[0:04] Okay, we're going to call this uh
workshop together. Welcome to the city
[0:08] of Montlair's city council special
meeting. And um um terms of roll call, u
[0:16] I believe uh council member Lopez will
not be here today as city clerk. Okay.
[0:21] So, we have four council members
present. And now we have public comment.
[0:25] This is an opportunity for members of
the public to address the city council
[0:28] regarding the uh special uh meeting of
the council. We have members of the
[0:32] public wish address city council. Uh it
doesn't look like anybody's angering the
[0:37] audience. So we'll move on.
Supposed to be a joke. Supposed to
[0:41] laugh. Come on guys. All right. Okay. So
we'll we'll go down to the presentation.
[0:47] And this is the uh 2627 U presentation
of the city of Montlair's Mous Mousing
[0:54] Housing Corporation budget. All right,
who's leading off?
[1:00] Get started. Good evening, mayor, city
council, city staff, and members of the
[1:05] audience, which are also city staff. I'm
here tonight to present the 20 fiscal
[1:11] year 2026 27 preliminary budget review.
We'll start with the overview and budget
[1:19] process.
This evening's budget workshop provides
[1:22] an overview of the proposed fiscal year
202627
[1:26] annual budget for the city of Montlair
with focused discussion on the following
[1:30] topics. Overview and budget process.
Producing a balanced budget. Revenue and
[1:36] appropriations. Unassigned and special
purpose reserve funds. Personnel
[1:41] services. General fund special purpose
funds. bonds and debt service. And our
[1:46] conclusion,
the fivemonth annual budget development
[1:50] process includes the following
significant steps. Finance department
[1:55] staff develop and refine revenue
projections. Finance department staff in
[1:59] conjunction with departments forecast
personnel requirements. Department heads
[2:04] and their staff are provided with prior
year amounts and formats for budgeting
[2:08] annual budget requests.
departments prepare their budget
[2:12] requests for appropriations.
City manager and finance department meet
[2:16] with department heads and staff to
evaluate, modify, and finalize
[2:20] department level requests. The proposed
annual budget document is submitted for
[2:25] city council review and consideration.
Producing a balanced budget.
[2:31] The annual and primary goal related to
budget preparation. produce an operating
[2:36] budget where revenues equal or exceed
appropriations and programs and services
[2:41] are adequately funded to meet community
and organizational needs and
[2:45] requirements. The fiscal year 2026
budget as presented has a net deficiency
[2:52] of general fund revenues over general
fund appropriations in the amount of
[2:56] $631,544.
[3:00] This deficiency in general fund revenues
is driven largely by one a lethargic
[3:05] national economy with inflation
demonstrating a progressive rise. Two,
[3:10] federal economic, domestic and foreign
policies including tariffs, immigration
[3:15] enforcement activities and military
incursions together suppressing global
[3:21] economic activity.
three suppress suppressed local economic
[3:25] activity and four a decline in consumer
confidence due to the increasing costs
[3:30] of goods and services. The deficiency in
general fund revenue over general fund
[3:36] appropriations is projected to reduce
the general fund unassigned reserve to
[3:41] 5.46 million at end of year. At 5.46 46
million. The general fund unassigned
[3:47] reserve represents approximately 13.14%
of the general fund operating
[3:53] appropriations which is less than the
city council's unassigned reserve ratio
[3:57] goal of 25%.
Now we'll discuss revenues for the next
[4:03] fiscal year.
So this table one shows uh the current
[4:08] year our estimated revenue all funds uh
73,117,557
[4:17] revised prior years just over 70
million. This is a change of just over
[4:21] three million and that change is
basically due to a uh about two million
[4:27] in grant funding to purchase potentially
purchase a a fire truck. General fund
[4:32] operating fund uh current year for 40.9
million revised prior year 40.4 million
[4:39] so a slight increase of 553,000
[4:44] significant revenue components general
fund 32.6 6 million in combined property
[4:50] sales and use and transactions and use
taxes. This amount includes the
[4:54] following estimates.
Just over 15 million in Bradley Burn
[4:58] sales tax, 10.9 million in transaction
and use tax revenue related to measure
[5:04] L, 2.7 million in transaction and use
tax revenue related to measure F, and
[5:10] 3.86 million in property tax revenue. Of
the above totals, the following amounts
[5:16] are allocated for debt service as
indicated. Debt service on bonds, 2.59
[5:22] million for the 2014 lease revenue bond,
2.39 million for the 2021 lease revenue
[5:28] bond, and 4.4 million for the 2021
pension obligation bond. Other fiscal
[5:36] year 2026 27 general fund revenue
adjustments $210,880
[5:42] increase in taxes other than property
sales and transaction and use taxes.
[5:47] Overall sales and transactions and use
taxes are projected to show very minimal
[5:51] year-over-year increases.
$80,000 decrease in licenses and permits
[5:57] due primarily to an expected decrease in
the issuance of building permits.
[6:01] $34,600
increase in fines and forfeitures due
[6:06] primarily to an increase in parking
citations. $8,500 increase in charges
[6:12] for services due primarily to an
increase in reimburse program costs. A
[6:17] $12,200 decrease in miscellaneous
revenue due primarily to a decrease in
[6:22] reimbured expenditures.
for all other funds. A $79,257
[6:30] increase in the section two 2032 road
maintenance re rehabilitation fund due
[6:37] primarily to an increase in gas prices.
$95,000 increase in the traffic safety
[6:43] fund due primarily to an increase in
parking citations.
[6:48] $200,000 decrease in the park
development fund due primarily to a
[6:52] current decline in proposed new housing
development in the city.
[6:57] $29,445
increase in the public safety fund due
[7:01] primarily to an increase in gas prices.
$388,473
[7:07] increase in the afterchool program fund
due primarily to assist in covering
[7:12] higher costs. $125,000
increase in the economic development
[7:17] agency assets fund due primarily to an
increase in redevelopment property tax
[7:22] trust fund property taxes. A $550,000
increase in the sewer operating fund due
[7:28] primarily to an increase in sewer fees.
[7:33] So now we'll talk a little bit about our
projected deficit. The fiscal year
[7:37] 202627 budget presently has a projected
general fund operating deficit of
[7:43] 631,544.
[7:46] Montlair's heavy reliance on sales tax
and transaction and use tax revenue have
[7:51] contributed to this projected deficit.
Montlair is not alone in confronting
[7:55] projected declines in revenue and
general fund deficits. Other neighboring
[7:59] cities include, but are not limited to,
the following: Pomona, an 11.4 4 million
[8:05] deficit. Upland a $5.69 million deficit.
Chino Hills a $4.3 million deficit. LMA
[8:14] Linda an 847,100
deficit which may be worse due to the
[8:20] June 2nd 2026 loss of a 1% tax measure
and Redlands a $2.7 million revenue
[8:27] decline.
Depressed growth in na in general fund
[8:31] tax projections for fiscal year 2026 27
is based on but not limited to the
[8:37] following areas of concern. National
factors revenue estimates are largely
[8:42] impacted by a national economic
environment that presents significant
[8:46] challenges. A lethargic national economy
with a progressive rising inflation.
[8:51] Declining consumer confidence. Recurring
swings in tariff policies. Rising fuel
[8:57] and energy prices. A growing economic
gap defined by a K-shaped economy,
[9:04] fluctuations and uncertainty in the
housing market, growing concerns related
[9:08] to affordable health care coverage,
homelessness, immigration enforcement
[9:12] activities, and other social issues,
economic uncertainty restricting the
[9:17] Federal Reserve's ability to lower the
federal funds rate.
[9:21] The California factors. The state's
economic cycles are shaped by growth and
[9:26] downturns that are more volatile that
what is experienced by many other
[9:30] states. Heavy reliance on a few key
industries, progressive tax structure,
[9:36] boom and bust budget cycles, external
economic shocks, demographics and labor
[9:42] market shifts, political and policy
factors. For fiscal year 2026 27,
[9:48] California's legislative analyst office
has projected an almost $18 billion
[9:53] shortfall.
[9:57] Uh Montclair regional factors drawing on
fourth quarter 2025 and first quarter
[10:02] 2026 data from HDL companies. Sales tax
trends demonstrate limited improvement
[10:08] in sales tax revenues heading into
fiscal year 2026 27. Consumer spending.
[10:14] Consumers are holding back or focusing
on essentials and value. Declining slow
[10:19] growth and tax revenue sources. Montlair
sales and transactions and use tax
[10:24] measures are showing minimal
year-over-year growth. E-commerce versus
[10:29] brickandmortar. Retail growth continues
in online fulfillment centers, which
[10:33] decreases sales and transactions and use
taxes collected by the city.
[10:38] » Let's stop right there for a second. Any
questions on the revenue side so far by
[10:42] council? Any questions right now?
>> On the revenue side?
[10:47] » The revenue we just talked about want to
start with revenue. Go for it.
[11:05] » I have a quick question if you need a
second.
[11:07] » Go ahead.
What was last year's
[11:13] general fund revenue
you can recall?
[11:22] » Oh, yeah. 40.4 million.
>> Yeah.
[11:36] on slide eight. Um, we're talking about
current year revised prior year and
[11:42] change. Uh, I know we talk about being
in a $631,000
[11:48] deficit. So, it just seems odd that we
would be increasing our our next year by
[11:55] three. Here it says 3 point or 3033
million where but in the um that we were
[12:04] given. My calculations are more like 4
and a.5 million um in what I see. I'm
[12:11] just wondering why we're increasing if
we're in a deficit. And u that's one of
[12:17] my questions on that side of it. And
then um on the lease revenue bonds, I
[12:23] got I have a question regarding
um what our debt service that we pay
[12:28] back. Is that a fixed rate or is that an
adjustable? Yeah, that the lease
[12:34] revenues are on the later on agenda. So,
let's let's uh we'll look at that later
[12:38] on if you want to lease bond mentioned a
few it's mentioned a few times in the
[12:44] » there's there's a section on the revenue
bonds all that we can get that one there
[12:49] but let's let's focus on slide eight
first. So the the three million change
[12:53] that's over all funds. So that includes
everything and that our deficit is we're
[12:58] discussing is just in the general fund.
>> Okay, I understand. I'm just wondering
[13:04] why we're increasing
if we're in a deficit. Why would we
[13:09] increase our budget?
>> You're you're asking why the funds are
[13:12] increasing? because the revenues coming
into other funds other than general fund
[13:17] are increasing
>> and those funds are used to operate
[13:20] other than general government
operations.
[13:22] » Yes, I I understand that. But my
question is if we're in a deficit and
[13:27] we're bringing in more revenue, why are
we do we have to spend it all or
[13:34] » Okay, so general fund monies are used to
operate general government operations
[13:40] including personnel. Yeah.
>> Um that's the burden of the general
[13:45] fund. Other funds are for specific
activities and most of that would rep be
[13:51] represented for example by grants that
are used for infrastructure projects um
[13:56] and other things that those funds are
specifically designed for. We don't have
[13:59] control over those funds. They're
specific for specific purposes. The
[14:04] general fund is for general government
operations which is 95% of our
[14:09] operations. And those funds are what we
are experiencing a deficit in
[14:16] » the funds that were receiving
>> general fund
[14:18] » the general fund the that money that we
receive from our general tax operations,
[14:23] property taxes, sales tax operations, uh
u transactions and use tax revenues, uh
[14:30] things like uh police department going
out and issuing traffic citations. Those
[14:34] monies all go into the general fund. And
that fund which operates the majority of
[14:39] our services to the community including
personnel expenditures
[14:45] is what is experiencing the deficit.
[14:49] » Okay. Um I understand what you're
saying. I understand the funds that
[14:54] we're receiving and the general
operating fund. I guess I just I'm
[14:58] having difficulty understanding why if
we're having a deficit, why we're
[15:06] increasing
certain things. Why aren't we cutting
[15:10] back in areas? I'm not saying
everything, but to to prevent having the
[15:15] deficit.
>> Well, we did cut back. We cut back $3.8
[15:18] million from the requests that were
submitted by the various departments. We
[15:23] also froze a number of physicians that
saved the budget about 1 point
[15:28] » just a little over a million.
>> Yeah.$1.3 million.
[15:31] » Yeah, I saw that. I saw that in the
budget and your message and everything.
