[0:04] Okay, we're going to call this uh workshop together. Welcome to the city

[0:08] of Montlair's city council special meeting. And um um terms of roll call, u

[0:16] I believe uh council member Lopez will not be here today as city clerk. Okay.

[0:21] So, we have four council members present. And now we have public comment.

[0:25] This is an opportunity for members of the public to address the city council

[0:28] regarding the uh special uh meeting of the council. We have members of the

[0:32] public wish address city council. Uh it doesn't look like anybody's angering the

[0:37] audience. So we'll move on. Supposed to be a joke. Supposed to

[0:41] laugh. Come on guys. All right. Okay. So we'll we'll go down to the presentation.

[0:47] And this is the uh 2627 U presentation of the city of Montlair's Mous Mousing

[0:54] Housing Corporation budget. All right, who's leading off?

[1:00] Get started. Good evening, mayor, city council, city staff, and members of the

[1:05] audience, which are also city staff. I'm here tonight to present the 20 fiscal

[1:11] year 2026 27 preliminary budget review. We'll start with the overview and budget

[1:19] process. This evening's budget workshop provides

[1:22] an overview of the proposed fiscal year 202627

[1:26] annual budget for the city of Montlair with focused discussion on the following

[1:30] topics. Overview and budget process. Producing a balanced budget. Revenue and

[1:36] appropriations. Unassigned and special purpose reserve funds. Personnel

[1:41] services. General fund special purpose funds. bonds and debt service. And our

[1:46] conclusion, the fivemonth annual budget development

[1:50] process includes the following significant steps. Finance department

[1:55] staff develop and refine revenue projections. Finance department staff in

[1:59] conjunction with departments forecast personnel requirements. Department heads

[2:04] and their staff are provided with prior year amounts and formats for budgeting

[2:08] annual budget requests. departments prepare their budget

[2:12] requests for appropriations. City manager and finance department meet

[2:16] with department heads and staff to evaluate, modify, and finalize

[2:20] department level requests. The proposed annual budget document is submitted for

[2:25] city council review and consideration. Producing a balanced budget.

[2:31] The annual and primary goal related to budget preparation. produce an operating

[2:36] budget where revenues equal or exceed appropriations and programs and services

[2:41] are adequately funded to meet community and organizational needs and

[2:45] requirements. The fiscal year 2026 budget as presented has a net deficiency

[2:52] of general fund revenues over general fund appropriations in the amount of

[2:56] $631,544.

[3:00] This deficiency in general fund revenues is driven largely by one a lethargic

[3:05] national economy with inflation demonstrating a progressive rise. Two,

[3:10] federal economic, domestic and foreign policies including tariffs, immigration

[3:15] enforcement activities and military incursions together suppressing global

[3:21] economic activity. three suppress suppressed local economic

[3:25] activity and four a decline in consumer confidence due to the increasing costs

[3:30] of goods and services. The deficiency in general fund revenue over general fund

[3:36] appropriations is projected to reduce the general fund unassigned reserve to

[3:41] 5.46 million at end of year. At 5.46 46 million. The general fund unassigned

[3:47] reserve represents approximately 13.14% of the general fund operating

[3:53] appropriations which is less than the city council's unassigned reserve ratio

[3:57] goal of 25%. Now we'll discuss revenues for the next

[4:03] fiscal year. So this table one shows uh the current

[4:08] year our estimated revenue all funds uh 73,117,557

[4:17] revised prior years just over 70 million. This is a change of just over

[4:21] three million and that change is basically due to a uh about two million

[4:27] in grant funding to purchase potentially purchase a a fire truck. General fund

[4:32] operating fund uh current year for 40.9 million revised prior year 40.4 million

[4:39] so a slight increase of 553,000

[4:44] significant revenue components general fund 32.6 6 million in combined property

[4:50] sales and use and transactions and use taxes. This amount includes the

[4:54] following estimates. Just over 15 million in Bradley Burn

[4:58] sales tax, 10.9 million in transaction and use tax revenue related to measure

[5:04] L, 2.7 million in transaction and use tax revenue related to measure F, and

[5:10] 3.86 million in property tax revenue. Of the above totals, the following amounts

[5:16] are allocated for debt service as indicated. Debt service on bonds, 2.59

[5:22] million for the 2014 lease revenue bond, 2.39 million for the 2021 lease revenue

[5:28] bond, and 4.4 million for the 2021 pension obligation bond. Other fiscal

[5:36] year 2026 27 general fund revenue adjustments $210,880

[5:42] increase in taxes other than property sales and transaction and use taxes.

[5:47] Overall sales and transactions and use taxes are projected to show very minimal

[5:51] year-over-year increases. $80,000 decrease in licenses and permits

[5:57] due primarily to an expected decrease in the issuance of building permits.

[6:01] $34,600 increase in fines and forfeitures due

[6:06] primarily to an increase in parking citations. $8,500 increase in charges

[6:12] for services due primarily to an increase in reimburse program costs. A

[6:17] $12,200 decrease in miscellaneous revenue due primarily to a decrease in

[6:22] reimbured expenditures. for all other funds. A $79,257

[6:30] increase in the section two 2032 road maintenance re rehabilitation fund due

[6:37] primarily to an increase in gas prices. $95,000 increase in the traffic safety

[6:43] fund due primarily to an increase in parking citations.

[6:48] $200,000 decrease in the park development fund due primarily to a

[6:52] current decline in proposed new housing development in the city.

[6:57] $29,445 increase in the public safety fund due

[7:01] primarily to an increase in gas prices. $388,473

[7:07] increase in the afterchool program fund due primarily to assist in covering

[7:12] higher costs. $125,000 increase in the economic development

[7:17] agency assets fund due primarily to an increase in redevelopment property tax

[7:22] trust fund property taxes. A $550,000 increase in the sewer operating fund due

[7:28] primarily to an increase in sewer fees.

[7:33] So now we'll talk a little bit about our projected deficit. The fiscal year

[7:37] 202627 budget presently has a projected general fund operating deficit of

[7:43] 631,544.

[7:46] Montlair's heavy reliance on sales tax and transaction and use tax revenue have

[7:51] contributed to this projected deficit. Montlair is not alone in confronting

[7:55] projected declines in revenue and general fund deficits. Other neighboring

[7:59] cities include, but are not limited to, the following: Pomona, an 11.4 4 million

[8:05] deficit. Upland a $5.69 million deficit. Chino Hills a $4.3 million deficit. LMA

[8:14] Linda an 847,100 deficit which may be worse due to the

[8:20] June 2nd 2026 loss of a 1% tax measure and Redlands a $2.7 million revenue

[8:27] decline. Depressed growth in na in general fund

[8:31] tax projections for fiscal year 2026 27 is based on but not limited to the

[8:37] following areas of concern. National factors revenue estimates are largely

[8:42] impacted by a national economic environment that presents significant

[8:46] challenges. A lethargic national economy with a progressive rising inflation.

[8:51] Declining consumer confidence. Recurring swings in tariff policies. Rising fuel

[8:57] and energy prices. A growing economic gap defined by a K-shaped economy,

[9:04] fluctuations and uncertainty in the housing market, growing concerns related

[9:08] to affordable health care coverage, homelessness, immigration enforcement

[9:12] activities, and other social issues, economic uncertainty restricting the

[9:17] Federal Reserve's ability to lower the federal funds rate.

[9:21] The California factors. The state's economic cycles are shaped by growth and

[9:26] downturns that are more volatile that what is experienced by many other

[9:30] states. Heavy reliance on a few key industries, progressive tax structure,

[9:36] boom and bust budget cycles, external economic shocks, demographics and labor

[9:42] market shifts, political and policy factors. For fiscal year 2026 27,

[9:48] California's legislative analyst office has projected an almost $18 billion

[9:53] shortfall.

[9:57] Uh Montclair regional factors drawing on fourth quarter 2025 and first quarter

[10:02] 2026 data from HDL companies. Sales tax trends demonstrate limited improvement

[10:08] in sales tax revenues heading into fiscal year 2026 27. Consumer spending.

[10:14] Consumers are holding back or focusing on essentials and value. Declining slow

[10:19] growth and tax revenue sources. Montlair sales and transactions and use tax

[10:24] measures are showing minimal year-over-year growth. E-commerce versus

[10:29] brickandmortar. Retail growth continues in online fulfillment centers, which

[10:33] decreases sales and transactions and use taxes collected by the city.

[10:38] » Let's stop right there for a second. Any questions on the revenue side so far by

[10:42] council? Any questions right now? >> On the revenue side?

[10:47] » The revenue we just talked about want to start with revenue. Go for it.

[11:05] » I have a quick question if you need a second.

[11:07] » Go ahead. What was last year's

[11:13] general fund revenue you can recall?

[11:22] » Oh, yeah. 40.4 million. >> Yeah.

[11:36] on slide eight. Um, we're talking about current year revised prior year and

[11:42] change. Uh, I know we talk about being in a $631,000

[11:48] deficit. So, it just seems odd that we would be increasing our our next year by

[11:55] three. Here it says 3 point or 3033 million where but in the um that we were

[12:04] given. My calculations are more like 4 and a.5 million um in what I see. I'm

[12:11] just wondering why we're increasing if we're in a deficit. And u that's one of

[12:17] my questions on that side of it. And then um on the lease revenue bonds, I

[12:23] got I have a question regarding um what our debt service that we pay

[12:28] back. Is that a fixed rate or is that an adjustable? Yeah, that the lease

[12:34] revenues are on the later on agenda. So, let's let's uh we'll look at that later

[12:38] on if you want to lease bond mentioned a few it's mentioned a few times in the

[12:44] » there's there's a section on the revenue bonds all that we can get that one there

[12:49] but let's let's focus on slide eight first. So the the three million change

[12:53] that's over all funds. So that includes everything and that our deficit is we're

[12:58] discussing is just in the general fund. >> Okay, I understand. I'm just wondering

[13:04] why we're increasing if we're in a deficit. Why would we

[13:09] increase our budget? >> You're you're asking why the funds are

[13:12] increasing? because the revenues coming into other funds other than general fund

[13:17] are increasing >> and those funds are used to operate

[13:20] other than general government operations.

[13:22] » Yes, I I understand that. But my question is if we're in a deficit and

[13:27] we're bringing in more revenue, why are we do we have to spend it all or

[13:34] » Okay, so general fund monies are used to operate general government operations

[13:40] including personnel. Yeah. >> Um that's the burden of the general

[13:45] fund. Other funds are for specific activities and most of that would rep be

[13:51] represented for example by grants that are used for infrastructure projects um

[13:56] and other things that those funds are specifically designed for. We don't have

[13:59] control over those funds. They're specific for specific purposes. The

[14:04] general fund is for general government operations which is 95% of our

[14:09] operations. And those funds are what we are experiencing a deficit in

[14:16] » the funds that were receiving >> general fund

[14:18] » the general fund the that money that we receive from our general tax operations,

[14:23] property taxes, sales tax operations, uh u transactions and use tax revenues, uh

[14:30] things like uh police department going out and issuing traffic citations. Those

[14:34] monies all go into the general fund. And that fund which operates the majority of

[14:39] our services to the community including personnel expenditures

[14:45] is what is experiencing the deficit.

[14:49] » Okay. Um I understand what you're saying. I understand the funds that

[14:54] we're receiving and the general operating fund. I guess I just I'm

[14:58] having difficulty understanding why if we're having a deficit, why we're

[15:06] increasing certain things. Why aren't we cutting

[15:10] back in areas? I'm not saying everything, but to to prevent having the

[15:15] deficit. >> Well, we did cut back. We cut back $3.8

[15:18] million from the requests that were submitted by the various departments. We

[15:23] also froze a number of physicians that saved the budget about 1 point

[15:28] » just a little over a million. >> Yeah.$1.3 million.

[15:31] » Yeah, I saw that. I saw that in the budget and your message and everything.

