George Rodericks

City Manager's Blog

The City Manager's Blog is an online educational tool to provide general information to the community in open communication style. Periodically, the City Manager will post articles of general interest covering topics such as the Town's budget, budget process, capital projects, upcoming meetings, community issues, public safety, and general Town operations.

Articles in the blog are not designed as press releases or Town publications, rather, they are written in more of a conversational style. The Blog does not have a comments feature but readers are free to respond to the Blog and its entries view email directly to the City Manager.

Sep 20

That's A Wrap! - September 19, 2018

Posted on September 20, 2018 at 10:03 AM by grodericks grodericks

Thats A Wrap Logo

Council Meeting Date: September 19, 2018
Video Link: https://www.youtube.com/user/TownOfAtherton/featured

Details of each item can be found via the links to Staff Reports within the narrative. 


The City Council met their Regular City Council Meeting on Wednesday, September 19 beginning at 7 pm.

At 7 pm, the Council convened in Open Session for the Regular Meeting. 

Following the Pledge of Allegiance, the Council moved to Presentations. The Mayor and Council presented a Proclamation to Barbara Wood in recognition of her service as a journalist covering the Town of Atherton for the Almanac News and congratulating her on her upcoming retirement. The Council also heard a presentation from Atherton Fiber/Paxio on the status of their fiber network deployment throughout Town. Following presentations, the Council moved to Public Comment where there were two speakers commenting on the current status of Surf Air. Later in the Agenda, the Mayor advised that he would be sending a letter to the County on behalf of the Town asking that they take efforts to prevent the return of Surf Air to San Carlos Airport. 

Report.jpegFollowing Public Comment, the Council moved to the City Manager's Report. The City Manager's Report is prepared monthly as part of the City Council's Regular Agenda. In addition to current reports from the City Manager, it includes departmental updates on the various happenings around Town such as reports from Administration, Community Services, Planning, Police, and Public Works. 

After the City Manager's Report, the Council moved to the Consent Agenda consisting of Items 8 through 18. Items on the Consent Agenda are considered routine in nature and are generally considered in one motion and adopted by a single vote of the Council. Included in this month's Consent Agenda were bills, minutes, Treasurer's Report, 2nd Reading and Adoption of a Development Agreement Ordinance, Acceptance of Work for various Town projects, adoption of a Resolution establishing speed limits and authorization of a Request for Proposal for Environmental Work in support of a Water Capture Project at Cartan Field.

Following the Consent Agenda, the Council took up the first of four (4) Public Hearings. Item No. 19 was an Appeal of a Notice and Order Issued for 370 Walsh Road. The Council opened the Public Hearing and took comments from the appellant (property owner) and other public comment. Following the Public Hearing, the Council discussed issues related to the current condition of the property, the enforcement process, plans for the property by the property owner, concerns of the neighbors, remedies, fines, and next steps. Following discussion, the Council denied the Appeal and directed the property owner to work with Town staff over the next 30 days to bring the property into compliance. 

Item No. 20 was a Public Hearing to introduce an Ordinance amending Chapter 12.24 of the Atherton Municipal Code related to Holbrook Palmer Park. Staff gave a brief presentation noting that the proposed ordinance amended sections of the Code related to the Park in order to bring those sections into alignment with other current law. A suggested amendment was related to Section 12.24.055, Animals to ensure that approved Facility Rental Agreements were taken into consideration. Following the staff report and public comment, the Council discussed the amendments and whether or not to consider a future discussion of an off leash area. It was noted that the Park & Recreation Committee would be reviewing the possibility of an off leash area in the near future. Following discussion, the Council introduced the Ordinance, as amended. 

Item No. 21 was a Public Hearing for 2nd Reading and Adoption of an Ordinance related to False Alarm Systems and Adoption of a related Fee Resolution. Following the brief staff report and public comment, the Council briefly discussed issues related to processing of renewals. Following discussion, the Council adopted the Ordinance and Resolution.
 