[15:34] » I think we're trying to do right now is
focus on the understand the revenue
[15:37] issues because we'll talk about
corporations next.
[15:40] » Yeah.
>> Corporations will talk about
[15:42] expenditures, talk about positions are
frozen. I guess the big the big to me
[15:47] when I look at the revenue, the big
issue is revenue is our revenues are
[15:50] flat. Our sales tax revenues are flat.
They're not growing to offset uh offset
[15:56] cost decreases.
>> I think that's I think that's what
[15:59] staff's trying to say here. Am I
correct? Uh
[16:02] » well, and and revenue
>> Yeah, our revenues are flat.
[16:05] » Yes, revenues are flat. And even if
they're up, they're up over previous
[16:09] years that were negative. So, if for
example, if you were 6% negative uh two
[16:15] years ago and 3% negative the following
year, and even if you're up 2% this
[16:21] year, you've only gained uh improvement
uh on a negative of of uh uh 8%. So,
[16:30] you're still behind. You just are
demonstrating moving forward. You're not
[16:35] going negative, but you're still not
where you were at three years ago.
[16:40] And I understand that. And so, and then
the same with the reverse. If we had
[16:44] more money than we were expecting, then
we'd be at a positive. Correct.
[16:49] » Well, no, not necessarily because you
still have to make up the negative from
[16:52] previous years.
>> Okay. Well, well, I'm talking, I guess,
[16:55] about Measure L. You know, Measure
Measure L I know you you put in the
[17:00] report that the first year we brought in
11 point something million. the next,
[17:04] you know, few years it dropped, you
know, about a million dollars and then
[17:07] it's slowly going back up. And we talk
about how that's not very much. But if
[17:13] you really go back to 2020 when we, you
know, wanted and we put this on the
[17:19] ballot for the residents, what was our
projected revenue at that time that we
[17:24] were thinking we were going to get from
it? It was $7 million. So technically
[17:28] we're really four million more than what
we are originally wanting which is about
[17:33] 40% rather than saying we're do you
understand what I'm saying? I I'm
[17:38] looking I go back in history and I'm
just trying to see where we are and
[17:42] what's going on with you know all the
funds and that's why I was asking about
[17:45] » yeah I I understand and projections
versus actual results are are typically
[17:49] two different things. You hope and
expect that you will generate more. Of
[17:53] course, at the time we were coming out
of COVID. So, while we had had actually
[17:58] anticipated that it would generate up to
$11 million because of COVID, uh all of
[18:04] the advisers told us that we should
lower that number and expect much less
[18:08] than that. And that is why we had
projected that we would be somewhere
[18:12] between seven and 8 million. The result
obviously was better than we uh well the
[18:18] advisers had anticipated but what we had
actually anticipated it would be uh it
[18:23] came in at $11 million and I think if
you go back and you look at all of the
[18:27] materials related to discussions at that
time staff was more positive than the
[18:31] consultants were and believe that it
would generate that $11 million it did.
[18:36] Uh but again that was over five years
ago and here we are uh now in 2026 27
[18:44] and the numbers now are less than what
it what we earned uh five years ago.
[18:50] That's not positive growth. That's
backward growth. And while we are moving
[18:54] back we moving back to that $11 million.
It's five years ago that we came in at
[19:02] $1 million. Those numbers should be at
$14 million if the economy was really
[19:08] progressing in a positive direction.
It's not progressing in a positive
[19:13] direction. We're not at $14 million.
We're still about $400,000 short of
[19:19] where we were in uh 2021 2022.
>> I I understand all of that, but I'll
[19:26] I'll let you continue on.
[19:32] Okay.
[19:37] Okay. So now we will discuss
appropriations.
[19:42] So table two shows the department
request versus city manager recommended.
[19:46] So overall funds the department's
requests were 64.5 million. City manager
[19:52] approved is 60.6 million. So we were
able to uh reduce the budgets by 3.9
[20:00] million for the general fund department
requests were 45.2 million. City manager
[20:06] approved 41.6 million. So our reductions
were 3.6 million. City manager
[20:12] recommended amounts uh the current year
70 million 58,000
[20:17] for the new fiscal year. This current
year we're at 65,230. So there's almost
[20:23] a $5 million
jump right there over all funds, 4.8
[20:28] million. And the general operating fund
current year is um for the next fiscal
[20:33] year 41.6.
Uh the current fiscal year 39.5 million.
[20:38] So that's 2.1 million increase over pri
over over the prior year.
[20:44] Personnel services all funds 35.6 6
million which is 58.9% of total
[20:50] appropriations which is up from 30 34.4
million which was 61.7%
[20:57] for fiscal year 202526.
Uh general that was over all funds
[21:02] general fund 28.7 million which is 69%
of general fund appropriations which is
[21:08] up from 27.2
2 million which was 68.9% for fiscal
[21:13] year 202526.
Personnel increases year-toear are
[21:18] related to addition of grant funed
positions in the fire department
[21:22] restoration of certain general fund
positions in various departments
[21:26] following the CO 19 pandemic. enhancing
staff in key functional areas,
[21:31] succession planning, implementation of
negotiated wage and benefit increases,
[21:36] and annual increases to Kalpers's fund
unfunded acred liabilities for employee
[21:42] pensions,
services, and supplies. All funds 21.6
[21:48] million, which is 35.8% of total
appropriations, up from 20 million, 20.6
[21:54] 6 million which was 37.1%
for fiscal year 202526.
[22:00] For the general fund 12.5 million which
is 30.2%
[22:05] of general fund appropriations up from
11.9 million which was 29.2% for fiscal
[22:12] year 202526.
[22:16] Capital outlay for fiscal year 2627 is
3,244
[22:23] two 3,244,114
[22:27] of which 597,799
is being funded by the equipment
[22:32] replacement fund. All major capital
outlay requires authorization from the
[22:37] city manager before issuance of purchase
order requests.
[22:42] So, here's a listing for each
department. For the information
[22:45] technology department, $247,000
for computer equipment, human services,
[22:52] a total of $165,000
for two passenger vans, which are we're
[22:57] getting through a grant, and uh MAP
office furniture, which is the
[23:01] afterchool program fund. Police
Department, $194,400
[23:06] for three patrol vehicles being paid out
of the equipment replacement fund and
[23:11] dispatch console upgrade, which is the
general fund. the fire department
[23:16] 2,54,552
[23:20] for a tractor drawn aerial ladder truck
which will be paid out of the equipment
[23:24] replacement fund and grants from San
Bernardino County and community project
[23:28] funding forcible entry training props
general fund life 35 cardiac monitor the
[23:36] general fund and five life pack CR2
defibrillators general fund and for the
[23:42] public works department 133 $3,162
for a 2026 Chevrolet Silverado, which
[23:49] will be paid out of the equipment
replacement fund. WCO towable arrowboard
[23:55] case 13in trenching bucket, R234
YIF AC machine, CEK manufacturing tool
[24:03] drawer, all those paid out of the
general fund. and out of the sewer fund
[24:07] sewer BMP program and three smart cover
manhole lid systems.
[24:15] So this table shows all the allocations
by department and a change from the
[24:20] prior year is just over 4.3 million.
There's only uh one fund transfer
[24:27] budgeted and that is our annual $100,000
transfer from the traffic safety fund
[24:32] for applicable programs to the general
fund.
[24:37] So, do you want me to stop here?
>> Keep keep on going.
[24:40] » Keep on going.
>> Yeah, we'll stop.
[24:42] » Uh general fund operating fund balance
unassigned reserve.
[24:46] So, here's our um general fund operating
fund balance uh and comparisons with
[24:52] operating appropriations. So at the end
of fiscal year 2627
[24:57] we're estimating our operating fund
balance will be 5.4 million which is
[25:01] 13.14%
uh which is below the recommended 25%.
[25:08] An assigned reserve balance government
finance officers association general
[25:13] fund unassigned reserve ratio
recommendation is minimum 25% optimum
[25:18] 50%. City Council direction maintain
minimum unassigned reserve ratio of 25%
[25:25] of operating appropriations with a goal
to achieve a 50% unassigned reserve
[25:30] ratio estimated June 30th 2027 general
operating funds fund balance estimate of
[25:37] approximately 5.4 4 million of the
general fund unassigned reserve which is
[25:41] less than the threshold target of 25% of
operating appropriations.
[25:46] Estimated June 30th 2027 general fund
reserve fund equity rep representing
[25:52] reserves for special purposes is 25.3
million.
[25:58] Over the past seven fiscal years, the
reserve ratio has fluctuated with a low
[26:02] of 16.55%
and a high of 24.95%.
[26:07] These fluctuations are generally the
result of the following. A difference in
[26:12] operating appropriations between
consecutive years. Adjustments to the
[26:16] city's revenue profile. Creation of the
following debt service funds to achieve
[26:20] adequate funding for annual payments of
the 2021 issue of lease revenue bonds
[26:25] debt service fund. 2021 issue of pension
obligation bonds debt service fund and
[26:31] the UAL POB amortization fund.
Adjusting special purpose reserve funds
[26:38] as necessary and when surplus funding is
available. Establishing additional
[26:42] special purpose reserve funds to reflect
changing requirements related to city
[26:47] operations. Funding assigned to the
economic development agency for real
[26:51] property acquisition. End of year audit
adjustments for actual revenues and
[26:56] expenditures. Mid-year budget
adjustments. City staff will continue
[27:00] working toward a fund balance ratio in
the general operating funds unassigned
[27:04] reserves that represents no less than
25% of the general operating funds
[27:09] appropriations budget with the long-term
goal of achieving a 50% unassigned
[27:14] reserve ratio.
>> Okay, we can stop there for a second.
[27:17] So, any questions on the appropriations
right now or the unassigned reserves
[27:23] at this time? Okay, questions continue
on.
[27:28] » Okay.
>> Okay.
[27:30] Maintaining general funds fund balance
and reserves.
[27:34] Maintaining a healthy general fund
operating fund unassigned reserve fund
[27:38] balance. In recent years, the city's
success at achieving and maintaining a
[27:42] healthy general fund operating fund
unassigned reserve fund balance has been
[27:46] accomplished through commitment to the
following coordinated objectives. Fiscal
[27:51] restraint achieved by implementation of
sound economic policies and practices.
[27:56] Reviewing the shared allocation of
personnel related costs between the
[28:00] general operating fund, other city
entities, and other city funds.
[28:04] Maintaining an appropriate employee
ratio. Requiring employees to pay their
[28:09] respective share of the CalPERS member
contribution. Implementation of revenue
[28:14] enhancement measures for fiscal year
2026 27. The following revenue
[28:19] enhancement measures are submitted for
consideration.
[28:23] Measure L. This is an existing measure.
Continue encouraging economic activity
[28:28] to improve general fund tax receipts.
Community facilities districts. This is
[28:33] also an existing measure. Continue
encouraging highdensity residential
[28:37] development to improve CFD tax receipts
in support of police and fire services,
[28:43] emergency equipment apparatus, and
public works maintenance programs.
[28:49] Implementation of revenue enhancement
measures continued. commercial cannabis
[28:53] businesses. In fiscal year 20 2026 27,
city council will be asked to consider
[28:59] adoption of a revenue raising ordinance
which could generate $2 million in
[29:04] general fund revenue. The proposed tax
rate is 7% authorized by voters in the
[29:10] November 2022 general municipal
election.
[29:14] Cost of P personal choice services study
implementation. On May 4th, 2026, a
[29:20] workshop was conducted related to
assessed fees for personal choice
[29:24] services. Services that are offered to
customers and that can be withheld for
[29:29] non-payment may be likened to user fees.
City council adoption of the
[29:34] recommendations contained in the cost of
services study can potentially generate
[29:38] $760,000
annually. Utility users tax adjustment
[29:44] to the voter authorized rate of 4.74%
to generate approximately $600,000 in
[29:50] new general fund revenue.
Utility users tax considered 2028 voter
[29:56] amendment to include cable streaming
services and/or other utilities, for
[30:01] example, refugees and sewer not
currently provided for in the UUT
[30:06] ordinance may generate in excess of
$800,000 annually in general fund
[30:11] revenue.
e-commerce. Continue working with
[30:15] legislators to amend California's
current tax code related to point of
[30:20] sale. Alternatively, consider working
with special legal counselor council to
[30:25] pursue pursue a class action lawsuit to
require cities with point of sale
[30:31] agreements, sales tax sharing agreements
with online instate retailers to amend
[30:36] those agreements to favor a point of
delivery reporting scheme or report all
[30:41] online in-state transactions and use tax
receipts received through tax sharing
[30:46] agreements to their respective county
pools for distribution to agencies based
[30:51] on per agency brick and mortar per
capita sales tax performance. Potential
[30:57] to generate $2 million annually in
online transactions and use tax revenue.
