elcome thank you good afternoon mayor brenner and city council members elissa kroger housing program manager with monterey bay economics partnership calling in today to express our strong support for requests to prepare an impact study of the our downtown our future ballot initiative and require an accurate depiction of the facts framing the issues put forth by the initiative if it qualifies our housing initiative supports projects that reflect high quality design higher density housing serving all income levels and inappropriate locations near jobs and other amenities projects like the downtown library affordable housing project odos initiative if passed would terminate the proposed downtown library affordable housing project along with the difficult to secure grant funding associated with this project effectively halting 125 affordable units already in the pipeline that would assist the city in reaching its increased six cycle arena targets of 3736 new units by 2030 and would keep a green space modern library with resources for all a child care facility and a parking component that includes up to 315 public spaces none of which are intended for the proposed affordable housing units and which consolidates current surface parking lots resulting in an overall decrease in parking spaces and downtown Santa Cruz from benefiting the greater community it is paramount especially in the face of our local housing affordability crisis that a thoughtful analysis of the odos initiatives impacts be thoroughly studied and presented to the public to address any potential for misinformation and encourage informed decision-making at the polls thank you for your leadership and addressing the potential impacts of this far-reaching affordable housing issue as it relates to the odos ballot initiative thank you for your comment our next member of the public is kyle kelly now i'm here bruner and council members this is kyle kelly i'm in support of conducting a study on the effect of the our downtown our future initiative i'm in full support of the expanded library space affordable housing child care and public open space that come together to form the library mixed use project additionally i do support a permanent home for the farmers market on lot seven i'm ready to bike walk and roll to the new farmers market market location i welcome neighbors to their new homes above the library as a supporter of the library mixed use project that was watched to become a better and better project through years of community input i would like to have the honest truth about a measure that allocates zero funding while throwing away years of work and advocacy as part of the study i asked you to determine how much additional time families will have to wait for their chance to live in affordable apartments downtown if this measure were to pass this should include how many evictions increases in rent and the overall exacerbation of homelessness will be expected if these 100 plus homes are stopped and housing advocates know that if the library mixed use project is stopped it will affect not just the 100 plus families that move into their new homes people that move out are making room for someone else to move in right you're looking at not just those 100 families but everybody else is able to basically move in a new housing is as as people move into affordable housing right stopping the library housing project now is telling hundreds or even thousands of families to wait their turn please support conducting the study and reaffirm your support for building housing a library and childcare now on lot four thank you for your comment our next member of the public is reggie mysir welcome hi i just want to take this opportunity to sort of note how interesting is that we have yinbi supporters coming on to comment on this ordinance but not on the empty home tax which they supposedly endorsed just recently um i find it really disingenuous or the santa cruz yinbi group to endorse ordinances that they put no actual energy or support behind and then kind of you know endorse candidates for district three supervisor race let's say that are against said ordinances so i just wanted to sort of bring out that sort of discrepancy to the public about what santa cruz yinbi says they support and what they actually do thank you okay that looks like that concludes our public comment at this time i will bring it back to council and our agenda um and does anyone want to make a motion we can further discussion vice mayor wattkins i see council member calentari johnson who brought this item forward are you interested in making the motion if so i'm happy to say sure i'd like to make the mention thank you vice mayor wattkins okay we have a motion by council member calentari johnson and a second by vice mayor wattkins okay and now a discussion uh city clerk bunny bush thank you i just want to confirm um because the agenda report as we brought forward had a date of June 28th for the report back i just want to confirm yes making that a little bit later we need to make it later yeah we could uh sorry mayor and council and perhaps uh council member calentari johnson might want to make a tweet to the motion but uh we would ask for um time to develop that study to bring it back no later than July 20th which would be approximately 30 days from the council's expected certification of the petition as the maker of the motion want to amend that date in the recommendation sure would you like me to read the motion i realize i didn't do that yes thank you okay so um motion to order an impact report pursuant to california election code section nine two one two and as described here in related to our downtown our future initiative petition with the report to come to council no later than July 28th 2022 okay and is the seconder okay with that okay uh city attorney did you have any comment no okay um okay thank you so we have that motion on the table um council member brown and then council member comings thank you mayor um yeah so i i just wanted to say that i i also support moving forward with this uh analysis and in in the spirit of ensuring that it is an impartial analysis i would hope as we discussed with the previous item that um members of the community and in in particular uh representatives of the our downtown our future campaign be consulted in that process um you know i unfortunately because we in our community have we have trouble and i don't think this is particular to Santa Cruz but as we engage in in politics um having conversations with each other and it often feels like um you know people feel like their voices aren't being heard um this is i think part of the the challenge that we face and part of the reason we are here today with this initiative coming forward um and uh so i would like to make um i'll i'll attempt to make a friendly amendment here to um ask that uh the consultants you know in the spirit of impartial analysis include um our downtown our future representatives in the conversation as part of their analysis i'm happy to uh include that as a friendly amendment thank you okay all right so in the seconder of the motion great so we have a friendly amendment to include in the spirit of impartial analysis the consultants of our downtown our future okay city clerk did you get that i did thank you all right uh councilmember Cummings thank you mayor yeah um i just want to express um my support as well for the impact report um i mean it's it's pretty clear that there's gonna be some financial impacts if we deviate from the direction we've been heading just because we've been spending money on um architects kind of designs and so you know if we shift it away from this right now it's it's clear that there's gonna be financial impacts um so i guess you know and i guess that actually leads me to a question is part of this analysis gonna really look at you know the overall should the measure pass the overall impacts on all the different pieces of the ordinance or is this specifically focusing on um the library i'm here i'm gonna attempt to i can attempt to respond to that real briefly i appreciate that the question councilmember Cummings you'll note in the staff report that we included um a detailed range of potential impacts associated with the various proposals set forth uh in the initiative so the the hope here is we can get a full comprehensive understanding of the potential impacts related to the proposal both financial but land use as well as the project as well how the project stacks up with remaining in its current location versus the the current path that we are headed down in addition to applications that could have on the farmers market as well as housing generation of the downtown and an overall downtown economic development as well so we tried to put together a fairly robust set of impacts to be studied acknowledging that this is a fairly complex proposal and wanting the council and the community to have the benefit of understanding what the potential impacts would be yeah i just wanted to make sure that that was clear to the community because there's a lot of potential impacts and you know being gonna be good for us to see what those will be and i know for some community members it's going to be at a shock and they're going to be opposed to it and for some community members they might actually want to you know they might think it's a good use of tax dollars so um so yeah again just hoping that you can have a very impartial um an unbiased process and just encourage us to have that process clearly laid out um along with who was engaged with how many meetings were had the how the analysis came about just so that um we're reducing the potential for um for bias and also so that we are being transparent most importantly with the community on how this process that was carried out great thank you there any further council member comments or discussion if not we'll move to a roll call vote on this item okay uh city clerk we can have a roll call vote please council member is calentary johnson hi boulder hi council member meyer the absent um vice mayor wadkins and mayor bernard hi that motion passes six in favor one absent council member meyers thank you um okay so at this time we will recess for a food break dinner break and we will return at five fifteen for oral communications and um our budget hearing presentations so i will see everybody at five fifteen thank you oh council member brown mayor bernard i'm i'm just wondering is it possible i know we have budget hearings tonight and tomorrow um what departments will be up this evening or will we be doing an overview i'm just trying to get a sense of where to focus my next hour in our big binder yeah so um city manager matt puffer i believe it's library and water right so this afternoon thanks for the question council member brown we plan on starting off with a budget overview that'll be followed by uh library finance human resources information technology and water which will then be followed by an opportunity for public input so we're hoping to cover our afternoon session thank you and we will continue our meeting welcome back is the city clerk ready i am thank you okay thank you all right good evening welcome to our five fifteen p.m session of the may 24th 2022 meeting of the santa cruz city council and i would like to ask the first please call roll thank you ma'am oh my gosh thank you mayor council members calentary johnson president boulder president coming member coming just currently absent brown council member meyer his absent okay vice mayor watkins here and mayor brunner president thank you our agenda is oral communications oral communications is an opportunity for members of the community to speak to us on items that are not on the agenda for members of the public who are streaming this meeting if you wish to comment during oral communications now is the time to call in instructions should be on your screen oral communications is an opportunity for members of the community to speak to us on items not listed on today's agenda if you are interested in addressing the council raise your hand either by dialing star nine on your phone or selecting raise hand in the webinar controls of your computer you will have three minutes to speak please remember this is a time for council to hear from the public in this format we are not able to engage in dialogue with each member of the public but when we are able we will address the questions raised after oral communications has completed i will now go out to our attendees and look for any hands raised and i see a hand ending phone number ending in 1999 go ahead and press star six to unmute yourself welcome good evening my name is james ewing wittman let's see just what's coming next i just wrote something and read it back to myself i'm just going to say it in october 2024 cosmological alignment not experienced since 79 day ad is stated to be happening i.e a mud flood fast changing the subject vast amounts of study in regards to the sun of a clock cycle based upon thousands of core samples around planet earth where in just the last 200,000 years an average has been made of 12,068 years this is a naturally occurring ice age the last one 12,500 years ago was the younger drive this ice age doesn't occur in months it's some people you know it could occur in hours imagine 1,000 feet of ocean evaporating that will cause an ice age but but but we have world famous i use the word idiots that are sharing that carbon dioxide is an issue where in fact 400 parts per million which is what we're currently at now is the lowest it's been in two million years so what makes planet earth healthy it's carbon dioxide now i'm just going to go through some other stuff um you know there are a great deal of carbon that's being used it's being used to track our food it's called graphene oxide it's one of the adjuvants that's in these vaccines now you guys are are being cautious but are you really being as logical as you could be let's use the example of if the cornholio virus was really so deadly why haven't all the homeless people died in the past two and a half years i think that you guys would uh would market that as well so i have a lot of questions going on and it seems like for whatever reason what steiner wrote about the soul of man was going to be removed through vaccines is happening vaccines and frequencies he wrote that in two in 1917 so i have a lot of compassion for the things that i keep hearing um but i find it kind of annoying can i be told how much time i have left i forgot my timer 45 i know if i'm still on the phone 45 seconds 39 seconds you know what i have a lot of questions i am reminded of the beautiful conversation i had with police chief andy mills on january 24th 2020 where after like a 30 minute one-on-one conversation i looked out his windows of his office and i said you know i was going to rent a garage there but i don't think that's the best part of town but wow what a bunch of chemtrails today and he said you know i'm not worried about that there's a lot of things that could be talked about that jurisdictions like this are not talking about thank you very much okay our next member of the public for oral communications is the name brian shield hi there welcome hello and uh thank you for thank you for spending your time tonight um good evening mayor and council members my name is brian shields i'm an organizer for carpenter's local 505 that covers Santa Cruz tonight i want to speak to you about the need for labor standards standards that would secure the working class's place here in Santa Cruz as everything continues to increase in price as we know apprenticeship healthcare local hire and livable wage should be the template developers need to approach Santa Cruz by i would like to express to you that without such standards the construction force is systematically