Okay, we're going to call this uh workshop together. Welcome to the city
of Montlair's city council special meeting. And um um terms of roll call, u
I believe uh council member Lopez will not be here today as city clerk. Okay.
So, we have four council members present. And now we have public comment.
This is an opportunity for members of the public to address the city council
regarding the uh special uh meeting of the council. We have members of the
public wish address city council. Uh it doesn't look like anybody's angering the
audience. So we'll move on. Supposed to be a joke. Supposed to
laugh. Come on guys. All right. Okay. So we'll we'll go down to the presentation.
And this is the uh 2627 U presentation of the city of Montlair's Mous Mousing
Housing Corporation budget. All right, who's leading off?
Get started. Good evening, mayor, city council, city staff, and members of the
audience, which are also city staff. I'm here tonight to present the 20 fiscal
year 2026 27 preliminary budget review. We'll start with the overview and budget
process. This evening's budget workshop provides
an overview of the proposed fiscal year 202627
annual budget for the city of Montlair with focused discussion on the following
topics. Overview and budget process. Producing a balanced budget. Revenue and
appropriations. Unassigned and special purpose reserve funds. Personnel
services. General fund special purpose funds. bonds and debt service. And our
conclusion, the fivemonth annual budget development
process includes the following significant steps. Finance department
staff develop and refine revenue projections. Finance department staff in
conjunction with departments forecast personnel requirements. Department heads
and their staff are provided with prior year amounts and formats for budgeting
annual budget requests. departments prepare their budget
requests for appropriations. City manager and finance department meet
with department heads and staff to evaluate, modify, and finalize
department level requests. The proposed annual budget document is submitted for
city council review and consideration. Producing a balanced budget.
The annual and primary goal related to budget preparation. produce an operating
budget where revenues equal or exceed appropriations and programs and services
are adequately funded to meet community and organizational needs and
requirements. The fiscal year 2026 budget as presented has a net deficiency
of general fund revenues over general fund appropriations in the amount of
$631,544.
This deficiency in general fund revenues is driven largely by one a lethargic
national economy with inflation demonstrating a progressive rise. Two,
federal economic, domestic and foreign policies including tariffs, immigration
enforcement activities and military incursions together suppressing global
economic activity. three suppress suppressed local economic
activity and four a decline in consumer confidence due to the increasing costs
of goods and services. The deficiency in general fund revenue over general fund
appropriations is projected to reduce the general fund unassigned reserve to
5.46 million at end of year. At 5.46 46 million. The general fund unassigned
reserve represents approximately 13.14% of the general fund operating
appropriations which is less than the city council's unassigned reserve ratio
goal of 25%. Now we'll discuss revenues for the next
fiscal year. So this table one shows uh the current
year our estimated revenue all funds uh 73,117,557
revised prior years just over 70 million. This is a change of just over
three million and that change is basically due to a uh about two million
in grant funding to purchase potentially purchase a a fire truck. General fund
operating fund uh current year for 40.9 million revised prior year 40.4 million
so a slight increase of 553,000
significant revenue components general fund 32.6 6 million in combined property
sales and use and transactions and use taxes. This amount includes the
following estimates. Just over 15 million in Bradley Burn
sales tax, 10.9 million in transaction and use tax revenue related to measure
L, 2.7 million in transaction and use tax revenue related to measure F, and
3.86 million in property tax revenue. Of the above totals, the following amounts
are allocated for debt service as indicated. Debt service on bonds, 2.59
million for the 2014 lease revenue bond, 2.39 million for the 2021 lease revenue
bond, and 4.4 million for the 2021 pension obligation bond. Other fiscal
year 2026 27 general fund revenue adjustments $210,880
increase in taxes other than property sales and transaction and use taxes.
Overall sales and transactions and use taxes are projected to show very minimal
year-over-year increases. $80,000 decrease in licenses and permits
due primarily to an expected decrease in the issuance of building permits.
$34,600 increase in fines and forfeitures due
primarily to an increase in parking citations. $8,500 increase in charges
for services due primarily to an increase in reimburse program costs. A
$12,200 decrease in miscellaneous revenue due primarily to a decrease in
reimbured expenditures. for all other funds. A $79,257
increase in the section two 2032 road maintenance re rehabilitation fund due
primarily to an increase in gas prices. $95,000 increase in the traffic safety
fund due primarily to an increase in parking citations.
$200,000 decrease in the park development fund due primarily to a
current decline in proposed new housing development in the city.
$29,445 increase in the public safety fund due
primarily to an increase in gas prices. $388,473
increase in the afterchool program fund due primarily to assist in covering
higher costs. $125,000 increase in the economic development
agency assets fund due primarily to an increase in redevelopment property tax
trust fund property taxes. A $550,000 increase in the sewer operating fund due
primarily to an increase in sewer fees.
So now we'll talk a little bit about our projected deficit. The fiscal year
202627 budget presently has a projected general fund operating deficit of
631,544.
Montlair's heavy reliance on sales tax and transaction and use tax revenue have
contributed to this projected deficit. Montlair is not alone in confronting
projected declines in revenue and general fund deficits. Other neighboring
cities include, but are not limited to, the following: Pomona, an 11.4 4 million
deficit. Upland a $5.69 million deficit. Chino Hills a $4.3 million deficit. LMA
Linda an 847,100 deficit which may be worse due to the
June 2nd 2026 loss of a 1% tax measure and Redlands a $2.7 million revenue
decline. Depressed growth in na in general fund
tax projections for fiscal year 2026 27 is based on but not limited to the
following areas of concern. National factors revenue estimates are largely
impacted by a national economic environment that presents significant
challenges. A lethargic national economy with a progressive rising inflation.
Declining consumer confidence. Recurring swings in tariff policies. Rising fuel
and energy prices. A growing economic gap defined by a K-shaped economy,
fluctuations and uncertainty in the housing market, growing concerns related
to affordable health care coverage, homelessness, immigration enforcement
activities, and other social issues, economic uncertainty restricting the
Federal Reserve's ability to lower the federal funds rate.
The California factors. The state's economic cycles are shaped by growth and
downturns that are more volatile that what is experienced by many other
states. Heavy reliance on a few key industries, progressive tax structure,
boom and bust budget cycles, external economic shocks, demographics and labor
market shifts, political and policy factors. For fiscal year 2026 27,
California's legislative analyst office has projected an almost $18 billion
shortfall.
Uh Montclair regional factors drawing on fourth quarter 2025 and first quarter
2026 data from HDL companies. Sales tax trends demonstrate limited improvement
in sales tax revenues heading into fiscal year 2026 27. Consumer spending.
Consumers are holding back or focusing on essentials and value. Declining slow
growth and tax revenue sources. Montlair sales and transactions and use tax
measures are showing minimal year-over-year growth. E-commerce versus
brickandmortar. Retail growth continues in online fulfillment centers, which
decreases sales and transactions and use taxes collected by the city.
» Let's stop right there for a second. Any questions on the revenue side so far by
council? Any questions right now? >> On the revenue side?
» The revenue we just talked about want to start with revenue. Go for it.
» I have a quick question if you need a second.
» Go ahead. What was last year's
general fund revenue you can recall?
» Oh, yeah. 40.4 million. >> Yeah.
on slide eight. Um, we're talking about current year revised prior year and
change. Uh, I know we talk about being in a $631,000
deficit. So, it just seems odd that we would be increasing our our next year by
three. Here it says 3 point or 3033 million where but in the um that we were
given. My calculations are more like 4 and a.5 million um in what I see. I'm
just wondering why we're increasing if we're in a deficit. And u that's one of
my questions on that side of it. And then um on the lease revenue bonds, I
got I have a question regarding um what our debt service that we pay
back. Is that a fixed rate or is that an adjustable? Yeah, that the lease
revenues are on the later on agenda. So, let's let's uh we'll look at that later
on if you want to lease bond mentioned a few it's mentioned a few times in the
» there's there's a section on the revenue bonds all that we can get that one there
but let's let's focus on slide eight first. So the the three million change
that's over all funds. So that includes everything and that our deficit is we're
discussing is just in the general fund. >> Okay, I understand. I'm just wondering
why we're increasing if we're in a deficit. Why would we
increase our budget? >> You're you're asking why the funds are
increasing? because the revenues coming into other funds other than general fund
are increasing >> and those funds are used to operate
other than general government operations.
» Yes, I I understand that. But my question is if we're in a deficit and
we're bringing in more revenue, why are we do we have to spend it all or
» Okay, so general fund monies are used to operate general government operations
including personnel. Yeah. >> Um that's the burden of the general
fund. Other funds are for specific activities and most of that would rep be
represented for example by grants that are used for infrastructure projects um
and other things that those funds are specifically designed for. We don't have
control over those funds. They're specific for specific purposes. The
general fund is for general government operations which is 95% of our
operations. And those funds are what we are experiencing a deficit in
» the funds that were receiving >> general fund
» the general fund the that money that we receive from our general tax operations,
property taxes, sales tax operations, uh u transactions and use tax revenues, uh
things like uh police department going out and issuing traffic citations. Those
monies all go into the general fund. And that fund which operates the majority of
our services to the community including personnel expenditures
is what is experiencing the deficit.
» Okay. Um I understand what you're saying. I understand the funds that
we're receiving and the general operating fund. I guess I just I'm
having difficulty understanding why if we're having a deficit, why we're
increasing certain things. Why aren't we cutting
back in areas? I'm not saying everything, but to to prevent having the
deficit. >> Well, we did cut back. We cut back $3.8
million from the requests that were submitted by the various departments. We
also froze a number of physicians that saved the budget about 1 point
» just a little over a million. >> Yeah.$1.3 million.