[15:34] » I think we're trying to do right now is focus on the understand the revenue

[15:37] issues because we'll talk about corporations next.

[15:40] » Yeah. >> Corporations will talk about

[15:42] expenditures, talk about positions are frozen. I guess the big the big to me

[15:47] when I look at the revenue, the big issue is revenue is our revenues are

[15:50] flat. Our sales tax revenues are flat. They're not growing to offset uh offset

[15:56] cost decreases. >> I think that's I think that's what

[15:59] staff's trying to say here. Am I correct? Uh

[16:02] » well, and and revenue >> Yeah, our revenues are flat.

[16:05] » Yes, revenues are flat. And even if they're up, they're up over previous

[16:09] years that were negative. So, if for example, if you were 6% negative uh two

[16:15] years ago and 3% negative the following year, and even if you're up 2% this

[16:21] year, you've only gained uh improvement uh on a negative of of uh uh 8%. So,

[16:30] you're still behind. You just are demonstrating moving forward. You're not

[16:35] going negative, but you're still not where you were at three years ago.

[16:40] And I understand that. And so, and then the same with the reverse. If we had

[16:44] more money than we were expecting, then we'd be at a positive. Correct.

[16:49] » Well, no, not necessarily because you still have to make up the negative from

[16:52] previous years. >> Okay. Well, well, I'm talking, I guess,

[16:55] about Measure L. You know, Measure Measure L I know you you put in the

[17:00] report that the first year we brought in 11 point something million. the next,

[17:04] you know, few years it dropped, you know, about a million dollars and then

[17:07] it's slowly going back up. And we talk about how that's not very much. But if

[17:13] you really go back to 2020 when we, you know, wanted and we put this on the

[17:19] ballot for the residents, what was our projected revenue at that time that we

[17:24] were thinking we were going to get from it? It was $7 million. So technically

[17:28] we're really four million more than what we are originally wanting which is about

[17:33] 40% rather than saying we're do you understand what I'm saying? I I'm

[17:38] looking I go back in history and I'm just trying to see where we are and

[17:42] what's going on with you know all the funds and that's why I was asking about

[17:45] » yeah I I understand and projections versus actual results are are typically

[17:49] two different things. You hope and expect that you will generate more. Of

[17:53] course, at the time we were coming out of COVID. So, while we had had actually

[17:58] anticipated that it would generate up to $11 million because of COVID, uh all of

[18:04] the advisers told us that we should lower that number and expect much less

[18:08] than that. And that is why we had projected that we would be somewhere

[18:12] between seven and 8 million. The result obviously was better than we uh well the

[18:18] advisers had anticipated but what we had actually anticipated it would be uh it

[18:23] came in at $11 million and I think if you go back and you look at all of the

[18:27] materials related to discussions at that time staff was more positive than the

[18:31] consultants were and believe that it would generate that $11 million it did.

[18:36] Uh but again that was over five years ago and here we are uh now in 2026 27

[18:44] and the numbers now are less than what it what we earned uh five years ago.

[18:50] That's not positive growth. That's backward growth. And while we are moving

[18:54] back we moving back to that $11 million. It's five years ago that we came in at

[19:02] $1 million. Those numbers should be at $14 million if the economy was really

[19:08] progressing in a positive direction. It's not progressing in a positive

[19:13] direction. We're not at $14 million. We're still about $400,000 short of

[19:19] where we were in uh 2021 2022. >> I I understand all of that, but I'll

[19:26] I'll let you continue on.

[19:32] Okay.

[19:37] Okay. So now we will discuss appropriations.

[19:42] So table two shows the department request versus city manager recommended.

[19:46] So overall funds the department's requests were 64.5 million. City manager

[19:52] approved is 60.6 million. So we were able to uh reduce the budgets by 3.9

[20:00] million for the general fund department requests were 45.2 million. City manager

[20:06] approved 41.6 million. So our reductions were 3.6 million. City manager

[20:12] recommended amounts uh the current year 70 million 58,000

[20:17] for the new fiscal year. This current year we're at 65,230. So there's almost

[20:23] a $5 million jump right there over all funds, 4.8

[20:28] million. And the general operating fund current year is um for the next fiscal

[20:33] year 41.6. Uh the current fiscal year 39.5 million.

[20:38] So that's 2.1 million increase over pri over over the prior year.

[20:44] Personnel services all funds 35.6 6 million which is 58.9% of total

[20:50] appropriations which is up from 30 34.4 million which was 61.7%

[20:57] for fiscal year 202526. Uh general that was over all funds

[21:02] general fund 28.7 million which is 69% of general fund appropriations which is

[21:08] up from 27.2 2 million which was 68.9% for fiscal

[21:13] year 202526. Personnel increases year-toear are

[21:18] related to addition of grant funed positions in the fire department

[21:22] restoration of certain general fund positions in various departments

[21:26] following the CO 19 pandemic. enhancing staff in key functional areas,

[21:31] succession planning, implementation of negotiated wage and benefit increases,

[21:36] and annual increases to Kalpers's fund unfunded acred liabilities for employee

[21:42] pensions, services, and supplies. All funds 21.6

[21:48] million, which is 35.8% of total appropriations, up from 20 million, 20.6

[21:54] 6 million which was 37.1% for fiscal year 202526.

[22:00] For the general fund 12.5 million which is 30.2%

[22:05] of general fund appropriations up from 11.9 million which was 29.2% for fiscal

[22:12] year 202526.

[22:16] Capital outlay for fiscal year 2627 is 3,244

[22:23] two 3,244,114

[22:27] of which 597,799 is being funded by the equipment

[22:32] replacement fund. All major capital outlay requires authorization from the

[22:37] city manager before issuance of purchase order requests.

[22:42] So, here's a listing for each department. For the information

[22:45] technology department, $247,000 for computer equipment, human services,

[22:52] a total of $165,000 for two passenger vans, which are we're

[22:57] getting through a grant, and uh MAP office furniture, which is the

[23:01] afterchool program fund. Police Department, $194,400

[23:06] for three patrol vehicles being paid out of the equipment replacement fund and

[23:11] dispatch console upgrade, which is the general fund. the fire department

[23:16] 2,54,552

[23:20] for a tractor drawn aerial ladder truck which will be paid out of the equipment

[23:24] replacement fund and grants from San Bernardino County and community project

[23:28] funding forcible entry training props general fund life 35 cardiac monitor the

[23:36] general fund and five life pack CR2 defibrillators general fund and for the

[23:42] public works department 133 $3,162 for a 2026 Chevrolet Silverado, which

[23:49] will be paid out of the equipment replacement fund. WCO towable arrowboard

[23:55] case 13in trenching bucket, R234 YIF AC machine, CEK manufacturing tool

[24:03] drawer, all those paid out of the general fund. and out of the sewer fund

[24:07] sewer BMP program and three smart cover manhole lid systems.

[24:15] So this table shows all the allocations by department and a change from the

[24:20] prior year is just over 4.3 million. There's only uh one fund transfer

[24:27] budgeted and that is our annual $100,000 transfer from the traffic safety fund

[24:32] for applicable programs to the general fund.

[24:37] So, do you want me to stop here? >> Keep keep on going.

[24:40] » Keep on going. >> Yeah, we'll stop.

[24:42] » Uh general fund operating fund balance unassigned reserve.

[24:46] So, here's our um general fund operating fund balance uh and comparisons with

[24:52] operating appropriations. So at the end of fiscal year 2627

[24:57] we're estimating our operating fund balance will be 5.4 million which is

[25:01] 13.14% uh which is below the recommended 25%.

[25:08] An assigned reserve balance government finance officers association general

[25:13] fund unassigned reserve ratio recommendation is minimum 25% optimum

[25:18] 50%. City Council direction maintain minimum unassigned reserve ratio of 25%

[25:25] of operating appropriations with a goal to achieve a 50% unassigned reserve

[25:30] ratio estimated June 30th 2027 general operating funds fund balance estimate of

[25:37] approximately 5.4 4 million of the general fund unassigned reserve which is

[25:41] less than the threshold target of 25% of operating appropriations.

[25:46] Estimated June 30th 2027 general fund reserve fund equity rep representing

[25:52] reserves for special purposes is 25.3 million.

[25:58] Over the past seven fiscal years, the reserve ratio has fluctuated with a low

[26:02] of 16.55% and a high of 24.95%.

[26:07] These fluctuations are generally the result of the following. A difference in

[26:12] operating appropriations between consecutive years. Adjustments to the

[26:16] city's revenue profile. Creation of the following debt service funds to achieve

[26:20] adequate funding for annual payments of the 2021 issue of lease revenue bonds

[26:25] debt service fund. 2021 issue of pension obligation bonds debt service fund and

[26:31] the UAL POB amortization fund. Adjusting special purpose reserve funds

[26:38] as necessary and when surplus funding is available. Establishing additional

[26:42] special purpose reserve funds to reflect changing requirements related to city

[26:47] operations. Funding assigned to the economic development agency for real

[26:51] property acquisition. End of year audit adjustments for actual revenues and

[26:56] expenditures. Mid-year budget adjustments. City staff will continue

[27:00] working toward a fund balance ratio in the general operating funds unassigned

[27:04] reserves that represents no less than 25% of the general operating funds

[27:09] appropriations budget with the long-term goal of achieving a 50% unassigned

[27:14] reserve ratio. >> Okay, we can stop there for a second.

[27:17] So, any questions on the appropriations right now or the unassigned reserves

[27:23] at this time? Okay, questions continue on.

[27:28] » Okay. >> Okay.

[27:30] Maintaining general funds fund balance and reserves.

[27:34] Maintaining a healthy general fund operating fund unassigned reserve fund

[27:38] balance. In recent years, the city's success at achieving and maintaining a

[27:42] healthy general fund operating fund unassigned reserve fund balance has been

[27:46] accomplished through commitment to the following coordinated objectives. Fiscal

[27:51] restraint achieved by implementation of sound economic policies and practices.

[27:56] Reviewing the shared allocation of personnel related costs between the

[28:00] general operating fund, other city entities, and other city funds.

[28:04] Maintaining an appropriate employee ratio. Requiring employees to pay their

[28:09] respective share of the CalPERS member contribution. Implementation of revenue

[28:14] enhancement measures for fiscal year 2026 27. The following revenue

[28:19] enhancement measures are submitted for consideration.

[28:23] Measure L. This is an existing measure. Continue encouraging economic activity

[28:28] to improve general fund tax receipts. Community facilities districts. This is

[28:33] also an existing measure. Continue encouraging highdensity residential

[28:37] development to improve CFD tax receipts in support of police and fire services,

[28:43] emergency equipment apparatus, and public works maintenance programs.

[28:49] Implementation of revenue enhancement measures continued. commercial cannabis

[28:53] businesses. In fiscal year 20 2026 27, city council will be asked to consider

[28:59] adoption of a revenue raising ordinance which could generate $2 million in

[29:04] general fund revenue. The proposed tax rate is 7% authorized by voters in the

[29:10] November 2022 general municipal election.

[29:14] Cost of P personal choice services study implementation. On May 4th, 2026, a

[29:20] workshop was conducted related to assessed fees for personal choice

[29:24] services. Services that are offered to customers and that can be withheld for

[29:29] non-payment may be likened to user fees. City council adoption of the

[29:34] recommendations contained in the cost of services study can potentially generate

[29:38] $760,000 annually. Utility users tax adjustment

[29:44] to the voter authorized rate of 4.74% to generate approximately $600,000 in

[29:50] new general fund revenue. Utility users tax considered 2028 voter

[29:56] amendment to include cable streaming services and/or other utilities, for

[30:01] example, refugees and sewer not currently provided for in the UUT

[30:06] ordinance may generate in excess of $800,000 annually in general fund

[30:11] revenue. e-commerce. Continue working with

[30:15] legislators to amend California's current tax code related to point of

[30:20] sale. Alternatively, consider working with special legal counselor council to

[30:25] pursue pursue a class action lawsuit to require cities with point of sale

[30:31] agreements, sales tax sharing agreements with online instate retailers to amend

[30:36] those agreements to favor a point of delivery reporting scheme or report all

[30:41] online in-state transactions and use tax receipts received through tax sharing

[30:46] agreements to their respective county pools for distribution to agencies based

[30:51] on per agency brick and mortar per capita sales tax performance. Potential

[30:57] to generate $2 million annually in online transactions and use tax revenue.