abused through wage theft 1099 where workers have no workers compensation when heard on the job and a litany of safety violations the language that should become policy here in Santa Cruz would support responsible contractors that are already doing the right thing by their clients environments and employees these responsible contractors have proven time after time that they can perform to the highest standards the policy would bolster the working class and cultivate responsible markets for good contractors this would be the creation of a floor a minimum bar set for developers that are coming into Santa Cruz saying value our citizens as you build on our land i would very much like to have a real conversation a valued conversation with each and every one of you to answer questions that you might have about labor violations that i have seen and what the standards might look like before i go let me leave you with this question how can you as city council members better support and guard the working women and men of beautiful Santa Cruz and thank you very much for your time thank you our next member of the public for oral communications is phone number ending in 8157 press star six to unmute yourself good evening my name is john hall and the co-chair of our downtown our future i'm not sure whether the consent agenda item number 22 was pulled to be discussed if it was i would wait until it comes on to the agenda to talk otherwise i'd like to speak now this is for any at oral communications for anything not on today's agenda all right but i guess my question is has item 22 been discussed or not we are currently on item oral communications and then going into item 23 i see so you've already talked about i am 22 the odor of our downtown our future consultant that item has passed okay all right well i would still like a i can't comment on it except in public comment given it was on the consent agenda so i just like to say that our downtown our future would look forward to working with the city within its planning framework as it's implemented if our measure passes we do endorse the motion for a consultant to conduct an impact assessment of our downtown our future's measure and we encourage the city to search for a consultant of the highest competence and one that can provide a completely objective and unbiased analysis as a policy analysts will know analyses concerning future events and their impacts have to be based on information that can never be complete or absolute given unknown developments and unanticipated events we therefore urge that the consultant be tasked with reporting its range of confidence in its analytic conclusions as well as the degree of certainty concerning predicted events and finally i'd like to raise the issue of scoping both our downtown our future's measure and the lot four mixed use library parking structure housing proposal contain potential costs and potential benefits uh each alternative thus should be analyzed in these terms as the staff report indicates the consultant's analysis needs to incorporate comparison not only to the status quo but to the present plans for downtown so we anticipate that a thorough consultants report would include analyses of a number of issues that we have identified in our letter that i submitted to the city council and the mayor yesterday i would appreciate it if you would attend to that and forward those requests for the report to include those analyses for the public's benefit as well and we look forward to working with and hope that both the consultant and city staff will consult with our downtown our future during the period of the consultants work on its report thanks very much to all of you we appreciate your time okay our next member of the public um and this is oral communications um and then we will have item 23 on our agenda after oral communications so oral communications is a time to comment on anything that is not on today's agenda rob daryl is santa cruz pride welcome thank you mayor brunner and members of the city council first i want to thank you for the proclamation declaring june 2022 is lgbtq plus pride month hopefully i'll get a copy of that and i can put it on our website um as you may or may not know the first santa cruz pride event in santa cruz county was in 1975 the third such event in the state of california after san francisco and los angeles that year the santa cruz pride organizers organized the first day pride week in june of that year most of those activities were in salamence a park i'm here today to invite you to be part of santa cruz pride and the santa cruz pride parade this year which will be on june 5th and downtown santa cruz in particular if you'd like to be in the parade please let anybody uh let me know and i'll make sure that you can be included in the parade um in addition i want to just commend the city parks and recreation department for guiding us in the organization and the permitting of the pride parade and festival they have been helpful in our planning and quick to respond finally in 2025 will be our 50th anniversary of santa cruz pride and we look forward to working with the future council members to make that 50th anniversary a big celebration across the county more than anything i want to thank all of you for the work you do to make the city of santa cruz one of the most inclusive cities for lgbtq plus people in the nation thank you thank you our next member of the public is marie bunch hello city council members my name is marie bunch i'm a seventh grader from tier pacific at charter schools and a youth representative of friday night live santa cruz city schools chapter tonight i would like to share with you our project that's focused on tobacco waste as well as my personal experience and perspective of how tobacco waste affects our community i've lived in santa cruz my whole life and seen trash and especially cigarette litter and not just my community but the larger santa cruz county has made me disappointed and frustrated over 4.5 trillion cigarette butts are littered worldwide but are also the number one littered item found on california roads and our beautiful beaches in marge of this year five fnl youth collected over a thousand cigarette butts around downtown santa cruz and over 300 butts around the beach boardwalk in just one hour even though smoking is in both of these locations it's amazing how large these numbers are it makes me think about the impact on fish and other marine animals because cigarette waste is not only disgusting to look at but also has a huge impact on the animals living here and human health cigarettes contain things like arsenic hydrogen cyanide sulfuric acid tar and many more incredibly harmful chemicals when cigarettes are littered these chemicals make their way into our waterways soil and oceans harming our plants and ecosystems santa cruz is such a beautiful place with so much wildlife and it's home to many different animal habitats seeing all that harm by cigarette litter makes me inspired to advocate for policy change to make a turn for the better as i expected other people care about this issue as well i've been able to go to events like the sea morse under earth day event to share our concerns and the community response has been overwhelmingly positive we've collected over 64 signatures from residents of the city the degree that they support a policy solution to mitigate the impacts of tobacco waste in the city of santa cruz f&l youth want to thank you for recognizing tobacco waste as a public health environmental threat and for your commitment to prioritize it in an upcoming agenda we ask that you continue to prioritize next steps to identify a policy solution they'll mitigate the impact of tobacco waste in the city of santa cruz and keep our community and wildlife safe thank you thank you our next member of the public is nico marino vick hi um i'm uh f&l youth representatives like the person before me and i'm here to give a little speech on my uh the project that we just did um this year the santa cruz city schools friday night live f&l chapter has taken a specific interest in tobacco waste we dedicated our time to understanding the impacts of tobacco waste designing a project to educate our peers and community on this issue and are passionate about reducing tobacco waste in the city of santa cruz we wish to commend you for your council resolution in april of 2021 recognizing tobacco waste as a public health and environmental threat to the people of the city and we recently unanimously voted to put tobacco waste on the agenda in an upcoming city council meeting no later than august we thank you for your leadership we support you in these efforts and we look forward to the adoption of policy as a best practice solution to addressing tobacco waste through our research we have learned that tobacco waste is the serious public health and environmental justice issue secret butts are the number one littered item on the plan this has been the case for the last 35 years furthermore they are the number one littered item on california roads and our beautiful beaches that are special to our county over 2.5 million adults in california smoke cigarettes in 2019 which is roughly 10 of the population over 40 000 adults die of tobacco related illnesses every year but that's not all in 2019 37 of all us high school students reported using some kind of tobacco product the city council has shown its commitment to creating a community where young people can thrive in a healthy environment we ask you to continue prioritizing and protecting youth in our natural environment from toxic waste produced by tobacco products as you take action on this important health issue thank you for your time thank you our next member of the public is i am watching you yes thank you i am perplexed considering the wad of amoola jackola per homeless individual being committed to a new welfare program lately that i would be surprised if better even if small private sector capitalist innovative partnership solutions couldn't exist why do only the so-called non-profit homeless industrial complexes and the government get to blow all this money mostly on themselves for starters to cost per person to supervise house and feed one person at the armory i calculated is at least 26 30 a month while i can't say i personally would be interested in renting and providing for a few subsidized homeless people let's say in a backyard backyard adu i could afford to build because my girlfriend would disown and dismember me but if my situation was different or in general a suitable potential adu property was under a five-year rental contract when built to the city to rent to the benefit of two or three homeless individuals at anything like those per person armory rates two people for a year being 64 000 three people being 96 000 i have to believe there are select investor landlord providers that would be oh yeah very interested even if it meant some supervision stocking food and paying utilities it could also be catalytic housing not sleeping on the floor at the same price as the army including a mailing address food showers bathroom heat and perhaps laundry try a pilot program to see what happens offered only to landlord investors willing to build a new adu and participate for five years to spur building more housing the agreement could be tricky needs definitions not for everyone but there's nothing quite big cash only to spur new housing investment and house homeless at the same time as those money gushing rates i would guess there are landlord investors who would take even less than armory rates of housing three people the city would be responsible to fill the vacancies allow reports big reports vacancies that the city was possible to replace problem tenants the entire contract is between the city and the landlord with ample landlord protections and insurance i doubt we'd run out of homeless candidates if such a rental market existed it could spur and target new adu construction considering adu would be paid off in dang short order as a great investment yes i suppose such a program could be problematic with drug addicts these mainly all aggressive types and those who don't respect private property but considering they're doing this promising homeless people who would respect what a great opportunity it is for them and the city would be obligated to send them back to the shoulders of streets if they cause problems eventually some people would behave most agreeably that's not everyone but i'm not talking about housing just anyone or everyone this way this special housing benefit would be for promising individuals and that would have time limits so they would know this is their one valuable chance in time to achieve personal independence so don't blow it landlords pay taxes unlike nonprofits and they do like the cash use also the money you would spend is the same as now that accomplishes less thanks thank you it looks like that concludes our oral communications i'm just making sure there's no other attendees with their hands raised i will bring it back to our meeting and before we begin with item number 23 i just i know that news reports are coming in and i wanted to take a moment of silence um there was a elementary school shooting in texas and it looks like 14 students and a teacher um i don't know if anyone has any other updates but it's just so tragic and i just thought we could take a moment to just take a moment of silence for them okay now we begin item number 23 on our agenda this is the fiscal year 2023 proposed budget this is part one of the city's annual budget presentations we will receive part two presentations or we will receive some presentations today from some departments and we'll continue and resume tomorrow part two nine a.m for the remaining department presentations at the end of today's presentations i will call for public comment on the departments that have presented today i will now call on city manager matt huffaker to get us started thank you mayor burner and counsel it's good to be here this evening i'm going to be tag teaming our kickoff of our budget hearings with interim finance director bobby magie who's going to be pulling the presentation here up shortly all right can everyone see the screen yes thank okay very good well again i wanted to start off by saying i'm pleased to kick off the fiscal year 2023 proposed budget next slide our agenda for the evening will include an introduction and overall outlook that'll be followed by a fiscal summary from bobby based on our current fiscal outlook and then of course that will be followed by a series of department budget briefings as we move through this evening and our discussions tomorrow next slide as we get started or you can go back one bobby one ahead of you as we get started i wanted to thank bobby magie lupita alamos and our whole finance team along with all of our departments who have contributed to the proposed budget that you will hear more about today these continue to be challenging and unprecedented times in the proposed budget like the last two budgets required making sacrifices with departments across the city contributing to budget reductions as part of our ongoing focus to achieve long-term fiscal sustainability for the city i know these decisions have not been easy and i want to thank all of our departments and our employees for rolling up their sleeves and helping to achieve a proposed balanced budget for the next 12 months ahead i know a significant amount of work led to the proposed budgets that we will be presenting this evening next line as we look to the year ahead i also think it's important to reflect on how we got to where we are today the many challenges that we've navigated together as a community and the organization these times continue to be challenging and it has obviously been quite the journey and i wanted