GRASS VALLEY CITY COUNCIL 125 East Main St., Grass Valley, CA 95945

Daniel C. Holler, City Administrator

Council Members Jan Arbuckle, Mayor

Dan Miller, Vice Mayor Lisa Swarthout

Yolanda Cookson Jason Fouyer

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To: City Council From: Daniel C. Holler, City Administrator Date: July 13, 2012 RE: Local Sales Tax Funding Program Background The City Council requested staff to prepare a funding plan and program for the use of a ½ % general purpose local sales tax for a 10 year period. The funding program focuses on three core service areas: Police, Fire and Streets. These service areas comprise the greatest areas of concern by staff as they have the greatest impact on our community’s quality of life, directly impact our residents and businesses on a daily basis, and if not addressed will add to future costs for the community. The City’s budget has been in a decline for the past five years due to the loss of revenues. Sales tax revenues declined from a high of $5.35 million in FY07-08 to $4.04 million in FY10-11. Property tax revenues have also declined by $100,000 ($2.4 to $2.3 million). The City’s General Fund budget has declined from $12.5 million in FY07-08 to the current budget of $10 million. City employees have been reduced by 25% with reductions across all departments. The quick and steep decline in revenue has required the City to focus on providing core city services. This has reduced the City’s ability to adequately fund capital programs and to set aside funding for longer-term equipment replacement. The proposed sales tax measure and funding program will not address all of the City’s needs. It is specifically designed to focus on three core service areas: Police, Fire and Streets. These services address the City’s primary mission to provide a safe environment for our residents, businesses and visitors. Spending Plan Overview The proposed spending plan is balanced with allocations between personnel and equipment and capital expenditures. An overview by department is provided in Attachment A. Police and Fire includes personnel and equipment costs and Streets has funding for one position and street projects. The plan is balanced each year. The Spending Plan begins with revenues of $2.4 million with revenues projected to grow at 1% per year. This is a conservative approach which allows for one economic down turn over the 10 year period. Historical

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growth would be in the 2-3.5% range, but as we have recently experienced, an economic down turn can drop dramatically. The spending plan is designed for adjustments to be made in the capital program to account for ups and downs in the revenues. The conservative approach is realistic at this time and keeps the program from being overly optimistic, leading to greater difficulties in the future. The staffing plan assumes that employees are hired at the top end of the pay ranges and receive half of their eligible incentive pay and then grows by 2.5% per year. It also assumes full employment with no vacancies. Again, this is a very conservative approach. To the extent there are savings, the capital replacement programs will have additional funding. The program supports initial equipment costs for employees and training. The staffing plan includes 5 positions for Police, 4 new positions and one reclassification for the Fire and one position for Public Works. The positions and services provided are discussed in detail under each department. The staffing plan is designed for a transition at the end of the 10 year period. At the end of the period the projected staffing costs are $1.43 million. If the City is successful over the time period of replacing just the lost sales tax revenue, which would be $1.31 million, this would a manageable gap to be addressed between new revenue and the added positions. The offset of new personnel costs is assumed to be done with new revenue. The assumption is that inflationary increases and additional growth in other revenues will be necessary to fund the overall operations of the City. Over the last two years of the plan, revenues and staffing would need to be reviewed and a decision made on leaving any positions vacant if adequate revenue is not available. This program will require the City to continue to be disciplined in managing its expenditures. The capital program is designed primarily for the replacement and upgrade of vehicles and operating equipment. For the Police, this includes the average replacement of 2 patrol vehicles per year, the use of up to $400,000 for radios and related equipment, with potentially $200,000 remaining in reserves at the end of the 10 year period. The Fire Services has a much greater capital need due to the cost of fire apparatus (engines and ladder truck). The program includes the replacement of 3 engines and the department’s two command vehicles. The command vehicles would have two replacements during the 10 year period. At the end of the period the reserve balance pending inflation would allow for the future replacement of the ladder truck and potentially substantial funding for one additional engine ($1.5 million). Police Services The staffing plan for Police Services is for five positions (four Patrol Officers and one Detective) The Police Department has frozen 9 police officer positions out of