» Yeah, I saw that. I saw that in the budget and your message and everything.
» I think we're trying to do right now is focus on the understand the revenue
issues because we'll talk about corporations next.
» Yeah. >> Corporations will talk about
expenditures, talk about positions are frozen. I guess the big the big to me
when I look at the revenue, the big issue is revenue is our revenues are
flat. Our sales tax revenues are flat. They're not growing to offset uh offset
cost decreases. >> I think that's I think that's what
staff's trying to say here. Am I correct? Uh
» well, and and revenue >> Yeah, our revenues are flat.
» Yes, revenues are flat. And even if they're up, they're up over previous
years that were negative. So, if for example, if you were 6% negative uh two
years ago and 3% negative the following year, and even if you're up 2% this
year, you've only gained uh improvement uh on a negative of of uh uh 8%. So,
you're still behind. You just are demonstrating moving forward. You're not
going negative, but you're still not where you were at three years ago.
And I understand that. And so, and then the same with the reverse. If we had
more money than we were expecting, then we'd be at a positive. Correct.
» Well, no, not necessarily because you still have to make up the negative from
previous years. >> Okay. Well, well, I'm talking, I guess,
about Measure L. You know, Measure Measure L I know you you put in the
report that the first year we brought in 11 point something million. the next,
you know, few years it dropped, you know, about a million dollars and then
it's slowly going back up. And we talk about how that's not very much. But if
you really go back to 2020 when we, you know, wanted and we put this on the
ballot for the residents, what was our projected revenue at that time that we
were thinking we were going to get from it? It was $7 million. So technically
we're really four million more than what we are originally wanting which is about
40% rather than saying we're do you understand what I'm saying? I I'm
looking I go back in history and I'm just trying to see where we are and
what's going on with you know all the funds and that's why I was asking about
» yeah I I understand and projections versus actual results are are typically
two different things. You hope and expect that you will generate more. Of
course, at the time we were coming out of COVID. So, while we had had actually
anticipated that it would generate up to $11 million because of COVID, uh all of
the advisers told us that we should lower that number and expect much less
than that. And that is why we had projected that we would be somewhere
between seven and 8 million. The result obviously was better than we uh well the
advisers had anticipated but what we had actually anticipated it would be uh it
came in at $11 million and I think if you go back and you look at all of the
materials related to discussions at that time staff was more positive than the
consultants were and believe that it would generate that $11 million it did.
Uh but again that was over five years ago and here we are uh now in 2026 27
and the numbers now are less than what it what we earned uh five years ago.
That's not positive growth. That's backward growth. And while we are moving
back we moving back to that $11 million. It's five years ago that we came in at
$1 million. Those numbers should be at $14 million if the economy was really
progressing in a positive direction. It's not progressing in a positive
direction. We're not at $14 million. We're still about $400,000 short of
where we were in uh 2021 2022. >> I I understand all of that, but I'll
I'll let you continue on.
Okay.
Okay. So now we will discuss appropriations.
So table two shows the department request versus city manager recommended.
So overall funds the department's requests were 64.5 million. City manager
approved is 60.6 million. So we were able to uh reduce the budgets by 3.9
million for the general fund department requests were 45.2 million. City manager
approved 41.6 million. So our reductions were 3.6 million. City manager
recommended amounts uh the current year 70 million 58,000
for the new fiscal year. This current year we're at 65,230. So there's almost
a $5 million jump right there over all funds, 4.8
million. And the general operating fund current year is um for the next fiscal
year 41.6. Uh the current fiscal year 39.5 million.
So that's 2.1 million increase over pri over over the prior year.
Personnel services all funds 35.6 6 million which is 58.9% of total
appropriations which is up from 30 34.4 million which was 61.7%
for fiscal year 202526. Uh general that was over all funds
general fund 28.7 million which is 69% of general fund appropriations which is
up from 27.2 2 million which was 68.9% for fiscal
year 202526. Personnel increases year-toear are
related to addition of grant funed positions in the fire department
restoration of certain general fund positions in various departments
following the CO 19 pandemic. enhancing staff in key functional areas,
succession planning, implementation of negotiated wage and benefit increases,
and annual increases to Kalpers's fund unfunded acred liabilities for employee
pensions, services, and supplies. All funds 21.6
million, which is 35.8% of total appropriations, up from 20 million, 20.6
6 million which was 37.1% for fiscal year 202526.
For the general fund 12.5 million which is 30.2%
of general fund appropriations up from 11.9 million which was 29.2% for fiscal
year 202526.
Capital outlay for fiscal year 2627 is 3,244
two 3,244,114
of which 597,799 is being funded by the equipment
replacement fund. All major capital outlay requires authorization from the
city manager before issuance of purchase order requests.
So, here's a listing for each department. For the information
technology department, $247,000 for computer equipment, human services,
a total of $165,000 for two passenger vans, which are we're
getting through a grant, and uh MAP office furniture, which is the
afterchool program fund. Police Department, $194,400
for three patrol vehicles being paid out of the equipment replacement fund and
dispatch console upgrade, which is the general fund. the fire department
2,54,552
for a tractor drawn aerial ladder truck which will be paid out of the equipment
replacement fund and grants from San Bernardino County and community project
funding forcible entry training props general fund life 35 cardiac monitor the
general fund and five life pack CR2 defibrillators general fund and for the
public works department 133 $3,162 for a 2026 Chevrolet Silverado, which
will be paid out of the equipment replacement fund. WCO towable arrowboard
case 13in trenching bucket, R234 YIF AC machine, CEK manufacturing tool
drawer, all those paid out of the general fund. and out of the sewer fund
sewer BMP program and three smart cover manhole lid systems.
So this table shows all the allocations by department and a change from the
prior year is just over 4.3 million. There's only uh one fund transfer
budgeted and that is our annual $100,000 transfer from the traffic safety fund
for applicable programs to the general fund.
So, do you want me to stop here? >> Keep keep on going.
» Keep on going. >> Yeah, we'll stop.
» Uh general fund operating fund balance unassigned reserve.
So, here's our um general fund operating fund balance uh and comparisons with
operating appropriations. So at the end of fiscal year 2627
we're estimating our operating fund balance will be 5.4 million which is
13.14% uh which is below the recommended 25%.
An assigned reserve balance government finance officers association general
fund unassigned reserve ratio recommendation is minimum 25% optimum
50%. City Council direction maintain minimum unassigned reserve ratio of 25%
of operating appropriations with a goal to achieve a 50% unassigned reserve
ratio estimated June 30th 2027 general operating funds fund balance estimate of
approximately 5.4 4 million of the general fund unassigned reserve which is
less than the threshold target of 25% of operating appropriations.
Estimated June 30th 2027 general fund reserve fund equity rep representing
reserves for special purposes is 25.3 million.
Over the past seven fiscal years, the reserve ratio has fluctuated with a low
of 16.55% and a high of 24.95%.
These fluctuations are generally the result of the following. A difference in
operating appropriations between consecutive years. Adjustments to the
city's revenue profile. Creation of the following debt service funds to achieve
adequate funding for annual payments of the 2021 issue of lease revenue bonds
debt service fund. 2021 issue of pension obligation bonds debt service fund and
the UAL POB amortization fund. Adjusting special purpose reserve funds
as necessary and when surplus funding is available. Establishing additional
special purpose reserve funds to reflect changing requirements related to city
operations. Funding assigned to the economic development agency for real
property acquisition. End of year audit adjustments for actual revenues and
expenditures. Mid-year budget adjustments. City staff will continue
working toward a fund balance ratio in the general operating funds unassigned
reserves that represents no less than 25% of the general operating funds
appropriations budget with the long-term goal of achieving a 50% unassigned
reserve ratio. >> Okay, we can stop there for a second.
So, any questions on the appropriations right now or the unassigned reserves
at this time? Okay, questions continue on.
» Okay. >> Okay.
Maintaining general funds fund balance and reserves.
Maintaining a healthy general fund operating fund unassigned reserve fund
balance. In recent years, the city's success at achieving and maintaining a
healthy general fund operating fund unassigned reserve fund balance has been
accomplished through commitment to the following coordinated objectives. Fiscal
restraint achieved by implementation of sound economic policies and practices.
Reviewing the shared allocation of personnel related costs between the
general operating fund, other city entities, and other city funds.
Maintaining an appropriate employee ratio. Requiring employees to pay their
respective share of the CalPERS member contribution. Implementation of revenue
enhancement measures for fiscal year 2026 27. The following revenue
enhancement measures are submitted for consideration.
Measure L. This is an existing measure. Continue encouraging economic activity
to improve general fund tax receipts. Community facilities districts. This is
also an existing measure. Continue encouraging highdensity residential
development to improve CFD tax receipts in support of police and fire services,
emergency equipment apparatus, and public works maintenance programs.
Implementation of revenue enhancement measures continued. commercial cannabis
businesses. In fiscal year 20 2026 27, city council will be asked to consider
adoption of a revenue raising ordinance which could generate $2 million in
general fund revenue. The proposed tax rate is 7% authorized by voters in the
November 2022 general municipal election.