to to run through a number of the challenges that we have faced and responded to over the last nearly two and a half years of the COVID-19 pandemic that includes the the pandemic itself along with the czu lightning complex fire which had significant ripple effects across our county including our community there was also the significant shock to the local economy from tourism business closures the university abruptly closing down and and being slow to really come back to life and all the residual effects that that has on our downtown on our local economy is our business's struggle to keep their doors open of course the pandemic has also worsened and really exacerbated our homeless crisis and housing availability and scarcity it's a it's a challenge that we have seen really reach unprecedented levels not just in santa cruz but across the state of california of course santa cruz is not immune to those impacts we faced two fiscal years of revenue losses really a large piece of the way in which we've been struggling to keep our revenues and expenditures balanced which has resulted in a reliance on reserves one-time money and budget solutions to keep bridging that gap which has proven to be increasingly difficult as we move into this budget cycle and budget cycles to come and again just a shout out to our employees and the tremendous resiliency that this challenging period has required and the many contributions over the last two years to keep the organization running to keep our budgets balanced it has not been an easy time to work in local government and to keep budgets afloat next slide in the face of these many challenges our organization was quick to respond on a multitude of fronts we declared a fiscal emergency in early 2020 and for the past nearly two and a half years have continued to adapt and respond to the changing community needs and unexpected new challenges that have come with it that focus and to prioritize our work a comprehensive re-envision santa cruz work plan was developed to ensure that we're investing our time and our resources and the right things as we help our community recover and ad hoc revenue committee was established to help explore and identify new revenue streams to get us on more stable financial footing and in fact the the measure f half-cent sales tax that's on the june ballot is a is a byproduct of that important work that staff has been exploring alongside the council subcommittee and I want to thank them for their time and leadership on on that front we have our fingers crossed for june and that community will be supportive of this very important additional revenue stream and in the meantime we have been fortunate to receive one-time state and federal funding to help our organization stay afloat invest in recovery efforts and develop more sustainable approaches to homelessness response next slide so what's next as we look ahead we're framing the 2023 budget through the lenses of recover rebuild and refocus we've overcome significant challenges and we have tremendous opportunities ahead of us you'll hear from bobby and our budget team this afternoon that we are continuing to see encouraging signs of economic recovery as major revenue streams reach pre-pandemic levels of course many of those gains are also being offset by some storm clouds on the horizon when it comes to the direction our overall economy is heading risks of a recession and of course the ongoing challenges of increased inflation as well as federal reserve increased interest rates we'll talk more about that as we dive into the fiscal summary and bobby has more details on that front as well and we're continuing to prioritize our employees fill vacant positions build back areas of the organization that were hardest hit through the pandemic as well as bolstering our homelessness response capacity in an effort to increase our effectiveness and alleviate the burden on our operating departments as we focus on rebuild data then lastly our ref refocus refocus in our work through the development and intentional work plans that align with the council's priorities all of this work has helped to inform the proposed budget that you'll hear about this this evening and as we move forward into the year ahead so with that I'd like to go ahead and hand it over to bobby McGee who's going to run us through the rest of the presentation before we jump into our department presentations thank you for your time thank you mr. Hefker I would like to echo his comments and and acknowledge the this financial department budget team who put in some very long and very stressful hours in order to prepare for today's budget hearings today and tomorrow's budget hearings so thank you to the entire team I wanted to talk a little bit about economic trends is as you already heard we are monitoring a number of things and of course inflation is a hot topic right now we have noticed that inflation in the month of April was actually down a little bit however that is not in line with what the overall inflationary trends have been for the year and we are continuing to monitor that as we've looked at some of the high fuel prices that you'll see down there I know that we've looked at oil futures and we are expecting inflation to continue well into the summer based on some of the data that we have seen so far there's a number of other things that you'll see on this slide that we are continuing to monitor as far as macroeconomic trends the general fund revenue trends as the council has heard me say multiple times the recovery the revenue recovery this year has been stronger than expected and so although we have we are approaching overall pre-pandemic general fund revenues I do want to caution that this is not adjusted for inflation and so while we've seen the the hard number of actual revenue come back what we have not seen is our purchasing power that we enjoyed previously before the pandemic so major expenditures that that we're looking at here in fiscal year 23 there have been a significant increase in liability and property insurance costs that is not indigenous to this city I've talked to finance directors all over the state that have said they're seeing some of the same types of activities as far as risk management costs the budget includes five million dollars in capital projects for this year as we've discussed a number of times five million dollars barely scratches the surface when considering the city's overall unfunded capital needs an ERP system is going to be required to be replaced in the near future the city is currently using the Tyler Eden system that system we received notification from Tyler that it will be sunsetting in fiscal year 27 and so at this point we have no choice we're going to have to replace that system that is a known cost and so what we are recommending is a set aside for each of the next four budget cycles and and two million dollars has been included in this year's budget we are projecting at this time that in fiscal year 27 that replace the replacement of that system will be in the neighborhood of about eight million dollars and so this year's budget includes two million dollars and set aside for that investing and organizational capacity continue to implement council goals and then there are we are currently in negotiations with five different bargaining units whose contracts are expiring this year major investments the homelessness response so obviously the council has put together a program in response to employee and community feedback taking a very proactive approach to this we need to build capacity and and we will continue to search for systematic solutions at the state and federal level by our lobbyists so the fiscal year 23 proposed budget so the total general fund expenditures are 127 million the total general fund revenues are only 122 million in order to achieve a balanced budget we are recommending the use of 5.2 million dollars in existing fund balance and i'll get into that in just a moment and so as you can see when we look at the general fund reserves that use of the 5.2 million dollars in general fund unrestricted general fund reserves in order to balance this year's budget will take our general fund unrestricted balance all the way down to zero there is still approximately 21 million dollars in total general fund reserves that is restricted funds the OPEV reserve and the pension reserve those are locked up in trust funds they can only be used for those specific types of activities and then the council's familiar with the stabilization reserve and the recommendation would be to keep about 6.6 million dollars in in that reserve so other funds we have a number of funds that are currently showing deficit balances in the funds including the parking fund the general fund CIP the street maintenance CIP the stormwater overlay fund and the equipment operations fund and that is something that we are actively monitoring and trying to find solutions for how to bring these funds back into into balance as the council has heard we have some very large unfunded capital needs you can see the numbers here the total unfunded CIP estimates right now are about 365 million dollars so as part of achieving a structurally sound budget we do have a balanced budget for this year but you all have seen a number of times the long-term projections that we plug into our budget model and in order to move continue to move towards a structurally balanced budget we asked departments this year to have a target reduction of 2.3 million dollars in structural cost and departments were able to come up with proposed solutions of about 2.4 million dollars and over the next two days you will hear from the departments on on where these proposed cuts are some of these are one-time cuts some of them are structural cuts and so what is measure F measure F is ballot measure for the city of Santa Cruz general fund maintaining essential services it's a one-half of one percent sales tax or about five cents on every ten dollars we are currently estimating that that will raise about eight million dollars annually in the first year the way that that the city tfa collects the taxes we would only raise about six million dollars in the first year because we would only receive nine out of the twelve months and then in subsequent years we were expecting to receive about eight million annually so the budget forecast with no measure F and once again when we put together these graphs we make a number of assumptions on absent of any future budget solutions given some of the known costs known revenues that we are expecting what would what would the future look like moving out several years if we were not to take any actions at all this includes no new programs no new staff no expansion of programs and you can see off to the left there the number of assumptions that we've made as far as expenditures continuing to put five million dollars a year into that unfunded cip project list about one point six million dollars in new positions and other items that you'll hear about in today in today and tomorrow's budget four million dollars in council directed ongoing homelessness response programs the two million dollars over the next four years for the erp system the one time homelessness cip projects of seven million dollars it includes an assumption of modest growth and employee costs somewhat can measure it with the expected long range rate of inflation over the course of time we have here in america we have experienced about two and a half percent and so that while inflationary costs are very high right now we have built into the model an assumption that those caught those inflationary factors will return to normal over the long haul the liability insurance as i mentioned that's going up significantly and from what we have heard from the city's actuaries we're expecting that to continue to rise significantly over the next several years revenues and offsets we did receive 14 million dollars in california state funding some ongoing fiscal reductions that you can see there as well as we just applied for the second tranche of arpa funds that we are expecting to receive realistically any day now haven't i to my knowledge we have not received it yet our revenue manager is on vacation this week but when she had left she had said we had not received it yet but we have entered the application so the budget forecast with measure f looks a little better you can see the graph off to the right there the the net total includes all of those various general funds items that we talked about earlier the available would be your unrestricted balances which includes some of the arpa money that is completely unrestricted and that's why you see a little bit of a spike here in 22 23 and 24 but we have built into the model a recessionary impact around fiscal year 27 and the reason we do that is historically we've experienced a recession about every seven years and so to not build those types of things into the model would probably be false so we build those types of things in and as you can see even with measure f we still have some structural issues that will need to be addressed in future years so fiscal strategies the ad hoc revenue and budget committee will continue its work to explore new revenue sources we are going to be doing a citywide fee to address full cost recovery of programs we'll continue working with our lobbyists to secure state and federal funding and just yesterday we released to the public a request for qualifications for assisting the city and developing a long-term financial plan which includes a tremendous amount of citywide items that will will be rolled into the plan that the council will see at a later date so the public hearing schedule right now we are in the fiscal summary and then tonight after questions on the overall presentation from the council we'll turn it over to the library for the the start of departmental presentations and then the administrative departments administrative services departments will follow including finance human resources and information technology and then we'll wrap it up with water and then the remainder of the departments will be on tomorrow's agenda thank you bobby mickey what do those different blue colors um what what do those do you know that yeah in that chart here sure that that's really just to break it up so so that it's visually more appealing obviously the gray areas we the light blue areas really are the departments the gray areas are your breaks your lunch public comment sessions okay great thank you and that is the end of my presentation be happy to answer any questions that the council may have for that overview um are there any questions from council thus far before i call on our departments let me go to council okay um i would like to ask the city clerk if um we are good to continue i know we've been having so yeah if we could take a three minute break just to reset on base okay get our streaming going okay great um so we will take a three minute uh break to reset on base and um return at 602 city clerk i'll wait for your confirmation that we're ready to continue great thank you they're still working on it thank you okay thanks everyone we're good whenever you are wonderful thank you okay so then thank you for everyone's patience thank you to interim finance director bobby mickey for that introduction we will now continue and receive presentations from departments and provide feedback to staff for preparation of the fiscal year 2023 adopted budget i will now call on yolanda wilburn director of libraries to give a presentation on the library budget and i will call for questions from council members after welcome yolanda our council members thank you for having me here i'm so happy um that i can be here to share this with you i'm just going to pull up my presentation here and share my screen all right can