[31:04] Monavista Fire Protection District
pursue cost reimbursement for fire
[31:08] service in the city's sphere of
influence. Current and prospective
[31:12] annual payments are estimated at
approximately $760,000.
[31:17] Montlair potentially entitled to
retroactive service costs to be
[31:21] determined.
The A-line, formerly the Gold Line
[31:25] litigation, continue pursuing current
claims and litigation against the San
[31:29] Bernardino County Transportation
Authority regarding extension of light
[31:33] rail to the Montlair Transit Center.
Economic recovery undetermined, however,
[31:38] could s significantly exceed$1 billion
dollars based on Beacon economic study
[31:44] related to loss and economic output and
annual tax revenues.
[31:48] Commercial use of the former Pep Boys
building site. Evaluate conversion of
[31:53] the former Pep Boys into a commercial
use that could potentially generate up
[31:57] to 30 to $50,000 monthly in lease
revenue payments. the I 10 freeway
[32:03] adjacent electronic messaging sign.
Potential for two sites along the I 10
[32:08] freeway corridor. Installation of
electronic messaging signs could
[32:12] generate an estimated 100,000 to
$500,000 annually in leasing
[32:17] advertisement revenue for the general
fund opportunity zone designation. This
[32:22] designation in the North Montlair Census
District would allow for infusion of
[32:27] investment C capital in North Montlair
which could be in excess of seven
[32:31] billion dollars.
>> Okay. Any questions on this section of
[32:36] general operating fund balance revenue?
Maybe I'll lead off. I know that on we
[32:41] go to slide 31. I just want to pinpoint
to my colleagues. These are potential
[32:47] revenues that the city can attempt to
capture. These are obviously revenue.
[32:53] You know, one is a cannabis business. We
had a workshop on that two weeks ago and
[32:58] I believe it's essential that this
council have a strong consideration of
[33:04] of the cannabis business ordinance uh
later this year. Um I think uh staff did
[33:11] receive directions at the last workshop
and uh obviously this is expected to
[33:16] come back to us. The other thing here is
this uh cost of per personnel choices
[33:21] service studies. We also had a workshop
on this projected to generate 760,000
[33:26] annually and this will also come back to
the uh city council at a regular meeting
[33:31] uh for us to consider this but this is
also new revenue. Um
[33:36] this this is new re this is not in the
bud in the proposed budget.
[33:40] » Correct. So we were to adopt this uh
this could potentially be new revenue
[33:45] coming in um for us. The other thing
here is you know the utility usage tax
[33:50] uh um when this was first adopted back
in 1992 was 5% was 5% that was a voter
[33:59] approved utility users tax and then the
count at the time um
[34:04] had a plan to reduce it based on sales
tax dollars. uh uh increases. So we have
[34:12] a potential to look at this. I think if
you know depending on where the budget
[34:15] is the second half of the fiscal year or
the first half of 27 that we should also
[34:21] look at this maybe our midyear budget
review and uh and consider uh if this
[34:27] the utility usage tax should be
adjusted. This is another one utility
[34:31] users tax. I don't quite understand the
whole cable
[34:34] uh streaming services but if you know
this is that the council wants to uh put
[34:40] this place in the ballot in 28. I'm not
advocating to do right now, but it is
[34:44] something for us to consider at a future
date. If we go to number 32,
[34:51] um
this is a big issue. I don't know if you
[34:55] have any questions about it, but
obviously e-commerce and in these tax
[34:59] sharing agreements some of the
jurisdictions are doing. I know there's
[35:02] some legislation
league California city has also been
[35:06] involved to try to make it more
equitable. There's no leeways but
[35:10] obviously brick and mortars which were a
brick and mortar city is being impacted
[35:15] by the e-commerce or the big warehouses
uh that uh are point of sale. So, um,
[35:23] and then of course the Monav Vista Fire
Protection District, uh, this is
[35:27] something also the staff's worked on,
identified that this revenue of 760,000
[35:32] that we were never getting. Um, I don't
add, uh, I believe uh, we have
[35:38] communication with the county on this
now, but this is also potentially new
[35:41] revenue uh, for the city of Monler's
general fund. So, I'll stop there and
[35:46] receive any more questions. Mayor Paul
Martinez,
[35:50] » I was just curious, does the GFOA's
unassigned reserve ratio recommendation
[35:56] have any bearing on like insurance or
>> No,
[36:00] » nothing like that. It's just just
>> recommendation. Yeah.
[36:04] » Thank you. That's all I have.
>> Okay. Council Ruth,
[36:10] » I
I will start with a question. I have
[36:14] some others in here, but some of them
can wait.
[36:17] uh personal
services, the personal choice for
[36:22] services. How would that work?
[36:27] Well, these are effectively similar to
what user fees are where if somebody
[36:31] requests a service specific from the
city that is separate from uh general
[36:36] services provided to the community, they
would be obligated to pay for those
[36:39] services.
>> What would that service be?
[36:42] » Yes.
Oh, what would the service be? For
[36:45] example, if they're uh doing a
development and they need specific
[36:49] services from the city related to their
development project, the community uh
[36:54] would not be responsible for paying for
the city providing that service to them.
[36:58] The individual themselves would be
responsible for paying for that service.
[37:02] » Well, we already have developer fees
that developers pay.
[37:05] » Yes. I'm only using that as an example.
Uh but
[37:08] » what would an example be to an average
resident?
[37:12] a resident who would come in for example
who would want solar panels on their uh
[37:17] roof. That is not a service that the
city would provide and charge to the
[37:22] residents generally. That would be
charged specifically to the individual.
[37:28] » So what would the using solar panels?
What would that fee be? A fee to install
[37:34] them? We don't install solar panels
anyway. They hire somebody to do
[37:37] » No, but it's a processing fee that the
city applies for uh uh permits and other
[37:43] inspection services and things that
would be required from the city. So,
[37:46] there are only services directed to
individuals who are requesting that the
[37:50] city provide services beyond what is
normally provided to the community.
[37:56] » That would not include police and fire,
would it?
[37:58] » No, this is not inclusive of that.
>> Just point of order that we discussed
[38:03] this at the workshop. I know. I'm I'm
just trying to to to get my head around
[38:07] all this.
>> Got a big document relating to the fee
[38:10] study that was done,
>> right? No, it and then we're talking
[38:13] about the utility users tax and
increasing that.
[38:18] What my concern is what it means to one
businesses in town, not large businesses
[38:25] or very small businesses who are very
dependent on electricity for example and
[38:30] natural gas. those rates are going up
all the time. These businesses are many
[38:35] cases marginal. An increase in this tax
could result in that business simply
[38:41] saying, "I can't be here anymore. I've
got to close my doors." And I hope we we
[38:45] look at that very carefully.
It would mean a lot to residents who are
[38:50] struggling to make ends meet right now.
All utility costs are high, very high.
[38:55] Nobody can tell me they're not. And if
we do this, many residents may have to
[39:01] make a choice
on the utility on when they use certain
[39:06] what time of day they use electricity,
when they use their natural gas, if they
[39:10] even use certain things at all. They may
simply turn around and say, "I can't
[39:14] afford it. I have to really cut back."
So, I hope whatever we do with that, we
[39:18] think about it. Um, most of our
residents are struggling. They don't
[39:21] have the income. And then the last
question I have, I have others, but
[39:26] that's for later. on the CFD we're
talking about in North Montlair. Um that
[39:32] CFD I thought just covered those units.
I didn't know what if I were to
[39:37] understand what this said. I didn't know
that those units or that these CFDs go
[39:43] for the whole city. I thought it was
just for that area. Community facilities
[39:47] district. It's not citywide. It's
specific to a district.
[39:50] » Well, no, it could be applicable
citywide. It is used primarily in North
[39:54] Montlair because that is where the
highdensity development projects are
[39:57] occurring. But if there were projects in
other areas of the city and uh it was
[40:03] the intent to require that the because
of the size of the project that there
[40:08] would be a responsibility related to
providing additional police and fire and
[40:12] public works maintenance services to
that area. uh then that would be imposed
[40:16] on those areas as well
>> because the the way I read this, it
[40:19] looked as if these CFDs are being used
to balance the budget in regard to
[40:24] police and fire services and they really
are applicable only to that area. If I
[40:28] were resident there, I wouldn't want to
know that I'm paying for something and
[40:32] it's being used somewhere else.
>> Yeah. Well, they are used only for the
[40:37] area in which the CFD is paid for. So,
they do go into uh obviously their
[40:41] general fund dollars, but they're used
specifically for the project that the
[40:46] money is uh uh derived from, and it is
not used generally throughout the city.
[40:51] » That that's all I have for now.
>> All right, Council Member uh Mendes.
[40:56] » Uh yeah, just a couple questions on the
um cannabis business. The proposed tax
[41:01] rate of 7% that was authorized um by the
council, that's um on top of the regular
[41:07] 9%
Correct.
[41:10] » That would be on top of the Bradley
Burns and the transactions use text.
[41:13] That is correct.
>> Okay. So, 16%.
[41:18] Um, and then going down to the personnel
uh choice services study implementation,
[41:25] I I think that is a good idea. Um, but
obviously it's not going to be used for
[41:32] basic questions or simple questions over
the counter. These are more for
[41:36] developers or or things that people
need. I I understand what these are.
[41:41] Yeah. And um when it takes time out of
one of our employees to pull reports or
[41:47] do things, I understand. I mean, there
has to be a cost for that. And and I
[41:51] know it won't be outrageous, but I think
it's definitely something that we should
[41:55] look into. Um and as Bill mentioned, as
long as it doesn't, you know, affect
[42:00] police and fire calls. Um
on the let's see here the utility users
[42:07] tax. Um I I know John just mentioned 5%
but is is that what it is? The max could
[42:13] be is five or
>> the maximum maximum authorized is I
[42:17] believe 4.74%. Yes.
>> Yeah. That's what I think. Yeah.
[42:20] » Which is considerably low when you
compare it to what it is in other
[42:23] cities.
>> Yeah. And we're currently right now
[42:25] we're only charging 3 point something.
>> 3.89.
[42:29] Yeah.
>> Oh I'm sorry.
[42:30] » 89. my fault. Okay,
>> no worries. Um,
[42:34] » so yeah, and obviously we created that.
I mean, well, the council created that
[42:39] at that time in '92 just to help the
city when it needed help and they
[42:44] reduced it when they could and you know,
and right now we're having a little bit
[42:47] of trouble. So, yeah, we may
>> and can I talk about that for a second?
[42:51] I'm sorry.
>> Oh, yeah.
[42:52] » Yeah, this could we can do this for if
it's needed. I'm not saying it's needed
[42:56] right now. We we'll you know next year
but if we do it maybe would you do it
[43:00] for one year and then we reevaluate
again.
[43:02] » Yeah.
>> I'm not saying that.
[43:04] » Yeah. No no I I understand. And then the
um consideration of bringing the uh to
[43:10] the voters in 2028 to include
um cable and streaming services. I I
[43:16] agree with that as far as the refu
sewer. Um because I I know refuge isn't
[43:22] ours, but I feel like it comes through
the city and it's almost like a city. I
[43:27] I would say that we probably shouldn't
include sewer and trash, but yes, um
[43:34] definitely the cable and streaming
services on that one. And as far as the
[43:39] Monav Vista Fire Protection District and
um pursuing cost reimbursement, how many
[43:45] years um is it that um they owe us for
that we never were paid?
[43:50] » Well, it's to our understanding that the
uh payments to the city of Montlair,
[43:55] which were previously uh allocated to us
through property tax revenues, ceased in
[44:00] 2005 when LAFCO made a decision to
eliminate the paper district. And well,
[44:06] they interpreted that the Monav Vista
Fire Protection District was a paper
[44:10] district and it was LFCO's desire to
eliminate paper districts at that time.