Cost of P personal choice services study implementation. On May 4th, 2026, a
workshop was conducted related to assessed fees for personal choice
services. Services that are offered to customers and that can be withheld for
non-payment may be likened to user fees. City council adoption of the
recommendations contained in the cost of services study can potentially generate
$760,000 annually. Utility users tax adjustment
to the voter authorized rate of 4.74% to generate approximately $600,000 in
new general fund revenue. Utility users tax considered 2028 voter
amendment to include cable streaming services and/or other utilities, for
example, refugees and sewer not currently provided for in the UUT
ordinance may generate in excess of $800,000 annually in general fund
revenue. e-commerce. Continue working with
legislators to amend California's current tax code related to point of
sale. Alternatively, consider working with special legal counselor council to
pursue pursue a class action lawsuit to require cities with point of sale
agreements, sales tax sharing agreements with online instate retailers to amend
those agreements to favor a point of delivery reporting scheme or report all
online in-state transactions and use tax receipts received through tax sharing
agreements to their respective county pools for distribution to agencies based
on per agency brick and mortar per capita sales tax performance. Potential
to generate $2 million annually in online transactions and use tax revenue.
Monavista Fire Protection District pursue cost reimbursement for fire
service in the city's sphere of influence. Current and prospective
annual payments are estimated at approximately $760,000.
Montlair potentially entitled to retroactive service costs to be
determined. The A-line, formerly the Gold Line
litigation, continue pursuing current claims and litigation against the San
Bernardino County Transportation Authority regarding extension of light
rail to the Montlair Transit Center. Economic recovery undetermined, however,
could s significantly exceed$1 billion dollars based on Beacon economic study
related to loss and economic output and annual tax revenues.
Commercial use of the former Pep Boys building site. Evaluate conversion of
the former Pep Boys into a commercial use that could potentially generate up
to 30 to $50,000 monthly in lease revenue payments. the I 10 freeway
adjacent electronic messaging sign. Potential for two sites along the I 10
freeway corridor. Installation of electronic messaging signs could
generate an estimated 100,000 to $500,000 annually in leasing
advertisement revenue for the general fund opportunity zone designation. This
designation in the North Montlair Census District would allow for infusion of
investment C capital in North Montlair which could be in excess of seven
billion dollars. >> Okay. Any questions on this section of
general operating fund balance revenue? Maybe I'll lead off. I know that on we
go to slide 31. I just want to pinpoint to my colleagues. These are potential
revenues that the city can attempt to capture. These are obviously revenue.
You know, one is a cannabis business. We had a workshop on that two weeks ago and
I believe it's essential that this council have a strong consideration of
of the cannabis business ordinance uh later this year. Um I think uh staff did
receive directions at the last workshop and uh obviously this is expected to
come back to us. The other thing here is this uh cost of per personnel choices
service studies. We also had a workshop on this projected to generate 760,000
annually and this will also come back to the uh city council at a regular meeting
uh for us to consider this but this is also new revenue. Um
this this is new re this is not in the bud in the proposed budget.
» Correct. So we were to adopt this uh this could potentially be new revenue
coming in um for us. The other thing here is you know the utility usage tax
uh um when this was first adopted back in 1992 was 5% was 5% that was a voter
approved utility users tax and then the count at the time um
had a plan to reduce it based on sales tax dollars. uh uh increases. So we have
a potential to look at this. I think if you know depending on where the budget
is the second half of the fiscal year or the first half of 27 that we should also
look at this maybe our midyear budget review and uh and consider uh if this
the utility usage tax should be adjusted. This is another one utility
users tax. I don't quite understand the whole cable
uh streaming services but if you know this is that the council wants to uh put
this place in the ballot in 28. I'm not advocating to do right now, but it is
something for us to consider at a future date. If we go to number 32,
um this is a big issue. I don't know if you
have any questions about it, but obviously e-commerce and in these tax
sharing agreements some of the jurisdictions are doing. I know there's
some legislation league California city has also been
involved to try to make it more equitable. There's no leeways but
obviously brick and mortars which were a brick and mortar city is being impacted
by the e-commerce or the big warehouses uh that uh are point of sale. So, um,
and then of course the Monav Vista Fire Protection District, uh, this is
something also the staff's worked on, identified that this revenue of 760,000
that we were never getting. Um, I don't add, uh, I believe uh, we have
communication with the county on this now, but this is also potentially new
revenue uh, for the city of Monler's general fund. So, I'll stop there and
receive any more questions. Mayor Paul Martinez,
» I was just curious, does the GFOA's unassigned reserve ratio recommendation
have any bearing on like insurance or >> No,
» nothing like that. It's just just >> recommendation. Yeah.
» Thank you. That's all I have. >> Okay. Council Ruth,
» I I will start with a question. I have
some others in here, but some of them can wait.
uh personal services, the personal choice for
services. How would that work?
Well, these are effectively similar to what user fees are where if somebody
requests a service specific from the city that is separate from uh general
services provided to the community, they would be obligated to pay for those
services. >> What would that service be?
» Yes. Oh, what would the service be? For
example, if they're uh doing a development and they need specific
services from the city related to their development project, the community uh
would not be responsible for paying for the city providing that service to them.
The individual themselves would be responsible for paying for that service.
» Well, we already have developer fees that developers pay.
» Yes. I'm only using that as an example. Uh but
» what would an example be to an average resident?
a resident who would come in for example who would want solar panels on their uh
roof. That is not a service that the city would provide and charge to the
residents generally. That would be charged specifically to the individual.
» So what would the using solar panels? What would that fee be? A fee to install
them? We don't install solar panels anyway. They hire somebody to do
» No, but it's a processing fee that the city applies for uh uh permits and other
inspection services and things that would be required from the city. So,
there are only services directed to individuals who are requesting that the
city provide services beyond what is normally provided to the community.
» That would not include police and fire, would it?
» No, this is not inclusive of that. >> Just point of order that we discussed
this at the workshop. I know. I'm I'm just trying to to to get my head around
all this. >> Got a big document relating to the fee
study that was done, >> right? No, it and then we're talking
about the utility users tax and increasing that.
What my concern is what it means to one businesses in town, not large businesses
or very small businesses who are very dependent on electricity for example and
natural gas. those rates are going up all the time. These businesses are many
cases marginal. An increase in this tax could result in that business simply
saying, "I can't be here anymore. I've got to close my doors." And I hope we we
look at that very carefully. It would mean a lot to residents who are
struggling to make ends meet right now. All utility costs are high, very high.
Nobody can tell me they're not. And if we do this, many residents may have to
make a choice on the utility on when they use certain
what time of day they use electricity, when they use their natural gas, if they
even use certain things at all. They may simply turn around and say, "I can't
afford it. I have to really cut back." So, I hope whatever we do with that, we
think about it. Um, most of our residents are struggling. They don't
have the income. And then the last question I have, I have others, but
that's for later. on the CFD we're talking about in North Montlair. Um that
CFD I thought just covered those units. I didn't know what if I were to
understand what this said. I didn't know that those units or that these CFDs go
for the whole city. I thought it was just for that area. Community facilities
district. It's not citywide. It's specific to a district.
» Well, no, it could be applicable citywide. It is used primarily in North
Montlair because that is where the highdensity development projects are
occurring. But if there were projects in other areas of the city and uh it was
the intent to require that the because of the size of the project that there
would be a responsibility related to providing additional police and fire and
public works maintenance services to that area. uh then that would be imposed
on those areas as well >> because the the way I read this, it
looked as if these CFDs are being used to balance the budget in regard to
police and fire services and they really are applicable only to that area. If I
were resident there, I wouldn't want to know that I'm paying for something and
it's being used somewhere else. >> Yeah. Well, they are used only for the
area in which the CFD is paid for. So, they do go into uh obviously their
general fund dollars, but they're used specifically for the project that the
money is uh uh derived from, and it is not used generally throughout the city.
» That that's all I have for now. >> All right, Council Member uh Mendes.
» Uh yeah, just a couple questions on the um cannabis business. The proposed tax
rate of 7% that was authorized um by the council, that's um on top of the regular
9% Correct.
» That would be on top of the Bradley Burns and the transactions use text.
That is correct. >> Okay. So, 16%.
Um, and then going down to the personnel uh choice services study implementation,
I I think that is a good idea. Um, but obviously it's not going to be used for
basic questions or simple questions over the counter. These are more for
developers or or things that people need. I I understand what these are.
Yeah. And um when it takes time out of one of our employees to pull reports or
do things, I understand. I mean, there has to be a cost for that. And and I
know it won't be outrageous, but I think it's definitely something that we should
look into. Um and as Bill mentioned, as long as it doesn't, you know, affect
police and fire calls. Um on the let's see here the utility users
tax. Um I I know John just mentioned 5% but is is that what it is? The max could
be is five or >> the maximum maximum authorized is I
believe 4.74%. Yes. >> Yeah. That's what I think. Yeah.
» Which is considerably low when you compare it to what it is in other
cities. >> Yeah. And we're currently right now
we're only charging 3 point something. >> 3.89.
Yeah. >> Oh I'm sorry.
» 89. my fault. Okay, >> no worries. Um,
» so yeah, and obviously we created that. I mean, well, the council created that
at that time in '92 just to help the city when it needed help and they
reduced it when they could and you know, and right now we're having a little bit
of trouble. So, yeah, we may >> and can I talk about that for a second?
I'm sorry. >> Oh, yeah.
» Yeah, this could we can do this for if it's needed. I'm not saying it's needed
right now. We we'll you know next year but if we do it maybe would you do it
for one year and then we reevaluate again.