Next up was the final Public Hearing, Item No. 22, a Fee Resolution Amending Fees and Charges Related to Rental of the Pavilion in Holbrook Palmer Park. Following a brief staff report and public comment, the Council discussed issues related to the various rental periods, comparatives to other rental venues, and the Administrative Fees charged by the Town. Following discussion, the Council adopted the Fee Resolution. 

Next was the Regular Agenda, Item No. 23 was Review and Discussion of the Civic Center Project and approval of a Scope of Work from the Project Architect for the City Hall/Police Department Building Value Engineering. Following the staff report and public comment, the Council discussed issues related to the clay tile roof value engineering option, the future installation of photovoltaic panels, project funding, and the Council Chambers. Following discussion, the Council amended the scope for the roofing to place asphalt shingle wherever there were planned photovoltaic panels and clay tile in the remainder and directed that staff move the Council Chambers to an Additive Alternate as opposed to being a part of the base bid. With these changes to the value engineering options, the Council authorized the Scope of Work for the Project Architect.  

Item No. 24 was the Adoption of a Tree Inspection and Risk Management Policy for Town-owned or Town-maintained Trees and Direction on the Continued Maintenance of Trees on Middlefield Road and the possibility of Maintenance of Trees on Marsh Road. Following a staff report and public comment, the Council discussed issues related to tree maintenance budget, types of trees, the tree inventory, current maintenance standards, rationale for the policy, Town risk, and complaint response. Following discussion, the Council adopted the Policy and directed that staff continue to maintain the trees along Middlefield Road but continue to require property owner maintenance of the trees along Marsh Road. 

Next the Council moved on to the Staff Reports on Responses to the San Mateo County Grand Jury. Items 25 through 28 were required responses to four (4) Grand Jury Reports to Cities, Towns, and Jurisdictions in San Mateo County on various issues. For each Report, the Council heard a brief overview of the issue, reviewed the response letter, took any public comment and ultimately approved the response letters as written. There were no public comments. 

Item No. 25 was a Response Letter to the Grand Jury Report Regarding Deployment of Narcan by Police Officers

Item No. 26 was a Response Letter to the Grand Jury Report Regarding Smoke-Free Multi-Unit Housing.

Item No. 27 was a Response Letter to the Grand Jury Report Regarding Cooperative Purchasing

Item No. 28 was a Response Letter to the Grand Jury Report Regarding Pension Obligations

Item No. 29 was the last item on the Agenda, Introduction of an Ordinance Amending the Contract between the Town and CalPERS for Employee Pickup of a share of the Employer Pension Obligation. Staff gave a brief staff report. Following the staff report and public comment, the Council Introduced the Ordinance for adoption. 

Following Council Reports and Final Public Comments, having cleared the entire Agenda, at approximately 10:10 pm, that as they say - was a wrap!



The next meeting of the City Council will be a Study Session on October 3. Tentative items for the Agenda include a presentation of options for Power Purchase Agreements and a presentation on options for funding related to the Atherton Channel District.  

GeorgeR6824xThanks for reading!

George Rodericks
City Manager

Town of Atherton
grodericks@ci.atherton.ca.us




#AthertonTalks
#AthertonCivicCenter

Aug 08

Financial Health of Local Governments

Posted on August 8, 2018 at 4:16 PM by grodericks grodericks

Local Government Finance

Fiscal PortalThis blog post was adapted from a Governing Magazine article on "How to Measure Financial Health - a Guide to Financial Literacy." After reading the article, I thought it would be an interesting article to share adding Atherton's information. Atherton has a very dependable financial outlook.

Building ReportOver time, I hope to expand the tools available to residents to "drill down" on our financial picture via our Fiscal Transparency Portal and Data Reports (part of every City Manager's Report during City Council meetings). 