[31:04] Monavista Fire Protection District pursue cost reimbursement for fire

[31:08] service in the city's sphere of influence. Current and prospective

[31:12] annual payments are estimated at approximately $760,000.

[31:17] Montlair potentially entitled to retroactive service costs to be

[31:21] determined. The A-line, formerly the Gold Line

[31:25] litigation, continue pursuing current claims and litigation against the San

[31:29] Bernardino County Transportation Authority regarding extension of light

[31:33] rail to the Montlair Transit Center. Economic recovery undetermined, however,

[31:38] could s significantly exceed$1 billion dollars based on Beacon economic study

[31:44] related to loss and economic output and annual tax revenues.

[31:48] Commercial use of the former Pep Boys building site. Evaluate conversion of

[31:53] the former Pep Boys into a commercial use that could potentially generate up

[31:57] to 30 to $50,000 monthly in lease revenue payments. the I 10 freeway

[32:03] adjacent electronic messaging sign. Potential for two sites along the I 10

[32:08] freeway corridor. Installation of electronic messaging signs could

[32:12] generate an estimated 100,000 to $500,000 annually in leasing

[32:17] advertisement revenue for the general fund opportunity zone designation. This

[32:22] designation in the North Montlair Census District would allow for infusion of

[32:27] investment C capital in North Montlair which could be in excess of seven

[32:31] billion dollars. >> Okay. Any questions on this section of

[32:36] general operating fund balance revenue? Maybe I'll lead off. I know that on we

[32:41] go to slide 31. I just want to pinpoint to my colleagues. These are potential

[32:47] revenues that the city can attempt to capture. These are obviously revenue.

[32:53] You know, one is a cannabis business. We had a workshop on that two weeks ago and

[32:58] I believe it's essential that this council have a strong consideration of

[33:04] of the cannabis business ordinance uh later this year. Um I think uh staff did

[33:11] receive directions at the last workshop and uh obviously this is expected to

[33:16] come back to us. The other thing here is this uh cost of per personnel choices

[33:21] service studies. We also had a workshop on this projected to generate 760,000

[33:26] annually and this will also come back to the uh city council at a regular meeting

[33:31] uh for us to consider this but this is also new revenue. Um

[33:36] this this is new re this is not in the bud in the proposed budget.

[33:40] » Correct. So we were to adopt this uh this could potentially be new revenue

[33:45] coming in um for us. The other thing here is you know the utility usage tax

[33:50] uh um when this was first adopted back in 1992 was 5% was 5% that was a voter

[33:59] approved utility users tax and then the count at the time um

[34:04] had a plan to reduce it based on sales tax dollars. uh uh increases. So we have

[34:12] a potential to look at this. I think if you know depending on where the budget

[34:15] is the second half of the fiscal year or the first half of 27 that we should also

[34:21] look at this maybe our midyear budget review and uh and consider uh if this

[34:27] the utility usage tax should be adjusted. This is another one utility

[34:31] users tax. I don't quite understand the whole cable

[34:34] uh streaming services but if you know this is that the council wants to uh put

[34:40] this place in the ballot in 28. I'm not advocating to do right now, but it is

[34:44] something for us to consider at a future date. If we go to number 32,

[34:51] um this is a big issue. I don't know if you

[34:55] have any questions about it, but obviously e-commerce and in these tax

[34:59] sharing agreements some of the jurisdictions are doing. I know there's

[35:02] some legislation league California city has also been

[35:06] involved to try to make it more equitable. There's no leeways but

[35:10] obviously brick and mortars which were a brick and mortar city is being impacted

[35:15] by the e-commerce or the big warehouses uh that uh are point of sale. So, um,

[35:23] and then of course the Monav Vista Fire Protection District, uh, this is

[35:27] something also the staff's worked on, identified that this revenue of 760,000

[35:32] that we were never getting. Um, I don't add, uh, I believe uh, we have

[35:38] communication with the county on this now, but this is also potentially new

[35:41] revenue uh, for the city of Monler's general fund. So, I'll stop there and

[35:46] receive any more questions. Mayor Paul Martinez,

[35:50] » I was just curious, does the GFOA's unassigned reserve ratio recommendation

[35:56] have any bearing on like insurance or >> No,

[36:00] » nothing like that. It's just just >> recommendation. Yeah.

[36:04] » Thank you. That's all I have. >> Okay. Council Ruth,

[36:10] » I I will start with a question. I have

[36:14] some others in here, but some of them can wait.

[36:17] uh personal services, the personal choice for

[36:22] services. How would that work?

[36:27] Well, these are effectively similar to what user fees are where if somebody

[36:31] requests a service specific from the city that is separate from uh general

[36:36] services provided to the community, they would be obligated to pay for those

[36:39] services. >> What would that service be?

[36:42] » Yes. Oh, what would the service be? For

[36:45] example, if they're uh doing a development and they need specific

[36:49] services from the city related to their development project, the community uh

[36:54] would not be responsible for paying for the city providing that service to them.

[36:58] The individual themselves would be responsible for paying for that service.

[37:02] » Well, we already have developer fees that developers pay.

[37:05] » Yes. I'm only using that as an example. Uh but

[37:08] » what would an example be to an average resident?

[37:12] a resident who would come in for example who would want solar panels on their uh

[37:17] roof. That is not a service that the city would provide and charge to the

[37:22] residents generally. That would be charged specifically to the individual.

[37:28] » So what would the using solar panels? What would that fee be? A fee to install

[37:34] them? We don't install solar panels anyway. They hire somebody to do

[37:37] » No, but it's a processing fee that the city applies for uh uh permits and other

[37:43] inspection services and things that would be required from the city. So,

[37:46] there are only services directed to individuals who are requesting that the

[37:50] city provide services beyond what is normally provided to the community.

[37:56] » That would not include police and fire, would it?

[37:58] » No, this is not inclusive of that. >> Just point of order that we discussed

[38:03] this at the workshop. I know. I'm I'm just trying to to to get my head around

[38:07] all this. >> Got a big document relating to the fee

[38:10] study that was done, >> right? No, it and then we're talking

[38:13] about the utility users tax and increasing that.

[38:18] What my concern is what it means to one businesses in town, not large businesses

[38:25] or very small businesses who are very dependent on electricity for example and

[38:30] natural gas. those rates are going up all the time. These businesses are many

[38:35] cases marginal. An increase in this tax could result in that business simply

[38:41] saying, "I can't be here anymore. I've got to close my doors." And I hope we we

[38:45] look at that very carefully. It would mean a lot to residents who are

[38:50] struggling to make ends meet right now. All utility costs are high, very high.

[38:55] Nobody can tell me they're not. And if we do this, many residents may have to

[39:01] make a choice on the utility on when they use certain

[39:06] what time of day they use electricity, when they use their natural gas, if they

[39:10] even use certain things at all. They may simply turn around and say, "I can't

[39:14] afford it. I have to really cut back." So, I hope whatever we do with that, we

[39:18] think about it. Um, most of our residents are struggling. They don't

[39:21] have the income. And then the last question I have, I have others, but

[39:26] that's for later. on the CFD we're talking about in North Montlair. Um that

[39:32] CFD I thought just covered those units. I didn't know what if I were to

[39:37] understand what this said. I didn't know that those units or that these CFDs go

[39:43] for the whole city. I thought it was just for that area. Community facilities

[39:47] district. It's not citywide. It's specific to a district.

[39:50] » Well, no, it could be applicable citywide. It is used primarily in North

[39:54] Montlair because that is where the highdensity development projects are

[39:57] occurring. But if there were projects in other areas of the city and uh it was

[40:03] the intent to require that the because of the size of the project that there

[40:08] would be a responsibility related to providing additional police and fire and

[40:12] public works maintenance services to that area. uh then that would be imposed

[40:16] on those areas as well >> because the the way I read this, it

[40:19] looked as if these CFDs are being used to balance the budget in regard to

[40:24] police and fire services and they really are applicable only to that area. If I

[40:28] were resident there, I wouldn't want to know that I'm paying for something and

[40:32] it's being used somewhere else. >> Yeah. Well, they are used only for the

[40:37] area in which the CFD is paid for. So, they do go into uh obviously their

[40:41] general fund dollars, but they're used specifically for the project that the

[40:46] money is uh uh derived from, and it is not used generally throughout the city.

[40:51] » That that's all I have for now. >> All right, Council Member uh Mendes.

[40:56] » Uh yeah, just a couple questions on the um cannabis business. The proposed tax

[41:01] rate of 7% that was authorized um by the council, that's um on top of the regular

[41:07] 9% Correct.

[41:10] » That would be on top of the Bradley Burns and the transactions use text.

[41:13] That is correct. >> Okay. So, 16%.

[41:18] Um, and then going down to the personnel uh choice services study implementation,

[41:25] I I think that is a good idea. Um, but obviously it's not going to be used for

[41:32] basic questions or simple questions over the counter. These are more for

[41:36] developers or or things that people need. I I understand what these are.

[41:41] Yeah. And um when it takes time out of one of our employees to pull reports or

[41:47] do things, I understand. I mean, there has to be a cost for that. And and I

[41:51] know it won't be outrageous, but I think it's definitely something that we should

[41:55] look into. Um and as Bill mentioned, as long as it doesn't, you know, affect

[42:00] police and fire calls. Um on the let's see here the utility users

[42:07] tax. Um I I know John just mentioned 5% but is is that what it is? The max could

[42:13] be is five or >> the maximum maximum authorized is I

[42:17] believe 4.74%. Yes. >> Yeah. That's what I think. Yeah.

[42:20] » Which is considerably low when you compare it to what it is in other

[42:23] cities. >> Yeah. And we're currently right now

[42:25] we're only charging 3 point something. >> 3.89.

[42:29] Yeah. >> Oh I'm sorry.

[42:30] » 89. my fault. Okay, >> no worries. Um,

[42:34] » so yeah, and obviously we created that. I mean, well, the council created that

[42:39] at that time in '92 just to help the city when it needed help and they

[42:44] reduced it when they could and you know, and right now we're having a little bit

[42:47] of trouble. So, yeah, we may >> and can I talk about that for a second?

[42:51] I'm sorry. >> Oh, yeah.

[42:52] » Yeah, this could we can do this for if it's needed. I'm not saying it's needed

[42:56] right now. We we'll you know next year but if we do it maybe would you do it

[43:00] for one year and then we reevaluate again.

[43:02] » Yeah. >> I'm not saying that.

[43:04] » Yeah. No no I I understand. And then the um consideration of bringing the uh to

[43:10] the voters in 2028 to include um cable and streaming services. I I

[43:16] agree with that as far as the refu sewer. Um because I I know refuge isn't

[43:22] ours, but I feel like it comes through the city and it's almost like a city. I

[43:27] I would say that we probably shouldn't include sewer and trash, but yes, um

[43:34] definitely the cable and streaming services on that one. And as far as the

[43:39] Monav Vista Fire Protection District and um pursuing cost reimbursement, how many

[43:45] years um is it that um they owe us for that we never were paid?

[43:50] » Well, it's to our understanding that the uh payments to the city of Montlair,

[43:55] which were previously uh allocated to us through property tax revenues, ceased in

[44:00] 2005 when LAFCO made a decision to eliminate the paper district. And well,

[44:06] they interpreted that the Monav Vista Fire Protection District was a paper

[44:10] district and it was LFCO's desire to eliminate paper districts at that time.