you see that yes thank you perfect all right so this evening i am going to just give you a brief overview about the background of the library talk a little bit about some of our core services our achievements over the last year and some of the challenges that we're facing as we move forward into our 2023 budget the santa cruz public library system is one of two library systems in santa cruz county our system serves its region independently although we do share revenue sources with boxonville the santa cruz public libraries operate under a joint powers agreement uh among the county of santa cruz the cities of capitol scott's val and scott's valley and santa cruz the original joint powers agreement was approved in 1996 and in december of 2015 all four jurisdictions approved the fourth amendment to the joint powers agreement that currently governs our library services today the library system is supported by a quarter cent sales tax that's measure r and that taxes from the jurisdictional and there's also jurisdictional contributions known as the moe or maintenance of effort that comes from the cities of santa cruz and watson bill and the county library fund which includes capitol and scott's valley santa cruz public libraries also receives a modest income from bequests the revenue donations from the public and our friends of the santa cruz public libraries the library joint exercise of powers agreement which enables which establishes the contributions for each jurisdiction is set to expire in on june 30th and a fourth amendment is expected to be approved in the next few weeks by each jurisdiction once that is approved it will establish an updated maintenance effort contribution for our libraries from those systems the library's mission is to connect inspire and inform our community members we do that by providing core services that support lifelong learning through our programs services and collections we support digital inclusion through our training programs um maintaining digital devices and high speed broadband that our communities need to fully participate in the world our transformative spaces in the library promote individual and collaborative multi-purpose learning zones and our user experiences are patron centered to reflect our each of our community's needs we also strive to provide organizational capacity that really works to develop our staff with the skills that they need so that we can pursue strategic partnerships in the community very currently um employees approximately 102 full-time equivalent team members in a variety of administrative and public facing positions we do anticipate that the number of staff will be increasing we've had a number of vacancies over the last year we anticipate that that will continue to increase as we begin to reopen our libraries and expand our programming and services as well as look at increasing some of the hours that we have at our library facilities a few of our library achievements over the last year include maintaining open hours and services during the fluctuating pandemic safety precautions um that there were several challenges with staff and having our doors open but we overcame those um we reopened the boulder creek branch on May 7th of this year and we are anticipating opening our garfield park library branch on June 11th from 12 to 4 pm and so we certainly hope we'll see all of you there just last week our youth services team received the first ever county office of education partner of the year award which is really exciting because of the work that we're doing with them and how we help to support the schools during the pandemic um so that their students could have devices hot spots and the digital um resources that they needed to be able to continue their educations our staff implemented a number of state library grant programs over the last fiscal year including programs with regard to book to action the community conversation around housing with Connor Doherty and Jonathan Franzen we increased the number of Wi-Fi hot spots and Chromebooks that we have for checkout because of some of the grants we received and we're also providing California State uh park passes for patrons to be able to check out for free and of course we cannot forget our friends in the library who not only met but surpassed their goal of raising a million dollars for our libraries as wonderful as our achievements are we do know that there's still work to be done and challenges we see opportunities to complete and implement our new strategic plan in the fiscal year 2023 as well as improve our information technology infrastructure collaborate with partners and other organizations including the aptos history museum when we reopen the aptos library after construction is completed in 2023 we also will review and revise our processes to improve performance and ensure fiscal responsibility um we want to make sure that we are operating in a way that is most efficient and effective for our organization we continue to face challenges around supply chain delays with regard to completing our renovations and rebuilds staffing shortages are currently being addressed um as we fill positions vacated over the last two years we are increasing uh the trainings that we're doing and that training budget is increasing this year by 20 percent because we know that we need to help our staff grow and develop professionally the costs of housing for our staff and for those who we seek to hire from outside of the community the the cost of housing is really creating um some threats to our ability to hire and actually retain uh highly trained staff we do also know that we need to prepare ourselves to ensure the sustainability of our new and renovated and rebuilt libraries by supporting ongoing maintenance efforts and so we're trying to make sure we're studying aside funding for that the downtown library is desperately in need of replacement and the current efforts that delay and threaten the rebuild not only put us further behind on the new library but also mean that we're losing out on some of the sunk costs today leaving us short on the project should we have to start all over again and so that's a concern that we have the library budget overview pictured here shows a 2.9 percent increase in staffing costs and this is largely due to PERS and health insurance costs the rising costs of collection the collection insurance premiums which Bobby mentioned in his presentation have been a factor for us bilingual translation services as well as the rising costs of goods and an increase in our training training budget for staff have all contributed to the 8.3 percent rise in services supplies and other charges under the current MOE agreement the city of Santa Cruz will contribute approximately 1.8 million dollars in 2023 through the maintenance of effort however the library does pay the city for a variety of services including human resources risk management city attorney and other administrative and fleet work those costs as you can see here are deducted under the resources by fund section with the resulting net general fund cost going to the library system some notables with regard to our revenues sales tax is projected to grow 4.6 percent in 2023 yielding an approximately 500 thousand dollar increase in our revenue in 2023 and for the purposes of this presentation the maintenance of effort does remain flat for us right now however as I mentioned previously the county and cities are renegotiating the MOE contributions made by each jurisdiction and once those are finalized we may see that that MOE contribution begins to grow instead of remaining flat other notables for 2023 include a review of the number of staff needed to provide excellent service levels and reduce our reliance on on-call staff we're hoping that that will help us to stabilize our staff so that we can get them the training and support that they need to develop professionally ensuring that we can retain good staff members sort of grow your own culture is what we're looking at and then as measure s projects wrap up and we reopen we want to ensure that all of our systems and infrastructure meet the health and safety needs for our staff and patrons while striving to achieve the sustainability goals set out by the city one time costs are needed to relocate our collection management and information technology teams into the library administration building and some of our fleet vehicles are in need of replacement our Felton library will be established as a PG and E community resource center in the event of public safety power shutoffs and so we hope to add that type of infrastructure at our other locations so that we can be prepared to help the community be resilient in the event of other emergencies as well we'll also continue to work with our friends of the library as as they begin their next fund raising campaign and that is for the new downtown library branch they have an aggressive goal to accomplish over the next three years and we are really grateful for all of their dedication and support in trying to raise those funds for the downtown library we're also incredibly grateful for the support of our joint powers authority board our library advisory commission and the Santa Cruz city council and with that I thank you for your time I'm happy to answer any questions that you might have for me thank you so much that was very informative and thank you for that overview I'm also appreciated the information in the binder that we received and let's see I'm going to bring it out and call for questions from council members there's any questions on the library presentation and budget and I see council member brown thank you mayor and thank you director wilburn for the presentation yes it's really helpful to get a sense of where the money is coming from and what the needs are I just wanted to ask about the maintenance of effort agreement and your projections on that I mean obviously that's going to be renegotiated but I'm just wondering if you think that that's going to change significantly or if you think it will be kind of within the same range and I recognize that's some speculation but I know you're closer to those conversations so just wondering if you could give us a sense of what might happen absolutely so right now we are anticipating that the increases in the maintenance of effort will bring us will generate an additional million dollars a year for the library at least in the first in the in 2023 typically the agreements will stagger so each year it increases slightly more and more to keep up with inflation and so that will be really critical for us as I said our collection insurance just this was went through the roof and so and then again being able to retain good staff is important to us so that we can provide the community with the services they need thank you thank you council member brown any other council members I guess I'll just say thanks and welcome I know this is your first budget hearing but I just want to appreciate the work that you all are doing at the library and also I'm imagining we're going to continue to hear a common theme of affordability and retention of workers being one of the number one issues facing the city so just want to thank you again and that's all I have to say thank you thank you director will burn appreciate your work I will now call on the next department I will call on Bobby McGee interim director of finance to give a presentation on the finance department's budget thank you mayor welcome back thank you all righty this is the finance department fiscal year 2023 budget on the agenda today um talk a little bit about our core services our organizational chart we have had a little bit of a reorganization since I've been here some achievements in fiscal year 22 our goals for fiscal year 23 our fiscal year 23 budget overview and then finally some impacts as part of the budget reductions that that we are recommending so our core services are accounting accounts payable and payroll budget and then we're recommending to split out purchasing and have that as its own division again and revenue and then finally risk and safety management we currently are recommending 29 employees you can see the distribution is fairly even across the board there with the exception of purchasing it's a pretty lean purchasing division in a decentralized environment we think that's probably an appropriate number so fiscal year 2022 achievements there's a couple of things that I'd really like to highlight for the council here so one of the things that the feedback I've gotten from finance staff is they have really enjoyed working with the council's budget and revenue ad hoc committee they feel like and I will say this for all of us we feel like we're really getting an opportunity to make a positive impact on our community and and assisting the council in getting the sales tax measure on the ballot was it was a real sort the source of joy for for our staff earlier this year you may have heard that kronos experienced a a global hack event and we had to pivot on a dime and establish and implement an emergency payroll processing protocol and I'd like to give a shout out to every department out there people were very understanding and very helpful as we went into absolute crisis mode trying to figure out how do we get payroll out this week given that the entire system for all employees citywide went down it was really a citywide effort and we couldn't have done it without everyone else's help a couple of other items on this slide that I'd like to draw attention to was since I've been here I've been working with our revenue manager one of the things that we've noticed over the past several years is that the city's investments primarily in life do not earn a very high percentage and so one of the things that I've been working with Kim Wigley on is restructuring the allocation of some of these and pulled investments and so far we've shifted about 30 million dollars out of life and put that into government agency bonds and the council does receive that report each month and so I think that you'll notice moving forward that while theoretically not taking on much additional risk we've you're going to see some additional interest revenue coming in over the next over the next year and then we have also developed a new account structure to better track resources and uses of funds related to homelessness response this is something that the finance department is extremely proud of because we've been trying to find anyone who has done this nationwide and so far we haven't found anyone we've understand that a lot of agencies have talked about doing these types of activities but I can tell you that developing an accounting system which is multi-directional multi-departmental multi-disciplinary to track what all of these homelessness services expenses and report that back to the council is a little bit bigger the challenge than just saying hey start tracking that and so under the leadership of assistant director Marisol Gomez and our accounting team they've developed a system that that we believe is is really kind of groundbreaking and so we're going to roll that out and some of my friends in the consulting world have reached out to us and and and said how you know how are you going to do this and please let us know how this looks moving forward so those are those are some achievements that the department is very proud of our goals for next year is a study of citywide fees as you heard me mention earlier the long-range financial plan which hit the street yesterday so hopefully we'll get that thing started sometime in august the consultants work will begin on that we've been in developing a new cost allocation plan for citywide use we hope to implement that in fiscal year 2023 we've hired a individual to focus on on transient occupancy tax audits of