Laguna Beach will spend $2.6 million in unanticipated revenue and savings from last fiscal year on information technology improvements and other items following a unanimous City Council decision Tuesday night.
In city staff’s budget update, finance and IT director Gavin Curran said the city received more property and hotel tax revenue than previously estimated and saved $1.4 million in general spending across city departments in the 2017-18 fiscal year. Though sales taxes and community development fees came in at less than budget estimates last year, the city showed a total of $2.6 million above a 20% reserve.
With the city budget in “sound financial shape,” Curran said, staff requested that the city appropriate the $2.6 million for various items, including $800,000 in IT improvements such as a master plan, equipment purchases and software replacement.
City Manager John Pietig said the city has been funding IT improvements for years through savings and a capital equipment fund but will soon need to plan to better invest in technological infrastructure.
“We can’t just continue to handle that through savings like we’ve done the last 20 years,” Pietig said. “It’s now gotten so expensive and so critical that we need to start having a reserve fund for it.”
Curran said he expects to bring an IT master plan and funding proposal to the council in a few months when it discusses the upcoming two-year budget.
As part of the budget appropriations, the council also approved funding two community development positions until the full-time salaries are incorporated in the next budget, which is set to go into effect July 1. Community Development Director Greg Pfost requested the positions as part of a broader plan to improve various aspects of his department.
The council directed staff to return in June with a resolution to raise building fees by 5% and planning and zoning fees by 15% to help fund Community Development Department improvements. Pietig said the city last raised fees three years ago.
In January, local real estate developer Mo Honarkar proposed giving $250,000 to the Community Development Department “to advance a portion of [his] expected developer fees.” Honarkar became the long-term leaseholder of Hotel Laguna at the beginning of the year and planned several large-scale improvements to the property and his other hotel projects around the city.
Some community members said allowing a special donation from a developer could lead to conflicts of interest. Pietig removed the item from the City Council’s agenda Jan. 23 because “it [was] clear this item [was] misunderstood.” He said at the time that the city didn’t have the capacity to handle large project applications and would have to pay for extra staffing.
“Those costs have to be paid by somebody, and so if it’s not paid by the developer, then it’s going to be paid by the general public or other people through fee increases,” Pietig said in January.
Honarkar’s proposed funding was not discussed at Tuesday’s meeting.
The city parking fund ended fiscal 2017-18 with $658,000 from unanticipated parking lot and meter revenue and savings on parking enforcement and maintenance, according to the staff report. The council unanimously approved allocations for part-time salaries related to neighborhood trolley service, a required national transit database audit, and Act V parking and weekend trolley services during the Village Entrance project.
On Pietig’s recommendation, the council also added $20,000 to the budget appropriations list to pay for expediting beach cleanups following the past month’s storms.