[44:16] And so they did that. It was our understanding that while that occurred,

[44:20] the payment would continue to Montlair through property tax revenues. Um and

[44:25] earlier this year we made the discovery that in fact the property tax revenues

[44:30] which were very difficult to distinguish between uh what is coming from the city

[44:35] versus what is coming from the sphere of influence. So there was no clear

[44:38] indication of of that tax flow. And then when I had asked for a audit to be

[44:44] conducted by finance, they made a determination that we were receiving

[44:49] minimal in property tax revenues from the sphere of influence, which opened

[44:54] our eyes to the fact that the county was not making the payment. And so we hired

[44:58] HDL to look at it. and HDL did make the determination that the county does owe

[45:04] the city a substantial amount of money. Uh I say or it is said in the

[45:10] presentation that that amount needs to be determined. We project that it's

[45:15] probably in the neighborhood of $9.3 million. Uh we will have to negotiate

[45:20] that with the county. Uh the county will probably make an argument that uh we can

[45:25] only go back a number of years. Our argument would be that this is not a

[45:28] commercial debt. This is a service debt. We provided the services you owe us for

[45:33] the services and we're going to stand by that plus uh the current year and all

[45:40] future years including a CPI adjustment in future years. So uh we are seeking to

[45:45] set up a meeting with the county to have that conversation.

[45:49] » Okay. All right. That's all the questions I had. Thank you. Okay. Let's

[45:53] uh move on.

[45:58] So uh now we will discuss personnel services.

[46:04] Uh for fiscal year 2026 27 there are 205 full-time positions. Uh the majority of

[46:11] that coming out of general fund sewer fund and grants and then.24 of people uh

[46:17] come are paid through the Montlair successor redevelopment agency. There is

[46:22] one part-time benefited position. uh the employee has elected to remain in the

[46:26] part-time benefited position to maintain social security coverage and the

[46:30] part-time benefited program will end upon employee separation from

[46:34] employment.

[46:37] The city's fiscal year 2026 27 proposed operating budget anticipates several

[46:42] adjustments to personnel classifications for some or all of the following

[46:46] reasons. Ensure the effective and efficient operation of city departments.

[46:51] Provide for succession planning, ensure adequate staffing, promote personnel

[46:57] retention, achieve depth of experience, and ensure the provision of city

[47:01] services. Address evolving needs and changes to organizational operations.

[47:07] Respond to underperformance of sales and transaction and use tax earnings.

[47:12] Respond to the availability or loss of grants. be responsive to potential

[47:17] shifts in the local economy due to the state of uncertainty regarding federal

[47:21] economic policies. Personnel modifications are submitted to

[47:25] the city personnel committee for consideration prior to implementation of

[47:29] classification modifications and/or the appointment of qualified and appropriate

[47:35] personnel. The fisc year 2026 27 budget city

[47:40] manager recommendations. The city manager is not presently

[47:44] proposing any significant operational or personnel reorganization changes. The

[47:50] fiscal year 2026 27 budget does propose freezing nine full-time and seven

[47:56] part-time designated vacant positions. Each position is vacant for the

[48:00] following reasons. The position is vacant due to attrition. The position is

[48:05] vacant because it is an added extra position and remains vacant. The

[48:10] provision The position remains vacant because No recruitment was conducted,

[48:14] the position is vacant because it is a proposed new position in the fiscal year

[48:18] 2026 27 budget or the position remains vacant because the incumbent was

[48:24] promoted. The fiscal year 2026 27 proposed budget does not recommend that

[48:29] any active employee be subject to layoff, nor does the city manager

[48:34] project the need to meet with any bargaining groups to discuss layoff

[48:37] procedures. The city council is advised that due to

[48:41] employee attrition and positioning by the MFA bargaining group, city staff is

[48:46] in conversation with the San Bernardino County Fire Protection District

[48:50] regarding fire protection emergency services, a process that would result in

[48:55] transitional position layoffs. So, here's a list of the frozen vacant

[49:01] positions. There are five uh departments involved and it's saving uh just a

[49:07] little over 1 million uh with us freezing these positions. If not, our

[49:11] deficit would be over 1.6 million. >> Let's stop there for a second. So I just

[49:17] last point Dan again is uh because these positions are frozen

[49:22] um it wasn't frozen this you said that the deficit would be 1.6 million

[49:29] » and just want to clarify that with the council and then uh uh the bargaining

[49:34] negotiations. Um so if you obviously we're still in

[49:39] labor negotiations, but if the council did approve any personnel

[49:45] adjustments in compensation uh that could add on to

[49:50] the deficit. >> That is correct. My anticipation could

[49:54] add 500,000 to $1 million to the deficit. Okay.

[49:57] » And Mr. Mayor, if I may, I just want to backtrack to the uh sphere of influence

[50:01] issue. And I want to congratulate and thank our fire chief Ryan Derk who was

[50:05] instrumental in addressing this issue and working with city staff. U he uh

[50:12] generated a significant amount of information related to this issue and I

[50:17] do want to commend him for his effort in working with us uh to bring this issue

[50:21] to the forefront so that we could move forward in addressing this with the

[50:25] county. I'm sorry. The issue again is I'm sorry

[50:29] » would be the sphere of influence issue. The issue related to providing fire

[50:32] protection services to the sphere of influence to the former Mont Vista Fire

[50:37] Protection District. >> Okay. U and and and going back to labor

[50:41] negotiations and obviously we're not talking about it

[50:44] here. Uh but uh obviously there's you're working on it. You know, we're in labor

[50:50] negotiations right now. Uh but this makes the council aware that the deficit

[50:57] could be added based on how labor changes go. So

[51:00] » yes, it's probably the best thing for us to do. We'll have that conversation in

[51:04] close session during negotiations. All right. C May 10 Martinez.

[51:10] » Yeah. Could you explain transitional position layoffs

[51:16] 37 very bottom? >> All right. That issue is in relation

[51:19] again to the discussions with county fire in the potential issue related to

[51:25] annexation into or contracting with the county fire protection district. The

[51:30] county fire would have to vet each one of the employees and there is not always

[51:36] the possibility that every employee will be picked up. However, the general

[51:40] process in relation to uh annexation, not contracting, but at least in

[51:45] relation to annexation, is that uh employees are technically laid off and

[51:50] then hired back by County Fire Protection District.

[51:55] » And that's typically what would happen, assuming we pass all of this. Yes, that

[51:58] is exactly what will happen. If we if the city ultimately had to make the

[52:03] decision that annexation was the only way to keep the fire department uh uh

[52:07] operating functionally, um then that is what the county would require is that uh

[52:15] in order for these employees to be picked up by the county, they have to be

[52:19] laid off by the city and then rehired by the county.

[52:22] » Okay. Thank you. >> Yes, Council Member Mendes.

[52:27] Uh yeah, just um quick question. Um as far as full-time positions, I know for

[52:33] 22 20 or 26 27, we're saying 205 full-time positions, and that's minus

[52:41] the nine full-time um that um are funded positions, but

[52:48] we're freezing those. So technically we currently have uh 20 what 14 full-time

[52:56] positions. We're just not >> No, that the 205 includes the nine that

[53:00] are unfunded because they're still in the budget but they're just

[53:03] » still funded. Yeah. >> Yeah.

[53:04] » Okay. So those are funed.

[53:09] » And then I just have one other thing. Sorry.

[53:19] That was it. Thank you. >> Thank you very much. Uh we'll go on to

[53:22] the next section. >> General fund special purpose funds.

[53:28] Special purpose funds established to address current and future liabilities,

[53:32] programs, projects, and goals requiring a commitment of funds not incorporated

[53:37] into the general fund operating budget. The CalPERS unanticipated normal cost

[53:42] retains 3.5 million for CalPERS and post-employment liabilities.

[53:47] Technology enhancements account retains $643,045

[53:51] for techn technology acquisitions. The self- insurance fund retains 1.6

[53:57] million for city related self- insurance retention liabilities. The building

[54:02] maintenance fund retains 1.8 million for building maintenance.

[54:07] Unanticipated personnel adjustment fund retains 1 million for unanticipated

[54:12] personnel related expenditures. Equipment replacement fund retains oops

[54:17] we lost some numbers there um just a little over 1.2 million for equipment

[54:22] acquisitions. This reflects a reduction of $597,799

[54:29] towards fiscal year 202627 capital outlay purchases. The OPE retiree

[54:35] medical liability retains $2 million for other postmployment benefits.

[54:42] Contingency account retains $79,821 for unanticipated expenditures.

[54:49] The UAL POB amortization service fund is at $0 right now for unanticipated UL

[54:55] charges. Parking facility development retains 9.5 million for parking facility

[55:01] development. Tariff recession inflation fiscal expenditure control fund retains

[55:06] $1 million for unanticipated cost increases.

[55:12] Uh, A-ine Betterment Fund retains 1.75 million for improvements to

[55:17] infrastructure for the A-line light rail system at Monavista Avenue and the

[55:21] Montclair Trans Center. Street Maintenance Fund retains 1.25 million

[55:26] for street maintenance and the homelessness advocacy housing outreach

[55:30] assistant fund retains $330,633 for homelessness aid. Total estimated

[55:37] all special purpose funds is 25.3 million after proposed equipment

[55:43] replacement fund uses is that's will be our balance. Reminder, all major capital

[55:48] outlay will require approval from the city manager before purchase orders will

[55:52] be issued. >> We'll stop there for a second. Did you

[55:55] have a question? >> Yeah, on that. Yeah,

[55:58] » go ahead. >> Yeah. Um so on all these special funds

[56:03] um that these monies are obviously almost like a reserve ed technically.

[56:10] » Well they are uh yes in the reserve fund. Yes. They are designated for

[56:14] special purposes and can only be used for those special purposes

[56:17] » and they can only be used for those >> unless the council redirects that they

[56:21] be redirected. Yes. >> Because it's general fund money.

[56:24] Correct. >> Yes. Um and then does that include the

[56:28] three lease revenue bond u amounts that are left?

[56:32] » No, those monies are allocated separately uh so that they are committed

[56:38] to those funds specifically and have no bearing on other general fund

[56:42] operations. >> Okay, that's all I have.

[56:45] » Yeah. And just on this uh I know the park facility development the $9.6

[56:50] million and uh we were looking at using money

[56:55] for real estate transaction or purchase and uh those deals have fallen apart. So

[57:00] we still have this $9.6 million. Am I correct that?

[57:04] » That is correct. You know, I wouldn't say that the deals have fallen apart.

[57:07] It's just that >> as of right now those deals are

[57:10] » the owners have asked for more money than the city is willing to pay.

[57:12] » All right. So that that potentially could drop depending on those real

[57:17] estate deals we decide to purchase those properties.

[57:20] » Yes. Yeah. That is correct. >> To answer my questions, my colleagues

[57:23] questions. Um on the uh on the reserves yeah our un undesated reserves is what

[57:30] 14 point something budget what is it J we have 14 point something

[57:35] » the undesated reserve >> are you talking about special purpose

[57:38] funds >> no no the

[57:39] » the unassigned reserve is 5.4 million >> thank you

[57:42] » 5.4 4 million. >> Yeah.

[57:44] » Which is about 14 >> 13.