short-term vacation rentals this is your air bnb crowd your vrbo crowd those have historically been not not audited at the rate that we felt was appropriate and so now we have an individual who is focused specifically on those she's she's really hit the ground running and has really ramped up her activities quickly on that we're planning on implementing phase two of creating equity and budgeting we recently completed that we and we now have a draft report of a procurement organizational assessment and we are going to be moving into phase two which is a citywide purchasing task force so that we can continue to strengthen our procurement activities citywide based on what council policies are and we will certainly be bringing some recommendations back to the council sometime hopefully sometime this year on ways to strengthen and improve our procurement system and then finally coming up with the new cost allocation formula for the city's self-insured liability program and i say and much more because i know that there's going to be a lot of other things that come up during the year so the finance department budget is about seven million dollars in services and supplies a lot of that is tied up in risk management activities as well as just short of four point three million dollars in personnel costs the liability fund obviously takes up the bulk of the revenue against that and then the general fund supports the department to the tune of about four point five million so budget reduction impacts we are in the process of moving into a permanent location now we have been in a temporary location the niac building on front street which is scheduled to be torn down and so we knew that we were going to have to move and so the council approved a seven year lease over at 1200 pacific avenue so we are making final plans as we speak to move over there hopefully we will be able to move into our new location in july although it may get delayed until august we are recommending a decrease in temporary hours which is really kind of right sizing what the department needs are and it'll result in longer processing times for digital conversion of some paper documents that come in and into the agency however we feel it's appropriate it'll take a little longer to get to it but we do believe we will still be able to get to those types of activities legal services decreasing by five thousand dollars again just right sizing it based on historical activities we thought that that was an appropriate line to cut and then finally in courier services a decrease in cash pickup services and so with that I will say thank you and ask the council if there are any questions I am available as well as members of the finance staff thank you director McGee I see council member golder and then council member Cummings with questions hey bobby um sorry for not thinking of this in advance but it came to me while you were giving your presentation and I've been asking this for years I'm curious I saw that you have an auditor that's doing like the short term rentals and I know people are you know I know I understand what they're doing what I don't understand is why we don't collect those tot taxes off the top like via the platforms Airbnb and VRBO like the county does and I've never understood like why we don't do that because I feel like our revenue would be um you know higher uh yeah candidly I was unaware that the the county had a system where they were collecting it off the top um my understanding uh in working with our revenue manager uh is that VRBO Airbnb they don't have the system capabilities in order to collect that directly and then have that um ship to the state and so the way the program works currently is the hoteliers actually report it back to the city and then they uh they submit the funds and then we'll come back and audit their results later but they do have that capability I'm happy to look into that yeah because because I I know because that we rent our house out on Airbnb when we're out of town and it's like as a host it's not very convenient to like submit monthly things it especially you know nine months out of the year I'm not going anywhere but I have to submit a receipt to the city saying zero zero zero zero and it's just kind of a pain and just knowing other friends like I guarantee people aren't being entirely honest with the city if I can be frank and like like if um if it was just collected and it's confusing for the guests too they always think I'm some kind of shyster like asking for this extra 11 so I have to have like this receipt book and this explanation and this link to the city website and they're like well this other people don't charge me and so it's just kind of confusing and I just think um if if there's a way to talk to the county about the way they've been doing because they've been doing it for several years that way I getting text messages from my staff as we're speaking we're happy to get into that and see how the county is doing that information that that we've been given I've been on the phone for some of these conversations so I'm not sure exactly how they're doing it but I'm happy to look into that and and see if there's a better way cool thank you thank you council member golder council member coming yeah thanks for that presentation actually the question it's related to the presentation but it's also for the city manager I'm just wondering I know you were able to show where those you know certain cuts and reductions are going to need to occur and I was just curious for the city manager if we have that information for all the the the departments and if so if we can get that because I think it really helps because the budget packet that we have doesn't include that information and it'll really help as we're thinking about where cuts are being made and if we want to you know shift the where those cuts occur it'll help to have those numbers and be able to see um you know where the cuts are are happening yeah thanks for the thanks for the question council member Cummings as we move through the department presentations that information will certainly be included as we move through so happy to continue providing those details as we move through department by department of where those reductions have been made and as bobby mentioned earlier it's about split 50-50 between one time reductions and ongoing reductions so it's a combination including some some unfilled positions and we're happy to provide those details as we move through thanks but I guess my my bigger question is wondering is there a way we can get that in writing because like if that was with our packets we could see if we could kind of follow it line by line and um yeah it would be just be helpful if we had physical copies of that information as well we can certainly provide a summary for the council to review does that conclude your questions thank you uh council member calentari johnson uh council member brown glasses yeah I so it just as a follow-up I it would be to council member Cummings that would be really helpful in the past during budget hearings um and prior to adopting the budget we have had those summary summarized for us by department so we just have a kind of like a cheat sheet to help us um uh understand by department what's um where the cuts are uh and so it that would be great if we could get that via I don't know in a memo or something that we could have for reference thanks are there any other council member comments or questions okay thank you so much um to your work and to your department thank you let's see I will now call on Ken Morgan director of information technology to give a presentation on the IT budget sure I think HR was scheduled to go first but I'm happy to jump in and jump out of order sure thank you no problem uh sharing my screen can you see my presentation yes thank you great so good evening mayor brunner city council my name is ken morgan director of the city's information technology department and here to give you an overview of our proposed budget for the upcoming fiscal year presentation like other departments will include an overview of our core services uh highlight of some of our key accomplishments this past year I'll cover our fiscal year 23 proposed budget and finally discuss goals associated with our upcoming fiscal year starting off with our organizational chart these folks make up the city's IT department when fully staffed the department has 21 full-time equipment employees with three of those individuals being funded and assigned to the public works and water department at this time last year I reported out that the IT department was operating in about 65 capacity and while we're still working towards reaching full capacity we have made progress including filling some key leadership vacancies Mike Schmidt joined the team eight months ago as our assistant director Dennis Kiyabu has been promoted to IT manager in charge of our infrastructure and we've also added some talented folks to supplement our process and application solutions teams and that would be James Armstrong our new business systems analyst too and Eric Kuimoku our new programmer analyst and just as yesterday we added Blake Irby our new business systems analyst for the water department our IT mission remains the same which is to cultivate increased connectivity of people technology and processes and we do this by trying to deliver business driven efficient quality technology solutions and services for our staff and the public and these efforts really do start with our amazing client services team these are the folks responsible for receiving and resolving thousands of annual requests via phone calls work orders at the city's help desk and they really do an amazing job of supporting the hardware and software on the city's endpoint infrastructure that's our PCs our laptops our mobile devices our desk phones and all together that's an ecosystem of about 2000 devices our infrastructure services team manages network and infrastructure and data centers and offices throughout the city it includes our wired and wireless networks our server infrastructure our voice over IP telephonic equipment and they spend a lot of time on security and that's both cyber security to keep the bad guys out and our physical access security to protect our city assets our process and application solutions team and we support over 90 applications citywide these are our database admins our developers our custom report writers project managers and application experts and the last we have our strategic and admin services division focused on strategy special projects and of course budget planning and execution with regards to our accomplishments always best to start by highlighting our customer service despite staffing challenges and COVID challenges and shifts in how our colleagues are doing business the level of customer service continues to be something our department is proud of and that equates to directly serving 554 of our employees that means 70% of city staff sought out IT for technology support of some type we replaced 127 PCs as part of the ongoing emergency telecommunication policy we supported 230 employees that worked remotely in some capacity we answered or responded to 2800 help desk phone calls and we completed 6300 work orders which was an uptick of about 5% over the previous years with regards to infrastructure this is often a less recognized aspect of service delivery which is why I wanted to highlight a few impressive statistics our critical network infrastructure and our critical server infrastructure were available 99.9% of the time last year and I know Bobby mentioned the Chronos outage and that is a hosted application not one that we manage internally here so good to delineate that IT geeks refer to 99.9% as the triple nines and really that just means that services like email network files applications they were available for all but eight hours accumulatively last year pretty impressive cyber security continues to be a focus for us from an infrastructure perspective we took a very proactive step forward and we partnered this year with a managed security security service provider the service provides both intrusion prevention and detection devices in our network as well as an actual security engineer that monitors our endpoints within our network 24 hours a day seven days a week 365 days a year so a really important step forward in improving our posture along with security awareness our security awareness training continues to be prioritized we provide quarterly security awareness campaigns for employees and this year we also introduced fishing tests in which we anonymously sent out suspicious emails asking employees to take actions that would be considered risky or counterintuitive to best practices and the hope is that the training employees have taken paced dividends but if not the tests give us some insight as to where training would be focused in the future and then applications while we were onboarding an almost entirely new team to the application space there were some notable accomplishments supporting 90 plus applications we upgraded our Tyler ERP system our cash sharing system our utility management system system we added additional transaction types to our aggregated payment portal my city of Santa Cruz the community can now pay for planning permits online and last from the final phase of two rps to select a couple of enterprise applications it's going to bring us a new and modern land land management system and also a new computerized maintenance management system for our public works and water department getting us to our budget overview slide it's proposed budget is 5.9 million 3.4 goes to personnel services the remaining 2.5 is going to be our service supplies other and capital outlay the major costs for it continue to be the the software and hardware maintenance contract as well as our telecommunication services these three categories make up about 81% of our non personnel related costs it's proposed budget does represent an increase of 4.5% and this is the result of a few factors first we have our anticipated inflation for our maintenance and support contracts this is typically about 1 to 3% the depending on the contract in addition to those kind of uncontrolled expenses we have committed ourselves to a couple of other priorities one is our Microsoft 365 implementation which is currently underway that is going to modernize our employee's ability to work and collaborate and then the other investment priority is our cyber security enhancements which i highlighted when i discussed our managed security service provider from a personnel perspective we are also requesting two additional FTEs to help support our applications team one position will be funded and assigned by the water department and the second position is an IT business systems analyst three position so outside of the water department we currently have one IT BSA that is responsible for supporting those 90 applications and business systems and so adding this position is going to add a senior level BSA to supplement those support challenges and in addition bobby had mentioned the sunsetting of our ERP and so this person will kind of lead the process to replace Eden which is going to be a multi-year multi-department effort so we are proposing close to $180,000 in cuts to help offset some of these increases cuts would include eliminating and consolidating some IT tools and departmental apps additionally we have worked with AT&T to find some cost savings in the types of telephonic equipment that's used in our city on elevators and then the large impacts are going to come from a reduction in our capital outlay fund as well as reducing the number of PCs replaced next year reducing capital outlay will prolong the replacement of some of our networking and server infrastructure