San Diego Budget Review Committee Meeting - May 4, 2016
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San Diego Budget Review Committee Meeting - May 4, 2016
The Budget Review Committee, chaired by Councilmember Todd Gloria, met on May 4, 2016, starting at approximately 10:15 AM, to review the fiscal year 2017 proposed budgets for several city departments and agencies. The meeting featured presentations from financial management, the San Diego Convention Center Corporation, City Treasurer, Risk Management, Financial Management & Citywide Program Expenditures, Performance & Analytics, and the Assistant Chief Operating Officer. The Independent Budget Analyst (IBA) provided reviews and the committee heard public comments.
Public Comments & Testimony
- John Stump spoke on the risk management item, raising concerns about the Gardens Lease Agreement with Zoo Global Corporation. He stated that the lease requires specific risk management reports on animal deaths, building damage, and injuries, and questioned whether those reports are being made. He also mentioned the need for proper noticing under the Brown Act for discussions on the $12.5 million zoo tax. During the Financial Management section, Mr. Stump spoke again about the zoo tax, noting that the council has oversight responsibilities and that Zoo Global has over 100% operating expenses in reserves, questioning the reasonableness of fees and potential bonding of the tax.
Discussion Items
San Diego Convention Center Corporation Budget
- Presentation: Gil Cabrera (Board Secretary) and Mark Emsch (CFO) presented the FY17 budget. Budgeted expenditures total $35.8 million (up $1.9 million, 5.7%), revenues $36 million (up $1.5 million). The budget includes a $3.4 million allocation from the City of San Diego (up $31,000). The center projects a record-breaking 2016 with $1.2 billion regional impact, 674,000 primary attendees, 67 citywide conventions, and building occupancy of 73.7%. Reserves: policy target 14% ($4.6 million), projected end FY16 at $6.88 million (20% of expenses), FY17 at $3.5 million (below target) due to increased infrastructure spending and IBank loan payments. The corporation plans a $25 million loan from the California Infrastructure Bank (IBank) for the sales pavilion roof and other projects, with debt service of approximately $1.5 million/year starting FY18, and an interest-only payment in FY17 included in the budget. The IBA noted the loan is contingent on IBank board approval expected June 2016. Councilmembers discussed rental credits (33% of gross rent, lower than industry average), cell site revenue changes, and the elimination of registration services and Fifth Avenue Landing parking lot (possible footprint for expansion). The IBA recommended resuming discussions with the Port of San Diego on naming rights, which could generate $14.5–$20.5 million over 10–20 years. City COO Scott Chadwick indicated informal discussions with the Port are ongoing but have not yet engaged Port commissioners.
City Treasurer
- Presentation: Gail Granowitz (City Treasurer) presented a proposed general fund budget decrease of $358,000, including the addition of two Accountant II positions for TOT/TMD audits (fully cost recoverable). The parking meter operations fund decreases by $400,000 while increasing revenue by $560,000. Key accomplishments: mobile pay pilot at 1,300 meters (started September 2015, runs through September 2016), business tax consolidation, and TOT/TMD online registration (50% of new accounts register online). Performance indicators include 100% customer satisfaction in Treasury lobby, and an 83% recovery rate for delinquent accounts (industry standard 23%). The IBA noted a 50% increase in registered short-term rental operators over 18 months to approximately 3,000, and a planned six-month pilot of vehicle detection sensors (200 meters) in FY17. Councilmembers asked about audits of short-term rentals, registration totals, and the mobile pay program. The city treasurer clarified that no fines or library fees are tacked onto water bills, contrary to a recent news article.
Risk Management
- Presentation: Julio Canisal (Risk Management Director) presented a FY17 proposed budget of $10.5 million with 87.23 FTE, a net decrease of $17,000 but adding 3.95 FTE. Additions include four positions for workers' compensation ($307,000) due to increased complexity from state legislation, one program coordinator for IT projects ($150,000), and one claims representative for public liability ($85,000). Reserve targets: public liability 43% of outstanding claims ($39.5 million) by FY17, workers' compensation 25% ($57 million), long-term disability 100% (target met at $18.5 million, $3.5 million excess). The IBA discussed FY16 public liability claims payouts estimated at $75 million, requiring a $15 million transfer from reserves and additional $3 million year-end adjustment. Workers' compensation also needs additional $3 million citywide. Councilmember Sherman suggested exploring outsourcing workers' compensation to a private carrier to potentially reduce reserves. Councilmember Leitner asked about litigation rates; risk management reports monthly on claims, with about 670 of 1,800 claims currently litigated.
Financial Management & Citywide Program Expenditures
- Presentation: Tracy McCraner (Financial Management Director) and Matt Vespee (Deputy Director) presented. Financial Management asks for no new positions; highlights include new CIP semi-annual report and year-end financial performance report, and a new training program. Citywide program expenditures budget is $114 million, up ~$25 million. Major increases: $9.5 million combined for public liability operations and reserve, $7.6 million for general fund reserve (to reach 14.75% of operating revenues in FY17, ultimate goal 16.7% by FY21), $4.4 million placeholder for labor negotiations (later spread across departments), and $2.3 million increase for mission bay lease revenue transfers. The IBA noted elections cost uncertainty: FY16 June primary estimated at $5.2 million (above budgeted $4.2 million), and FY17 may be higher due to state initiatives. Councilmembers asked about the labor negotiation placeholder, memberships, and animal services contract increase (5% increase, $443,000, with additional 1% in May revise).