[57:47] » Yeah. 134%. >> However, if we take this amount, the 25

[57:51] million, this gets us up to like 66 67%. Again, this is this is if you know

[57:59] things get pretty dramatic in the fiscal year and so we have these these these

[58:03] funds for cash flow purposes and gives us the time to figure out what we're

[58:08] going to do. So, >> yes. So, just to give you an example,

[58:13] you talk about the UL uh alloc or I'm sorry, the allocation for opeps. The

[58:19] goof prefers that cities commit funding into trust funds. And in our case, the

[58:26] cost to pay for our um opeds, our other post-employment benefits would be about

[58:32] $9.5 million. Um and GOAF would want us to put nine and a half million dollars

[58:37] in trust funds. that money is restricted and it can only be used for uh paying

[58:43] off ops. We use a pay as you go system. But in allocating money to the uh

[58:50] special purpose fund that we have here in our opinion and the way that it

[58:54] appears to be working is that that money is separately designated for opeds in

[59:00] the event that we need to draw on that uh because of an increase in opeds. We

[59:05] believe that our process has effectively worked uh because if you'll recall back

[59:11] in the early 2000s, there was a workshop presentation to the city council by a

[59:18] auditor who projected that Montlair's opeds would be around 12.5 million and

[59:26] continue to increase. But the city has effectively controlled uh the cost of

[59:31] other post-employment benefits. And in fact, our costs to OPB have declined

[59:38] from that $12.5 million at that time to $9.4 million now. And so having put this

[59:46] money in a trust and restricting it only for that and h not having it available

[59:50] uh to the city for other purposes would not have been to the best interest of

[59:54] the community. And so I believe that our process has paid off and uh we continue

[59:59] to see that oped come down through our controlling mechanisms.

[1:00:05] » At any budget you uh you know long very long budget message. Um you talked about

[1:00:12] the risk factor. Um I think the department controllers department state

[1:00:16] controller did one about five or six years ago and staff went back. So what

[1:00:20] what is the health of our budget based on the controllers's office method?

[1:00:27] » Right. So I believe that our the health of the city's budget has improved

[1:00:30] significantly since then in large part to measure L uh but also begin again as

[1:00:36] I indicated in relation to the oped uh before where we have received maybe a

[1:00:41] high risk factor in that area because of the amount of our oped but because we

[1:00:45] control it and the oped has actually come down to $9.4 4 million. Uh I would

[1:00:51] rate us as I do in that uh in that graph at moderate. And so while we have seen

[1:00:58] some increases back up from last year primarily because of the u downturn in

[1:01:05] the economy overall, I would still say that Montlair is between low and

[1:01:10] moderate in our risk. >> Thank you. Okay, let's move on.

[1:01:19] So our 2014 issue of lease revenue bonds payment period fiscal year 2014 to 2045.

[1:01:27] So the issue amount for this bond was $45 million. Purpose was to defease

[1:01:32] balance of the 2005 issue which was used for police facility and youth and senior

[1:01:38] center projects. Approximately $22 million for public works infrastructure

[1:01:42] projects. The 2014 issue of lease revenue bond funds have been exhausted.

[1:01:47] Annual debt service approximately 2.6 million through fiscal year 20445.

[1:01:54] Funding source for annual debt service is the general fund revenue and for

[1:01:59] fiscal year 2026 27 the payment will be 2,597,163.

[1:02:08] The 2021 issue of lease revenue bonds payment period fiscal year 2022 to 201.

[1:02:15] The issue amount for this bond was $45 million. The purpose complete

[1:02:20] infrastructure improvement projects throughout the city. Remaining balance

[1:02:24] approximately $20 million retained to primarily function as a matching source

[1:02:29] for grants. Annual debt service approximately $2.4 million through

[1:02:34] fiscal year 205051. Funding source for annual debt service

[1:02:39] is general fund revenue. Payment for fiscal year 2026 27 is 2,396

[1:02:48] $2,396,313.

[1:02:52] Our 2021 issue of pension obligation bonds payment period fiscal year 2021 to

[1:02:58] 2041. The issue amount of this bond was 62.1

[1:03:03] million dollar. The purpose transfer debt from the city's California public

[1:03:07] employees pension system unfunded acrewed liability account to the pension

[1:03:12] obligation bond. Annual debt service approximately 4.4 million through fiscal

[1:03:18] year 204041. Funding source for annual debt service

[1:03:22] is the general fund. Uh the payment for 2026 27 is $4,434,713.

[1:03:32] » Okay, let's talk for a second. Council Mendez.

[1:03:36] » Yeah. So, um, my questions on these are obviously two of them have zero

[1:03:41] balances, one has a $20 million balance. Uh, do we we collect interest on that?

[1:03:47] Correct. >> Yeah. Yes, we do. But we are prohibited

[1:03:51] from collecting excessive uh interest and any insert any interest rate above

[1:03:57] or any interest acrruel above a certain amount we have to return to the bond

[1:04:03] agencies >> like what type of percentage is it like

[1:04:07] a 3% interest rate or >> I believe it's above the the bond rate

[1:04:15] itself. >> Yeah. So anything above that we're not

[1:04:18] allowed to keep. Mhm. >> So, for example, I believe uh maybe last

[1:04:22] year, uh we probably made around $4 million in interest and and had to

[1:04:26] return $3 million because we're not allowed to hold it. You're not you are

[1:04:30] not by arbitration laws, you are not allowed to make uh income off of

[1:04:35] borrowed funds. >> And that money that you got to pay back

[1:04:38] doesn't reduce our balance. Correct. >> Well, it doesn't reduce the whole

[1:04:42] balance. No, that we originally borrowed. That is correct. Only the

[1:04:46] interest amount. >> Yeah. And then as far as um the rates

[1:04:51] that that we're paying, are are they fixed rates or they

[1:04:54] » the debt service payment? >> It varies every year, but very

[1:04:57] minimally. Maybe, you know, a couple thousand dollars.

[1:05:00] » So, >> yeah. And I think actually on one of the

[1:05:02] previous slides, the debt service payments went up like $1,817

[1:05:07] for next fiscal year. >> So, it just kind of fluctuates up and

[1:05:10] down just a little bit. >> But is there like a limit that I mean,

[1:05:13] obviously, it's probably written somewhere where the bond documents each

[1:05:17] year it tells me how much I we need to pay.

[1:05:20] » I mean but is there like a max like it cannot go over 1% you know increase

[1:05:25] annually or >> No I mean it's already when when the

[1:05:29] when we get the bonds it's already laid out for the entire

[1:05:33] » Yeah. Right. >> So it it it once it's set in those bond

[1:05:37] documents it doesn't change. >> Yeah. It's not a surprise. We know each

[1:05:41] year what to plan for because we receive the depending on the payback period, 30

[1:05:46] years, 40 years, we know what what each annual payment will be.

[1:05:50] » Somewhat somewhat fixed with a little bit of adjustment.

[1:05:54] » Okay. And um that's all I have right now on that one.

[1:05:59] » Yeah. I'm going to on 47 the $20 million uh obviously that that's money for

[1:06:06] projects to do capital improvement projects. Um Are we getting close to

[1:06:11] some projects, Ed, or I know we've got street projects. I know we talked about

[1:06:15] Saratoga. >> We have a a significant number of

[1:06:18] projects that are being prepared for moving forward. Some of them just

[1:06:22] require some additional funding and we're hoping for uh grants for that

[1:06:26] purpose. We have a number of grants that are outstanding and we are just waiting

[1:06:30] to receive information as to whether or not we are successful on those grants.

[1:06:35] Uh every month we meet with our grant advisor in this case Alyssa Colunga and

[1:06:42] uh Blae to go over potential grants that we can additionally apply for. So the

[1:06:47] city has a significant number of grants currently uh in play uh ready to be

[1:06:53] spent as well as ones that we are applying for. And I I assume a lot of

[1:06:58] the projects uh the planning stage is uh the design stage is either in design or

[1:07:06] almost completed or design completed uh close to where we can go out and do bids

[1:07:12] on some of these projects. >> Well, it depends on the grant. Some of

[1:07:15] them require that you be shovel ready, >> right?

[1:07:19] » U and we do strive to be shovel ready with every project that we have. Others

[1:07:25] uh simply require that uh we're only paying for engineering services or for

[1:07:30] studies related to doing the project and others are for the construction. So it

[1:07:35] just depends on the depends on the project. It depends on the grant.

[1:07:38] » All right, let's talk about pension real fast. So we did this back in uh 2122

[1:07:44] whenever it was. Back then we had five we were paying addition out what five

[1:07:50] million 5 point something million a year at that time did the bonds we got it

[1:07:56] down to 4.4 came with the policy. The difference is

[1:08:00] we'll go into the special the special uh purpose fund. However, the last two

[1:08:07] years we've been hit with an additional unfunded liability. This year being what

[1:08:11] 3.5 million, last year being 2 something

[1:08:17] million. Of course, the year before it was zero. So basically uh versus two

[1:08:22] years ago, we're now dishing out an additional 3.5 million uh for pension

[1:08:28] that could be used for other things in the city, including uh salary increases,

[1:08:32] adjustments. So Ed, I talked about this, but maybe for the council's education,

[1:08:38] where do you think this is going? I know there's there's been improvement in the

[1:08:41] stock market for Kalpers, but can you kind of, you know, educate us a little

[1:08:45] bit on this? >> Right. So this year or at least next

[1:08:48] year the estimated uh UL will be about $3.8 million as you indicated. Um

[1:08:54] however Kalpers did perform quite well last year. They came in at 11.1% which

[1:09:00] is above their 6.8% uh on their uh standard residual. And so

[1:09:06] we believe that if end of year 2026, so June 30, 2026, if Kalpers demonstrates

[1:09:14] another positive year performance, uh their board will meet and we expect that

[1:09:19] that $3.8 million will be reduced. I don't know the amount, but I'm hoping

[1:09:23] that it will come uh closer to the $3 million range. However, I do want to

[1:09:27] point out that had we not done the bond back when we did, uh, that 5 million and

[1:09:34] a half $5.5 million payment that we were making then would probably be closer to

[1:09:40] a $9 million payment right now. So, even though the UAL uh is up to the $3.8

[1:09:47] million, if we pay that off, it takes us back to a zero. It's to our interest to

[1:09:52] pay it back pay it off every year. So we don't acrue the 7 point 7% interest that

[1:09:58] Kalpers applies. Uh that is our objective. We've been able to do that.

[1:10:04] But do keep it in perspective that if we did not do that, even if you add that

[1:10:09] $3.8 million onto the $4.5 million payment that we are making based on the

[1:10:17] terms of the bond. If we did not do that, we would be paying up to $9

[1:10:22] million to CalPERS annually at this point anyway. And that number would

[1:10:27] continue to increase, my estimation, at least through 2030, if not beyond.

[1:10:33] » Yeah. And that's, you know, that's uh well, if you take the 4.4 we're paying

[1:10:39] now plus a 3.8, that puts us in the about 20% of our general fund is just

[1:10:44] going to pay off Calves. >> Yeah. 1.4 million on top of that then

[1:10:51] we're getting closer to 25% of our general fund.

[1:10:54] » So um you know disturbing I don't say disturbing it just that's

[1:11:00] the reality and uh you know that's this is something we've been dealing with for

[1:11:05] the last 15 years. We thought we got to 21 we'll be in good shape and now here

[1:11:10] is the 3.3 or 3.8 million surprise we're dealing with. But I'll move on and we'll

[1:11:17] go on to the conclusion.

[1:11:22] » The fiscal year 2026 27 general fund operating budget as presented to the

[1:11:27] city council for consideration. The proposed fiscal year 2026 27 budget

[1:11:32] reflects a shortfall in revenues versus appropriations of $631,544.

[1:11:39] The deficit is resolved by the proposed transfer of $631,544

[1:11:45] from the unassigned general fund reserve to produce a balanced budget. For fiscal

[1:11:50] year 2026 27, each city department was provided flexibility in the preparation

[1:11:56] of their respective budget programs. However, after budgets were submitted,

[1:12:00] it was necessary for the city manager to reduce department budget requests by 3.9

[1:12:06] million across all funds and 3.6 6 million in relation to the general fund.

[1:12:11] Reductions were made using historical data, expenditure details, actual and

[1:12:16] projected needs, and available funding. The city manager directed the freezing

[1:12:20] of vacant positions in various departments, saving just over $1 million

[1:12:25] in wage and benefit costs. Without this action, the deficit would have grown to

[1:12:30] 1,673,194.

[1:12:35] The estimated deficit for fiscal year 2026 27 may be adjusted due to the

[1:12:40] potential for added personnel costs as a city has yet to complete labor

[1:12:44] negotiations with bargaining groups. Until negotiations are completed, the

[1:12:49] estimated additional budgetary impact remains unknown.