[44:16] And so they did that. It was our
understanding that while that occurred,
[44:20] the payment would continue to Montlair
through property tax revenues. Um and
[44:25] earlier this year we made the discovery
that in fact the property tax revenues
[44:30] which were very difficult to distinguish
between uh what is coming from the city
[44:35] versus what is coming from the sphere of
influence. So there was no clear
[44:38] indication of of that tax flow. And then
when I had asked for a audit to be
[44:44] conducted by finance, they made a
determination that we were receiving
[44:49] minimal in property tax revenues from
the sphere of influence, which opened
[44:54] our eyes to the fact that the county was
not making the payment. And so we hired
[44:58] HDL to look at it. and HDL did make the
determination that the county does owe
[45:04] the city a substantial amount of money.
Uh I say or it is said in the
[45:10] presentation that that amount needs to
be determined. We project that it's
[45:15] probably in the neighborhood of $9.3
million. Uh we will have to negotiate
[45:20] that with the county. Uh the county will
probably make an argument that uh we can
[45:25] only go back a number of years. Our
argument would be that this is not a
[45:28] commercial debt. This is a service debt.
We provided the services you owe us for
[45:33] the services and we're going to stand by
that plus uh the current year and all
[45:40] future years including a CPI adjustment
in future years. So uh we are seeking to
[45:45] set up a meeting with the county to have
that conversation.
[45:49] » Okay. All right. That's all the
questions I had. Thank you. Okay. Let's
[45:53] uh move on.
[45:58] So uh now we will discuss personnel
services.
[46:04] Uh for fiscal year 2026 27 there are 205
full-time positions. Uh the majority of
[46:11] that coming out of general fund sewer
fund and grants and then.24 of people uh
[46:17] come are paid through the Montlair
successor redevelopment agency. There is
[46:22] one part-time benefited position. uh the
employee has elected to remain in the
[46:26] part-time benefited position to maintain
social security coverage and the
[46:30] part-time benefited program will end
upon employee separation from
[46:34] employment.
[46:37] The city's fiscal year 2026 27 proposed
operating budget anticipates several
[46:42] adjustments to personnel classifications
for some or all of the following
[46:46] reasons. Ensure the effective and
efficient operation of city departments.
[46:51] Provide for succession planning, ensure
adequate staffing, promote personnel
[46:57] retention, achieve depth of experience,
and ensure the provision of city
[47:01] services. Address evolving needs and
changes to organizational operations.
[47:07] Respond to underperformance of sales and
transaction and use tax earnings.
[47:12] Respond to the availability or loss of
grants. be responsive to potential
[47:17] shifts in the local economy due to the
state of uncertainty regarding federal
[47:21] economic policies.
Personnel modifications are submitted to
[47:25] the city personnel committee for
consideration prior to implementation of
[47:29] classification modifications and/or the
appointment of qualified and appropriate
[47:35] personnel.
The fisc year 2026 27 budget city
[47:40] manager recommendations.
The city manager is not presently
[47:44] proposing any significant operational or
personnel reorganization changes. The
[47:50] fiscal year 2026 27 budget does propose
freezing nine full-time and seven
[47:56] part-time designated vacant positions.
Each position is vacant for the
[48:00] following reasons. The position is
vacant due to attrition. The position is
[48:05] vacant because it is an added extra
position and remains vacant. The
[48:10] provision The position remains vacant
because No recruitment was conducted,
[48:14] the position is vacant because it is a
proposed new position in the fiscal year
[48:18] 2026 27 budget or the position remains
vacant because the incumbent was
[48:24] promoted. The fiscal year 2026 27
proposed budget does not recommend that
[48:29] any active employee be subject to
layoff, nor does the city manager
[48:34] project the need to meet with any
bargaining groups to discuss layoff
[48:37] procedures.
The city council is advised that due to
[48:41] employee attrition and positioning by
the MFA bargaining group, city staff is
[48:46] in conversation with the San Bernardino
County Fire Protection District
[48:50] regarding fire protection emergency
services, a process that would result in
[48:55] transitional position layoffs.
So, here's a list of the frozen vacant
[49:01] positions. There are five uh departments
involved and it's saving uh just a
[49:07] little over 1 million uh with us
freezing these positions. If not, our
[49:11] deficit would be over 1.6 million.
>> Let's stop there for a second. So I just
[49:17] last point Dan again is uh because these
positions are frozen
[49:22] um it wasn't frozen this you said that
the deficit would be 1.6 million
[49:29] » and just want to clarify that with the
council and then uh uh the bargaining
[49:34] negotiations.
Um so if you obviously we're still in
[49:39] labor negotiations, but if the council
did approve any personnel
[49:45] adjustments
in compensation uh that could add on to
[49:50] the deficit.
>> That is correct. My anticipation could
[49:54] add 500,000 to $1 million to the
deficit. Okay.
[49:57] » And Mr. Mayor, if I may, I just want to
backtrack to the uh sphere of influence
[50:01] issue. And I want to congratulate and
thank our fire chief Ryan Derk who was
[50:05] instrumental in addressing this issue
and working with city staff. U he uh
[50:12] generated a significant amount of
information related to this issue and I
[50:17] do want to commend him for his effort in
working with us uh to bring this issue
[50:21] to the forefront so that we could move
forward in addressing this with the
[50:25] county. I'm sorry. The issue again is
I'm sorry
[50:29] » would be the sphere of influence issue.
The issue related to providing fire
[50:32] protection services to the sphere of
influence to the former Mont Vista Fire
[50:37] Protection District.
>> Okay. U and and and going back to labor
[50:41] negotiations
and obviously we're not talking about it
[50:44] here. Uh but uh obviously there's you're
working on it. You know, we're in labor
[50:50] negotiations right now. Uh but this
makes the council aware that the deficit
[50:57] could be added based on how labor
changes go. So
[51:00] » yes, it's probably the best thing for us
to do. We'll have that conversation in
[51:04] close session during negotiations. All
right. C May 10 Martinez.
[51:10] » Yeah. Could you explain transitional
position layoffs
[51:16] 37 very bottom?
>> All right. That issue is in relation
[51:19] again to the discussions with county
fire in the potential issue related to
[51:25] annexation into or contracting with the
county fire protection district. The
[51:30] county fire would have to vet each one
of the employees and there is not always
[51:36] the possibility that every employee will
be picked up. However, the general
[51:40] process in relation to uh annexation,
not contracting, but at least in
[51:45] relation to annexation, is that uh
employees are technically laid off and
[51:50] then hired back by County Fire
Protection District.
[51:55] » And that's typically what would happen,
assuming we pass all of this. Yes, that
[51:58] is exactly what will happen. If we if
the city ultimately had to make the
[52:03] decision that annexation was the only
way to keep the fire department uh uh
[52:07] operating functionally, um then that is
what the county would require is that uh
[52:15] in order for these employees to be
picked up by the county, they have to be
[52:19] laid off by the city and then rehired by
the county.
[52:22] » Okay. Thank you.
>> Yes, Council Member Mendes.
[52:27] Uh yeah, just um quick question. Um as
far as full-time positions, I know for
[52:33] 22 20 or 26 27, we're saying 205
full-time positions, and that's minus
[52:41] the nine full-time
um that um are funded positions, but
[52:48] we're freezing those. So technically we
currently have uh 20 what 14 full-time
[52:56] positions. We're just not
>> No, that the 205 includes the nine that
[53:00] are unfunded because they're still in
the budget but they're just
[53:03] » still funded. Yeah.
>> Yeah.
[53:04] » Okay. So those are funed.
[53:09] » And then I just have one other thing.
Sorry.
[53:19] That was it. Thank you.
>> Thank you very much. Uh we'll go on to
[53:22] the next section.
>> General fund special purpose funds.
[53:28] Special purpose funds established to
address current and future liabilities,
[53:32] programs, projects, and goals requiring
a commitment of funds not incorporated
[53:37] into the general fund operating budget.
The CalPERS unanticipated normal cost
[53:42] retains 3.5 million for CalPERS and
post-employment liabilities.
[53:47] Technology enhancements account retains
$643,045
[53:51] for techn technology acquisitions.
The self- insurance fund retains 1.6
[53:57] million for city related self- insurance
retention liabilities. The building
[54:02] maintenance fund retains 1.8 million for
building maintenance.
[54:07] Unanticipated personnel adjustment fund
retains 1 million for unanticipated
[54:12] personnel related expenditures.
Equipment replacement fund retains oops
[54:17] we lost some numbers there um just a
little over 1.2 million for equipment
[54:22] acquisitions. This reflects a reduction
of $597,799
[54:29] towards fiscal year 202627 capital
outlay purchases. The OPE retiree
[54:35] medical liability retains $2 million for
other postmployment benefits.
[54:42] Contingency account retains $79,821
for unanticipated expenditures.
[54:49] The UAL POB amortization service fund is
at $0 right now for unanticipated UL
[54:55] charges. Parking facility development
retains 9.5 million for parking facility
[55:01] development. Tariff recession inflation
fiscal expenditure control fund retains
[55:06] $1 million for unanticipated cost
increases.
[55:12] Uh, A-ine Betterment Fund retains 1.75
million for improvements to
[55:17] infrastructure for the A-line light rail
system at Monavista Avenue and the
[55:21] Montclair Trans Center. Street
Maintenance Fund retains 1.25 million
[55:26] for street maintenance and the
homelessness advocacy housing outreach
[55:30] assistant fund retains $330,633
for homelessness aid. Total estimated
[55:37] all special purpose funds is 25.3
million after proposed equipment
[55:43] replacement fund uses is that's will be
our balance. Reminder, all major capital
[55:48] outlay will require approval from the
city manager before purchase orders will
[55:52] be issued.
>> We'll stop there for a second. Did you
[55:55] have a question?
>> Yeah, on that. Yeah,
[55:58] » go ahead.
>> Yeah. Um so on all these special funds
[56:03] um that these monies are obviously
almost like a reserve ed technically.
[56:10] » Well they are uh yes in the reserve
fund. Yes. They are designated for
[56:14] special purposes and can only be used
for those special purposes
[56:17] » and they can only be used for those
>> unless the council redirects that they
[56:21] be redirected. Yes.
>> Because it's general fund money.
[56:24] Correct.
>> Yes. Um and then does that include the
[56:28] three lease revenue bond u amounts that
are left?
[56:32] » No, those monies are allocated
separately uh so that they are committed
[56:38] to those funds specifically and have no
bearing on other general fund
[56:42] operations.
>> Okay, that's all I have.
[56:45] » Yeah. And just on this uh I know the
park facility development the $9.6
[56:50] million
and uh we were looking at using money
[56:55] for real estate transaction or purchase
and uh those deals have fallen apart. So
[57:00] we still have this $9.6 million. Am I
correct that?
[57:04] » That is correct. You know, I wouldn't
say that the deals have fallen apart.
[57:07] It's just that
>> as of right now those deals are
[57:10] » the owners have asked for more money
than the city is willing to pay.
[57:12] » All right. So that that potentially
could drop depending on those real
[57:17] estate deals we decide to purchase those
properties.
[57:20] » Yes. Yeah. That is correct.
>> To answer my questions, my colleagues
[57:23] questions. Um on the uh on the reserves
yeah our un undesated reserves is what
[57:30] 14 point something budget what is it J
we have 14 point something
[57:35] » the undesated reserve
>> are you talking about special purpose
[57:38] funds
>> no no the
[57:39] » the unassigned reserve is 5.4 million
>> thank you
[57:42] » 5.4 4 million.
>> Yeah.
[57:44] » Which is about 14
>> 13.
[57:47] » Yeah. 134%.
>> However, if we take this amount, the 25
[57:51] million, this gets us up to like 66 67%.
Again, this is this is if you know
[57:59] things get pretty dramatic in the fiscal
year and so we have these these these
[58:03] funds for cash flow purposes and gives
us the time to figure out what we're
[58:08] going to do. So,
>> yes. So, just to give you an example,
[58:13] you talk about the UL uh alloc or I'm
sorry, the allocation for opeps. The
[58:19] goof prefers that cities commit funding
into trust funds. And in our case, the
[58:26] cost to pay for our um opeds, our other
post-employment benefits would be about
[58:32] $9.5 million. Um and GOAF would want us
to put nine and a half million dollars
[58:37] in trust funds. that money is restricted
and it can only be used for uh paying
[58:43] off ops. We use a pay as you go system.
