foot of assessable space for residential development and 47 cents per square foot of “chargeable” space for commercial and industrial development.

The new fees, per square foot of assessable or chargeable space: $3.05 single-family, $3.20 multifamily, 51 cents senior housing, 35.5 cents retail services, 51 cents offices, 48.3 cents research and development, 42.6 cents industrial/warehouse/manufacturing, 44.3 cents hospital and 1.8 cents hotel/motel.

City officials support higher housing densities

Some city officials—including the city attorney and four of five City Council members—are warning of dire consequences if voters turn down two measures on the June 5 primary ballot that would increase densities to allow possible low-cost, multi-family housing units.

The warnings are included in City Attorney Todd Litfin’s “impartial analysis” of Measures H and I and in arguments favoring the measures. Council members John Anderson, Tom Lindsey and Jim Winder signed both arguments, while Nancy Rikel signed one argument.

Mailing of the analysis and arguments to this city’s registered voters—numbering 43,331 as of April 4—will begin April 26 and end by a May 26 deadline, the county Registrar of Voters announced. Last day to register to vote is May 21.

According to Litfin’s analysis, if the measures fail, “[T]he city could potentially be more susceptible to legal challenges alleging that the city is in violation of state housing laws.”

Litfin further stated, “If the city were to lose such a lawsuit, the city could suffer severe legal ramifications including but not limited to court ordered compliance with state law, the suspension of the city’s power to issue building permits or other land use approvals, judicial control of housing project approvals and potential payment of attorney fees.”

Measure H will change zoning on two Savi Ranch properties to allow up to 30 units per acre and heights of 50 feet or four stories, whichever is less. However, the argument for H states the developer has agreed to build no more than 21.6 units per acre.

Measure I will change zoning on nine west-side properties to allow 10 units per acre on three sites, 20 units per acre on two sites (with heights to 35 feet or two stories, plus one-half story for underground parking) and 30 units per acre on four sites (heights to 50 feet).

Litfin’s analysis doesn’t mention the acreage of each property or the total number of units allowed if each measure passes, but based on other city reports, my calculations show that the west-side parcels total nearly 40 acres and could support 770 units and the Savi Ranch parcels total six acres and could support 180 units, although around 130 are planned.

But Litfin does note the measures don’t “require that property owners construct such housing on the identified sites.” They “merely” allow “such housing to potentially be built. Whether the property is or is not developed is up to the property owner.”

The four council members who signed the argument favoring H claimed the state “could penalize the city and implement their own housing plan without our community’s input,” with the city facing lawsuits and “spending millions on attorneys and settlement fees….”

The three council members who signed the argument favoring I stated that passage could “prevent a losing, costly legal battle.” They noted that 24 cities and counties “have spent millions fighting the state-imposed mandates and all have lost.”

Council set aside $45,000 to educate voters about the measures, so expect mailers and public meetings to often stress these calamitous consequences.

Mostly bad news for new budget outlook

With a majority of City Council seats at stake in the Nov. 6 election, expect large doses of politics in upcoming weeks to impact decisions on municipal issues, including police services, higher densities for low-cost housing and a new budget to take effect July 1.

This week, let’s take a look at the city’s budget troubles for the 2012-13 fiscal year, since already the five council incumbents are wrestling with efforts to put into place a spending plan that preserves a $38 million pile of cash saved from better economic times.

First, the bad news: one large revenue stream--lease payments for a 32-acre city-owned site for a planned Friends Christian High School--is in danger. School officials missed the January payment, which was rolled over so that two payments came due this month.

March went by without school officials returning to the council with proposed changes in lease terms that they said would allow them to obtain the additional cash from donors and financial institutions needed to pay for the ground lease as well as construction costs.

Total payments to the city January through June this year was to be $420,000, with $840,000, plus a consumer price index increase, due during the 2012-13 fiscal year.

Another uncertainty is whether the council, as successor body to the Redevelopment Agency, “will be able to continue contributing for the salaries and benefits of city employees performing work related to the former agency....” a city report stated.

These costs are estimated at $355,000 for February through June this year, with more than $860,000 projected for 2012-13. In past years, the amounts were paid from cash collected by the Redevelopment Agency from increased project area property taxes.

The potential shortfalls, $775,000 this fiscal year and $1.7 million next year, are in addition to an estimated $1.2 million in general fund dollars needed to supplement revenue collected through the citywide arterial landscape district for ongoing costs.

Also this fiscal year, the city will pay $80,000 more than anticipated for claims and judgments and $220,000 to handle an increased number of lawsuits against the city.

Second, the good news: the city’s general fund ended the 2010-11 fiscal year better than expected, spending only $1.1 million instead of an anticipated $1.4 million from reserves.

By June 30, the city expects to spend $2.5 million more from reserves, leaving a projected $38.8 million “available for use,” about 139 percent of the city’s annual operating expense.

Meanwhile, for the first six months of the current fiscal year, the city’s two largest income sources--property tax and sales tax revenues--met projections, according to figures offered at a March 20 council meeting by Finance Director Dave Christian.

Finally, council turned down potential income by refusing to sign a “snitch” agreement with the state Franchise Tax Board allowing a city-state exchange of names of business license holders and names of businesses filing tax returns, which could have increased city revenue by identifying scofflaws who dodge city business license fees.