» Yeah. >> I'm not saying that.
» Yeah. No no I I understand. And then the um consideration of bringing the uh to
the voters in 2028 to include um cable and streaming services. I I
agree with that as far as the refu sewer. Um because I I know refuge isn't
ours, but I feel like it comes through the city and it's almost like a city. I
I would say that we probably shouldn't include sewer and trash, but yes, um
definitely the cable and streaming services on that one. And as far as the
Monav Vista Fire Protection District and um pursuing cost reimbursement, how many
years um is it that um they owe us for that we never were paid?
» Well, it's to our understanding that the uh payments to the city of Montlair,
which were previously uh allocated to us through property tax revenues, ceased in
2005 when LAFCO made a decision to eliminate the paper district. And well,
they interpreted that the Monav Vista Fire Protection District was a paper
district and it was LFCO's desire to eliminate paper districts at that time.
And so they did that. It was our understanding that while that occurred,
the payment would continue to Montlair through property tax revenues. Um and
earlier this year we made the discovery that in fact the property tax revenues
which were very difficult to distinguish between uh what is coming from the city
versus what is coming from the sphere of influence. So there was no clear
indication of of that tax flow. And then when I had asked for a audit to be
conducted by finance, they made a determination that we were receiving
minimal in property tax revenues from the sphere of influence, which opened
our eyes to the fact that the county was not making the payment. And so we hired
HDL to look at it. and HDL did make the determination that the county does owe
the city a substantial amount of money. Uh I say or it is said in the
presentation that that amount needs to be determined. We project that it's
probably in the neighborhood of $9.3 million. Uh we will have to negotiate
that with the county. Uh the county will probably make an argument that uh we can
only go back a number of years. Our argument would be that this is not a
commercial debt. This is a service debt. We provided the services you owe us for
the services and we're going to stand by that plus uh the current year and all
future years including a CPI adjustment in future years. So uh we are seeking to
set up a meeting with the county to have that conversation.
» Okay. All right. That's all the questions I had. Thank you. Okay. Let's
uh move on.
So uh now we will discuss personnel services.
Uh for fiscal year 2026 27 there are 205 full-time positions. Uh the majority of
that coming out of general fund sewer fund and grants and then.24 of people uh
come are paid through the Montlair successor redevelopment agency. There is
one part-time benefited position. uh the employee has elected to remain in the
part-time benefited position to maintain social security coverage and the
part-time benefited program will end upon employee separation from
employment.
The city's fiscal year 2026 27 proposed operating budget anticipates several
adjustments to personnel classifications for some or all of the following
reasons. Ensure the effective and efficient operation of city departments.
Provide for succession planning, ensure adequate staffing, promote personnel
retention, achieve depth of experience, and ensure the provision of city
services. Address evolving needs and changes to organizational operations.
Respond to underperformance of sales and transaction and use tax earnings.
Respond to the availability or loss of grants. be responsive to potential
shifts in the local economy due to the state of uncertainty regarding federal
economic policies. Personnel modifications are submitted to
the city personnel committee for consideration prior to implementation of
classification modifications and/or the appointment of qualified and appropriate
personnel. The fisc year 2026 27 budget city
manager recommendations. The city manager is not presently
proposing any significant operational or personnel reorganization changes. The
fiscal year 2026 27 budget does propose freezing nine full-time and seven
part-time designated vacant positions. Each position is vacant for the
following reasons. The position is vacant due to attrition. The position is
vacant because it is an added extra position and remains vacant. The
provision The position remains vacant because No recruitment was conducted,
the position is vacant because it is a proposed new position in the fiscal year
2026 27 budget or the position remains vacant because the incumbent was
promoted. The fiscal year 2026 27 proposed budget does not recommend that
any active employee be subject to layoff, nor does the city manager
project the need to meet with any bargaining groups to discuss layoff
procedures. The city council is advised that due to
employee attrition and positioning by the MFA bargaining group, city staff is
in conversation with the San Bernardino County Fire Protection District
regarding fire protection emergency services, a process that would result in
transitional position layoffs. So, here's a list of the frozen vacant
positions. There are five uh departments involved and it's saving uh just a
little over 1 million uh with us freezing these positions. If not, our
deficit would be over 1.6 million. >> Let's stop there for a second. So I just
last point Dan again is uh because these positions are frozen
um it wasn't frozen this you said that the deficit would be 1.6 million
» and just want to clarify that with the council and then uh uh the bargaining
negotiations. Um so if you obviously we're still in
labor negotiations, but if the council did approve any personnel
adjustments in compensation uh that could add on to
the deficit. >> That is correct. My anticipation could
add 500,000 to $1 million to the deficit. Okay.
» And Mr. Mayor, if I may, I just want to backtrack to the uh sphere of influence
issue. And I want to congratulate and thank our fire chief Ryan Derk who was
instrumental in addressing this issue and working with city staff. U he uh
generated a significant amount of information related to this issue and I
do want to commend him for his effort in working with us uh to bring this issue
to the forefront so that we could move forward in addressing this with the
county. I'm sorry. The issue again is I'm sorry
» would be the sphere of influence issue. The issue related to providing fire
protection services to the sphere of influence to the former Mont Vista Fire
Protection District. >> Okay. U and and and going back to labor
negotiations and obviously we're not talking about it
here. Uh but uh obviously there's you're working on it. You know, we're in labor
negotiations right now. Uh but this makes the council aware that the deficit
could be added based on how labor changes go. So
» yes, it's probably the best thing for us to do. We'll have that conversation in
close session during negotiations. All right. C May 10 Martinez.
» Yeah. Could you explain transitional position layoffs
37 very bottom? >> All right. That issue is in relation
again to the discussions with county fire in the potential issue related to
annexation into or contracting with the county fire protection district. The
county fire would have to vet each one of the employees and there is not always
the possibility that every employee will be picked up. However, the general
process in relation to uh annexation, not contracting, but at least in
relation to annexation, is that uh employees are technically laid off and
then hired back by County Fire Protection District.
» And that's typically what would happen, assuming we pass all of this. Yes, that
is exactly what will happen. If we if the city ultimately had to make the
decision that annexation was the only way to keep the fire department uh uh
operating functionally, um then that is what the county would require is that uh
in order for these employees to be picked up by the county, they have to be
laid off by the city and then rehired by the county.
» Okay. Thank you. >> Yes, Council Member Mendes.
Uh yeah, just um quick question. Um as far as full-time positions, I know for
22 20 or 26 27, we're saying 205 full-time positions, and that's minus
the nine full-time um that um are funded positions, but
we're freezing those. So technically we currently have uh 20 what 14 full-time
positions. We're just not >> No, that the 205 includes the nine that
are unfunded because they're still in the budget but they're just
» still funded. Yeah. >> Yeah.
» Okay. So those are funed.
» And then I just have one other thing. Sorry.
That was it. Thank you. >> Thank you very much. Uh we'll go on to
the next section. >> General fund special purpose funds.
Special purpose funds established to address current and future liabilities,
programs, projects, and goals requiring a commitment of funds not incorporated
into the general fund operating budget. The CalPERS unanticipated normal cost
retains 3.5 million for CalPERS and post-employment liabilities.
Technology enhancements account retains $643,045
for techn technology acquisitions. The self- insurance fund retains 1.6
million for city related self- insurance retention liabilities. The building
maintenance fund retains 1.8 million for building maintenance.
Unanticipated personnel adjustment fund retains 1 million for unanticipated
personnel related expenditures. Equipment replacement fund retains oops
we lost some numbers there um just a little over 1.2 million for equipment
acquisitions. This reflects a reduction of $597,799
towards fiscal year 202627 capital outlay purchases. The OPE retiree
medical liability retains $2 million for other postmployment benefits.
Contingency account retains $79,821 for unanticipated expenditures.
The UAL POB amortization service fund is at $0 right now for unanticipated UL
charges. Parking facility development retains 9.5 million for parking facility
development. Tariff recession inflation fiscal expenditure control fund retains
$1 million for unanticipated cost increases.
Uh, A-ine Betterment Fund retains 1.75 million for improvements to
infrastructure for the A-line light rail system at Monavista Avenue and the
Montclair Trans Center. Street Maintenance Fund retains 1.25 million
for street maintenance and the homelessness advocacy housing outreach
assistant fund retains $330,633 for homelessness aid. Total estimated
all special purpose funds is 25.3 million after proposed equipment
replacement fund uses is that's will be our balance. Reminder, all major capital
outlay will require approval from the city manager before purchase orders will
be issued. >> We'll stop there for a second. Did you
have a question? >> Yeah, on that. Yeah,
» go ahead. >> Yeah. Um so on all these special funds
um that these monies are obviously almost like a reserve ed technically.
» Well they are uh yes in the reserve fund. Yes. They are designated for
special purposes and can only be used for those special purposes
» and they can only be used for those >> unless the council redirects that they
be redirected. Yes. >> Because it's general fund money.
Correct. >> Yes. Um and then does that include the
three lease revenue bond u amounts that are left?
» No, those monies are allocated separately uh so that they are committed
to those funds specifically and have no bearing on other general fund
operations. >> Okay, that's all I have.
» Yeah. And just on this uh I know the park facility development the $9.6
million and uh we were looking at using money
for real estate transaction or purchase and uh those deals have fallen apart. So
we still have this $9.6 million. Am I correct that?
» That is correct. You know, I wouldn't say that the deals have fallen apart.