Performance & Analytics
- Presentation: Alma Sudris (Director) and Ulysses Panganiban presented a FY17 proposed budget increase of ~$950,000, adding four positions: one program manager and two program coordinators for a 311-style customer experience program, and one program coordinator for open data. Non-personnel expenses of $767,000 for the 311 program (scoping, knowledge base, procurement). FY16 accomplishments: launched tactical planning process for all mayoral departments, developed 169 revamped KPI indicators, initiated Lean Six Sigma projects saving $200,000, conducted resident satisfaction survey (2,500 respondents), and launched open data portal. The department previewed a new performance dashboard (Perform SD) scheduled for launch July 2016. The IBA noted the 311 program's first phase focuses on web-based customer service, with implementation costs estimated at $3–4 million over five years. Councilmembers expressed concerns about the elimination of historical KPI data, lack of targets, and the value of spending on a 311 system when a new website was recently launched. Councilmember Gloria questioned the timing of deliverables and asked for a roadmap within 60–90 days.
Assistant Chief Operating Officer & Special Events and Filming
- Presentation: Stacey Lametica (Assistant COO) presented combined budgets with no additional FTEs. Highlights: all 212 projects in the 1997 ADA transition plan are either completed or funded; corporate partnerships secured over $1.1 million in revenue (excluding in-kind); special events team supported the MLB All-Star Game (July 2016); a filming program manager was hired in December 2015. Performance metrics: 25% reduction in ADA complaint resolution time, 15% increase in partnership value (to $1.6 million). The IBA noted $760,000 in DIF funding for ADA curb ramps but no new general fund money for the 156 projects in the 2009 phase two transition plan, recommending an annual update. Councilmembers discussed hearing loops being installed in council chambers (funded by City TV), and ADA curb ramp coordination with public works. On the film commission, the office completed an RFI and will issue RFPs in early FY17, with a county grant of $125,000 pending approval May 10, 2016.
Key Outcomes
- The committee reviewed each budget item and considered it reviewed. No formal votes were taken; the committee serves as a reviewing body before full council consideration.
- The San Diego Convention Center Corporation's FY17 budget was reviewed with acknowledgment of improved reserves but concerns about future infrastructure needs and naming rights.
- City Treasurer's budget was reviewed with emphasis on TOT compliance and parking meter pilot.
- Risk Management budget was reviewed, with a suggestion to explore outsourcing workers' compensation.
- Financial Management and Citywide expenditures were reviewed, with attention to elections cost uncertainty.
- Performance & Analytics budget was reviewed, with direction to provide historical KPI data and a roadmap for the 311 program.
- Assistant COO and Special Events budgets were reviewed, with a request for regular ADA project updates.
- The meeting adjourned at approximately 2:30 PM, to reconvene on Thursday, May 5, 2016.
Meeting Transcript
With the San Diego Convention Center Corporation's budget. For outside agency budgets, we'll begin with the financial management's technical review. Then we'll take the agency's presentation, then the IBA's review, and then public comment and question and answers from council members or from committee members. So with that, we'll go to FM. Good afternoon, Chair Gloria and members of the budget committee. I'm Lisa Slaya, budget coordinator with the financial management department. Today we'll summarize our technical review, which was provided to the city council on April 26th. We do this technical review because the convention center's budget process is separate and distinct from the city's formal budget development process. However, financial management interacts and collaborates routinely with the convention center staff. The San Diego Convention Center's board approved fiscal year 17 budget on March 16th. Our technical review provides details on budgeted expenditures, staffing, and funding sources. After my summary, the convention center will provide a more detailed presentation. For fiscal year 17, the convention center's budgeted expenditures total 35.8 million, which is a net increase of 1.9 million or 5.7%. Their budget includes the increase includes salary and benefit adjustments, a net decrease of 11.18 full-time equivalents, primarily part-time support. The elimination of two cost centers for the Fifth Avenue landing parking lot and in-house registration services. The revenue has increased 1.5 million due to increases in food and beverage in net building rent revenue. In addition, the budget includes a $3.4 million allocation from the City of San Diego, which represents an increase of $31,000. That concludes my comments. And I'll turn it over to the San Diego Convention Center. Thank you very much. How much time do you need, sir? I always ask for too much, but uh it's the budget committee. That's what people do. Yeah, well, that's what we do. Uh I walked into that one, I guess. So um I think we could probably do it in about hearing 15. I'll try to do it in 10, though. Okay. We'll give you 15 and see how you do. Thank you. Thank you, sir. Good afternoon, budget chair Gloria and members of the council. Uh, first, uh I wouldn't be a proper nerd if I didn't say happy Star Wars Day, and may the fourth be with you. Uh I'm Gil Cabrera, Secretary of the San Diego Convention Center Corporation's Board of Directors and Chair of the Budget Committee. With me present today uh is the corporation's vice president of finance and chief financial officer Mark Emsch. And also joining us is the corporation's new president and CEO Rip Ripito. Uh he took over as head of the convention center uh board Monday, April 18th, and wanted to be present here for today's uh presentation and say a few words. So I'll turn it over to Rip for a moment. Thank you, sir. Uh it's a pleasure to be here and I look forward very much to working with all of you. And uh you will be hearing from me shortly uh to be able to set up some time so that we can get together and I can uh properly introduce myself to you. So I'll send uh request for meetings and be able to get together with you. We have a great team. Uh we are held up as an organization nationally as being one of the best when it comes to customer service, taking care of our clients and being able to uh put back uh an ROI into a community and deliver the economic impact that is uh the purpose of why we exist. So I'm excited to be here. It's great to be in San Diego, and I look forward to working with all of you. Thank you very much. Thanks, Rip. Let's begin with an outline of uh what we'll be discussing in the afternoon. We'll give you an overview of the FY17 budget.
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