and then reducing the number of PCs replaced for a second because that could be yours going to likely lead to more increased help desk work orders to kind of support that that aging infrastructure. I'm running up against my 10 minutes but I got some goals for the next fiscal year for the department I mentioned the two RFPs that we are very close to wrapping up and we'll move into project implementation mode the Microsoft 365 project that I mentioned we're hoping to finish that in the summer and fall we have some plans to improve the technology and the security used to support our remote workers we've been pursuing an ongoing physical access security project we have over 30 sites completed now and we're focused on the downtown facilities including city hall parks and rec civic and ed like other departments there's some supply chain challenges so we're remaining patient there we have an ongoing approach to our cyber security mitigation will be required to perform an audit this year of our credit card handling the city executes about two million transactions per year so we're we've fallen to our PCI card audit that's required we're going to be working with the city manager's office and a third party vendor on an initial phase to improve our ADA compliance on our website and last as I mentioned the city's ERP is set to sunset in 2027 and this will be a multi-year multi-department project that we'll need to focus on and that brings me to the end. Wow okay you did it thank you so much for that presentation with that additional information from our binder our budget binder um can I ask a quick question of the analyst one two position you said was funded by the water department. So we have two position ads one is a programmer analyst one two that one will be funded by the department the water department and supplement the business systems analyst three that exists over there so two allocated positions to water and then the general fund request is for a business systems analyst three for the remainder of the city. Okay got it okay and one more question under business apps or where does Chris fall in your IT world? Yep so Chris falls under our process and application solutions team we have as I mentioned we had just onboarded a new assistant director Mike Schmidt and one of his first asks is to do a deep dive into Chris and kind of articulate out the business process and make sure that departments are working in a kind of concurrency that we have subject matter experts assigned so those work orders are getting completed. I understand a lot of the general service requests that we're coming through we're sometimes perhaps falling through the cracks so that'll be a part of this to make sure that we have a more cohesive approach to that. Great thank you and Chris for those that don't know CRSP is the acronym for the city's community request for service portal and there's a free app as well as a website URL to report to any of those categories to the city I think there's eight categories. Okay thank you. You're welcome. Council member Calentari Johnson. Thank you thanks for the presentation Ken I wasn't able to catch um did you say 800,000 in reductions? 180,000 dollars in reductions but we had an overall increase based off the obligations that I discussed like Microsoft 365 and the cybersecurity. Okay and so it was a four four point five percent increase that 180. So four point five percent equates to about two hundred and sixty five thousand dollars which is the overall increase for the department's budget. Okay that answers my question thank you. You're welcome. Any other council member comments or questions for IT director Ken Morgan? Just like you know a brief comment in that and you don't there doesn't necessarily need to be an answer but you know we get a lot of information about smart cities and how cities internationally are using technology just to improve quality of life and resilience to climate change and so I look to those world of tech to help us know what we could be doing or innovation that we could embrace particularly in our proximity to Silicon Valley and all of the innovative folks we have in our community um just to think about what you know what we might not be thinking about. So I know that you already have some of these goals set out and I just I feel like there's also so much more so anyways I appreciate the work and I appreciate your presentation. Thank you. Thank you Vice Mayor Watkins. Okay thank you that concludes thank you for jumping and being ready to go. No problem. I will now call on Lisa Murphy director of human resources to give a presentation on the HR budget. Good evening Mayor, good evening council members. Lisa Murphy your human resources director presenting my final budget. Let me put my PowerPoint up here and share my screen. Let's see share screen okay am I sharing my screen can you see that? No. Let's see let me try that again. I have it up if you need me to. Oh I think I'm getting there there we go. There we go. Yeah let me get it on to the um ending there we go great well thank you I'm pleased to present the FY 2023 budget from my department. Human resources mission I'd like to share with you as a resource and a trusted advisor we strive to cultivate an inspiring and fulfilling work environment that attracts and engages a talented workforce. Some of our notable achievements for this year COVID-19 response that's really a lot of what we focused on between creating new policies bringing on employee testing locations we are one of the first agencies to do that to returning our workers back to work safely. We've initiated a diversity equity inclusion program here in HR that's one of our biggest undertakings this year where we've worked on revising job descriptions to eliminate biasness. We've revised our minimum standards to recognize not everybody needs a college education to achieve to enter the workforce. We've implemented implicit bias training for all of our hiring panels and we've also implemented a new employee bias training program. We've moved to online applications and in our 2023 goals we want to move on to technology with the support of IT my partner in crime to do onboarding online. We've also completed a lengthy compensation study and we've also just about to wrap up our permanent remote work policy which I'm excited to get that implemented and along with a number of other notable number of recruitment implementation of benefits these are just a top-level look at some of our notable achievements. Just a quick summary of our budget overall our budget is $25.5 million but what you'll see that is primarily composed of workers compensation and benefits. There's five categories within there we have administration workers compensation benefits and employment and our volunteer program. We do all this we administer our program server 800 employees nearly four to five hundred temporary employees during given the season with just 11 employees. Our services include recruitment selection onboarding labor relations administering our workers compensation program our benefits management training and organizational development and we also staff the equal employment opportunity committee. Let's change in our budget what you're actually going to see is a pretty large increase in our budget and that's due to our workers compensation budget our unemployment insurance increased from an average of 90,000 to over 278,000 a lot of that had to do with COVID. Lisa? Yes. I'm so sorry this is Bonnie the issue we were having with Zoom earlier in office just happened so the people who are listening who are at City Hall probably missed a lot of what you just said so if you can go back maybe four slides or so I'm so sorry. No worries what do you think? I left technology okay do you think we're back online there? I am. I can see you where I last heard. All right I'll go over again because I don't want to shortchange my staff and and I want to be able to recognize that they have this incredible staff and achievements that they made again just a review for those who may have missed this section of my presentation. I think COVID response was again one of our number one priorities our return to work bringing back our employees safely implementing policies implementing the sick leave implementing employee testing on site. Also I want to really highlight our initiation initiated our diversity equity and inclusion and human resources department and some of those things that the actions that we took we have revised our job descriptions taking out any bias type language we revised our minimum standards for employment really looking at whether you need a college education or there is experience just as an equivalent. We have implemented implicit bias training for all of our hiring managers and hiring panels we have again new employee bias training for for our new employees a bias training program and some technologies we've moved to online application and we're looking to move to online onboarding which would be a huge technological achievement and we completed compensation study and finally one of our biggest lifts is to complete our remote work policy for our employees a high level summary of our budget it's 25.5 million to the general fund there's five budget categories that we break that into and I'll go into more detail in a couple of slides we have administration workers compensation benefits unemployment and we also house the volunteer program and we administer all of these programs to over 800 employees we have over between four and five hundred temporary employees depending on the season we do that with a staff of 11 really hard working dedicated human resources program employees we freeze I have a feeling we're frozen no we're not frozen okay let me just go over a few human resources services recruitment selection onboarding living relations workers compensation benefits management training organizational development and we also staff the Equal Employment Opportunity Committee that into our budget numbers some notable changes while my budget actually we we were tasked with eliminating two and a half percent of our budget which was an equivalent for the general fund was about $50,000 we also had some pretty large increases and those notable changes increased my total budget almost 10% and those were as a result of our workers compensation increased over $2 million and that is a reflection of an updated actuarial which we do every three years and it catches up and it looks back to what we've experienced and then we carry that forward and it raised our our workers compensation rates we've had some notable injuries the previous three years our employment insurance increased from an average of $90,000 in 2020 to nearly $300,000 in these past couple of years and that was most notably due to COVID and in addition medical insurance has increased nearly a million dollars from the previous year just to look at the numbers overall you can see from FY 19 to FY 23 we're fairly consistent but then we have this jump that's coming up again you see from 2022 to 2023 it's a cost of doing business quite frankly unemployment insurance medical benefits and workers compensation for over the past three again the the previous three years just a little more detail on my budget where that money goes you can see in the different categories administration that's what houses my staff for the most part and then we also have our medical insurance which you can see quite frankly the yellow is 20 million unemployment insurance roughly around 300,000 a volunteer program is roughly 50,000 and then our workers compensation program which is the gray which you can see has a steady increase where it went from 3.3 last year to 5.06 million but quickly want to give a little more detail of some of the things that we do because it's pretty incredible what my staff does our training and development program is pretty pretty robust we offer nearly 65 classes to our employees in our recruitment we looked at we reviewed 2,500 applications we are an employer of choice we do have a lot of people who want to come work for our city we also regular classification and compensation plans we we administer labor relations which is all of our employee negotiations we have eight bargaining units as you know we're in negotiations now and all of our employer relations and that's where we work with our employees we've resolving conflicts working to help improve relations and also our some of our fund programs that can play engagement which I want to give a little bit shout out again to my play training development this is one area where I really refuse to to shave off the budget or nibble at the edges because this is one area that's so important to professional development it contributes to succession planning and if we start to eliminate here that we're I think we'll find ourselves into trouble one of the things that training and development really again encourages our employees to move up through the through the ranks we do a lot of promotion internal promotions this last year we had 585 employees attend our voluntary training programs so we have voluntary training programs we also have mandatory training programs such as cultural awareness and sexual harassment and discrimination we have a really great leadership development academy where employees can advance in their career if they do not have one of the credits to doing our leadership academy is that if you take eight classes you will receive one year supervisory experience and that really helps those folks who never have that opportunity to supervise to start to move up through to be supervisors or into management and again over 65 classes that are voluntary for our employees to take and that and we're starting to see a pick up since COVID was tough trying to do it online my staff really worked hard to get folks to attend but now we're starting to do a little more in person we're going to kick off our fourth and employee engagement survey so that's pretty exciting news it it took a little hiatus because of COVID but we want to get back in there and get back to our work plan in addition it's really important for succession planning and we have a really robust program that again I think COVID has really you know impacted how we've been able to reach out to our folks but we're about to relaunch our programs such as our stretch assignments our career counseling our job shadowing programs and really getting our folks because that's what we want to do is get our folks ready for that next step to move up to our employee with labor relations again I want to give a little bit of a shout out there we have over eight units that we work with we have worked really hard to resolve workplace issues this this division also works with the equal employment opportunity commission and this this division also works on the diversity equity inclusion accessibility program that we're trying to launch benefits team this this really small team and you think about how many employees that they are trying to manage their benefits and all the programs medical disability retirement insurance vision dental long-term disability it's incredible the amount of knowledge that these people in the in the benefits division have and work with our employees particularly in some of their most trying times they they are there to help them through some of these really difficult decisions and help them with their benefits workers compensation we did see a 34% rise in our costs again what happens is is it's a look back we have an extra where we're all done every three years and they look to see what our experience factors are again we did have some pretty large claims we had some cancer we had some very large medical claims that have they're called presumptive in our public safety sector and then those will stay on our books