As an engaged citizen, you certainly do not need to be an expert on your local government's finances. Local government finance can also differ significantly from private sector finance - often seeming to follow an entirely different set of rules. What is helpful though, is to have an informed and educated perspective so that you can speak confidently about the financial health of your local government. If we can answer any questions you may have, please do not hesitate to contact us!

questionThe simple question of financial health raises many areas of query:
  • Did all the anticipated revenues come in for the year? 
  • Were the expenditure expectations on target or were they exceeded? 
  • Were "restricted funds" used properly? 
  • What about the future? Are there revenues in play to meet expenditure expectations? 
  • What about large infrastructure needs? 
  • What about reserves? 
  • What about unanticipated expenses? 
  • What about long-term debt? Pensions? Healthcare?
True, you can get a lot of this information from financial statements, but that's only part of the picture. The financial health of a local government is more than a balanced budget and a financial statement - it's also about context and the future. Atherton is no exception to this perspective.

Local governments are "financially healthy" if they can deliver the services that their residents expect with the resources their residents provide, now and in the future. Basically - do we have the ability to deliver the services our residents want with the resources they provide? For Atherton, the answer is yes. But, this is different than the private sector measure of financial health typically centered around profitability. Our residents expect us to deliver the services they desire now and for years to come. That's a long time and things change over time.

control weatherFirst, what our residents want today may be different than what they want tomorrow. For example, when I first started in local government in the late 80's it was not the mandate of local government to reduce waste from landfills or recycle. Now it is. A more recent mandate requires local government to address climate change in its programs and services delivered. These programs and services were largely left to state and federal agencies in the past - now they rest at the local level. Second, financial health can be measured in different ways depending on your definition of what constitutes the "future." If government pushes its funding horizon on any debt service out 20 or more years, the short-term financial picture looks pretty healthy. But, if local government spends all of its money today on our infrastructure, we weaken the short-term financial health but have better long-term health. What is the definition of future?  Lastly, we don't control the weather or the unexpected. Federal, state, and regional policy and rule-making has an economic impact - regulatory mandates, disasters, recessions all impact financial outlook and demands. But while we don't control them - we are expected to anticipate and plan for them. 

There are three components to financial health - Financial Position, Financial Performance, and Solvency. The first, Financial Position, is our ability to pay our bills as they come due. For local government, a good financial position is strong if we have plenty of cash and other liquid resources available. That seems obvious. The test is whether our general revenues provide sufficient resources to meet our debt, our general obligations as well as long-term obligations and liabilities. For Atherton, we do not have to borrow money or delay payments or even liquidate assets to meet our general obligations. We are even prepared for emergency infrastructure repairs with a healthy reserve policy and fund. The Town has a 35% Reserve Policy based on annual operational expenditures. This is broken down into a 15% Emergency Reserve for those unforeseen events and a 20% Operational or Budget Reserve. Together, these represent a $4.93 million set aside beyond our basic $14 million operational budget. Atherton is good shape here. 

The second, Financial Performance, is how well our "typical" revenues cover our "typical" expenses. In the private sector, this would represent our "profitability." But, for local government, it's a little more complex. Local government revenue should generate enough to cover most or all of a government's costs. In many cases, this is relatively easy to do, such as with a public utility or entry fees into a state park. But, for many local government services, residents do not expect to get a bill when using the service - such as when they call the police or stroll through the Park or call the Building or Planning Department with a general question. These are important basic services that the public believes are part of their basic taxes. For Atherton, our basic typical revenues (we call it our General Fund) consists of property taxes, sales taxes, franchise fees, business license taxes, permit fees, and facility rental fees. These total between $15 million and $17 million a year - it fluctuates based on some of the State's allocations - largely ERAF which can go from $1.2 million to $0 in any given year. As a result, we rely on about $15 million in stable, typical revenues. On the expenditure side, basic operational expenditures are about $14 million. This includes basic police services, administration, building, planning, public works, finance, and city attorney. Basic operational expenses do not include large capital projects such as drainage projects, road maintenance, park facilities, city facilities, and more - and that's the downside. We are in good shape here in Atherton with a healthy gap between operational revenues and operational expenditures; but, capital infrastructure is another matter altogether.