It's just that >> as of right now those deals are
» the owners have asked for more money than the city is willing to pay.
» All right. So that that potentially could drop depending on those real
estate deals we decide to purchase those properties.
» Yes. Yeah. That is correct. >> To answer my questions, my colleagues
questions. Um on the uh on the reserves yeah our un undesated reserves is what
14 point something budget what is it J we have 14 point something
» the undesated reserve >> are you talking about special purpose
funds >> no no the
» the unassigned reserve is 5.4 million >> thank you
» 5.4 4 million. >> Yeah.
» Which is about 14 >> 13.
» Yeah. 134%. >> However, if we take this amount, the 25
million, this gets us up to like 66 67%. Again, this is this is if you know
things get pretty dramatic in the fiscal year and so we have these these these
funds for cash flow purposes and gives us the time to figure out what we're
going to do. So, >> yes. So, just to give you an example,
you talk about the UL uh alloc or I'm sorry, the allocation for opeps. The
goof prefers that cities commit funding into trust funds. And in our case, the
cost to pay for our um opeds, our other post-employment benefits would be about
$9.5 million. Um and GOAF would want us to put nine and a half million dollars
in trust funds. that money is restricted and it can only be used for uh paying
off ops. We use a pay as you go system. But in allocating money to the uh
special purpose fund that we have here in our opinion and the way that it
appears to be working is that that money is separately designated for opeds in
the event that we need to draw on that uh because of an increase in opeds. We
believe that our process has effectively worked uh because if you'll recall back
in the early 2000s, there was a workshop presentation to the city council by a
auditor who projected that Montlair's opeds would be around 12.5 million and
continue to increase. But the city has effectively controlled uh the cost of
other post-employment benefits. And in fact, our costs to OPB have declined
from that $12.5 million at that time to $9.4 million now. And so having put this
money in a trust and restricting it only for that and h not having it available
uh to the city for other purposes would not have been to the best interest of
the community. And so I believe that our process has paid off and uh we continue
to see that oped come down through our controlling mechanisms.
» At any budget you uh you know long very long budget message. Um you talked about
the risk factor. Um I think the department controllers department state
controller did one about five or six years ago and staff went back. So what
what is the health of our budget based on the controllers's office method?
» Right. So I believe that our the health of the city's budget has improved
significantly since then in large part to measure L uh but also begin again as
I indicated in relation to the oped uh before where we have received maybe a
high risk factor in that area because of the amount of our oped but because we
control it and the oped has actually come down to $9.4 4 million. Uh I would
rate us as I do in that uh in that graph at moderate. And so while we have seen
some increases back up from last year primarily because of the u downturn in
the economy overall, I would still say that Montlair is between low and
moderate in our risk. >> Thank you. Okay, let's move on.
So our 2014 issue of lease revenue bonds payment period fiscal year 2014 to 2045.
So the issue amount for this bond was $45 million. Purpose was to defease
balance of the 2005 issue which was used for police facility and youth and senior
center projects. Approximately $22 million for public works infrastructure
projects. The 2014 issue of lease revenue bond funds have been exhausted.
Annual debt service approximately 2.6 million through fiscal year 20445.
Funding source for annual debt service is the general fund revenue and for
fiscal year 2026 27 the payment will be 2,597,163.
The 2021 issue of lease revenue bonds payment period fiscal year 2022 to 201.
The issue amount for this bond was $45 million. The purpose complete
infrastructure improvement projects throughout the city. Remaining balance
approximately $20 million retained to primarily function as a matching source
for grants. Annual debt service approximately $2.4 million through
fiscal year 205051. Funding source for annual debt service
is general fund revenue. Payment for fiscal year 2026 27 is 2,396
$2,396,313.
Our 2021 issue of pension obligation bonds payment period fiscal year 2021 to
2041. The issue amount of this bond was 62.1
million dollar. The purpose transfer debt from the city's California public
employees pension system unfunded acrewed liability account to the pension
obligation bond. Annual debt service approximately 4.4 million through fiscal
year 204041. Funding source for annual debt service
is the general fund. Uh the payment for 2026 27 is $4,434,713.
» Okay, let's talk for a second. Council Mendez.
» Yeah. So, um, my questions on these are obviously two of them have zero
balances, one has a $20 million balance. Uh, do we we collect interest on that?
Correct. >> Yeah. Yes, we do. But we are prohibited
from collecting excessive uh interest and any insert any interest rate above
or any interest acrruel above a certain amount we have to return to the bond
agencies >> like what type of percentage is it like
a 3% interest rate or >> I believe it's above the the bond rate
itself. >> Yeah. So anything above that we're not
allowed to keep. Mhm. >> So, for example, I believe uh maybe last
year, uh we probably made around $4 million in interest and and had to
return $3 million because we're not allowed to hold it. You're not you are
not by arbitration laws, you are not allowed to make uh income off of
borrowed funds. >> And that money that you got to pay back
doesn't reduce our balance. Correct. >> Well, it doesn't reduce the whole
balance. No, that we originally borrowed. That is correct. Only the
interest amount. >> Yeah. And then as far as um the rates
that that we're paying, are are they fixed rates or they
» the debt service payment? >> It varies every year, but very
minimally. Maybe, you know, a couple thousand dollars.
» So, >> yeah. And I think actually on one of the
previous slides, the debt service payments went up like $1,817
for next fiscal year. >> So, it just kind of fluctuates up and
down just a little bit. >> But is there like a limit that I mean,
obviously, it's probably written somewhere where the bond documents each
year it tells me how much I we need to pay.
» I mean but is there like a max like it cannot go over 1% you know increase
annually or >> No I mean it's already when when the
when we get the bonds it's already laid out for the entire
» Yeah. Right. >> So it it it once it's set in those bond
documents it doesn't change. >> Yeah. It's not a surprise. We know each
year what to plan for because we receive the depending on the payback period, 30
years, 40 years, we know what what each annual payment will be.
» Somewhat somewhat fixed with a little bit of adjustment.
» Okay. And um that's all I have right now on that one.
» Yeah. I'm going to on 47 the $20 million uh obviously that that's money for
projects to do capital improvement projects. Um Are we getting close to
some projects, Ed, or I know we've got street projects. I know we talked about
Saratoga. >> We have a a significant number of
projects that are being prepared for moving forward. Some of them just
require some additional funding and we're hoping for uh grants for that
purpose. We have a number of grants that are outstanding and we are just waiting
to receive information as to whether or not we are successful on those grants.
Uh every month we meet with our grant advisor in this case Alyssa Colunga and
uh Blae to go over potential grants that we can additionally apply for. So the
city has a significant number of grants currently uh in play uh ready to be
spent as well as ones that we are applying for. And I I assume a lot of
the projects uh the planning stage is uh the design stage is either in design or
almost completed or design completed uh close to where we can go out and do bids
on some of these projects. >> Well, it depends on the grant. Some of
them require that you be shovel ready, >> right?
» U and we do strive to be shovel ready with every project that we have. Others
uh simply require that uh we're only paying for engineering services or for
studies related to doing the project and others are for the construction. So it
just depends on the depends on the project. It depends on the grant.
» All right, let's talk about pension real fast. So we did this back in uh 2122
whenever it was. Back then we had five we were paying addition out what five
million 5 point something million a year at that time did the bonds we got it
down to 4.4 came with the policy. The difference is
we'll go into the special the special uh purpose fund. However, the last two
years we've been hit with an additional unfunded liability. This year being what
3.5 million, last year being 2 something
million. Of course, the year before it was zero. So basically uh versus two
years ago, we're now dishing out an additional 3.5 million uh for pension
that could be used for other things in the city, including uh salary increases,
adjustments. So Ed, I talked about this, but maybe for the council's education,
where do you think this is going? I know there's there's been improvement in the
stock market for Kalpers, but can you kind of, you know, educate us a little
bit on this? >> Right. So this year or at least next
year the estimated uh UL will be about $3.8 million as you indicated. Um
however Kalpers did perform quite well last year. They came in at 11.1% which
is above their 6.8% uh on their uh standard residual. And so
we believe that if end of year 2026, so June 30, 2026, if Kalpers demonstrates
another positive year performance, uh their board will meet and we expect that
that $3.8 million will be reduced. I don't know the amount, but I'm hoping
that it will come uh closer to the $3 million range. However, I do want to
point out that had we not done the bond back when we did, uh, that 5 million and
a half $5.5 million payment that we were making then would probably be closer to
a $9 million payment right now. So, even though the UAL uh is up to the $3.8
million, if we pay that off, it takes us back to a zero. It's to our interest to
pay it back pay it off every year. So we don't acrue the 7 point 7% interest that
Kalpers applies. Uh that is our objective. We've been able to do that.
But do keep it in perspective that if we did not do that, even if you add that
$3.8 million onto the $4.5 million payment that we are making based on the
terms of the bond. If we did not do that, we would be paying up to $9
million to CalPERS annually at this point anyway. And that number would
continue to increase, my estimation, at least through 2030, if not beyond.
» Yeah. And that's, you know, that's uh well, if you take the 4.4 we're paying
now plus a 3.8, that puts us in the about 20% of our general fund is just
going to pay off Calves. >> Yeah. 1.4 million on top of that then
we're getting closer to 25% of our general fund.
» So um you know disturbing I don't say disturbing it just that's
the reality and uh you know that's this is something we've been dealing with for
the last 15 years. We thought we got to 21 we'll be in good shape and now here
is the 3.3 or 3.8 million surprise we're dealing with. But I'll move on and we'll
go on to the conclusion.