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23 authorized police officer positions. The vacant positions include two traffic officers, one detective and one narcotics detective, and 5 patrol officers. The reduction in staffing has resulted in a diminished level of service to the community, officers being fatigued and not having appropriate leave time or training time, and has created officer safety concerns by not having the appropriate back up available for high risk situations. The staffing reduction has dropped our officer ratio from 2.08 per 1,000 population to 1.01. Of the current 14 positions, 2.5 are grant funded. Recognizing the budgetary constraints the City is currently facing, and the limited nature of the proposed sales tax measure, the Police Department is proposing a minimum number of officers to help maintain/regain our current levels of service as well as meeting our community expectations. Residents responding to the Department’s most recent Citizen Attitude Survey indicate that they desire a police service level with an emphasis on quality of life issues. The concern over drug enforcement and crime prevention programs for both juveniles and adults is consistently on the top of the list, followed by traffic enforcement. The core function of the department is active community patrol and response to criminal activity. With the addition of these 5 positions, we would be able to fill our patrol staffing to a realistic level and re-establish one of the vacant detective positions. With more consistent staffing for patrol, the ability to assign officers to support special duty assignments is enhanced. This may include more directed patrols in specific neighborhoods, area focused traffic enforcement, and more direct work with community groups (i.e. neighborhood watch, downtown merchants). The other priority would be to re-establish the dedication of an officer to the drug task force work. We believe focusing the additional resources in these areas will directly impact the quality life standards, feeling of community safety and security, through an increased police presence. By regaining some of the lost service levels we will be better able to meet our community’s expectations. Fire Services The primary staffing request for the Fire Department is to meet adequate engine staffing. The Occupational Health and Safety Act, under a regulation commonly known as 2 in/2 out, requires whenever firefighters are doing interior firefighting that they must, at a minimum, be in pairs, and that when two fire fighters are in the interior of a burning building, that a minimum, of an additional two fire fighters must be immediately available to come to the aid of the interior firefighters should they become trapped. The additional firefighters must be in place at the incident prior to the interior firefighters being able to make entry into a burning building. Delays in assembling the four FFs only delays the entry into the building causing greater fire losses and ultimately increases the risk to FFs as they are now faced with a larger fire. As a department and at current staffing levels, the GVFD does not staff on a daily basis with enough firefighters to meet this requirement and

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must rely on employees from other agencies. In addition, in order for a fire department to be able to complete the multitude of tasks at a fire incident concurrently, the National Fire Protection Assoc. standard is that a department be able to assemble a minimum of 14 FFs at a structure fire within 8 minutes. This staffing standard is met by the sharing of resources by area departments, but the 8 minutes arrival time is not being met as the required firefighters are coming from stations more than 8 minutes from the city. The requested funding is for 4 firefighting personnel (one to fill a salary savings position and three to fill a position on each of the 3 shifts). The additional staffing gives the GVFD the ability to meet 2 in/2 out requirement without reliance on outside agencies. The Fire Prevention Bureau performs important functions within the fire department including review of plans for new construction, inspection of buildings for compliance with fire and building codes and arson investigation. Prior to the economic crisis the FD’s Fire Prevention staff consisted of a fire marshal who was a NCCFD employee but was partially compensated by the City, a full time deputy fire marshal at the fire captain level and a fire inspector (both city funded). With the retirement of the fire marshal and the deputy fire marshal the Fire Prevention responsibilities fall the fire inspector and the half time fire chief as the fire marshal. Most plan reviews are contracted out to a consulting firm. This request includes funding of the differential costs between a fire inspector position and a deputy fire marshal position funded at the fire captain level. This will allow the single employee in the position to assume a higher level of responsibility and will eliminate the requirement for the Chief to serve in the capacity of the fire marshal on a regular basis. Fire apparatus and command vehicles are considered severe duty vehicles and in the case of fire engines and ladder trucks, operate at maximum gross vehicle weights at all times. Because of the implications on public safety should a fire vehicle breakdown on the way to an emergency or experience excessive amounts of out-of-service time, routine replacement of aging or failing apparatus is essential to the Fire Department’s ability to provide uninterrupted emergency services. Over time, standard replacement intervals have been developed for guiding fire departments on when apparatus should be considered for replacement. These standards are principally based on out-of-service time, cost of repairs, availability of repair parts and breakdown frequency and reliability. Based upon activity levels the standard service life for fire apparatus ranges from 12-20 years and from 5 to 10 years for staff vehicles. GVFD’s replacement plan identifies 20 years for apparatus (Engines and Truck), 8 years for command vehicles and 10 years for staff vehicles. These standards are used to develop replacement plans which are then used to identify funding needs and develop mechanisms for vehicle replacement. They are then used to trigger review of