[1:12:54] With strate with strategies proposed in this budget message coupled with

[1:12:58] anticipated long-term improvements in the economy, the city manager

[1:13:02] anticipates the deficit will remain limited in its scope and not extend to

[1:13:07] future fiscal years. Montlair's deficit is manageable and does not represent a

[1:13:12] structural problem. The fiscal year 2026 27 proposed budget

[1:13:17] incorporates the following debt service funds. The 2014 issue of lease revenue

[1:13:22] bonds debt service fund 2,597,163.

[1:13:28] The 2021 issue of lease revenue bonds debt service funds just over 2.3

[1:13:33] million. And the 2021 issue of pension obligation bonds debt service fund 4.4

[1:13:39] million. The passage of measure L in 2020 greatly improved the city's revenue

[1:13:44] profile. However, sales and transaction and use tax receipts are

[1:13:48] underperforming, and both measure L and Measure F have become fully integrated

[1:13:53] into the city's operational profile, and the revenue generated is necessary to

[1:13:58] meet ongoing obligations without excess revenue available to enhance the

[1:14:02] unassigned and specialurpose general fund reserve capacity.

[1:14:08] Going forward, city staff will routinely look at fresh approaches for service

[1:14:13] delivery, continue to evaluate grants and outside funding opportunities, seek

[1:14:18] to develop strategies to improve both the appearance and infrastructure of the

[1:14:23] community, promote new revenue concepts, pursue development of the city's

[1:14:28] commercial and residential base. promote economic development opportunities by

[1:14:33] drawing on the city's past and effective promotion of redevelopment.

[1:14:37] Continue to develop the partnerships for investments not only in North Montlair

[1:14:42] but throughout the city and work with regional, state, and federal

[1:14:46] representatives to promote efforts designed to move Montclair forward.

[1:14:51] And that is the end of the presentation for the city.

[1:14:55] » Okay. Any uh questions for uh city staff on this? Council

[1:15:02] R.

[1:15:08] » First, I want to thank staff for all of their hard work on this.

[1:15:14] It is not always easy to do this, but I think they've done a commendable job.

[1:15:21] I have a couple of questions on things more related to revenue than anything

[1:15:26] else.

[1:15:30] I'm looking at >> globally the need to pull in more

[1:15:36] revenue. >> One of the things I wonder if we could

[1:15:41] do and I know I'll get beaten up for saying

[1:15:45] this so I'm already aware of it. What we can do to bring in more gasoline

[1:15:49] stations. They provide a tremendous amount of

[1:15:52] revenue. The more we have in here, people will

[1:15:56] get off the freeway or as they commute through town,

[1:16:00] purchase gasoline, and that's a revenue source for us. Electric charging

[1:16:05] stations are wonderful, and I'm not saying not to have them. They're great,

[1:16:09] but they don't provide the revenue that a gasoline station does. Is there

[1:16:13] something we can do to try to get more gas stations here? because I go back to

[1:16:20] oh the days of the Montlair heyday of the Montlair Plaza there were gas

[1:16:24] stations everywhere up there and I'm wondering if there's something we can do

[1:16:28] along those lines because that is a great source of revenue. I realize cars

[1:16:33] are more fuel efficient so they're using you know not as much gas but we could

[1:16:40] still get revenue from it. Is is there any thought about that? Well, yes. In

[1:16:46] fact, right now Costco is expanding their bays from eight bays to 16 bays.

[1:16:50] If you go to Costco, you'll see that the construction is ongoing. It's a little

[1:16:55] bit problematic and we probably will experience some revenue loss because of

[1:16:59] the uh difficulty in getting in and out of Costco, but hopefully uh within the

[1:17:05] next four months, they'll complete the project and that will double the bays

[1:17:11] from again 8 to 16. Costco also expressed interest in uh developing an

[1:17:16] offsite gas facility in Montlair. We don't know the status of that right now.

[1:17:21] We've given them a number of locations. Uh and they are still weighing whether

[1:17:25] or not that will be something that they would want to do in Montlair. Uh other

[1:17:29] gas stations, no there hasn't been much interest in developing additional gas

[1:17:35] stations in Montlair, but Costco is the leader and generating more facilities

[1:17:41] through Costco. uh certainly is to our interest. At the same time, uh Montclair

[1:17:46] Place has toyed with the idea of bringing a Sam's Club to the site and

[1:17:52] that would generate additional gas station facilities if uh CIM did

[1:17:57] ultimately go that direction. >> I'm glad to hear that because that's a

[1:18:01] great source of revenue. And again, I'm not opposed to electric charging

[1:18:06] stations. Um >> that's true. Keep in mind though that

[1:18:10] when it comes to gas, the gas tax revenue generated by gasoline stations

[1:18:15] can only be used for transportation infrastructure projects is not available

[1:18:19] for general fund operations. >> But that would be a great use for them

[1:18:23] for uh our roads repairs on that would be great. What we

[1:18:30] need to do, you know, maybe we could be the leader in bringing in gasoline sales

[1:18:35] tax revenue. And again, before anybody beats me up, I'm not opposed to electric

[1:18:40] charging stations. I think they're important.

[1:18:43] It's another option, but they don't bring in the revenue that a gas station

[1:18:47] does. Another question I have,

[1:18:51] I listened at a prior meeting where we talked about believing in the free

[1:18:56] market, which I certainly do, and that we need to be free market on

[1:19:01] certain things. I would hope that it would include all

[1:19:05] businesses. Um,

[1:19:09] you know, a business, let's say, doughnut shop wants to locate in

[1:19:14] Montlair, we shouldn't be turning them down. We

[1:19:18] should be doing everything we can to get them in. Do they generate a lot of sales

[1:19:22] tax? No. I believe it's only on dine in if I'm correct.

[1:19:27] But that's still some revenue. Maybe if they generate 15,000 a year in sales

[1:19:31] tax. I don't know what they generate. That would cover the cost of uh the

[1:19:37] office furniture we're buying for the MAP program. I hope we get to the point

[1:19:41] of being more pro business. There's a business that wants to be here. Let's

[1:19:44] see what we need to do to bring them in. Doughnut shops are not a bad thing.

[1:19:49] Uh other types of stores are not a bad

[1:19:52] thing. Retail is declining. So, we need to figure out what we do to supplant the

[1:19:57] retail with something else. And I hope we would start to look at that. Um, it

[1:20:03] distresses me when I hear, "Oh, well, I don't think people would have wanted

[1:20:06] that. What's wrong with bringing in

[1:20:11] sources of revenue? We need to really be serious about that." And

[1:20:18] I think the last thing I want to look at is I concur with a comment made at the

[1:20:24] first part of the meeting by Council Member Mendes about uh we're cutting but

[1:20:29] we're still spend we're increasing the budget in other areas. I understand

[1:20:33] that. But somebody at home who's sitting there, they're they're not going to be

[1:20:38] able to do that with their private budget. They're going to just have to

[1:20:40] cut cut. And so I don't understand the expanding or increasing at a time when

[1:20:48] it's bad. I don't know if the economy is going to recover next year or not. I

[1:20:53] can't predict that. But even if it does, if we can set a base and start putting

[1:20:58] then more money away, that would be good. Thank you.

[1:21:02] » So if I may, Mr. Mayor, the increase in revenues is primarily related to grants

[1:21:07] and other revenues that come to the city specifically for those projects. So

[1:21:11] either we spend the money on those projects or we don't get the grant

[1:21:14] money. It isn't that the city is securing uh new monies through the

[1:21:19] general fund and we're not spending them on personnel or other services. These

[1:21:24] are typically grants or one-time monies that are designed for specific purposes

[1:21:28] like for example SB509 which is designed for uh public safety. We have to spend

[1:21:34] those monies or we continue to acrew them but we can't spend them on other

[1:21:37] sources. We can only spend them on those purposes. So, as long as that revenue

[1:21:42] comes in and it's available for us to spend and while it looks like the budget

[1:21:47] is increasing because of those revenues, keep in mind that it is a general fund

[1:21:52] that really is the key to the operations of the city as far as personnel and the

[1:21:59] general services that we deliver to the community. these other dollars that make

[1:22:03] it appear that the budget is growing despite the fact that we project a

[1:22:08] deficit. Those dollars are either spent on those specific requirements that the

[1:22:13] funding sources tell us that we can spend them on or we don't spend them at

[1:22:17] all or we don't apply for those funds. In which case then you're right, you

[1:22:21] wouldn't see the growth, but you wouldn't also see the type of

[1:22:25] development activity that is occurring in the Montlair despite the fact that

[1:22:29] the general fund may not be performing to the level that it is.

[1:22:34] » Okay. Thank you, Council Mayor Pan Martinez.

[1:22:37] » Thank you. Uh once again, I appreciate the transparency in the report and the

[1:22:43] numbers and even though this is uh not ideal revenue-wise,

[1:22:49] um I want to say thank you for the creativity and the efforts with the

[1:22:54] grants um and and just putting it all out there

[1:22:58] for us for our consideration. I think we are a goodlooking city. I think we take

[1:23:04] a lot of care of our residents and of our city um and our city staff and I

[1:23:09] like to see that continue happening. Um but for what we're dealing with, this is

[1:23:16] once again fantastic and thank you for the effort and putting this together for

[1:23:20] us. >> Thank you, U Council Member Mendes.

[1:23:25] » All right. First of all, just to um piggy back on what Chris was just

[1:23:30] saying. Yes. I I appreciate everything that um you guys go through. I I know

[1:23:36] that Mr. Ed over here is probably the mastermind to most of these things um

[1:23:42] because I see him here all the time and I do appreciate him answering lots of my

[1:23:47] questions at at personal times when no one else is around. It's just it's it's

[1:23:52] nice to be able to have somebody that's available like that. But I do um

[1:23:56] continue to have questions relating to to things. Um one I I would definitely

[1:24:03] love to see a salary survey done with all of our local

[1:24:10] surrounding cities. Um just to see where our employees are so we can see and and

[1:24:16] include health benefits. Um, with that also, I I know I may have to pay a a fee

[1:24:24] to to get the employees to do that, you know, if we have that new rule come in,

[1:24:29] but um I I'll be willing to pay for that. That's a joke. That's people are

[1:24:34] supposed to laugh, John. >> Yeah. So, um,

[1:24:38] » that was you personally will be willing to pay.

[1:24:40] » Yeah, that's that's what I'm saying. That that new fee that we have

[1:24:44] » three paychecks. You got you got a pension paycheck. You got your web

[1:24:47] paycheck. Cal's paycheck. You can afford it.

[1:24:49] » Yeah, I'll pay for that for sure. But um I I just um I just want to make sure

[1:24:55] that you know we're I want to see where our short falls are and you know and try

[1:25:00] to focus maybe on that in the next years or so to to try to get those divisions

[1:25:05] or departments um back up to where they should be. Um,

[1:25:12] as far as, you know, I, as I mentioned earlier about the monies, I I understand

[1:25:17] a lot of the funds and I understand a lot of, you know, how these work. I I

[1:25:22] was privy to be able to create my own budgets for years and um but there's

[1:25:28] still so much that I don't know and I I would love to see us have another

[1:25:34] workshop to allow us a little bit more time to learn more about these special

[1:25:39] funds um payments you know everything that we can learn. I would I would

[1:25:44] personally appreciate it. I'm not saying everybody has to attend it, but I would

[1:25:48] be willing to attend something or if there's a class that I could take, I

[1:25:52] would definitely take that. Um, but I noticed, you know, going through all the

[1:25:57] different um departments, that, you know, some of them had increases,

[1:26:02] including the city council um um budget. I was just wondering who who's the one

[1:26:08] that actually writes that up because it shows that we were requesting an

[1:26:13] additional u more money than we asked and I I don't

[1:26:17] remember ever telling anybody. So, I just don't know who who's the one that

[1:26:21] creates I'm assuming it's Ed. Um but ours went up $20,000. City manager, your

[1:26:27] your department went up $180,000. Admin services 92,000. Human services

[1:26:33] 338,000. But which now I know is part of the afterchool program. Is that a grant

[1:26:40] also that we received that 300? >> Yes. Yes.