» The fiscal year 2026 27 general fund operating budget as presented to the
city council for consideration. The proposed fiscal year 2026 27 budget
reflects a shortfall in revenues versus appropriations of $631,544.
The deficit is resolved by the proposed transfer of $631,544
from the unassigned general fund reserve to produce a balanced budget. For fiscal
year 2026 27, each city department was provided flexibility in the preparation
of their respective budget programs. However, after budgets were submitted,
it was necessary for the city manager to reduce department budget requests by 3.9
million across all funds and 3.6 6 million in relation to the general fund.
Reductions were made using historical data, expenditure details, actual and
projected needs, and available funding. The city manager directed the freezing
of vacant positions in various departments, saving just over $1 million
in wage and benefit costs. Without this action, the deficit would have grown to
1,673,194.
The estimated deficit for fiscal year 2026 27 may be adjusted due to the
potential for added personnel costs as a city has yet to complete labor
negotiations with bargaining groups. Until negotiations are completed, the
estimated additional budgetary impact remains unknown.
With strate with strategies proposed in this budget message coupled with
anticipated long-term improvements in the economy, the city manager
anticipates the deficit will remain limited in its scope and not extend to
future fiscal years. Montlair's deficit is manageable and does not represent a
structural problem. The fiscal year 2026 27 proposed budget
incorporates the following debt service funds. The 2014 issue of lease revenue
bonds debt service fund 2,597,163.
The 2021 issue of lease revenue bonds debt service funds just over 2.3
million. And the 2021 issue of pension obligation bonds debt service fund 4.4
million. The passage of measure L in 2020 greatly improved the city's revenue
profile. However, sales and transaction and use tax receipts are
underperforming, and both measure L and Measure F have become fully integrated
into the city's operational profile, and the revenue generated is necessary to
meet ongoing obligations without excess revenue available to enhance the
unassigned and specialurpose general fund reserve capacity.
Going forward, city staff will routinely look at fresh approaches for service
delivery, continue to evaluate grants and outside funding opportunities, seek
to develop strategies to improve both the appearance and infrastructure of the
community, promote new revenue concepts, pursue development of the city's
commercial and residential base. promote economic development opportunities by
drawing on the city's past and effective promotion of redevelopment.
Continue to develop the partnerships for investments not only in North Montlair
but throughout the city and work with regional, state, and federal
representatives to promote efforts designed to move Montclair forward.
And that is the end of the presentation for the city.
» Okay. Any uh questions for uh city staff on this? Council
R.
» First, I want to thank staff for all of their hard work on this.
It is not always easy to do this, but I think they've done a commendable job.
I have a couple of questions on things more related to revenue than anything
else.
I'm looking at >> globally the need to pull in more
revenue. >> One of the things I wonder if we could
do and I know I'll get beaten up for saying
this so I'm already aware of it. What we can do to bring in more gasoline
stations. They provide a tremendous amount of
revenue. The more we have in here, people will
get off the freeway or as they commute through town,
purchase gasoline, and that's a revenue source for us. Electric charging
stations are wonderful, and I'm not saying not to have them. They're great,
but they don't provide the revenue that a gasoline station does. Is there
something we can do to try to get more gas stations here? because I go back to
oh the days of the Montlair heyday of the Montlair Plaza there were gas
stations everywhere up there and I'm wondering if there's something we can do
along those lines because that is a great source of revenue. I realize cars
are more fuel efficient so they're using you know not as much gas but we could
still get revenue from it. Is is there any thought about that? Well, yes. In
fact, right now Costco is expanding their bays from eight bays to 16 bays.
If you go to Costco, you'll see that the construction is ongoing. It's a little
bit problematic and we probably will experience some revenue loss because of
the uh difficulty in getting in and out of Costco, but hopefully uh within the
next four months, they'll complete the project and that will double the bays
from again 8 to 16. Costco also expressed interest in uh developing an
offsite gas facility in Montlair. We don't know the status of that right now.
We've given them a number of locations. Uh and they are still weighing whether
or not that will be something that they would want to do in Montlair. Uh other
gas stations, no there hasn't been much interest in developing additional gas
stations in Montlair, but Costco is the leader and generating more facilities
through Costco. uh certainly is to our interest. At the same time, uh Montclair
Place has toyed with the idea of bringing a Sam's Club to the site and
that would generate additional gas station facilities if uh CIM did
ultimately go that direction. >> I'm glad to hear that because that's a
great source of revenue. And again, I'm not opposed to electric charging
stations. Um >> that's true. Keep in mind though that
when it comes to gas, the gas tax revenue generated by gasoline stations
can only be used for transportation infrastructure projects is not available
for general fund operations. >> But that would be a great use for them
for uh our roads repairs on that would be great. What we
need to do, you know, maybe we could be the leader in bringing in gasoline sales
tax revenue. And again, before anybody beats me up, I'm not opposed to electric
charging stations. I think they're important.
It's another option, but they don't bring in the revenue that a gas station
does. Another question I have,
I listened at a prior meeting where we talked about believing in the free
market, which I certainly do, and that we need to be free market on
certain things. I would hope that it would include all
businesses. Um,
you know, a business, let's say, doughnut shop wants to locate in
Montlair, we shouldn't be turning them down. We
should be doing everything we can to get them in. Do they generate a lot of sales
tax? No. I believe it's only on dine in if I'm correct.
But that's still some revenue. Maybe if they generate 15,000 a year in sales
tax. I don't know what they generate. That would cover the cost of uh the
office furniture we're buying for the MAP program. I hope we get to the point
of being more pro business. There's a business that wants to be here. Let's
see what we need to do to bring them in. Doughnut shops are not a bad thing.
Uh other types of stores are not a bad
thing. Retail is declining. So, we need to figure out what we do to supplant the
retail with something else. And I hope we would start to look at that. Um, it
distresses me when I hear, "Oh, well, I don't think people would have wanted
that. What's wrong with bringing in
sources of revenue? We need to really be serious about that." And
I think the last thing I want to look at is I concur with a comment made at the
first part of the meeting by Council Member Mendes about uh we're cutting but
we're still spend we're increasing the budget in other areas. I understand
that. But somebody at home who's sitting there, they're they're not going to be
able to do that with their private budget. They're going to just have to
cut cut. And so I don't understand the expanding or increasing at a time when
it's bad. I don't know if the economy is going to recover next year or not. I
can't predict that. But even if it does, if we can set a base and start putting
then more money away, that would be good. Thank you.
» So if I may, Mr. Mayor, the increase in revenues is primarily related to grants
and other revenues that come to the city specifically for those projects. So
either we spend the money on those projects or we don't get the grant
money. It isn't that the city is securing uh new monies through the
general fund and we're not spending them on personnel or other services. These
are typically grants or one-time monies that are designed for specific purposes
like for example SB509 which is designed for uh public safety. We have to spend
those monies or we continue to acrew them but we can't spend them on other
sources. We can only spend them on those purposes. So, as long as that revenue
comes in and it's available for us to spend and while it looks like the budget
is increasing because of those revenues, keep in mind that it is a general fund
that really is the key to the operations of the city as far as personnel and the
general services that we deliver to the community. these other dollars that make
it appear that the budget is growing despite the fact that we project a
deficit. Those dollars are either spent on those specific requirements that the
funding sources tell us that we can spend them on or we don't spend them at
all or we don't apply for those funds. In which case then you're right, you
wouldn't see the growth, but you wouldn't also see the type of
development activity that is occurring in the Montlair despite the fact that
the general fund may not be performing to the level that it is.
» Okay. Thank you, Council Mayor Pan Martinez.
» Thank you. Uh once again, I appreciate the transparency in the report and the
numbers and even though this is uh not ideal revenue-wise,
um I want to say thank you for the creativity and the efforts with the
grants um and and just putting it all out there
for us for our consideration. I think we are a goodlooking city. I think we take
a lot of care of our residents and of our city um and our city staff and I
like to see that continue happening. Um but for what we're dealing with, this is
once again fantastic and thank you for the effort and putting this together for
us. >> Thank you, U Council Member Mendes.
» All right. First of all, just to um piggy back on what Chris was just
saying. Yes. I I appreciate everything that um you guys go through. I I know
that Mr. Ed over here is probably the mastermind to most of these things um
because I see him here all the time and I do appreciate him answering lots of my
questions at at personal times when no one else is around. It's just it's it's
nice to be able to have somebody that's available like that. But I do um
continue to have questions relating to to things. Um one I I would definitely
love to see a salary survey done with all of our local
surrounding cities. Um just to see where our employees are so we can see and and
include health benefits. Um, with that also, I I know I may have to pay a a fee
to to get the employees to do that, you know, if we have that new rule come in,
but um I I'll be willing to pay for that. That's a joke. That's people are
supposed to laugh, John. >> Yeah. So, um,
» that was you personally will be willing to pay.
» Yeah, that's that's what I'm saying. That that new fee that we have
» three paychecks. You got you got a pension paycheck. You got your web
paycheck. Cal's paycheck. You can afford it.