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apparatus for replacement. However, final replacement decisions are based upon the actual serviceability, condition of the vehicle and funding. Currently the City of Grass Valley has no funds reserved for the replacement of apparatus and based upon the 2012 replacement cost of the entire FD fleet there is currently a $1,463,000 replacement cost liability and a $146,000 continuing annual cost. For the purpose of this expenditure plan, it is recommended that the funding/replacement focus is for actual emergency response apparatus to include fire engines, the ladder truck and command vehicles. Due to the cost of these pieces of equipment the spending plan allocates $3.5 million over the 10 year program period. Street Repair The Public Works Department maintains approximately 50 miles of roadway in the City limits. Although the City regularly provides annual street maintenance, the need for street repair and regular maintenance and re-construction continues to grow. The City’s current budget relies mostly on gas tax and grants for street repair work, which is inadequate to fund a complete repair and preventative maintenance program. Currently, approximately 70% of city streets require some level of reconstruction. This percentage increases every year that preventative maintenance is delayed. An effective preventative maintenance program reduces future costs as the useful life of a street can be extended a number of years before pavement must be completely replaced. This includes the basic repair work conducted by City crews and the larger maintenance programs, such as a chip seal. The funding program does include one staff person to assist in the ongoing city crew maintenance program. Funds from the proposed sales tax dedicated to streets are proposed to more than double what is currently utilized in gas tax funds ($250,000) for street repair work. The spending plan allocates $700,000 annually for street projects. The use of the funds will be used where possible to leverage additional funding sources as many grant programs require local matching funds. The plan allocates $7 million over the 10 year period. The funds will focus on two programs:

Reconstruction and extensive preventative maintenance on major streets (i.e. Sutton Way, Nevada City Highway, Freeman Lane, Main Street and Richardson Street). The actual streets repaired may shift based on the priority needs of the City and the ability to leverage other funds. The program provides for 4 to 7 larger projects ranging from $500,000 to $800,000.

Provide extensive preventative maintenance on neighborhood streets throughout the City. This would include chip seals, slurry seals, minor overlays, crack sealing and repair of small failing areas. While the funds available will make a big difference, they will not address all of the City’s

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defined street repair work. The enhanced level of preventative maintenance on a number of local streets will improve the useful life of the pavement.

The spending plan shows level funding of $700,000 per year for this program. The actual project work will vary based on actual bids and availability of other funding. Projects will also extend across fiscal years. The other benefit of the street repair program is the ability of local contractors to bid on the work, which in turn helps our area economy. Conclusion The proposed program to utilize a ½ percent local sales tax over a 10 year period will have an important and visible impact on the City. Staff believes the combination of investments on enhanced public safety service delivery provided by having specific employees on the street, investment in needed equipment and street improvements will improve the quality of life for our residents. Departmental managers and employees have come together in putting together the proposed spending plan. While each department has additional needs, it is recognized that the program as presented will benefit all of Grass Valley and provides resources necessary for core departmental functions, programs and capital that enhances the services each Department provides the community. The effort put forth by employees working on this program is commendable. The proposed program addresses current shortfalls in public safety services and delivery capabilities. The program addresses a significant shortfall in critical vehicle/capital equipment replacement. The plan provides for a real, measurable investment in our streets, which is one of the City’s most visible and used infrastructure assets that benefit residents, businesses and visitors in the enjoyment of being in Grass Valley.

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Sales Tax Meaure Upholding Grasss Valley's Quality of Life - Supporting Police , Fire and Streets Attachment A

1/2% Lacal General Sales Tax - 10 year Spending Plan

Police FY13-14 FY14-15 FY15-16 FY16-17 FY17-18 FY 18-19 FY19-20 FY20-21 FY21-22 FY22-23 Totals

1 Detective and 4

Officers 565,600 579,740 594,234 609,089 624,317 639,924 655,923 672,321 689,129 706,357 6,336,633

Equip/Capital 145,400 141,660 186,216 180,273 173,814 181,111 173,928 168,444 168,580 168,720 1,688,146

Total Poice 711,000 721,400 780,450 789,362 798,131 821,035 829,851 840,765 857,709 875,077 8,024,779

Fire

1 Captian; 3 Firefighters,

Fire Marshal 519,000 530,725 543,993 557,593 571,533 571,533 585,821 600,467 615,478 630,865 5,727,008

Equip/Capital 395,000 395,000 345,000 345,000 345,000 345,000 345,000 342,742 334,289 325,238 3,517,269

Total Fire 914,000 925,725 888,993 902,593 916,533 916,533 930,821 943,209 949,767 956,103 9,244,277

Streets

Maint. Worker 75,000 76,875 78,797 80,767 82,786 84,856 86,977 89,151 91,380 93,665 840,254

Street Projects 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 7,000,000

Total Streets 775,000 776,875 778,797 780,767 782,786 784,856 786,977 789,151 791,380 793,665 7,000,000

Grand Total All Services 2,400,000 2,424,000 2,448,240 2,472,722 2,497,449 2,522,424 2,547,649 2,573,125 2,598,856 2,624,845 25,109,309

Proejcted Revenue 2,400,000 2,424,000 2,448,240 2,472,722 2,497,450 2,522,424 2,547,648 2,573,125 2,598,856 2,624,845 25,109,310

Total Personnel Costs at YR 10 1,430,887