But in allocating money to the uh
[58:50] special purpose fund that we have here
in our opinion and the way that it
[58:54] appears to be working is that that money
is separately designated for opeds in
[59:00] the event that we need to draw on that
uh because of an increase in opeds. We
[59:05] believe that our process has effectively
worked uh because if you'll recall back
[59:11] in the early 2000s, there was a workshop
presentation to the city council by a
[59:18] auditor who projected that Montlair's
opeds would be around 12.5 million and
[59:26] continue to increase. But the city has
effectively controlled uh the cost of
[59:31] other post-employment benefits. And in
fact, our costs to OPB have declined
[59:38] from that $12.5 million at that time to
$9.4 million now. And so having put this
[59:46] money in a trust and restricting it only
for that and h not having it available
[59:50] uh to the city for other purposes would
not have been to the best interest of
[59:54] the community. And so I believe that our
process has paid off and uh we continue
[59:59] to see that oped come down through our
controlling mechanisms.
[1:00:05] » At any budget you uh you know long very
long budget message. Um you talked about
[1:00:12] the risk factor. Um I think the
department controllers department state
[1:00:16] controller did one about five or six
years ago and staff went back. So what
[1:00:20] what is the health of our budget based
on the controllers's office method?
[1:00:27] » Right. So I believe that our the health
of the city's budget has improved
[1:00:30] significantly since then in large part
to measure L uh but also begin again as
[1:00:36] I indicated in relation to the oped uh
before where we have received maybe a
[1:00:41] high risk factor in that area because of
the amount of our oped but because we
[1:00:45] control it and the oped has actually
come down to $9.4 4 million. Uh I would
[1:00:51] rate us as I do in that uh in that graph
at moderate. And so while we have seen
[1:00:58] some increases back up from last year
primarily because of the u downturn in
[1:01:05] the economy overall, I would still say
that Montlair is between low and
[1:01:10] moderate in our risk.
>> Thank you. Okay, let's move on.
[1:01:19] So our 2014 issue of lease revenue bonds
payment period fiscal year 2014 to 2045.
[1:01:27] So the issue amount for this bond was
$45 million. Purpose was to defease
[1:01:32] balance of the 2005 issue which was used
for police facility and youth and senior
[1:01:38] center projects. Approximately $22
million for public works infrastructure
[1:01:42] projects. The 2014 issue of lease
revenue bond funds have been exhausted.
[1:01:47] Annual debt service approximately 2.6
million through fiscal year 20445.
[1:01:54] Funding source for annual debt service
is the general fund revenue and for
[1:01:59] fiscal year 2026 27 the payment will be
2,597,163.
[1:02:08] The 2021 issue of lease revenue bonds
payment period fiscal year 2022 to 201.
[1:02:15] The issue amount for this bond was $45
million. The purpose complete
[1:02:20] infrastructure improvement projects
throughout the city. Remaining balance
[1:02:24] approximately $20 million retained to
primarily function as a matching source
[1:02:29] for grants. Annual debt service
approximately $2.4 million through
[1:02:34] fiscal year 205051.
Funding source for annual debt service
[1:02:39] is general fund revenue. Payment for
fiscal year 2026 27 is 2,396
[1:02:48] $2,396,313.
[1:02:52] Our 2021 issue of pension obligation
bonds payment period fiscal year 2021 to
[1:02:58] 2041.
The issue amount of this bond was 62.1
[1:03:03] million dollar. The purpose transfer
debt from the city's California public
[1:03:07] employees pension system unfunded
acrewed liability account to the pension
[1:03:12] obligation bond. Annual debt service
approximately 4.4 million through fiscal
[1:03:18] year 204041.
Funding source for annual debt service
[1:03:22] is the general fund. Uh the payment for
2026 27 is $4,434,713.
[1:03:32] » Okay, let's talk for a second.
Council Mendez.
[1:03:36] » Yeah. So, um, my questions on these are
obviously two of them have zero
[1:03:41] balances, one has a $20 million balance.
Uh, do we we collect interest on that?
[1:03:47] Correct.
>> Yeah. Yes, we do. But we are prohibited
[1:03:51] from collecting excessive uh interest
and any insert any interest rate above
[1:03:57] or any interest acrruel above a certain
amount we have to return to the bond
[1:04:03] agencies
>> like what type of percentage is it like
[1:04:07] a 3% interest rate or
>> I believe it's above the the bond rate
[1:04:15] itself.
>> Yeah. So anything above that we're not
[1:04:18] allowed to keep. Mhm.
>> So, for example, I believe uh maybe last
[1:04:22] year, uh we probably made around $4
million in interest and and had to
[1:04:26] return $3 million because we're not
allowed to hold it. You're not you are
[1:04:30] not by arbitration laws, you are not
allowed to make uh income off of
[1:04:35] borrowed funds.
>> And that money that you got to pay back
[1:04:38] doesn't reduce our balance. Correct.
>> Well, it doesn't reduce the whole
[1:04:42] balance. No, that we originally
borrowed. That is correct. Only the
[1:04:46] interest amount.
>> Yeah. And then as far as um the rates
[1:04:51] that that we're paying, are are they
fixed rates or they
[1:04:54] » the debt service payment?
>> It varies every year, but very
[1:04:57] minimally. Maybe, you know, a couple
thousand dollars.
[1:05:00] » So,
>> yeah. And I think actually on one of the
[1:05:02] previous slides, the debt service
payments went up like $1,817
[1:05:07] for next fiscal year.
>> So, it just kind of fluctuates up and
[1:05:10] down just a little bit.
>> But is there like a limit that I mean,
[1:05:13] obviously, it's probably written
somewhere where the bond documents each
[1:05:17] year it tells me how much I we need to
pay.
[1:05:20] » I mean but is there like a max like it
cannot go over 1% you know increase
[1:05:25] annually or
>> No I mean it's already when when the
[1:05:29] when we get the bonds it's already laid
out for the entire
[1:05:33] » Yeah. Right.
>> So it it it once it's set in those bond
[1:05:37] documents it doesn't change.
>> Yeah. It's not a surprise. We know each
[1:05:41] year what to plan for because we receive
the depending on the payback period, 30
[1:05:46] years, 40 years, we know what what each
annual payment will be.
[1:05:50] » Somewhat somewhat fixed with a little
bit of adjustment.
[1:05:54] » Okay. And um
that's all I have right now on that one.
[1:05:59] » Yeah. I'm going to on 47 the $20 million
uh obviously that that's money for
[1:06:06] projects to do capital improvement
projects. Um Are we getting close to
[1:06:11] some projects, Ed, or I know we've got
street projects. I know we talked about
[1:06:15] Saratoga.
>> We have a a significant number of
[1:06:18] projects that are being prepared for
moving forward. Some of them just
[1:06:22] require some additional funding and
we're hoping for uh grants for that
[1:06:26] purpose. We have a number of grants that
are outstanding and we are just waiting
[1:06:30] to receive information as to whether or
not we are successful on those grants.
[1:06:35] Uh every month we meet with our grant
advisor in this case Alyssa Colunga and
[1:06:42] uh Blae to go over potential grants that
we can additionally apply for. So the
[1:06:47] city has a significant number of grants
currently uh in play uh ready to be
[1:06:53] spent as well as ones that we are
applying for. And I I assume a lot of
[1:06:58] the projects uh the planning stage is uh
the design stage is either in design or
[1:07:06] almost completed or design completed uh
close to where we can go out and do bids
[1:07:12] on some of these projects.
>> Well, it depends on the grant. Some of
[1:07:15] them require that you be shovel ready,
>> right?
[1:07:19] » U and we do strive to be shovel ready
with every project that we have. Others
[1:07:25] uh simply require that uh we're only
paying for engineering services or for
[1:07:30] studies related to doing the project and
others are for the construction. So it
[1:07:35] just depends on the depends on the
project. It depends on the grant.
[1:07:38] » All right, let's talk about pension real
fast. So we did this back in uh 2122
[1:07:44] whenever it was. Back then we had five
we were paying addition out what five
[1:07:50] million 5 point something million a year
at that time did the bonds we got it
[1:07:56] down to 4.4
came with the policy. The difference is
[1:08:00] we'll go into the special the special uh
purpose fund. However, the last two
[1:08:07] years we've been hit with an additional
unfunded liability. This year being what
[1:08:11] 3.5
million, last year being 2 something
[1:08:17] million. Of course, the year before it
was zero. So basically uh versus two
[1:08:22] years ago, we're now dishing out an
additional 3.5 million uh for pension
[1:08:28] that could be used for other things in
the city, including uh salary increases,
[1:08:32] adjustments. So Ed, I talked about this,
but maybe for the council's education,
[1:08:38] where do you think this is going? I know
there's there's been improvement in the
[1:08:41] stock market for Kalpers, but can you
kind of, you know, educate us a little
[1:08:45] bit on this?
>> Right. So this year or at least next
[1:08:48] year the estimated uh UL will be about
$3.8 million as you indicated. Um
[1:08:54] however Kalpers did perform quite well
last year. They came in at 11.1% which
[1:09:00] is above their 6.8%
uh on their uh standard residual. And so
[1:09:06] we believe that if end of year 2026, so
June 30, 2026, if Kalpers demonstrates
[1:09:14] another positive year performance, uh
their board will meet and we expect that
[1:09:19] that $3.8 million will be reduced. I
don't know the amount, but I'm hoping
[1:09:23] that it will come uh closer to the $3
million range. However, I do want to
[1:09:27] point out that had we not done the bond
back when we did, uh, that 5 million and
[1:09:34] a half $5.5 million payment that we were
making then would probably be closer to
[1:09:40] a $9 million payment right now. So, even
though the UAL uh is up to the $3.8
[1:09:47] million, if we pay that off, it takes us
back to a zero. It's to our interest to
[1:09:52] pay it back pay it off every year. So we
don't acrue the 7 point 7% interest that
[1:09:58] Kalpers applies. Uh that is our
objective. We've been able to do that.
[1:10:04] But do keep it in perspective that if we
did not do that, even if you add that
[1:10:09] $3.8 million onto the $4.5 million
payment that we are making based on the
[1:10:17] terms of the bond. If we did not do
that, we would be paying up to $9
[1:10:22] million to CalPERS annually at this
point anyway. And that number would
[1:10:27] continue to increase, my estimation, at
least through 2030, if not beyond.
[1:10:33] » Yeah. And that's, you know, that's uh
well, if you take the 4.4 we're paying
[1:10:39] now plus a 3.8, that puts us in the
about 20% of our general fund is just
[1:10:44] going to pay off Calves.
>> Yeah. 1.4 million on top of that then
[1:10:51] we're getting closer to 25% of our
general fund.
[1:10:54] » So um you know disturbing
I don't say disturbing it just that's
[1:11:00] the reality and uh you know that's this
is something we've been dealing with for
[1:11:05] the last 15 years. We thought we got to
21 we'll be in good shape and now here
[1:11:10] is the 3.3 or 3.8 million surprise we're
dealing with. But I'll move on and we'll
[1:11:17] go on to the conclusion.
[1:11:22] » The fiscal year 2026 27 general fund
operating budget as presented to the
[1:11:27] city council for consideration. The
proposed fiscal year 2026 27 budget
[1:11:32] reflects a shortfall in revenues versus
appropriations of $631,544.
[1:11:39] The deficit is resolved by the proposed
transfer of $631,544
[1:11:45] from the unassigned general fund reserve
to produce a balanced budget. For fiscal
[1:11:50] year 2026 27, each city department was
provided flexibility in the preparation
[1:11:56] of their respective budget programs.
However, after budgets were submitted,
[1:12:00] it was necessary for the city manager to
reduce department budget requests by 3.9
[1:12:06] million across all funds and 3.6 6
million in relation to the general fund.
[1:12:11] Reductions were made using historical
data, expenditure details, actual and
[1:12:16] projected needs, and available funding.
The city manager directed the freezing
[1:12:20] of vacant positions in various
departments, saving just over $1 million
[1:12:25] in wage and benefit costs. Without this
action, the deficit would have grown to
[1:12:30] 1,673,194.
[1:12:35] The estimated deficit for fiscal year
2026 27 may be adjusted due to the
[1:12:40] potential for added personnel costs as a
city has yet to complete labor
[1:12:44] negotiations with bargaining groups.