» Yeah, I'll pay for that for sure. But um I I just um I just want to make sure
that you know we're I want to see where our short falls are and you know and try
to focus maybe on that in the next years or so to to try to get those divisions
or departments um back up to where they should be. Um,
as far as, you know, I, as I mentioned earlier about the monies, I I understand
a lot of the funds and I understand a lot of, you know, how these work. I I
was privy to be able to create my own budgets for years and um but there's
still so much that I don't know and I I would love to see us have another
workshop to allow us a little bit more time to learn more about these special
funds um payments you know everything that we can learn. I would I would
personally appreciate it. I'm not saying everybody has to attend it, but I would
be willing to attend something or if there's a class that I could take, I
would definitely take that. Um, but I noticed, you know, going through all the
different um departments, that, you know, some of them had increases,
including the city council um um budget. I was just wondering who who's the one
that actually writes that up because it shows that we were requesting an
additional u more money than we asked and I I don't
remember ever telling anybody. So, I just don't know who who's the one that
creates I'm assuming it's Ed. Um but ours went up $20,000. City manager, your
your department went up $180,000. Admin services 92,000. Human services
338,000. But which now I know is part of the afterchool program. Is that a grant
also that we received that 300? >> Yes. Yes.
» So so wonderful. See and I would love that is important for us to know because
then it doesn't look like oh we're just spending more money in human services
and you know because then you go down to the police and sorry poor police you're
you're reducing by 450,000 you know on what you requested and what
you received. fire you guys increased 2.3 million almost and but I understand
why the grant you know the fire truck I I get it I I understand those things but
having the understanding of those just helps me and I think it would help the
residents not that we have any residents here right now to to ask but it's
important um well I think if I may the easy answer to a lot of your questions
just then are that a lot of costs are driven by contract and contracts have
annual CPI adjustments associated with them. We have no control over that.
» And so some budgets rise. So for example, when you're talking about the
city manager's budget, that budget incorporates refuge services. And refuge
services change significantly by hundreds of thousand dollars on an
annual basis. We have to pay that. But at the same time, that goes to the
increase in the revenue that you see and speak about. So, if the uh if the cost
of providing refuge services increases by $100,000 a year, it's also offset by
$100,000 in revenue. But the budget still has to demonstrate that there's an
appropriation increase of $100,000, but the revenue budget will also show an
increase in $100,000 to offset that. >> Yeah. But that's how most of those
budgets are driven as far as cost increases, contracts that commit us to
uh those adjustments. >> Yes. And thank you for that. And that
comes to my last department um which isn't a very old I don't think you've
had this one in there that long. I mean probably 10 years or more. Uh citywide
that that um department it increased by $1.175
million. And just maybe you could give me a little bit more um education on how
why that one went out. >> Sure. Easy answer on that is worker
compensation claims filed against the city, uh lawsuits filed against the
city, the cost of electricity, the cost of telephone services. So everything
that goes into the citywide budget are those cost components there are shared
throughout the organization. Kalpers's costs are in there. So, as the mayor
pointed out earlier, ULA increases, increases in the normal service cost
range, those are no longer part of individual bus uh of of individual
budgets uh for departments. That's all now incorporated into citywide because
collectively we all have to pay for those costs. They're not unique to the
police. They're not unique to human services. They are common to the entire
organization and citywide in fact is where the bulk of the cost increases
impact us because uh insurance is skyrocketing.
Uh worker compensate claims are based on the number of claims filed by uh
employees in the organization and lawsuits based on whoever is filing a
lawsuit and of course we have no control over the cost of electricity, water,
postage and other utilities and all that is reflected in citywide.
» Okay. So I and I understand that and thank you for that definition the 1.1.75
million increase but I know that we also mentioned that this is where we get the
unfunded balance also of PERS which increased by 3.8 million.
» Well it didn't increase by 3.8 million. >> Oh
» that's it's up >> to that but it didn't increase by that
amount. >> What was it last year? Do we know?
» Not off the top of my head I don't. I'm sorry.
» All right. Well, again, so this leads to my my final question or request. Um, and
I talked a little bit to John about it just a little bit ago, but I would
really, and I know staff may be upset with me again doing this, but I would
love to receive this budget a minimum of four to eight weeks before.
» Yeah. Well, if you look at every city in California, it's 4 to 8 weeks and that's
the average. >> When we are given a 778 page document to
review and then for us to sit up here and vote on, I just don't feel like it's
enough time for me to give the best answer to the to the people that put us
in here. And and I know you laughed just now at it. No, and I understand what
you're saying, but it's it's a it's a huge process.
» I know. I was involved with it. I I understand.
» Not like not like >> I I understand. I understand. But that's
your position. That's your job. >> Yeah. And uh I just would love to see
us, you know, get this, you know, like I said, four weeks in advance, you know,
rather than one week in advance, just because, like I said, 778 pages to
review this and then all these other supplements that we get, it's a lot. And
I really try to go through it and like I said, if I can even have a class where I
can understand it better. I'm not trying to be you. I'm not trying to be Ed. I'm
just trying to make the best decision I can for the residents and the community.
That's all I want to do. >> Well,
» understood. And if I may, Mr. Mayor, before you you comment, um the only way
that we could achieve this is one of two ways. And that is that we start the
budget process uh before the new calendar year even begins, which is I
think a significant burden on the departments because they don't really
understand uh necessarily where their expenditures are yet. The other issue is
that there is no provision in law that you adopt a budget by June the 30th. As
I I put in the budget at the very beginning, a discussion of what a budget
is. And that is to demonstrate to you that that we're not required to adopt a
budget. But if we don't, we run into a number of complications. And so we can
bring the budget to you even in July for your consideration. But you have to
understand we have no authorization to spend money until you do effect give us
that authorization. So those are the only two options that are available to
us. We start the process significantly earlier or you adopt the budget later in
the year. >> Well, let me interject here. First, you
can do a continue resolution to the next fiscal year too. U you continue the
existing budget to the new fiscal year and then then you
can adopt the budget later on. what we're doing at Metroink. We're extending
that budget for three months because obviously revenues for Metroink dropped
trying to figure out how to do service levels. But I think the answer to the
first question is yeah four weeks is kind of way in advance you know in this
budget. I I think what needs to happen is, you know, we should have this budget
at least two weeks before this meeting, at least two weeks. And I think that
during that period of time, there should be some type of a or this is a workshop,
but a study a study workshop for the council members, not in this
environment, perhaps at the library or in the conference room or council
members to just ask questions to staff and dig into it before this meeting
takes place. I don't know that could be the study session maybe call study
session doesn't mean all the counselors can come you know it will be a brown act
meeting we meet the brown act but it's it's optional council members want to
attend the study session and they can ask a lot of questions maybe another
thing needs to happen for this budget uh if council me wants this and then if
there's interest maybe we there should be a a a study session on the budget
this summer or this fall and Again, it's held someplace else and uh council
members can ask a lot of questions, dive into the budget with staff. U I will
recommend that and maybe that's the best way to get the education.
» Okay? And that's fine, but I'm I'm letting you know that your budget
message will be 10 to 20 pages. It will not be the 120 pages
» that you get now that I'm I'm letting you know you will not be getting 120
mill page budget message that explains to you everything that's going on. you
will be getting what every other city provides their city council and that's a
10-page budget decision. >> Hey, okay, let's let's not get excited
here. Okay, what I'm trying to say here is I understand among council I mean I
I've been doing this for 25 years and I kind of count, you know, budget. I look
for certain things. I have a pretty good understanding about the budget. I come
in talk to staff about it and make sure I understand what's in the budget uh
before today's meeting. Yes, Ed, you're correct because I don't know how many
cities budgets I go through and I look at the budget message and it's crap.
There's nothing there. So, I don't understand what's in the budget. What
I'm saying here is for the education of at least council member Menddees,
somebody else perhaps council me if nobody else is interested. Maybe you
want to have a meeting with staff conference room, the theater room and
gives you an opportunity to go through this current budget. Hopefully it was
adopted tonight and you get a better understanding of that budget here and
maybe next year when we have the budget session we kind of do the same thing at
the study session before this meeting and
council members can engage it with staff other questions. I understand we can't
hear this is a little more formal. I've always encouraged my council colleagues
to try to meet with staff and ahead of time on some of the bigger issues so you
get get your questions out of the way. But perhaps perhaps there's a formal
setting where we have a study session and again that's volunteer in which
councils want to show up and then uh be under the Brown Act and then you can ask
a lot of questions in that format. So I don't know that's
council MDZ is kind of asking for. >> I'm actually open.
» I'm open to anything and I I'm you know >> right
» I won't apologize for upsetting anybody here but I I wasn't I don't think I'm
asking for anything that's out of the question. Well, I think it's important
to council members to be educated. You know, this, you know, the budget is a
hard one to understand. Um, but it's important to council members be educated
and when they vote and what they're voting on. So, yes, you know, if again,
so perhaps staff, Ed, U or C, I don't know if anybody else interested, Council
Member Rue, Mayor Pin Martinez. I I just feel to be honest like
Ed, if I was you and I wrote this budget like you do, I would want more people to
read it and understand it and enjoy it. I mean, it it's a major document and
yes, it it's something that I would like to understand. So, I
» All right. So, maybe it sounds like I mean, I don't need a study session, but
if you like to have a I mean, I'll be be I'll be happy to participate in a study
session, I should say. Um but if you like to have a study session then
perhaps uh staff can uh at least contact you schedule one and it gives you a
chance at least go through this budget you have a better understanding so when
we prepare for next year's budget perhaps some of the things next year's
proposed budget you'll have you have understanding why it's there u ahead of
time. Okay. And then and then maybe next year we'll try to get the budget out two
weeks in advance and then again maybe a study session if council members want to
meet with staff and and then ask questions of the budget uh in that
format which is kind of informal uh as opposed to in this format.