solvencyThe last component of financial health is Solvency. There are three types of solvency measures in local government - cash solvency, service-level solvency and long-term solvency. For cash solvency, the basic measure is whether we have enough cash on hand to cover short-term expenses that might come in the next 60-90 days. With our healthy reserve policy, we have that covered - a lot better than most small agencies. Service-level solvency is whether we have the capacity to continue to deliver basic services in the face of major changes in our economic and political circumstance. For example, if we lost a major employer or industry. Since we are 99% residential, this is highly unlikely without some dramatic shift in how property taxes are collected and paid. However, it's important to note that local government still needs to be nimble enough to adapt should something like that occur - prepared to engage in a public-private partnership, cross-jurisdictional service delivery model or other alternative service delivery arrangements. Lastly is long-term solvency. This is our ability to generate the revenues needed to cover long-term spending needs. Assuming there are no changes to our tax base or other revenues, can we cover the debt service on any outstanding debt, our obligation to pensions and healthcare, and our infrastructure needs? The short answer is yes, but with a caveat - for long-term infrastructure, we have save for it. We do not have any debt service for capital infrastructure and because our revenues over expenditures are only about $1 million /- each year (without counting ERAF), it takes us a while to save up for those bigger projects and that has an impact. 

Strong financial performance means we more than likely will end the year with a surplus - every year. That surplus becomes cash, that in turn improves our financial position, which in turn allows us to borrow money at a lower interest rate to finance routine infrastructure maintenance (if we borrowed money), which in turn improves our long-term solvency. However, while not failing the solvency measures, some local governments are strong in one component and weak in others - that's us. For us, it's long-term solvency. Small cities often have robust financial positions where we hold cash and other liquid assets equal to more than year of our annual spending. At the same time, we have large unfunded infrastructure needs that are a major drag on our long-term financial position. This is the "save-spend" cycle. This happens to small cities because voters are typically sensitive to taxes. If local property values increase, we collect more property taxes. Absolutely true, but not at a significant enough rate to keep pace with the cost and magnitude of infrastructure improvements. At the same time, taxpayers oppose new taxes or increases to existing taxes to fund new programs or infrastructure. As a result, small cities are forced into the "save-spend" cycle; but with the construction climate continuing to escalate, they cannot "save up" enough to pay for infrastructure projects with cash, so those spending needs go unmet while, ironically, more cash goes into the bank. The carrot is always just out of reach. Right now, our FY 2018/19 projected unallocated reserves exceeds the required $4.93 million set aside by another $13 million. This is indicative of the "save-spend" scenario that small cities are put in to saving for large capital infrastructure.  
  
The challenges are different for every government - which is why context matters and it is crucial to think of your local government's fiscal health in relation to all factors and compare similar economic, political and demographic characteristics. Flexibility is a big part of financial health. If financial circumstances change, it helps to have the latitude to raise taxes, trim spending on programs and services, or take other corrective actions. Atherton has done some of that in the past. But, many local governments simply do not have that latitude. Their fiscal policy spaces are constrained by state and federal law, local service demand, and the local political climate. 

Thanks for reading! I am looking forward to revamping the Town's Financial Health Indicators and Resources for our residents and hope to release that in the coming months. 

George Rodericks
City Manager
Town of Atherton
grodericks@ci.atherton.ca.us




   
Aug 03

So What's Happening with the Civic Center Project?

Posted on August 3, 2018 at 10:32 AM by grodericks grodericks

Civic Center Project

ModularIf everything went according to plan, right now, I would be writing this Blog from my office in a temporary trailer adjacent to the Caltrain right-of-way listening to the contractor demolish the existing City Hall and hearing the familiar, and now even closer and louder whistle, of the train horn through the Atherton Station. As wonderful as that may have been, it did not come to pass. In May 2018, the bid climate proved spectacularly higher than anticipated and the number of pre-qualified bidders that opted to bid on the project dwindled to 2, with the remaining 5 dropping out because they were just simply too busy. The lower bid of the two submitted was nearly 40% higher than the base estimates for the project. There was no way that the City Council could award the contract given the amount of available funding. Both bids were rejected and the Council took the project back to the table for some value engineering.