[1:26:43] » So so wonderful. See and I would love that is important for us to know because

[1:26:49] then it doesn't look like oh we're just spending more money in human services

[1:26:52] and you know because then you go down to the police and sorry poor police you're

[1:26:57] you're reducing by 450,000 you know on what you requested and what

[1:27:02] you received. fire you guys increased 2.3 million almost and but I understand

[1:27:07] why the grant you know the fire truck I I get it I I understand those things but

[1:27:12] having the understanding of those just helps me and I think it would help the

[1:27:18] residents not that we have any residents here right now to to ask but it's

[1:27:22] important um well I think if I may the easy answer to a lot of your questions

[1:27:28] just then are that a lot of costs are driven by contract and contracts have

[1:27:34] annual CPI adjustments associated with them. We have no control over that.

[1:27:38] » And so some budgets rise. So for example, when you're talking about the

[1:27:42] city manager's budget, that budget incorporates refuge services. And refuge

[1:27:47] services change significantly by hundreds of thousand dollars on an

[1:27:50] annual basis. We have to pay that. But at the same time, that goes to the

[1:27:54] increase in the revenue that you see and speak about. So, if the uh if the cost

[1:28:01] of providing refuge services increases by $100,000 a year, it's also offset by

[1:28:07] $100,000 in revenue. But the budget still has to demonstrate that there's an

[1:28:12] appropriation increase of $100,000, but the revenue budget will also show an

[1:28:18] increase in $100,000 to offset that. >> Yeah. But that's how most of those

[1:28:22] budgets are driven as far as cost increases, contracts that commit us to

[1:28:28] uh those adjustments. >> Yes. And thank you for that. And that

[1:28:31] comes to my last department um which isn't a very old I don't think you've

[1:28:36] had this one in there that long. I mean probably 10 years or more. Uh citywide

[1:28:41] that that um department it increased by $1.175

[1:28:45] million. And just maybe you could give me a little bit more um education on how

[1:28:51] why that one went out. >> Sure. Easy answer on that is worker

[1:28:55] compensation claims filed against the city, uh lawsuits filed against the

[1:28:59] city, the cost of electricity, the cost of telephone services. So everything

[1:29:04] that goes into the citywide budget are those cost components there are shared

[1:29:09] throughout the organization. Kalpers's costs are in there. So, as the mayor

[1:29:13] pointed out earlier, ULA increases, increases in the normal service cost

[1:29:18] range, those are no longer part of individual bus uh of of individual

[1:29:24] budgets uh for departments. That's all now incorporated into citywide because

[1:29:31] collectively we all have to pay for those costs. They're not unique to the

[1:29:35] police. They're not unique to human services. They are common to the entire

[1:29:40] organization and citywide in fact is where the bulk of the cost increases

[1:29:45] impact us because uh insurance is skyrocketing.

[1:29:50] Uh worker compensate claims are based on the number of claims filed by uh

[1:29:55] employees in the organization and lawsuits based on whoever is filing a

[1:30:00] lawsuit and of course we have no control over the cost of electricity, water,

[1:30:04] postage and other utilities and all that is reflected in citywide.

[1:30:09] » Okay. So I and I understand that and thank you for that definition the 1.1.75

[1:30:15] million increase but I know that we also mentioned that this is where we get the

[1:30:19] unfunded balance also of PERS which increased by 3.8 million.

[1:30:23] » Well it didn't increase by 3.8 million. >> Oh

[1:30:26] » that's it's up >> to that but it didn't increase by that

[1:30:30] amount. >> What was it last year? Do we know?

[1:30:32] » Not off the top of my head I don't. I'm sorry.

[1:30:35] » All right. Well, again, so this leads to my my final question or request. Um, and

[1:30:43] I talked a little bit to John about it just a little bit ago, but I would

[1:30:47] really, and I know staff may be upset with me again doing this, but I would

[1:30:53] love to receive this budget a minimum of four to eight weeks before.

[1:31:00] » Yeah. Well, if you look at every city in California, it's 4 to 8 weeks and that's

[1:31:06] the average. >> When we are given a 778 page document to

[1:31:11] review and then for us to sit up here and vote on, I just don't feel like it's

[1:31:16] enough time for me to give the best answer to the to the people that put us

[1:31:22] in here. And and I know you laughed just now at it. No, and I understand what

[1:31:27] you're saying, but it's it's a it's a huge process.

[1:31:30] » I know. I was involved with it. I I understand.

[1:31:33] » Not like not like >> I I understand. I understand. But that's

[1:31:37] your position. That's your job. >> Yeah. And uh I just would love to see

[1:31:41] us, you know, get this, you know, like I said, four weeks in advance, you know,

[1:31:46] rather than one week in advance, just because, like I said, 778 pages to

[1:31:52] review this and then all these other supplements that we get, it's a lot. And

[1:31:56] I really try to go through it and like I said, if I can even have a class where I

[1:32:02] can understand it better. I'm not trying to be you. I'm not trying to be Ed. I'm

[1:32:06] just trying to make the best decision I can for the residents and the community.

[1:32:10] That's all I want to do. >> Well,

[1:32:11] » understood. And if I may, Mr. Mayor, before you you comment, um the only way

[1:32:16] that we could achieve this is one of two ways. And that is that we start the

[1:32:20] budget process uh before the new calendar year even begins, which is I

[1:32:26] think a significant burden on the departments because they don't really

[1:32:29] understand uh necessarily where their expenditures are yet. The other issue is

[1:32:34] that there is no provision in law that you adopt a budget by June the 30th. As

[1:32:39] I I put in the budget at the very beginning, a discussion of what a budget

[1:32:44] is. And that is to demonstrate to you that that we're not required to adopt a

[1:32:48] budget. But if we don't, we run into a number of complications. And so we can

[1:32:53] bring the budget to you even in July for your consideration. But you have to

[1:32:57] understand we have no authorization to spend money until you do effect give us

[1:33:03] that authorization. So those are the only two options that are available to

[1:33:06] us. We start the process significantly earlier or you adopt the budget later in

[1:33:10] the year. >> Well, let me interject here. First, you

[1:33:12] can do a continue resolution to the next fiscal year too. U you continue the

[1:33:16] existing budget to the new fiscal year and then then you

[1:33:20] can adopt the budget later on. what we're doing at Metroink. We're extending

[1:33:24] that budget for three months because obviously revenues for Metroink dropped

[1:33:28] trying to figure out how to do service levels. But I think the answer to the

[1:33:32] first question is yeah four weeks is kind of way in advance you know in this

[1:33:36] budget. I I think what needs to happen is, you know, we should have this budget

[1:33:39] at least two weeks before this meeting, at least two weeks. And I think that

[1:33:43] during that period of time, there should be some type of a or this is a workshop,

[1:33:47] but a study a study workshop for the council members, not in this

[1:33:53] environment, perhaps at the library or in the conference room or council

[1:33:57] members to just ask questions to staff and dig into it before this meeting

[1:34:01] takes place. I don't know that could be the study session maybe call study

[1:34:05] session doesn't mean all the counselors can come you know it will be a brown act

[1:34:10] meeting we meet the brown act but it's it's optional council members want to

[1:34:13] attend the study session and they can ask a lot of questions maybe another

[1:34:18] thing needs to happen for this budget uh if council me wants this and then if

[1:34:22] there's interest maybe we there should be a a a study session on the budget

[1:34:28] this summer or this fall and Again, it's held someplace else and uh council

[1:34:35] members can ask a lot of questions, dive into the budget with staff. U I will

[1:34:40] recommend that and maybe that's the best way to get the education.

[1:34:42] » Okay? And that's fine, but I'm I'm letting you know that your budget

[1:34:46] message will be 10 to 20 pages. It will not be the 120 pages

[1:34:51] » that you get now that I'm I'm letting you know you will not be getting 120

[1:34:55] mill page budget message that explains to you everything that's going on. you

[1:35:00] will be getting what every other city provides their city council and that's a

[1:35:04] 10-page budget decision. >> Hey, okay, let's let's not get excited

[1:35:07] here. Okay, what I'm trying to say here is I understand among council I mean I

[1:35:13] I've been doing this for 25 years and I kind of count, you know, budget. I look

[1:35:18] for certain things. I have a pretty good understanding about the budget. I come

[1:35:22] in talk to staff about it and make sure I understand what's in the budget uh

[1:35:26] before today's meeting. Yes, Ed, you're correct because I don't know how many

[1:35:30] cities budgets I go through and I look at the budget message and it's crap.

[1:35:34] There's nothing there. So, I don't understand what's in the budget. What

[1:35:36] I'm saying here is for the education of at least council member Menddees,

[1:35:41] somebody else perhaps council me if nobody else is interested. Maybe you

[1:35:45] want to have a meeting with staff conference room, the theater room and

[1:35:52] gives you an opportunity to go through this current budget. Hopefully it was

[1:35:55] adopted tonight and you get a better understanding of that budget here and

[1:35:58] maybe next year when we have the budget session we kind of do the same thing at

[1:36:01] the study session before this meeting and

[1:36:05] council members can engage it with staff other questions. I understand we can't

[1:36:11] hear this is a little more formal. I've always encouraged my council colleagues

[1:36:15] to try to meet with staff and ahead of time on some of the bigger issues so you

[1:36:20] get get your questions out of the way. But perhaps perhaps there's a formal

[1:36:24] setting where we have a study session and again that's volunteer in which

[1:36:27] councils want to show up and then uh be under the Brown Act and then you can ask

[1:36:31] a lot of questions in that format. So I don't know that's

[1:36:35] council MDZ is kind of asking for. >> I'm actually open.

[1:36:40] » I'm open to anything and I I'm you know >> right

[1:36:44] » I won't apologize for upsetting anybody here but I I wasn't I don't think I'm

[1:36:48] asking for anything that's out of the question. Well, I think it's important

[1:36:51] to council members to be educated. You know, this, you know, the budget is a

[1:36:55] hard one to understand. Um, but it's important to council members be educated

[1:36:59] and when they vote and what they're voting on. So, yes, you know, if again,

[1:37:05] so perhaps staff, Ed, U or C, I don't know if anybody else interested, Council

[1:37:10] Member Rue, Mayor Pin Martinez. I I just feel to be honest like

[1:37:15] Ed, if I was you and I wrote this budget like you do, I would want more people to

[1:37:20] read it and understand it and enjoy it. I mean, it it's a major document and

[1:37:25] yes, it it's something that I would like to understand. So, I

[1:37:30] » All right. So, maybe it sounds like I mean, I don't need a study session, but

[1:37:33] if you like to have a I mean, I'll be be I'll be happy to participate in a study

[1:37:37] session, I should say. Um but if you like to have a study session then

[1:37:41] perhaps uh staff can uh at least contact you schedule one and it gives you a

[1:37:46] chance at least go through this budget you have a better understanding so when

[1:37:49] we prepare for next year's budget perhaps some of the things next year's

[1:37:54] proposed budget you'll have you have understanding why it's there u ahead of

[1:37:59] time. Okay. And then and then maybe next year we'll try to get the budget out two

[1:38:03] weeks in advance and then again maybe a study session if council members want to

[1:38:08] meet with staff and and then ask questions of the budget uh in that

[1:38:13] format which is kind of informal uh as opposed to in this format.