Until negotiations are completed, the
[1:12:49] estimated additional budgetary impact
remains unknown.
[1:12:54] With strate with strategies proposed in
this budget message coupled with
[1:12:58] anticipated long-term improvements in
the economy, the city manager
[1:13:02] anticipates the deficit will remain
limited in its scope and not extend to
[1:13:07] future fiscal years. Montlair's deficit
is manageable and does not represent a
[1:13:12] structural problem.
The fiscal year 2026 27 proposed budget
[1:13:17] incorporates the following debt service
funds. The 2014 issue of lease revenue
[1:13:22] bonds debt service fund 2,597,163.
[1:13:28] The 2021 issue of lease revenue bonds
debt service funds just over 2.3
[1:13:33] million. And the 2021 issue of pension
obligation bonds debt service fund 4.4
[1:13:39] million. The passage of measure L in
2020 greatly improved the city's revenue
[1:13:44] profile. However, sales and transaction
and use tax receipts are
[1:13:48] underperforming, and both measure L and
Measure F have become fully integrated
[1:13:53] into the city's operational profile, and
the revenue generated is necessary to
[1:13:58] meet ongoing obligations without excess
revenue available to enhance the
[1:14:02] unassigned and specialurpose general
fund reserve capacity.
[1:14:08] Going forward, city staff will routinely
look at fresh approaches for service
[1:14:13] delivery, continue to evaluate grants
and outside funding opportunities, seek
[1:14:18] to develop strategies to improve both
the appearance and infrastructure of the
[1:14:23] community, promote new revenue concepts,
pursue development of the city's
[1:14:28] commercial and residential base. promote
economic development opportunities by
[1:14:33] drawing on the city's past and effective
promotion of redevelopment.
[1:14:37] Continue to develop the partnerships for
investments not only in North Montlair
[1:14:42] but throughout the city and work with
regional, state, and federal
[1:14:46] representatives to promote efforts
designed to move Montclair forward.
[1:14:51] And that is the end of the presentation
for the city.
[1:14:55] » Okay. Any uh questions for uh city staff
on this? Council
[1:15:02] R.
[1:15:08] » First, I want to thank staff for all of
their hard work on this.
[1:15:14] It is not always easy to do this, but I
think they've done a commendable job.
[1:15:21] I have a couple of questions on things
more related to revenue than anything
[1:15:26] else.
[1:15:30] I'm looking at
>> globally the need to pull in more
[1:15:36] revenue.
>> One of the things I wonder if we could
[1:15:41] do
and I know I'll get beaten up for saying
[1:15:45] this so I'm already aware of it. What we
can do to bring in more gasoline
[1:15:49] stations.
They provide a tremendous amount of
[1:15:52] revenue.
The more we have in here, people will
[1:15:56] get off the freeway or as they commute
through town,
[1:16:00] purchase gasoline, and that's a revenue
source for us. Electric charging
[1:16:05] stations are wonderful, and I'm not
saying not to have them. They're great,
[1:16:09] but they don't provide the revenue that
a gasoline station does. Is there
[1:16:13] something we can do to try to get more
gas stations here? because I go back to
[1:16:20] oh the days of the Montlair heyday of
the Montlair Plaza there were gas
[1:16:24] stations everywhere up there and I'm
wondering if there's something we can do
[1:16:28] along those lines because that is a
great source of revenue. I realize cars
[1:16:33] are more fuel efficient so they're using
you know not as much gas but we could
[1:16:40] still get revenue from it. Is is there
any thought about that? Well, yes. In
[1:16:46] fact, right now Costco is expanding
their bays from eight bays to 16 bays.
[1:16:50] If you go to Costco, you'll see that the
construction is ongoing. It's a little
[1:16:55] bit problematic and we probably will
experience some revenue loss because of
[1:16:59] the uh difficulty in getting in and out
of Costco, but hopefully uh within the
[1:17:05] next four months, they'll complete the
project and that will double the bays
[1:17:11] from again 8 to 16. Costco also
expressed interest in uh developing an
[1:17:16] offsite gas facility in Montlair. We
don't know the status of that right now.
[1:17:21] We've given them a number of locations.
Uh and they are still weighing whether
[1:17:25] or not that will be something that they
would want to do in Montlair. Uh other
[1:17:29] gas stations, no there hasn't been much
interest in developing additional gas
[1:17:35] stations in Montlair, but Costco is the
leader and generating more facilities
[1:17:41] through Costco. uh certainly is to our
interest. At the same time, uh Montclair
[1:17:46] Place has toyed with the idea of
bringing a Sam's Club to the site and
[1:17:52] that would generate additional gas
station facilities if uh CIM did
[1:17:57] ultimately go that direction.
>> I'm glad to hear that because that's a
[1:18:01] great source of revenue. And again, I'm
not opposed to electric charging
[1:18:06] stations. Um
>> that's true. Keep in mind though that
[1:18:10] when it comes to gas, the gas tax
revenue generated by gasoline stations
[1:18:15] can only be used for transportation
infrastructure projects is not available
[1:18:19] for general fund operations.
>> But that would be a great use for them
[1:18:23] for uh our roads
repairs on that would be great. What we
[1:18:30] need to do, you know, maybe we could be
the leader in bringing in gasoline sales
[1:18:35] tax revenue. And again, before anybody
beats me up, I'm not opposed to electric
[1:18:40] charging stations. I think they're
important.
[1:18:43] It's another option, but they don't
bring in the revenue that a gas station
[1:18:47] does. Another question I have,
[1:18:51] I listened at a prior meeting where we
talked about believing in the free
[1:18:56] market, which I certainly do,
and that we need to be free market on
[1:19:01] certain things.
I would hope that it would include all
[1:19:05] businesses.
Um,
[1:19:09] you know, a business, let's say,
doughnut shop wants to locate in
[1:19:14] Montlair,
we shouldn't be turning them down. We
[1:19:18] should be doing everything we can to get
them in. Do they generate a lot of sales
[1:19:22] tax? No. I believe it's only on dine in
if I'm correct.
[1:19:27] But that's still some revenue. Maybe if
they generate 15,000 a year in sales
[1:19:31] tax. I don't know what they generate.
That would cover the cost of uh the
[1:19:37] office furniture we're buying for the
MAP program. I hope we get to the point
[1:19:41] of being more pro business. There's a
business that wants to be here. Let's
[1:19:44] see what we need to do to bring them in.
Doughnut shops are not a bad thing.
[1:19:49] Uh
other types of stores are not a bad
[1:19:52] thing. Retail is declining. So, we need
to figure out what we do to supplant the
[1:19:57] retail with something else. And I hope
we would start to look at that. Um, it
[1:20:03] distresses me when I hear, "Oh, well, I
don't think people would have wanted
[1:20:06] that.
What's wrong with bringing in
[1:20:11] sources of revenue? We need to really be
serious about that." And
[1:20:18] I think the last thing I want to look at
is I concur with a comment made at the
[1:20:24] first part of the meeting by Council
Member Mendes about uh we're cutting but
[1:20:29] we're still spend we're increasing the
budget in other areas. I understand
[1:20:33] that. But somebody at home who's sitting
there, they're they're not going to be
[1:20:38] able to do that with their private
budget. They're going to just have to
[1:20:40] cut cut. And so I don't understand the
expanding or increasing at a time when
[1:20:48] it's bad. I don't know if the economy is
going to recover next year or not. I
[1:20:53] can't predict that. But even if it does,
if we can set a base and start putting
[1:20:58] then more money away, that would be
good. Thank you.
[1:21:02] » So if I may, Mr. Mayor, the increase in
revenues is primarily related to grants
[1:21:07] and other revenues that come to the city
specifically for those projects. So
[1:21:11] either we spend the money on those
projects or we don't get the grant
[1:21:14] money. It isn't that the city is
securing uh new monies through the
[1:21:19] general fund and we're not spending them
on personnel or other services. These
[1:21:24] are typically grants or one-time monies
that are designed for specific purposes
[1:21:28] like for example SB509 which is designed
for uh public safety. We have to spend
[1:21:34] those monies or we continue to acrew
them but we can't spend them on other
[1:21:37] sources. We can only spend them on those
purposes. So, as long as that revenue
[1:21:42] comes in and it's available for us to
spend and while it looks like the budget
[1:21:47] is increasing because of those revenues,
keep in mind that it is a general fund
[1:21:52] that really is the key to the operations
of the city as far as personnel and the
[1:21:59] general services that we deliver to the
community. these other dollars that make
[1:22:03] it appear that the budget is growing
despite the fact that we project a
[1:22:08] deficit. Those dollars are either spent
on those specific requirements that the
[1:22:13] funding sources tell us that we can
spend them on or we don't spend them at
[1:22:17] all or we don't apply for those funds.
In which case then you're right, you
[1:22:21] wouldn't see the growth, but you
wouldn't also see the type of
[1:22:25] development activity that is occurring
in the Montlair despite the fact that
[1:22:29] the general fund may not be performing
to the level that it is.
[1:22:34] » Okay. Thank you, Council Mayor Pan
Martinez.
[1:22:37] » Thank you. Uh once again, I appreciate
the transparency in the report and the
[1:22:43] numbers and even though this is uh not
ideal revenue-wise,
[1:22:49] um I want to say thank you for the
creativity and the efforts with the
[1:22:54] grants
um and and just putting it all out there
[1:22:58] for us for our consideration. I think we
are a goodlooking city. I think we take
[1:23:04] a lot of care of our residents and of
our city um and our city staff and I
[1:23:09] like to see that continue happening. Um
but for what we're dealing with, this is
[1:23:16] once again fantastic and thank you for
the effort and putting this together for
[1:23:20] us.
>> Thank you, U Council Member Mendes.
[1:23:25] » All right. First of all, just to um
piggy back on what Chris was just
[1:23:30] saying. Yes. I I appreciate everything
that um you guys go through. I I know
[1:23:36] that Mr. Ed over here is probably the
mastermind to most of these things um
[1:23:42] because I see him here all the time and
I do appreciate him answering lots of my
[1:23:47] questions at at personal times when no
one else is around. It's just it's it's
[1:23:52] nice to be able to have somebody that's
available like that. But I do um
[1:23:56] continue to have questions relating to
to things. Um one I I would definitely
[1:24:03] love to see a
salary survey done with all of our local
[1:24:10] surrounding cities. Um just to see where
our employees are so we can see and and
[1:24:16] include health benefits. Um, with that
also, I I know I may have to pay a a fee
[1:24:24] to to get the employees to do that, you
know, if we have that new rule come in,
[1:24:29] but um I I'll be willing to pay for
that. That's a joke. That's people are
[1:24:34] supposed to laugh, John.
>> Yeah. So, um,
[1:24:38] » that was you personally will be willing
to pay.
[1:24:40] » Yeah, that's that's what I'm saying.
That that new fee that we have
[1:24:44] » three paychecks. You got you got a
pension paycheck. You got your web
[1:24:47] paycheck.
Cal's paycheck. You can afford it.
[1:24:49] » Yeah, I'll pay for that for sure. But um
I I just um I just want to make sure
[1:24:55] that you know we're I want to see where
our short falls are and you know and try
[1:25:00] to focus maybe on that in the next years
or so to to try to get those divisions
[1:25:05] or departments um back up to where they
should be. Um,
[1:25:12] as far as, you know, I, as I mentioned
earlier about the monies, I I understand
[1:25:17] a lot of the funds and I understand a
lot of, you know, how these work. I I
[1:25:22] was privy to be able to create my own
budgets for years and um but there's
[1:25:28] still so much that I don't know and I I
would love to see us have another
[1:25:34] workshop to allow us a little bit more
time to learn more about these special
[1:25:39] funds um payments you know everything
that we can learn. I would I would
[1:25:44] personally appreciate it. I'm not saying
everybody has to attend it, but I would
[1:25:48] be willing to attend something or if
there's a class that I could take, I
[1:25:52] would definitely take that. Um, but I
noticed, you know, going through all the
[1:25:57] different um departments, that, you
know, some of them had increases,
[1:26:02] including the city council um um budget.