» Yeah. And if I may, Mr. Mayor, we do always try to have the budget to you at
least two weeks in advance. You have to keep in mind that this particular year
we had a lawsuit that staff was preparing for. Uh we had a number of
other issues that staff was working on and the budget was just in the middle of
all of that. And I I agree and I even had this conversation with Janet and she
will agree that I was concerned that it was not getting to you at least the two
weeks in advance. We did get it to you a week and a half and I apologize for
that. But even to have this budget session, we're still going to have to
have the budget done for you even in a budget session, which does not remove
the responsibility from us of starting the process earlier. It's the only way
that this is going to happen. >> Yeah. So I I'm not ask I think right now
is let's just shoot for the two weeks with the idea if invite the council
members they want to come to a special session and just learn about it before
we actually have this workshop here. Maybe that's the format for the next
year format. Um I know that council member Midz you talked about salary
survey you brought that up. Um I think we need to do is go through the
negotiations first. Maybe you know Ed, I don't know if you want to opine on it on
this one here. I'm not sure exactly. I mean
» I'm sorry what what >> opine on the salary survey that was
brought up by council member Mendes. I think first of all we need to go through
the we get through the council on we need to get through negotiations.
Perhaps this is an item we should be discussing in close session as well. I'm
assuming this if you want to do a salary survey it should be discussed in close
session I'm assuming. >> I I I agree. We're in the middle of
labor negotiations and to talk about a sour survey would send out false
encouragement to the labor groups that the city is looking at something it's
not going to be doing. >> This is not the time to do a salary
survey. However, we will have a, you know, we'll have a close session at next
meeting, talk about bargain units, and we'll go from there.
» Yeah. And that's fine, but I just I brought this up last year, the salary
survey, and it never happened. So, I I'm just wanting it to happen is all I'm
asking. >> Well, I I think right now this is an
issue we should not be talking about up here. This is a close
» No, no, no. I I understand what you're saying about
» and I think we should discuss this in close session.
» Yeah. So, two things. One, we do do salary surveys all the time. The labor
groups themselves do salary surveys all the time. If the council wants to do a
council directed salary survey, it would require that we contract that out. Um,
and last time we did a contracted out salary survey. It, you know, it costs a
significant amount of money and we can do that if you want us to bring it back
before the council. And the reason why I say this is that we do not necessarily
accept the salary surveys conducted by the bargaining groups uh because we
don't know the positions that they are surveying and they don't like the
surveys that we conduct because we look at positions and try to do a a like
forlike uh match and there's always disagreement. So the only way that there
is a medicable solution to these sorts of surveys is that there is an
independent third party that conducts the surveys and that does cost money.
» And I understand but honestly I could do my own salary survey if that's what's
what's needed. But and I I get it but it's not something I'm asking for that
all this information isn't readily available to contact each city and get
it. And I'm just talking about the salary city or the surveys that cities
that we used in the past because they're similar to ours and that's it. And then
regarding the the two weeks, like Ed mentioned, he already shoots for two
weeks every time. So maybe three weeks. I I don't know. I just I just want to
see something to where we we have some time.
» Okay. We hear your message and we'll try to work towards that.
» And as far as again, as far as salary survey, let's let's discuss that in
close session. >> Okay. Um, and then, uh, I know on the
citywide cost, I just want to say this, I saw this somewhere in your, uh,
report, our litigation cost and workers comp
costs, and not just us, it's other cities, too, is out of control. It's
it's it's gone up wacko by numbers. It's pretty amazing.
» They have increased significantly, and they're expected to increase uh, even
more significantly next year. And we will be bringing a uh request to the
city council to support uh documentation related to uh uh encouraging the
legislature to address the cost of insurance. Uh uh particularly as it
relates to how municipal agencies uh when they are found 1% responsible,
they're fully responsible for 100% of the cost of losses. This has to end. Uh
we are the deep pocket and everybody looks to us and it's just a burden that
we can't continue. I agree. And I just want to you have a paragraph in here on
page 51 of the slide. So I think this this puts an ease where we are right now
with this deficit but it says with strategy proposed in this budget message
coupled with the anticipated long-term improvements in the economy. The city
manager anticipates deficit will remain limited in scope and not extend to
future fiscal years. Mon deficit is manageable and does not represent
structure problem. I think that's that's important right there. The the Fire
alarms are not going off right now. Um I I think uh I think we're doing a better
job than the state of California is or maybe some big city in LA is doing in
their deficit in my opinion. Um I think we're we are acting as though what
Monontlair households would do and manage their money, manage their
expenses u based on current economic times. So I think we're
sh So I I do want to say this. I appreciate staff all the hard work from
staff on this. I know we have the the uh housing corporation. So, let's do the
housing corporation. >> Mayor, I I know I'm not a member of the
council, but I do need to exercise a point of privilege. If you can give us a
few minute break, please. >> Oh, you can have a break. That's fine.
Actually, I need a break anyway. So, all right. Break time f
Okay, we're back. Let's do housing corporation real fast.
» Yes, this will be quick. Montlair Housing Corporation proposed budget for
fiscal year 202627. So, the Montlair Housing Corporation
list of Montclair Housing Corporation properties contained in the Montlair
Housing Corporation budget estimated fund balance at July 1, 2026 is
$879,879.
The estimated revenue, rental income, uh, 1.77 million, income, $18,000
for a total of just over $2.6 million. Positions previously funded by the
housing corporation are now fully funded by the general fund, an action that
reserves housing corporation funding for maintenance and expansion of the city's
affordable housing program. So the estimated fund balance at the end
of fiscal year 2026 27 is 1,284,935
after we have um $1,389,400 in expenses.
And that's the end of the presentation. >> Any questions on the housing stuff?
Council R.
» Do we own our properties debtree? >> Yes.
» Yes. All properties are owned debtree. >> So, Miss Colbeck, it is debtree.
» Yes. >> Okay.
» Yeah. We don't make any We bought them outright. We don't make monthly payments
or anything. >> Because I was wondering what the
interest would have been on these. So, I don't need to ask that question. Thank
you. How many units again? 104 108. What was
it? >> Uh, no. We're probably up somewhere in
the neighborhood of 110 now. >> Yeah. And I think a couple years ago, I
tried to figure out the average. We take the random income divided by the number
of units we own. I think it was coming out like $700 a month per unit,
something like that, or 800 or something like that. Well, it depends, but there
there are adjustments periodically. Not >> fair market rate. We'll probably get
triple the income, I suspect. So, >> yes, but to be clear, they're not market
rate. >> I know. I understand.
» Okay. Um Oh, I'm sorry, Council Member Menddees.
» Yeah, I um so all of these are debtree, but all of these units are all um have
leans on them. Correct. For the lease revenue bonds though,
» they have leans, but not all of them. No, some of them have been acquired
recently. Uh well, no. In fact, housing corporation properties don't have leans
on them. I'm sorry. >> Uh these are debtree. They have no leans
on them. >> It's only other city properties that the
city owns uh as operational facilities. >> Right.
» All right. Thank you. That's that's good news.
» Well, let me ask I got a question to ask. Mikey's not here. I know that. The
question is, if we were to sell, >> he's online.
» Oh, me and Mike can answer the question. I'm trying to remember my days of
redevelopment. If we were to sell these properties,
could we sell them for market rate or do we have covenants on them that prevents
the the affordability remains? And I thought some of the stuff we bought with
general fund money, but is there >> Well, the massive majority of the
properties were bought with redevelopment money,
» 20% set aside from the former redevelopment agency, and they do have
covenants on them. Yeah, those have covenants, but we also bought property
here recently, last >> anything bought after 2012 is not with
uh well, they do have covenants on them, but they are not bought with monies that
are subject to restrictions. We do have the $3.3 million that we received from
uh relation to the mobile home park uh issue that we resolved several months
ago. That money would have restrictions for affordable housing, but the monies
that the economic development agency has spent since 2012 generally does not have
those kind of restrictions. >> The monies that we we they've spent to
purchase these residential homes are not subject to affordability.
» Well, Mr. Mayor and city council. Uh so the properties that were purchased with
the former redevelopment agency, those properties, if we would
sell them off, we would then have to use the proceeds of those funds to put back
into the low and moderate uh fund category that we have. We wouldn't be
able to sell them. Um we wouldn't be able to use the the money for anything
else. the money that was the properties that were purchased with the economic
development agency funds, those do not have any restrictions. So, we would then
be able to use the proceeds from those funds. It's only the ones that were used
from the former redevelopment agencies that would then require to be reused for
low moderate. >> That makes sense. Thank you, Mikey.
Okay. So, uh now we have consent calendar. We have four items of consent
calendar including the adoption of the city's budget and the housing
corporation's budget. If there's no questions on it, can I get a a motion?
» I'll move for approval of >> move approval of Gen County. Can I get a
second? >> Second by Council Member Mendes. Um,
» are we going to vote on item four or we taking four and five together?
» We're doing consent calendar now, which is A, B, C, and D.
» Right. But what about item four, the budget?
» Item four, the budget. That's that is pres that's presentation. The budget now
is under consent calendar. It will be item C. 5C is the uh city mon budget and
5D is the housing authority budget. Okay. So we have a motion. Let's vote.
Great.
All right. That's adopted 40. Uh again that staff thank you very much for the
hard work and uh we're ajourned.