The construction budget for the Library was set at $16.5 million, inclusive of a built-in contingency - $11.8 million for the building and $4.7 million for the associated site work. The construction budget for the Administration and Police Department Building was set at $24 million - $17.2 million for the building and $6.8 million for the necessary site work. Together, the construction budget was $40.5 million, including the necessary site work to realign the roadways, upgrade the required parking and upgrade the utilities. The Council established another $4 million in market/bid contingency on top of that total just in case. Nevertheless, the low bid far exceeded the $40 million base estimate target and came in at $56 million - $16 million out of reach. Granted, you could break that down to the percentage of project for each building and allocate $6.6 million overage to the Library and $9.4 million to the Administration and Police Department Building; but it still doesn’t help. While the Library has informally advised that they would be willing to consider advancing tax funds based on future year Library-fund surplus expectations (after value engineering the existing facility as much as feasible), the Administration and Police Department facilities, the Town, is not so fortunate to have those available surpluses to advance. A $9.4 million gap must be addressed by some combination of short-term gap funding, fundraising, and value engineering. 

Library Value Engineering

LibraryValue engineering looks at the various ways that the project can be adjusted to bring it closer to an identified cost target. The Project Team is looking at the various building systems such as exterior assemblies, superstructure, windows, glazing, exterior materials, mechanical systems, plumbing systems, electrical systems, site work, decks, planting, irrigation, fencing, furnishings, interior materials, casework, square footage, and phasing options to find ways to adjust the project without compromising its functionality.

The Team has identified more than $8.8 million in potential cost adjustments for the Library. Not all of these will be selected by the Council as some significantly impact the functionality of the Library, but the Team’s job was to identify ways to meet the cost target. Some of the more significant cost adjustments are:
  • Deferral of the renovation of Historic Town Hall. This renovation was designed to bring the Historic Town Hall up to current seismic requirements and renovate the space to be used as a community room for the Library. The potential cost adjustment by deferring this renovation was $1.8 million but results in the loss of a community gathering space for Library programs. 
  • Removal of Adult Reading and Meeting Spaces. Another significant adjustment was the removal of the Adult Reading and Meeting Spaces by removing more than 1,610 square feet. This adjustment would save another $1.5 million but would limit the amount of reading and gathering space designed for adults in the Library. 
  • Deletion of Exterior Gathering Spaces. The next significant set of adjustments related to exterior spaces and eliminated all of the exterior gathering spaces (decks and shade garden, fencing, furnishings, and plantings). This resulted in a potential savings of another $1.0 million but has a significant impact on the exterior look and feel of the Library.  
  • Reduction in the quality and efficiency of Building Systems. The Library was designed as an energy and environmentally efficient model building. The Building was designed with photovoltaic panels, a Microgrid for energy storage, energy efficient lighting and ventilation and other features striving to reach LEED Certification. Removal of some of these features represented a savings of approximately $1.8 million and increased the annual operating cost of the Library.
  • Exterior Windows & Glazing. The Library was also designed with windows and doors with superior glazing for energy efficiency and indoor/outdoor spaces. Changing these systems to a more typical commercial-grade look and eliminating indoor/outdoor space access represented a savings of approximately $900,000. 
  • Rammed Earth Wall. One of the primary features of the Library was its exterior rammed earth wall along the east frontage. The wall was designed to insulate the Library saving on heating and cooling costs as well as to provide acoustic support for the interior of the Library. A final feature of the wall was its ability to eliminate the need for interior columns that would artificially divide up the interior space and limit its functionality. Building a traditional wall would require interior columns throughout the building, additional insulation, and an increased ventilation system; but, it would save approximately $900,000.
These are some of the big items being considered by the Council and the County Library as we decide on the value engineering options for the Library Building. Once the options are selected, the Council will task the project architect with the redesign. The Council established a goal of getting the buildings back out to bid by January 2019. 

Administration and Police Department Value Engineering

Civic CourtThe Library was designed as a LEED Certified Building and many of its features were upgrades to traditional systems in order to meet that objective. The return on investment for these features, such as photovoltaic panels, Microgrid, water systems, walls, lighting, windows and ventilation systems were such that the Library operational costs would be reduced and the Town would realize a savings over time. The Library also had a number of fit and finish fixtures that were elevated above normal commercial construction quality. All of these features were also an easy target during value engineering as they could be easily identified for savings in construction. The Administration and Police Department building was not so lucky. While the exterior of the building was designed to be a “neighborhood fit” and not look like a commercial building dropped in the middle of a residential neighborhood, the square footage and interior of the building was cost-effectively designed. Identification of a target $8-$10 million value engineering solution was much harder. 