I was just wondering who who's the one
[1:26:08] that actually writes that up because it
shows that we were requesting an
[1:26:13] additional
u more money than we asked and I I don't
[1:26:17] remember ever telling anybody. So, I
just don't know who who's the one that
[1:26:21] creates I'm assuming it's Ed. Um but
ours went up $20,000. City manager, your
[1:26:27] your department went up $180,000.
Admin services 92,000. Human services
[1:26:33] 338,000. But which now I know is part of
the afterchool program. Is that a grant
[1:26:40] also that we received that 300?
>> Yes. Yes.
[1:26:43] » So so wonderful. See and I would love
that is important for us to know because
[1:26:49] then it doesn't look like oh we're just
spending more money in human services
[1:26:52] and you know because then you go down to
the police and sorry poor police you're
[1:26:57] you're reducing by 450,000
you know on what you requested and what
[1:27:02] you received. fire you guys increased
2.3 million almost and but I understand
[1:27:07] why the grant you know the fire truck I
I get it I I understand those things but
[1:27:12] having the understanding of those just
helps me and I think it would help the
[1:27:18] residents not that we have any residents
here right now to to ask but it's
[1:27:22] important um well I think if I may the
easy answer to a lot of your questions
[1:27:28] just then are that a lot of costs are
driven by contract and contracts have
[1:27:34] annual CPI adjustments associated with
them. We have no control over that.
[1:27:38] » And so some budgets rise. So for
example, when you're talking about the
[1:27:42] city manager's budget, that budget
incorporates refuge services. And refuge
[1:27:47] services change significantly by
hundreds of thousand dollars on an
[1:27:50] annual basis. We have to pay that. But
at the same time, that goes to the
[1:27:54] increase in the revenue that you see and
speak about. So, if the uh if the cost
[1:28:01] of providing refuge services increases
by $100,000 a year, it's also offset by
[1:28:07] $100,000 in revenue. But the budget
still has to demonstrate that there's an
[1:28:12] appropriation increase of $100,000, but
the revenue budget will also show an
[1:28:18] increase in $100,000 to offset that.
>> Yeah. But that's how most of those
[1:28:22] budgets are driven as far as cost
increases, contracts that commit us to
[1:28:28] uh those adjustments.
>> Yes. And thank you for that. And that
[1:28:31] comes to my last department um which
isn't a very old I don't think you've
[1:28:36] had this one in there that long. I mean
probably 10 years or more. Uh citywide
[1:28:41] that that um department it increased by
$1.175
[1:28:45] million. And just maybe you could give
me a little bit more um education on how
[1:28:51] why that one went out.
>> Sure. Easy answer on that is worker
[1:28:55] compensation claims filed against the
city, uh lawsuits filed against the
[1:28:59] city, the cost of electricity, the cost
of telephone services. So everything
[1:29:04] that goes into the citywide budget are
those cost components there are shared
[1:29:09] throughout the organization. Kalpers's
costs are in there. So, as the mayor
[1:29:13] pointed out earlier, ULA increases,
increases in the normal service cost
[1:29:18] range, those are no longer part of
individual bus uh of of individual
[1:29:24] budgets uh for departments. That's all
now incorporated into citywide because
[1:29:31] collectively we all have to pay for
those costs. They're not unique to the
[1:29:35] police. They're not unique to human
services. They are common to the entire
[1:29:40] organization and citywide in fact is
where the bulk of the cost increases
[1:29:45] impact us because uh insurance is
skyrocketing.
[1:29:50] Uh worker compensate claims are based on
the number of claims filed by uh
[1:29:55] employees in the organization and
lawsuits based on whoever is filing a
[1:30:00] lawsuit and of course we have no control
over the cost of electricity, water,
[1:30:04] postage and other utilities and all that
is reflected in citywide.
[1:30:09] » Okay. So I and I understand that and
thank you for that definition the 1.1.75
[1:30:15] million increase but I know that we also
mentioned that this is where we get the
[1:30:19] unfunded balance also of PERS which
increased by 3.8 million.
[1:30:23] » Well it didn't increase by 3.8 million.
>> Oh
[1:30:26] » that's it's up
>> to that but it didn't increase by that
[1:30:30] amount.
>> What was it last year? Do we know?
[1:30:32] » Not off the top of my head I don't. I'm
sorry.
[1:30:35] » All right. Well, again, so this leads to
my my final question or request. Um, and
[1:30:43] I talked a little bit to John about it
just a little bit ago, but I would
[1:30:47] really, and I know staff may be upset
with me again doing this, but I would
[1:30:53] love to receive this budget a minimum of
four to eight weeks before.
[1:31:00] » Yeah. Well, if you look at every city in
California, it's 4 to 8 weeks and that's
[1:31:06] the average.
>> When we are given a 778 page document to
[1:31:11] review and then for us to sit up here
and vote on, I just don't feel like it's
[1:31:16] enough time for me to give the best
answer to the to the people that put us
[1:31:22] in here. And and I know you laughed just
now at it. No, and I understand what
[1:31:27] you're saying, but it's it's a it's a
huge process.
[1:31:30] » I know. I was involved with it. I I
understand.
[1:31:33] » Not like not like
>> I I understand. I understand. But that's
[1:31:37] your position. That's your job.
>> Yeah. And uh I just would love to see
[1:31:41] us, you know, get this, you know, like I
said, four weeks in advance, you know,
[1:31:46] rather than one week in advance, just
because, like I said, 778 pages to
[1:31:52] review this and then all these other
supplements that we get, it's a lot. And
[1:31:56] I really try to go through it and like I
said, if I can even have a class where I
[1:32:02] can understand it better. I'm not trying
to be you. I'm not trying to be Ed. I'm
[1:32:06] just trying to make the best decision I
can for the residents and the community.
[1:32:10] That's all I want to do.
>> Well,
[1:32:11] » understood. And if I may, Mr. Mayor,
before you you comment, um the only way
[1:32:16] that we could achieve this is one of two
ways. And that is that we start the
[1:32:20] budget process uh before the new
calendar year even begins, which is I
[1:32:26] think a significant burden on the
departments because they don't really
[1:32:29] understand uh necessarily where their
expenditures are yet. The other issue is
[1:32:34] that there is no provision in law that
you adopt a budget by June the 30th. As
[1:32:39] I I put in the budget at the very
beginning, a discussion of what a budget
[1:32:44] is. And that is to demonstrate to you
that that we're not required to adopt a
[1:32:48] budget. But if we don't, we run into a
number of complications. And so we can
[1:32:53] bring the budget to you even in July for
your consideration. But you have to
[1:32:57] understand we have no authorization to
spend money until you do effect give us
[1:33:03] that authorization. So those are the
only two options that are available to
[1:33:06] us. We start the process significantly
earlier or you adopt the budget later in
[1:33:10] the year.
>> Well, let me interject here. First, you
[1:33:12] can do a continue resolution to the next
fiscal year too. U you continue the
[1:33:16] existing budget
to the new fiscal year and then then you
[1:33:20] can adopt the budget later on. what
we're doing at Metroink. We're extending
[1:33:24] that budget for three months because
obviously revenues for Metroink dropped
[1:33:28] trying to figure out how to do service
levels. But I think the answer to the
[1:33:32] first question is yeah four weeks is
kind of way in advance you know in this
[1:33:36] budget. I I think what needs to happen
is, you know, we should have this budget
[1:33:39] at least two weeks before this meeting,
at least two weeks. And I think that
[1:33:43] during that period of time, there should
be some type of a or this is a workshop,
[1:33:47] but a study a study workshop for the
council members, not in this
[1:33:53] environment, perhaps at the library or
in the conference room or council
[1:33:57] members to just ask questions to staff
and dig into it before this meeting
[1:34:01] takes place. I don't know that could be
the study session maybe call study
[1:34:05] session doesn't mean all the counselors
can come you know it will be a brown act
[1:34:10] meeting we meet the brown act but it's
it's optional council members want to
[1:34:13] attend the study session and they can
ask a lot of questions maybe another
[1:34:18] thing needs to happen for this budget uh
if council me wants this and then if
[1:34:22] there's interest maybe we there should
be a a a study session on the budget
[1:34:28] this summer or this fall and Again, it's
held someplace else and uh council
[1:34:35] members can ask a lot of questions, dive
into the budget with staff. U I will
[1:34:40] recommend that and maybe that's the best
way to get the education.
[1:34:42] » Okay? And that's fine, but I'm I'm
letting you know that your budget
[1:34:46] message will be 10 to 20 pages. It will
not be the 120 pages
[1:34:51] » that you get now that I'm I'm letting
you know you will not be getting 120
[1:34:55] mill page budget message that explains
to you everything that's going on. you
[1:35:00] will be getting what every other city
provides their city council and that's a
[1:35:04] 10-page budget decision.
>> Hey, okay, let's let's not get excited
[1:35:07] here. Okay, what I'm trying to say here
is I understand among council I mean I
[1:35:13] I've been doing this for 25 years and I
kind of count, you know, budget. I look
[1:35:18] for certain things. I have a pretty good
understanding about the budget. I come
[1:35:22] in talk to staff about it and make sure
I understand what's in the budget uh
[1:35:26] before today's meeting. Yes, Ed, you're
correct because I don't know how many
[1:35:30] cities budgets I go through and I look
at the budget message and it's crap.
[1:35:34] There's nothing there. So, I don't
understand what's in the budget. What
[1:35:36] I'm saying here is for the education of
at least council member Menddees,
[1:35:41] somebody else perhaps council me if
nobody else is interested. Maybe you
[1:35:45] want to have a meeting with staff
conference room, the theater room and
[1:35:52] gives you an opportunity to go through
this current budget. Hopefully it was
[1:35:55] adopted tonight and you get a better
understanding of that budget here and
[1:35:58] maybe next year when we have the budget
session we kind of do the same thing at
[1:36:01] the study session before this meeting
and
[1:36:05] council members can engage it with staff
other questions. I understand we can't
[1:36:11] hear this is a little more formal. I've
always encouraged my council colleagues
[1:36:15] to try to meet with staff and ahead of
time on some of the bigger issues so you
[1:36:20] get get your questions out of the way.
But perhaps perhaps there's a formal
[1:36:24] setting where we have a study session
and again that's volunteer in which
[1:36:27] councils want to show up and then uh be
under the Brown Act and then you can ask
[1:36:31] a lot of questions in that format. So I
don't know that's
[1:36:35] council MDZ is kind of asking for.
>> I'm actually open.
[1:36:40] » I'm open to anything and I I'm you know
>> right
[1:36:44] » I won't apologize for upsetting anybody
here but I I wasn't I don't think I'm
[1:36:48] asking for anything that's out of the
question. Well, I think it's important
[1:36:51] to council members to be educated. You
know, this, you know, the budget is a
[1:36:55] hard one to understand. Um, but it's
important to council members be educated
[1:36:59] and when they vote and what they're
voting on. So, yes, you know, if again,
[1:37:05] so perhaps staff, Ed, U or C, I don't
know if anybody else interested, Council
[1:37:10] Member Rue, Mayor Pin Martinez. I I just
feel to be honest like
[1:37:15] Ed, if I was you and I wrote this budget
like you do, I would want more people to
[1:37:20] read it and understand it and enjoy it.
I mean, it it's a major document and
[1:37:25] yes, it it's something that I would like
to understand. So, I
[1:37:30] » All right. So, maybe it sounds like I
mean, I don't need a study session, but
[1:37:33] if you like to have a I mean, I'll be be
I'll be happy to participate in a study
[1:37:37] session, I should say. Um but if you
like to have a study session then
[1:37:41] perhaps uh staff can uh at least contact
you schedule one and it gives you a
[1:37:46] chance at least go through this budget
you have a better understanding so when
[1:37:49] we prepare for next year's budget
perhaps some of the things next year's
[1:37:54] proposed budget you'll have you have
understanding why it's there u ahead of
[1:37:59] time. Okay. And then and then maybe next
year we'll try to get the budget out two
[1:38:03] weeks in advance and then again maybe a
study session if council members want to
[1:38:08] meet with staff and and then ask
questions of the budget uh in that
[1:38:13] format which is kind of informal uh as
opposed to in this format.