[1:38:18] » Yeah. And if I may, Mr. Mayor, we do always try to have the budget to you at

[1:38:22] least two weeks in advance. You have to keep in mind that this particular year

[1:38:26] we had a lawsuit that staff was preparing for. Uh we had a number of

[1:38:33] other issues that staff was working on and the budget was just in the middle of

[1:38:38] all of that. And I I agree and I even had this conversation with Janet and she

[1:38:43] will agree that I was concerned that it was not getting to you at least the two

[1:38:47] weeks in advance. We did get it to you a week and a half and I apologize for

[1:38:51] that. But even to have this budget session, we're still going to have to

[1:38:54] have the budget done for you even in a budget session, which does not remove

[1:38:59] the responsibility from us of starting the process earlier. It's the only way

[1:39:03] that this is going to happen. >> Yeah. So I I'm not ask I think right now

[1:39:07] is let's just shoot for the two weeks with the idea if invite the council

[1:39:12] members they want to come to a special session and just learn about it before

[1:39:17] we actually have this workshop here. Maybe that's the format for the next

[1:39:21] year format. Um I know that council member Midz you talked about salary

[1:39:26] survey you brought that up. Um I think we need to do is go through the

[1:39:31] negotiations first. Maybe you know Ed, I don't know if you want to opine on it on

[1:39:36] this one here. I'm not sure exactly. I mean

[1:39:38] » I'm sorry what what >> opine on the salary survey that was

[1:39:41] brought up by council member Mendes. I think first of all we need to go through

[1:39:44] the we get through the council on we need to get through negotiations.

[1:39:48] Perhaps this is an item we should be discussing in close session as well. I'm

[1:39:50] assuming this if you want to do a salary survey it should be discussed in close

[1:39:54] session I'm assuming. >> I I I agree. We're in the middle of

[1:39:57] labor negotiations and to talk about a sour survey would send out false

[1:40:02] encouragement to the labor groups that the city is looking at something it's

[1:40:05] not going to be doing. >> This is not the time to do a salary

[1:40:07] survey. However, we will have a, you know, we'll have a close session at next

[1:40:11] meeting, talk about bargain units, and we'll go from there.

[1:40:17] » Yeah. And that's fine, but I just I brought this up last year, the salary

[1:40:21] survey, and it never happened. So, I I'm just wanting it to happen is all I'm

[1:40:26] asking. >> Well, I I think right now this is an

[1:40:28] issue we should not be talking about up here. This is a close

[1:40:31] » No, no, no. I I understand what you're saying about

[1:40:32] » and I think we should discuss this in close session.

[1:40:34] » Yeah. So, two things. One, we do do salary surveys all the time. The labor

[1:40:39] groups themselves do salary surveys all the time. If the council wants to do a

[1:40:44] council directed salary survey, it would require that we contract that out. Um,

[1:40:49] and last time we did a contracted out salary survey. It, you know, it costs a

[1:40:54] significant amount of money and we can do that if you want us to bring it back

[1:40:58] before the council. And the reason why I say this is that we do not necessarily

[1:41:03] accept the salary surveys conducted by the bargaining groups uh because we

[1:41:08] don't know the positions that they are surveying and they don't like the

[1:41:11] surveys that we conduct because we look at positions and try to do a a like

[1:41:16] forlike uh match and there's always disagreement. So the only way that there

[1:41:22] is a medicable solution to these sorts of surveys is that there is an

[1:41:28] independent third party that conducts the surveys and that does cost money.

[1:41:33] » And I understand but honestly I could do my own salary survey if that's what's

[1:41:38] what's needed. But and I I get it but it's not something I'm asking for that

[1:41:44] all this information isn't readily available to contact each city and get

[1:41:48] it. And I'm just talking about the salary city or the surveys that cities

[1:41:52] that we used in the past because they're similar to ours and that's it. And then

[1:41:56] regarding the the two weeks, like Ed mentioned, he already shoots for two

[1:42:00] weeks every time. So maybe three weeks. I I don't know. I just I just want to

[1:42:05] see something to where we we have some time.

[1:42:09] » Okay. We hear your message and we'll try to work towards that.

[1:42:11] » And as far as again, as far as salary survey, let's let's discuss that in

[1:42:14] close session. >> Okay. Um, and then, uh, I know on the

[1:42:18] citywide cost, I just want to say this, I saw this somewhere in your, uh,

[1:42:22] report, our litigation cost and workers comp

[1:42:26] costs, and not just us, it's other cities, too, is out of control. It's

[1:42:30] it's it's gone up wacko by numbers. It's pretty amazing.

[1:42:35] » They have increased significantly, and they're expected to increase uh, even

[1:42:38] more significantly next year. And we will be bringing a uh request to the

[1:42:43] city council to support uh documentation related to uh uh encouraging the

[1:42:49] legislature to address the cost of insurance. Uh uh particularly as it

[1:42:53] relates to how municipal agencies uh when they are found 1% responsible,

[1:42:58] they're fully responsible for 100% of the cost of losses. This has to end. Uh

[1:43:04] we are the deep pocket and everybody looks to us and it's just a burden that

[1:43:08] we can't continue. I agree. And I just want to you have a paragraph in here on

[1:43:13] page 51 of the slide. So I think this this puts an ease where we are right now

[1:43:19] with this deficit but it says with strategy proposed in this budget message

[1:43:23] coupled with the anticipated long-term improvements in the economy. The city

[1:43:26] manager anticipates deficit will remain limited in scope and not extend to

[1:43:31] future fiscal years. Mon deficit is manageable and does not represent

[1:43:35] structure problem. I think that's that's important right there. The the Fire

[1:43:39] alarms are not going off right now. Um I I think uh I think we're doing a better

[1:43:44] job than the state of California is or maybe some big city in LA is doing in

[1:43:48] their deficit in my opinion. Um I think we're we are acting as though what

[1:43:55] Monontlair households would do and manage their money, manage their

[1:43:58] expenses u based on current economic times. So I think we're

[1:44:06] sh So I I do want to say this. I appreciate staff all the hard work from

[1:44:09] staff on this. I know we have the the uh housing corporation. So, let's do the

[1:44:16] housing corporation. >> Mayor, I I know I'm not a member of the

[1:44:20] council, but I do need to exercise a point of privilege. If you can give us a

[1:44:23] few minute break, please. >> Oh, you can have a break. That's fine.

[1:44:26] Actually, I need a break anyway. So, all right. Break time f

[1:44:38] Okay, we're back. Let's do housing corporation real fast.

[1:44:41] » Yes, this will be quick. Montlair Housing Corporation proposed budget for

[1:44:45] fiscal year 202627. So, the Montlair Housing Corporation

[1:44:50] list of Montclair Housing Corporation properties contained in the Montlair

[1:44:54] Housing Corporation budget estimated fund balance at July 1, 2026 is

[1:45:00] $879,879.

[1:45:04] The estimated revenue, rental income, uh, 1.77 million, income, $18,000

[1:45:13] for a total of just over $2.6 million. Positions previously funded by the

[1:45:18] housing corporation are now fully funded by the general fund, an action that

[1:45:22] reserves housing corporation funding for maintenance and expansion of the city's

[1:45:26] affordable housing program. So the estimated fund balance at the end

[1:45:32] of fiscal year 2026 27 is 1,284,935

[1:45:40] after we have um $1,389,400 in expenses.

[1:45:48] And that's the end of the presentation. >> Any questions on the housing stuff?

[1:45:52] Council R.

[1:45:57] » Do we own our properties debtree? >> Yes.

[1:46:02] » Yes. All properties are owned debtree. >> So, Miss Colbeck, it is debtree.

[1:46:08] » Yes. >> Okay.

[1:46:09] » Yeah. We don't make any We bought them outright. We don't make monthly payments

[1:46:13] or anything. >> Because I was wondering what the

[1:46:15] interest would have been on these. So, I don't need to ask that question. Thank

[1:46:20] you. How many units again? 104 108. What was

[1:46:25] it? >> Uh, no. We're probably up somewhere in

[1:46:27] the neighborhood of 110 now. >> Yeah. And I think a couple years ago, I

[1:46:31] tried to figure out the average. We take the random income divided by the number

[1:46:35] of units we own. I think it was coming out like $700 a month per unit,

[1:46:39] something like that, or 800 or something like that. Well, it depends, but there

[1:46:45] there are adjustments periodically. Not >> fair market rate. We'll probably get

[1:46:49] triple the income, I suspect. So, >> yes, but to be clear, they're not market

[1:46:53] rate. >> I know. I understand.

[1:46:56] » Okay. Um Oh, I'm sorry, Council Member Menddees.

[1:47:01] » Yeah, I um so all of these are debtree, but all of these units are all um have

[1:47:08] leans on them. Correct. For the lease revenue bonds though,

[1:47:12] » they have leans, but not all of them. No, some of them have been acquired

[1:47:16] recently. Uh well, no. In fact, housing corporation properties don't have leans

[1:47:20] on them. I'm sorry. >> Uh these are debtree. They have no leans

[1:47:23] on them. >> It's only other city properties that the

[1:47:27] city owns uh as operational facilities. >> Right.

[1:47:31] » All right. Thank you. That's that's good news.

[1:47:33] » Well, let me ask I got a question to ask. Mikey's not here. I know that. The

[1:47:37] question is, if we were to sell, >> he's online.

[1:47:39] » Oh, me and Mike can answer the question. I'm trying to remember my days of

[1:47:42] redevelopment. If we were to sell these properties,

[1:47:45] could we sell them for market rate or do we have covenants on them that prevents

[1:47:50] the the affordability remains? And I thought some of the stuff we bought with

[1:47:54] general fund money, but is there >> Well, the massive majority of the

[1:47:58] properties were bought with redevelopment money,

[1:48:01] » 20% set aside from the former redevelopment agency, and they do have

[1:48:04] covenants on them. Yeah, those have covenants, but we also bought property

[1:48:08] here recently, last >> anything bought after 2012 is not with

[1:48:13] uh well, they do have covenants on them, but they are not bought with monies that

[1:48:18] are subject to restrictions. We do have the $3.3 million that we received from

[1:48:24] uh relation to the mobile home park uh issue that we resolved several months

[1:48:28] ago. That money would have restrictions for affordable housing, but the monies

[1:48:33] that the economic development agency has spent since 2012 generally does not have

[1:48:38] those kind of restrictions. >> The monies that we we they've spent to

[1:48:40] purchase these residential homes are not subject to affordability.

[1:48:44] » Well, Mr. Mayor and city council. Uh so the properties that were purchased with

[1:48:49] the former redevelopment agency, those properties, if we would

[1:48:54] sell them off, we would then have to use the proceeds of those funds to put back

[1:49:00] into the low and moderate uh fund category that we have. We wouldn't be

[1:49:05] able to sell them. Um we wouldn't be able to use the the money for anything

[1:49:09] else. the money that was the properties that were purchased with the economic

[1:49:13] development agency funds, those do not have any restrictions. So, we would then

[1:49:18] be able to use the proceeds from those funds. It's only the ones that were used

[1:49:22] from the former redevelopment agencies that would then require to be reused for

[1:49:26] low moderate. >> That makes sense. Thank you, Mikey.

[1:49:29] Okay. So, uh now we have consent calendar. We have four items of consent

[1:49:33] calendar including the adoption of the city's budget and the housing

[1:49:37] corporation's budget. If there's no questions on it, can I get a a motion?

[1:49:44] » I'll move for approval of >> move approval of Gen County. Can I get a

[1:49:47] second? >> Second by Council Member Mendes. Um,

[1:49:54] » are we going to vote on item four or we taking four and five together?

[1:50:00] » We're doing consent calendar now, which is A, B, C, and D.

[1:50:03] » Right. But what about item four, the budget?

[1:50:07] » Item four, the budget. That's that is pres that's presentation. The budget now

[1:50:12] is under consent calendar. It will be item C. 5C is the uh city mon budget and

[1:50:18] 5D is the housing authority budget. Okay. So we have a motion. Let's vote.

[1:50:29] Great.

[1:50:32] All right. That's adopted 40. Uh again that staff thank you very much for the

[1:50:37] hard work and uh we're ajourned.

City Council – June 25, 2026 – Special Meeting

Agenda

Transcript