Nevertheless, the Team has begun working on that same task with the same objective: look at the various ways that the project can be adjusted to bring it closer to an identified cost target without compromising its base functionality. Some of the more significant issues being reviewed:
  • Essential Services Building Standards and the Lobby. State Building Codes require that public safety facilities be built to “Essential Services” standards for construction. That basically means that the infrastructure materials of the building must be built to a higher standard than traditional buildings. This is one of the factors that result in the higher cost to build a police station versus a traditional building. One of the issues that arose is because the police building and administration building are connected by a lobby area, the administration and lobby side of the facility must also be built to that higher standard unless there is a seismic joint between the two facilities. This is being examined by the Team to evaluate retaining the lobby and adding a seismic joint or removing the lobby and either turning administration into a 1-story building versus maintaining a 2-story building with an additional elevator or smaller seismic joint and a walkway between the 2nd stories. This consideration is one of the more significant issues as it contemplates removing the lobby entirely. This could represent a savings of $1.0 million. 
  • Corporation Yard Fencing/Paving/Canopies. One of the features of the project was to renovate the exterior spaces of the corporation yard so that they remain screened from public view and provide adequate staff parking off of the campus public spaces. Canopies were being provided to shield storage of materials and provide for the potential future use of solar on the site. This is proposed for elimination at a potential savings of $840,000.
  • Heating and Ventilation Systems. One of the features of the “campus” design was that the Town could leverage the use of campus systems (Library and Town Hall) for a savings of operational costs across the campus versus a specific building. By eliminating these systems in the Library, the Town would have to add back a system for the Administration and Police Building at a cost of $572,000. 
  • Deferral of the Council Chambers. With the renovation of the existing Historic Town Hall as a community room for the Library, the Project was designed to add a new Council Chambers that would also serve as the Town’s Emergency Operations Center (EOC). The Town currently uses the Public Works Building (to be demolished) as an EOC. An EOC is a central location from which the Town’s emergency response personnel operate 24/7 and directs emergency response. If the Town’s EOC is activated (think earthquake, flood, regional fires, evacuations, train derailment, plane crash, etc.), its function is to facilitate the life safety and protection of property, overall management and coordination of emergency operations, coordination with appropriate Federal, State and regional agencies, management of mutual-aid, establishment of government and community action plans, and coordination of public information. The EOC is not solely police and fire, the EOC is representatives from Administration, Finance, Building, Planning, Public Works, Police, Fire, Water, Sewer, Rail, Utilities, etc. all in one room coordinating a local response and engaging regional agencies to protect local life safety and property. It’s part of our role - and my role as the Director of Emergency Services for the Town - to imagine all of the worst case scenarios that could occur and plan and train on how to respond. Deferral of the Council Chambers could save approximately $1.7 million but eliminates the Town’s EOC and forces the City Council and all Committees and Commissions to meet off campus (likely at the Park) until the Council Chambers is built at some future date. 
The Library was first up for value engineering so the Administration and Police Department Building is a couple weeks behind on the task - a much harder task. Aside from the Lobby, new Council Chambers, and overall building circulation (hallways, elevator, etc.), the interior spaces of the building were designed to closely mirror the square footage of the current distributed campus. Further, because the current facility was built more than 50 years ago, the minimum requirements for space has increased - restroom facilities, ADA, elevators, stairwells, emergency ingress/egress, etc. - making it more challenging to fit the same functionality into the same footprint. There is simply very little surplus to work with and reduce. That said, the Team is working on it and will be presenting updates to the City Council on a regular basis with the same goal in mind - get the options selected and task the project architect with the redesign to get back out to bid by January 2019. 

Thanks for reading!

George Rodericks
City Manager
Town of Atherton