[1:38:18] » Yeah. And if I may, Mr. Mayor, we do
always try to have the budget to you at
[1:38:22] least two weeks in advance. You have to
keep in mind that this particular year
[1:38:26] we had a lawsuit that staff was
preparing for. Uh we had a number of
[1:38:33] other issues that staff was working on
and the budget was just in the middle of
[1:38:38] all of that. And I I agree and I even
had this conversation with Janet and she
[1:38:43] will agree that I was concerned that it
was not getting to you at least the two
[1:38:47] weeks in advance. We did get it to you a
week and a half and I apologize for
[1:38:51] that. But even to have this budget
session, we're still going to have to
[1:38:54] have the budget done for you even in a
budget session, which does not remove
[1:38:59] the responsibility from us of starting
the process earlier. It's the only way
[1:39:03] that this is going to happen.
>> Yeah. So I I'm not ask I think right now
[1:39:07] is let's just shoot for the two weeks
with the idea if invite the council
[1:39:12] members they want to come to a special
session and just learn about it before
[1:39:17] we actually have this workshop here.
Maybe that's the format for the next
[1:39:21] year format. Um I know that council
member Midz you talked about salary
[1:39:26] survey you brought that up. Um I think
we need to do is go through the
[1:39:31] negotiations first. Maybe you know Ed, I
don't know if you want to opine on it on
[1:39:36] this one here. I'm not sure exactly. I
mean
[1:39:38] » I'm sorry what what
>> opine on the salary survey that was
[1:39:41] brought up by council member Mendes. I
think first of all we need to go through
[1:39:44] the we get through the council on we
need to get through negotiations.
[1:39:48] Perhaps this is an item we should be
discussing in close session as well. I'm
[1:39:50] assuming this if you want to do a salary
survey it should be discussed in close
[1:39:54] session I'm assuming.
>> I I I agree. We're in the middle of
[1:39:57] labor negotiations and to talk about a
sour survey would send out false
[1:40:02] encouragement to the labor groups that
the city is looking at something it's
[1:40:05] not going to be doing.
>> This is not the time to do a salary
[1:40:07] survey. However, we will have a, you
know, we'll have a close session at next
[1:40:11] meeting, talk about bargain units, and
we'll go from there.
[1:40:17] » Yeah. And that's fine, but I just I
brought this up last year, the salary
[1:40:21] survey, and it never happened. So, I I'm
just wanting it to happen is all I'm
[1:40:26] asking.
>> Well, I I think right now this is an
[1:40:28] issue we should not be talking about up
here. This is a close
[1:40:31] » No, no, no. I I understand what you're
saying about
[1:40:32] » and I think we should discuss this in
close session.
[1:40:34] » Yeah. So, two things. One, we do do
salary surveys all the time. The labor
[1:40:39] groups themselves do salary surveys all
the time. If the council wants to do a
[1:40:44] council directed salary survey, it would
require that we contract that out. Um,
[1:40:49] and last time we did a contracted out
salary survey. It, you know, it costs a
[1:40:54] significant amount of money and we can
do that if you want us to bring it back
[1:40:58] before the council. And the reason why I
say this is that we do not necessarily
[1:41:03] accept the salary surveys conducted by
the bargaining groups uh because we
[1:41:08] don't know the positions that they are
surveying and they don't like the
[1:41:11] surveys that we conduct because we look
at positions and try to do a a like
[1:41:16] forlike uh match and there's always
disagreement. So the only way that there
[1:41:22] is a medicable solution to these sorts
of surveys is that there is an
[1:41:28] independent third party that conducts
the surveys and that does cost money.
[1:41:33] » And I understand but honestly I could do
my own salary survey if that's what's
[1:41:38] what's needed. But and I I get it but
it's not something I'm asking for that
[1:41:44] all this information isn't readily
available to contact each city and get
[1:41:48] it. And I'm just talking about the
salary city or the surveys that cities
[1:41:52] that we used in the past because they're
similar to ours and that's it. And then
[1:41:56] regarding the the two weeks, like Ed
mentioned, he already shoots for two
[1:42:00] weeks every time. So maybe three weeks.
I I don't know. I just I just want to
[1:42:05] see something to where
we we have some time.
[1:42:09] » Okay. We hear your message and we'll try
to work towards that.
[1:42:11] » And as far as again, as far as salary
survey, let's let's discuss that in
[1:42:14] close session.
>> Okay. Um, and then, uh, I know on the
[1:42:18] citywide cost, I just want to say this,
I saw this somewhere in your, uh,
[1:42:22] report,
our litigation cost and workers comp
[1:42:26] costs, and not just us, it's other
cities, too, is out of control. It's
[1:42:30] it's it's gone up wacko by numbers. It's
pretty amazing.
[1:42:35] » They have increased significantly, and
they're expected to increase uh, even
[1:42:38] more significantly next year. And we
will be bringing a uh request to the
[1:42:43] city council to support uh documentation
related to uh uh encouraging the
[1:42:49] legislature to address the cost of
insurance. Uh uh particularly as it
[1:42:53] relates to how municipal agencies uh
when they are found 1% responsible,
[1:42:58] they're fully responsible for 100% of
the cost of losses. This has to end. Uh
[1:43:04] we are the deep pocket and everybody
looks to us and it's just a burden that
[1:43:08] we can't continue. I agree. And I just
want to you have a paragraph in here on
[1:43:13] page 51 of the slide. So I think this
this puts an ease where we are right now
[1:43:19] with this deficit but it says with
strategy proposed in this budget message
[1:43:23] coupled with the anticipated long-term
improvements in the economy. The city
[1:43:26] manager anticipates deficit will remain
limited in scope and not extend to
[1:43:31] future fiscal years. Mon deficit is
manageable and does not represent
[1:43:35] structure problem. I think that's that's
important right there. The the Fire
[1:43:39] alarms are not going off right now. Um I
I think uh I think we're doing a better
[1:43:44] job than the state of California is or
maybe some big city in LA is doing in
[1:43:48] their deficit in my opinion. Um I think
we're we are acting as though what
[1:43:55] Monontlair households would do and
manage their money, manage their
[1:43:58] expenses u based on current economic
times. So I think we're
[1:44:06] sh So I I do want to say this. I
appreciate staff all the hard work from
[1:44:09] staff on this. I know we have the the uh
housing corporation. So, let's do the
[1:44:16] housing corporation.
>> Mayor, I I know I'm not a member of the
[1:44:20] council, but I do need to exercise a
point of privilege. If you can give us a
[1:44:23] few minute break, please.
>> Oh, you can have a break. That's fine.
[1:44:26] Actually, I need a break anyway. So, all
right. Break time f
[1:44:38] Okay, we're back. Let's do housing
corporation real fast.
[1:44:41] » Yes, this will be quick. Montlair
Housing Corporation proposed budget for
[1:44:45] fiscal year 202627.
So, the Montlair Housing Corporation
[1:44:50] list of Montclair Housing Corporation
properties contained in the Montlair
[1:44:54] Housing Corporation budget estimated
fund balance at July 1, 2026 is
[1:45:00] $879,879.
[1:45:04] The estimated revenue, rental income,
uh, 1.77 million, income, $18,000
[1:45:13] for a total of just over $2.6 million.
Positions previously funded by the
[1:45:18] housing corporation are now fully funded
by the general fund, an action that
[1:45:22] reserves housing corporation funding for
maintenance and expansion of the city's
[1:45:26] affordable housing program.
So the estimated fund balance at the end
[1:45:32] of fiscal year 2026 27 is 1,284,935
[1:45:40] after we have um $1,389,400
in expenses.
[1:45:48] And that's the end of the presentation.
>> Any questions on the housing stuff?
[1:45:52] Council R.
[1:45:57] » Do we own our properties debtree?
>> Yes.
[1:46:02] » Yes. All properties are owned debtree.
>> So, Miss Colbeck, it is debtree.
[1:46:08] » Yes.
>> Okay.
[1:46:09] » Yeah. We don't make any We bought them
outright. We don't make monthly payments
[1:46:13] or anything.
>> Because I was wondering what the
[1:46:15] interest would have been on these. So, I
don't need to ask that question. Thank
[1:46:20] you.
How many units again? 104 108. What was
[1:46:25] it?
>> Uh, no. We're probably up somewhere in
[1:46:27] the neighborhood of 110 now.
>> Yeah. And I think a couple years ago, I
[1:46:31] tried to figure out the average. We take
the random income divided by the number
[1:46:35] of units we own. I think it was coming
out like $700 a month per unit,
[1:46:39] something like that, or 800 or something
like that. Well, it depends, but there
[1:46:45] there are adjustments periodically. Not
>> fair market rate. We'll probably get
[1:46:49] triple the income, I suspect. So,
>> yes, but to be clear, they're not market
[1:46:53] rate.
>> I know. I understand.
[1:46:56] » Okay. Um Oh, I'm sorry, Council Member
Menddees.
[1:47:01] » Yeah, I um so all of these are debtree,
but all of these units are all um have
[1:47:08] leans on them. Correct. For the lease
revenue bonds though,
[1:47:12] » they have leans, but not all of them.
No, some of them have been acquired
[1:47:16] recently. Uh well, no. In fact, housing
corporation properties don't have leans
[1:47:20] on them. I'm sorry.
>> Uh these are debtree. They have no leans
[1:47:23] on them.
>> It's only other city properties that the
[1:47:27] city owns uh as operational facilities.
>> Right.
[1:47:31] » All right. Thank you. That's that's good
news.
[1:47:33] » Well, let me ask I got a question to
ask. Mikey's not here. I know that. The
[1:47:37] question is, if we were to sell,
>> he's online.
[1:47:39] » Oh, me and Mike can answer the question.
I'm trying to remember my days of
[1:47:42] redevelopment. If we were to sell these
properties,
[1:47:45] could we sell them for market rate or do
we have covenants on them that prevents
[1:47:50] the the affordability remains? And I
thought some of the stuff we bought with
[1:47:54] general fund money, but is there
>> Well, the massive majority of the
[1:47:58] properties were bought with
redevelopment money,
[1:48:01] » 20% set aside from the former
redevelopment agency, and they do have
[1:48:04] covenants on them. Yeah, those have
covenants, but we also bought property
[1:48:08] here recently, last
>> anything bought after 2012 is not with
[1:48:13] uh well, they do have covenants on them,
but they are not bought with monies that
[1:48:18] are subject to restrictions. We do have
the $3.3 million that we received from
[1:48:24] uh relation to the mobile home park uh
issue that we resolved several months
[1:48:28] ago. That money would have restrictions
for affordable housing, but the monies
[1:48:33] that the economic development agency has
spent since 2012 generally does not have
[1:48:38] those kind of restrictions.
>> The monies that we we they've spent to
[1:48:40] purchase these residential homes are not
subject to affordability.
[1:48:44] » Well, Mr. Mayor and city council. Uh so
the properties that were purchased with
[1:48:49] the former redevelopment
agency, those properties, if we would
[1:48:54] sell them off, we would then have to use
the proceeds of those funds to put back
[1:49:00] into the low and moderate uh fund
category that we have. We wouldn't be
[1:49:05] able to sell them. Um we wouldn't be
able to use the the money for anything
[1:49:09] else. the money that was the properties
that were purchased with the economic
[1:49:13] development agency funds, those do not
have any restrictions. So, we would then
[1:49:18] be able to use the proceeds from those
funds. It's only the ones that were used
[1:49:22] from the former redevelopment agencies
that would then require to be reused for
[1:49:26] low moderate.
>> That makes sense. Thank you, Mikey.
[1:49:29] Okay. So, uh now we have consent
calendar. We have four items of consent
[1:49:33] calendar including the adoption of the
city's budget and the housing
[1:49:37] corporation's budget. If there's no
questions on it, can I get a a motion?
[1:49:44] » I'll move for approval of
>> move approval of Gen County. Can I get a
[1:49:47] second?
>> Second by Council Member Mendes. Um,
[1:49:54] » are we going to vote on item four or we
taking four and five together?
[1:50:00] » We're doing consent calendar now, which
is A, B, C, and D.
[1:50:03] » Right. But what about item four, the
budget?
[1:50:07] » Item four, the budget. That's that is
pres that's presentation. The budget now
[1:50:12] is under consent calendar. It will be
item C. 5C is the uh city mon budget and
[1:50:18] 5D is the housing authority budget.
Okay. So we have a motion. Let's vote.
[1:50:29] Great.
[1:50:32] All right. That's adopted 40. Uh again
that staff thank you very much for the
[1:50:37] hard work and uh we're ajourned.