for about again another three years till we can cycle those off just wrapping up just to give a shout out to our volunteer center they're a fabulous group we house them in the HR department our city contracts with the volunteer center we supported over 300 volunteers and our total volunteer hours last year was fiscal year was over 8 000 hours and that's actually kind of on the low and that's a lot of hours again because of COVID but I think we're going to see a nice big uptick finally my HR priorities are not very different from the previous year I want to stay consistent with what the things we're working on number one employee development for professional and personal development number two subsection planning stretch assignments the over hire program we implemented the coaching and the mentoring you can't get enough of this exceptional planning and three improving our organizational culture through our employee engagement program and our diversity equity inclusion accessibility program the HR we serve the people who serve the community so I thank you for your time and if you have any questions I'd be happy to thank you for that presentation director Murphy um thank you for the goals as well and can you give a little timeline on the diversity equity inclusion launch sure we're actually already in it we've been implementing for the past year where we take our uh we've been taking our job descriptions so as a new job opens up we've been taking them one at a time we already implemented the the hiring panel training in January February where we wanted to really before I even launched a documented program which I'm still working on the actual document with the work plan I wanted to get that out there and start training our employees and we already implemented what's called circle up has been the the company we brought on to do the the training for us for the cultural uh training we started that actually about a year and a half ago so we're so slowly implementing the different aspects of it and then the my my final version of the copy will go to the EOC to really solidify the plan and you know get it and writing is circle up the company out of Oakland yeah I think that's where they're from okay thank you uh council member golder thank you Lisa I took one of those classes online that you were offering I like I don't know maybe a year ago or something like that it was it was good it was it was interesting so thank you for doing that um I did have a question with two questions actually one is in regards to the workers compensation was you said it was do you with some of the increased cost due to COVID is that what I heard you say you know actually I had thought that that's what we were seeing was because what happened for public safety the law changed and that COVID was a presumptive injury that it happened at work and so that was a minor piece of it but we actually haven't quite seen that impact yet but it really unfortunately we had like you said some uh in public safety some um medical conditions that were um life-threatening and without revealing too much that really picked uh jumped our claims up quite a bit I'm sorry to hear that I hope those people are you know doing well I did have a question a follow-up to that question was um the department where my husband works over the hill they're required to be vaccinated are our public safety employees required to be vaccinated as well no our employees are not required to be vaccinated and so if they get COVID at work or if they then we still have to pay them it doesn't matter if they're vaccinated or not vaccinated we actually have a really high vaccination rate in our city was close to nearly 80% and actually in the prior department it was almost 100% but even we're still getting COVID no yeah I understand that I just was curious yeah but the way that works is you're right it's presumptive so it automatically is assumed that they got it at work and so immediately they get 100% of their salary from day one until they return to work okay and then a completely unrelated question about the work from home policy while I think it's great for people to be able to you know to do that I'm a slightly concerned because as the city we are you know a public service um organization and I'm concerned just about a decline in our ability to serve our customers in in departments where you know not everybody has access to technology and and I know it can be frustrating like for example like going to pick up a bird building permit or going to the water department or going from place to place and if people aren't available because they're working from home it can be quite frustrating and I've heard a number of complaints over the last couple years about when the workforce coming back and so if that's not happening I have a concern about the service that level of service that we're providing as an organization I agree I agree with your assessment we at the end of the day we are a public service that's what we do we we service the people right and so being open and being accessible is extremely important because you're right there are inequities in our accessibility on technology and I think each everybody needs to recognize that and make adjustments for that the policy is operational based on each department they can choose how they want to implement based on their their level of customer service so for example I'm open all the time and I do have an individual who is in the front office and so that person is not able to telecommute because I we have such a customer interaction where some are so it's really dependent on I think the job and the ability to telecommute and and the the ability to monitor to make sure that we aren't there aren't a reduction in service levels I agree and we've put in in terms of in the policy the agreement and the ability to monitor at least performance wise but that the customer facing in the office opening may be a different a different issue and I'd be happy to you know work on that and address that yeah I just think it's hard then when we're treating all employees essentially equally in bargaining negotiations but some are here physically every day day in day out and some are allowed to you know to not and it's it's hard to wrap my head around that as well thank you does that conclude your questions council member golden yes thank you thank you so any other council members have any comments or questions for the hr budget okay well thank you so much for the presentation and I believe now I will call on rosemary minard water director to give a presentation on the water department's budget welcome rosemary good evening there we go thanks everyone for the opportunity to talk about the water department's budget and I'm going to I'm going to tag team this presentation a little bit with our chief financial officer David bomb we're going to talk tonight about our core services and alignment with the re-envision Santa Cruz council priorities we're going to talk a little bit about our org chart we're going to talk about key accomplishments and then I'm going to give a quick overview of the operating budget and the capital investment program and then as you made some of you will probably recall we do an integrated thing where we have a financial pro forma that's part of our long-range financial plan that allows us to integrate the way we look at our capital and operating budgets into a kind of a one financial picture that helps us really look at how we're doing and how we're meeting the goals that the council established for us when they adopted our long-range financial plan which we updated in 2021 and then finally I'm going to talk a little bit about the water commission's engagement with us on our budget and cip development review so what our core services are you know we produce and deliver safe high quality water to 100,000 people we do it 24 7365 we provide meta reading and billing and prompting courteous customer service to our customers the meters are we have 27,000 meters in the system they're read monthly bills are produced and delivered monthly our our customer service staff process is about 45,000 customer calls a year and we do utility billing for the city for the wastewater and also the refuse so we take refuse calls and also the anything related to wastewater we operate maintain and when we're needed repair replace water system infrastructure about valued at about a billion dollars and we plan for and manage 4,000 acres of land and many valuable natural resources and for long-term sustainability in our community the the re-envision Santa Cruz priorities which got carried over into your new work plan for this coming year has had three priorities and we're our work is very aligned with two of those financial sustainability and also infrastructure investment and we're going to talk a little bit more about those things as we get through there we are we're an organization of about 120 fte's and you'll see that we're divided up into these four big operating organizations I wanted to mention a couple of things related to the the it budget because a number of you probably heard of things related to it that were specifically focused on water department things whether it was the computerized maintenance management system for example or the business systems analyst three or the programmer analyst position that is that's going to be added in the it budget this coming year and that the water department is funding part of the reason that we're doing those kinds of funding across our organization is that we have applications and needs based on our our billing system is one the uh the metering infrastructure that's being replaced now provides a lot of additional opportunity for technology innovations and also for customer portals to support that the computerized maintenance management system that we're talking about that you heard about a little bit earlier that's a basically a work order system that our customer service folks would use to take work orders that they receive from calls from customers send that information out to our staff to follow up whether it's a water quality complaint or a leak complaint that work order system will be the portal to you know connect those or the organization and send that out and produce a document that comes back into the system to make sure that we've finished the work but also when it comes back in to finish the work order it will update the asset information about that particular asset whether it's a meter or a pipe or you know a something that's going on like a pump station and that information is really invaluable in planning and and developing a capital investment program because you have really sophisticated and uh and on you know organized and online kind of information about the quality and condition of your assets what helps what helps you really have an effective and sustainable over time asset management program for the billion dollars in assets we manage I think that one of the another thing I just wanted to mention as we're sort of talking about this customer service or the the chart here the enterprise resource planning program the ERP replacement that Bobby talked about and that Ken talked about this is something that the what the utility billing system is currently a part of our Eden system so the replacement of that ERP process which is planned out a few years will also have a major impact on our utility billing system which supports obviously you know producing really tens of millions of dollars and revenues for our for our community for the enterprise resources so in terms of accomplishments I think that in addition to making water and making it come out under every kind of imagining condition whether it's you know COVID or other kinds of challenges we we did complete a lot of really important projects over the last couple of years involving updating the urban water management plan and water search contingency plan as I mentioned the updating the long-range financial plan and updating our system development fees and water rate charges rates and charges those are major elements of our financial foundation and our utility planning foundation that we completed in the last fiscal year and parts of this fiscal year and then we initiated construction on a system wide meter replacement program Graham Hill water treatment plant concrete tanks replacement project and continued construction on a really big project that's going on at Newport Dam right now and it's about six to nine months away from being completed a hundred and three million dollar project that's getting ready to be completed we're gonna I'm gonna show you some pictures of that in a little bit our key performance measures that we monitor obviously and we you know are really careful to see how we're doing is we have 100 compliance with drink and water quality standards zero worker comp entries requiring more than a 30 day absence we have 98 percent of folks paying with their 94 and fiscal 22 goal of 98 in fiscal 23 of people paying their water bills within 60 days so even in spite of the of the COVID and some of the economic issues associated that our customers continue to pay their bills we also implemented a water rearage program and we're in the process of implementing a wastewater a rearage program that's funded by the state and also a additional water low income water rate assistance program coming out of state funding and in the governor's may revise he authorized an additional 200 million to go into that fund so we have some progress on helping our our low income and fixed income customers who may be struggling with rising utility bills to provide some support there that's something we've been actively working on and then we maintained our credit ratings with the standard and for and bitch the overview the operating budget we're at 39.3 million you can see here that we are looking at some significant you know personnel costs are a big chunk of it clearly services and supplies chemicals power other kinds of services and supplies are a big chunk of it debt services becoming a bigger portion of our total budget over time and you'll see some information about that and then we have a capital outlay that pays for capital equipment trucks and you know other kind of machinery that we use in our operation that's not part of our capital improvement program we we're looking at personnel costs including no salary increases in this in the way that this budget has been put together because across the board that you know we're still in the process of negotiating with the the labor group so we don't have an assumption of building into for salary increases we we are looking at benefit increases of about eight and a half percent and services and plot and supplies increases of about six point nine percent from fiscal 22 part of that is definitely the cost of inflation and then three additional positions that I mentioned an additional engineering tech the replacement of a limited term management analyst with the management analyst for our customer service group and then the additional programmer analysts that we are funding out of the it's budget and then this is just some comparison of a number of years of our operating budgets of the actuals versus the adjusted budgets from that came in and I want to point out a couple of things going on here in 20 fiscal 2020 and fiscal 21 fiscal 2020 was the beginning of the impacts of the covid shutdown and so I think that the spending that we anticipated doing in that period really got scaled back due to the shelter in place activities that started happening there and then in fiscal 21 we had the impact of a furlough a 10 percent furlough for employees that wasn't built that was not built into the original budget but was shown up in the actual spending one of the things we've been working on over the last several years is to try to align our actual spending a lot more closely with the budgeted amounts and our staff have been working really hard on that so in proposed we're showing about 40 million close to 40 million and again the same categories that you saw in the previous slide moving on to the capital budget for the next five years our capital improvement budget is 295 million which is two million dollars more than last year however we have significant unspent funds that are carrying over from fiscal 22 to fiscal 23 a lot of that has to do with some of the slowdowns associated with some supply change things and you know things have taken a little longer to move forward than we imagine we do in terms of forecasting our capital costs we've been looking at construction costs which have been increasing and we're looking at a eight and a half percent increase in construction costs over last year the significant issue we're being actively monitoring it supply chain issues are a big part of that disruption and contributing to the inflation of our the cost of construction that has been experienced not just by the water department but really all across any the city and the community and the county and the country really this is an example of our what looks like our five year and the way that our capital budgets will be over the next five years as mentioned there's a pretty good size for year one there's a pretty good size carryover so this amount really is larger but this is the amount of additional appropriations we're asking for in fiscal 23 then we're funding these by a mix of state and federal loans low interest loans and bonds proceeds when needed as well as pay as you go financing and you'll see some results that compare those amounts a little bit further on in this presentation this is the the sort of new appropriations and where those dollars are going the Graham Hill tanks project is really it's underway right now it's under construction right now we have a new quick pipeline replacement project that is coming and that will be a big chunk of funding in fiscal 23 the finalizing of the new creek inlet outlet replacement project is occurring we're working on water supply after storage and recovery and recycled water projects that are moving forward to try to help us with our drought vulnerability meter replacement is on this list doing a lot of planning and design under the design build contract we have for the Graham Hill water treatment plant facilities improvement project we've got a brackening landslide area pipeline risk reduction that's a part of the new creek pipeline replacement project that's upstream of the felton to Graham Hill piece main replacements and water program administration these are funds that we use to sort of fund the sort of overarching support services for the the Santa Cruz water program and at the end of the year these funds are allocated to the projects that got worked on so they're not they're not just sort of like funds that are spent for things that are don't matter there they are allocated out to support the actual cap capital programs that will be happening I want to sort of take you through some slideshows this is a a picture of Graham Hill water treatment plant from the air the tanks that are being replaced are these three tanks right down here the plant is a subject the the facilities improvement plan is working on basically a major upgrade of this 1960 era facility and you will see here is the tank construction this is a few few months ago or a few weeks ago when they were oops sorry when they were removing the the original the one the tank one of three and they're getting right they are actually building the replacement tank for tank one right here and getting ready to build tank two which will then allow them to take tank two out and build tank three and then they'll finally the end process will get rid of the last tank so this is a few big project that's underway and we'd be really looking forward to an opportunity to take you up to see this construction and projects in in process it's a pretty fascinating project big and consequential for this facility the facility has to operate without these tanks which is a little bit of a challenge and so that's one of the reasons for the phasing why it happened here's a familiar picture of the of the no creek dam and lock loman reservoir this has also been the subject of a lot of work over the last couple of years this is the actual work in the reservoir to replace the the intake structures build new new intakes this is a part of a intake structure as you can see the scale of this particular thing that with this person here working on it this is a set around the the actual intakes to be able to protect them this is the part of the 1500 foot long tunnel that goes around the dam to connect the new piping to the new intakes and this shows you sort of all the way down into the tunnel this tunnel is completed now and they're getting ready to install the actual pipelines the intake structures are completed in the reservoir as well and by the miracle of I think GIS they were able to actually connect this tunnel to this intake structure under the reservoir and they hit the mark on the nose so that was really great another thing that we're doing and just to sort of wrap up this part then I'm going to turn it over to David this is the Laguna diversion which has a 1890 plaque on it this is a really one of the oldest structures in the obviously in the water system was part of an original privately owned water utility that was acquired by the city in the 1916 when they were pulling the various pieces of water infrastructure in the community together to create a water system and the one problem with this particular facility is that we've it traps a lot of sediment and it's a very difficult to operate once that sediment has been trapped so a new facility this is called a coanda screen has been added here that allows for the sediment to move through the system as opposed to accumulate behind and still allows us to divert water when water is available through a new intake structure here on this dam so this project was under construction last year and was completed at that time so I think with that I'm turning this over to David and David if you want to come on and take over this for the remaining part of it I think I can change the slides for you very great thank you and I'll just move quickly through this because this is sort of a reiteration of what Rosemary has already provided in terms of the operating and capital budget for the for the water department but the purpose of my little spiel here is just to talk about how we incorporate this into our pro forma model and we're guided by the long range financial plan which the council approved last September as well as we've we did a cost of service study last year and created new rates and and and that was something the council approved as well so that's all now being put into our long range financial plan and model and the outcome that we look for is the what is the debt service coverage what are the cash reserves because we sort of make a implied promise to the marketplace that loans money to us and you know we're held accountable by the RAIN agencies, Stern and Portes and Fitch to meet these and so we're very cognizant of these these coverages and these reserves and so this model will just I'll show you it meets those meets those targets next slide please so as Rosemary mentioned the key assumptions are these salary benefit increases um eight and a half percent and then the service and supplies you know we've we're fall we're we're coming into a period of great inflation and hopefully it's transitory but so far it's been a little bit sticky and so this is unfortunately what we're dealing with I mean one of the things that I think maybe Lisa mentioned earlier in her presentation is just how the pension costs have increased and you know we're looking at an 18 percent increase for the unfunded liability created by the Cal in the CalPERS system and so that's that's that really pushes on the salaries and benefits and services and supplies Rosemary mentioned the power of electricity where a huge electricity user over a million dollars a year that's going up by a greater than 10 percent chemicals kind of chemicals that we use to process through the water those are going significantly as well over 10 percent but maybe the biggest change are the interest rates we've enjoyed historically low interest rates I'm getting an SRF loan for 149 million to build a couple of those projects we're now seeking more SRF state revolving fund money for the next couple of projects and we're also seeking a loan from the EPA for water infrastructure finance and innovation act money which is also below market it's below what we would have to pay if we were to go out for municipal revenue bonds which in today's market they've risen to four percent just to put that into context last year they were at two and a half percent so that's why there's this asterisk at the bottom subject to change because interest rates if anybody's been refinancing a house or looking to buy a house recently you know how they've gone up dramatically in the last six months next slide please just to look back to last September November we got these increases for the water rates that we need to build what we think is about a 600 million dollar capital investment plan over the next 10 to 15 years we're focused on the the next five years in the cip that's the 295 million but these are the kind of rates that need to be increased 6.9 percent up to 16.4 percent to get those projects done and then if we look beyond that to the work that goes past the five years I mean we focused on five years because the cip is five years but we're looking at probably 10 percent for your rate increases thereafter next slide please the pro forma that we have again factors in the revenues the operating costs but also the capital investment plan the 295 million how do we pay for that and as rosemary mentioned there's 113 million in the current year fiscal year 22 not all that's going to be spent we bet burrito lunches over this we're told by our consultant that we're gonna probably spend 69 million and carry over 44 million some of us think that's more like something around 50 and 50 but suffice it to say there's going to be a fair amount of carryover of the capital improvement investment program into fiscal year 23 and then of course again through the pro forma we see that our metrics are met next slide please and here's a an abridged version of the pro forma showing the revenues the expenses and we break it out in much greater detail on our on our computers but for presentations sake this gets to show you what the net operating revenues are forecast to be in the current year and then the next five years and what the debt service also is forecasted to be so the focus we have is on that debt service coverage in the middle of the page and the the legal requirement for the water department's debt is that we have a dollar 20 of net operating revenue to each dollar of debt service but according to our long-range financial plan it's it's a dollar 50 to the dollar but here you can see that we are higher than that so we feel like we have a pretty good plan for meeting our debt service and then looking down the page the cash balances we focus on the at the bottom there fund 711 and fund 716 90 days of cash available in each or 180 days available in each to pay for operating expenses in the current year so like rosemary mentioned it's you know 100 it's a 40 million close to 40 we're looking close to 20 million for the 90 day cash and then okay so at the bottom line of our model is the 180 days cash that is the target that we meet for the next five years next slide please so just just some graphical presentation of what that looks like fiscal year 23 we have very little the red is cash funded versus the debt funded because we've had a couple of lean years in terms of revenue due to covet and drought we expect with the rate increases that we're going to do better in the cash funding in the years to come after fiscal year 23 overall over the next five years we're looking at 85% of funded with our loans and 15% funded by cash and that's aligns with the long range financial plan that we was approved next slide please by the operating forecast I guess one of the main takeaways that on this one is that well it is increases by the amount of 6.9 per year the biggest piece of it is the debt service which goes from about five million in fiscal year 23 to around 13.5 million in the last fiscal year so that's about 165 increase in the debt service and that's the main driver for the operating expense forecast over the next five years next slide please and then finally the cash balances by fund the cash balances increases mirror the increases in the operating expenses and they are an invaluable resource for us because you know for the last couple of years I mentioned that it's been lean and the rate stabilization fund 713 has been used to restore some lost money to the funds 711 and 713 to make sure we hit our targets over the last couple of years so we expect that to improve over time I just want to mention there's certain talk recently of recession that could come next year and if you look at the history of water revenues in the water department there was one bad year in particular in fiscal year 2010 where it dropped 10.7 percent and that if that happened today we would be dropping about four million four to five million dollars well because of these reserves we could weather that kind of a situation not saying that's going to happen and don't want to create a prophecy that would create a situation of negativity but we're pretty well positioned for you know changes in the economy if they should occur so now I'll turn it back to Rosemary for the final slide great thank you David so just to give that council a little bit of a context we work very closely with our water commission starting usually around the beginning of every year to talk to them about what's going on with the CIP and both the projects that have been completed and the projects that are planned in March we provide them with you know data that for example in this year that was linked to water quality data is linked to the Graham Hill Waste the Water Treatment Plant Facilities Improvement Plan which is a really important project in a big chunk of the funding that is going to the the capital investment work that's going to get done in this five-year window and then in May we present the sort of first look at the budget and CIP together including the kind of budget analytics that you've seen here the information about where we're going to be with our financial preforma and meeting our targets and then in June and a couple weeks here we'll have a final meeting with them well they will actually take an action on providing their recommendation to the council on our budget and CIP for the fiscal 23 and that will be reflected in the materials that you see in your budget approval packet that comes to you for the June 14th meeting and with that I'm going to take your questions. Thank you Rosemary Menard for that presentation and David Baum for explaining some of the trends and past financial overview. It's really interesting to see the scope of work that has been done and that still needs to be done and I always you know see the Water Department as this invisible need to to most of us in the community but extremely vital right. Thank you for all of the work and getting us financially stable in our reserves which is incredibly important for this department. I'm going to bring it out to council members for questions comments on this water budget presentation. Vice Mayor Watkins. Thank you mayor and thank you for the presentation Rosemar