#comptia | #ransomware | Seal Beach’s finances are focus as city leaders set goals

City officials discuss the budgeting process at last week’s strategic planning meeting. Photo by Jeannette Andruss

The City of Seal Beach has prioritized 10 objectives for city leaders to tackle over the coming months. The goals include developing a financial forecast, addressing pension liability, getting feedback for what to do with the space at the end of the Seal Beach Pier and figuring out financing options for a new community pool.

City staff also pledged to adopt changes to the city’s annual budget process at the request of council members. The changes include starting the budget process earlier, making the budget document easier for the public to comprehend and offering more opportunities for community involvement.

For most council members, the budget process changes and financial forecast are the most significant.

“I feel that the most important objective we addressed is to develop a 3 to 5-year general financial forecast for our city,” Mayor Schelly Sustarsic wrote in an email to The Sun. “This would help us with upcoming decisions about whether or not to build a community pool, to have a restaurant at the end of the pier, and/or look at possible streetscape improvements on Main Street.”

The objectives were decided during an all-day strategic planning meeting held Thursday, March 5 at Fire Station #48. All city council members attended as well as the city’s executive team including City Manager Jill Ingram, Police Chief Phil Gonshak and the city’s newly hired Finance Director, Kelly Telford (For more on Telford’s hiring, see story on page 1).

A team from Management Partners moderated the discussion, guiding council members and staff to craft goals to accomplish over the next twelve months. The public meeting was less formal than a council meeting. Staff and council members exchanged ideas, asked questions and expressed concerns freely. Three members of the public attended and took part in two public comment periods.

Below is a closer look at some of the adopted objectives. These were taken from a preliminary list created and displayed at the meeting. A finalized list and report on the meeting will be made available to the public in the coming weeks, according to Assistant City Manager Patrick Gallegos.

Financial forecast, long-term debt and measure BB money

Three of the objectives from last week’s meeting deal with the finances of Seal Beach. One is to “develop a 3 to 5-year financial forecast to inform the annual budget.” Council members expressed a desire to have a better long-term picture of the city’s finances. “The forecasting will help us make other decisions based on resources and money available,” District Two Councilman Thomas Moore wrote in an email.

During the meeting, District Three Councilman Mike Varipapa talked about having a “trend chart” of revenues and expenses to use as a guide so that if they see a revenue source dipping, for instance, they can be prepared. “We want to be aware of that and we want to be aware of that now,” Varipapa said.

Another objective focuses on the city’s long-term debt. It read: “Paying down long-term debt obligations, possibly with pension obligation bonds.” Pension obligation bonds came up during public comment at the planning meeting. Seal Beach resident Bruce Bennett urged council members to act quickly to take advantage of the Coronavirus-driven drop in interest rates. He said the city could save $9 million if it issued pension obligation bonds now. Fellow budget watcher Robert Goldberg had a similar message for council members. “These rates could snap back,” Goldberg said. “What you don’t want is a missed opportunity.”

City Manager Ingram noted that the city has a financial advisor that is looking into these issues.

The city’s new finance director also weighed in. Telford agreed that pension obligation bonds should be looked at but cautioned that they should be part of a bigger conversation about pension liability. “It’s not that simple,” Telford said. “The challenge is the kind of plan we have with CALPERS.” (CALPERS is the agency managing pension benefits for California’s public employees.) Telford said that Seal Beach has a cost-sharing plan with other small cities so liability is shared. Telford also said there’s a possibility that the California legislature could act to help cities with their unfunded pensions.  Telford was also optimistic that interest rates would remain low.

“There is currently a large percentage spread, but there are several pros and cons to consider,” District One Councilman Joe Kalmick wrote of pension obligation bonds in an email to The Sun. “Our Finance Director, City Manager, and investment advisor will be looking at what would be the best course of action.”

Lastly, there is a goal regarding Measure BB, the 1% sales tax increase passed by voters in 2018. The objective read: “Review revenue received and expenditure plan for Measure BB funds.”

At the meeting, Councilman Varipapa said constituents he talked to “want to know how much we’re getting [from Measure BB] and how much we’re spending.” Staff committed to possibly issuing quarterly reports on Measure BB money.

The public got a glimpse of Measure BB funding at Monday’s city council meeting. During a mid-year budget review presentation, city staff projected Measure BB would generate $4.6 million this fiscal year. An estimated $4.2 million of that was listed as appropriated with around $2.7 million going to the Seal Beach Police Department. A total of $631,700 was slated to go to Fire Services and Marine Safety while $546,100 was allocated for staffing.

Pier restaurant and pool

Seal Beach is considering some major community projects and they are also part of the strategic objectives. This includes whether or not to put a restaurant at the end of the pier. The short-term pier goal focuses on public outreach and read: “Engage community in discussion about whether to allow a restaurant at the end of the Pier.”

Assistant City Manager Gallegos said the feedback he’s seen so far suggests the community is evenly split on whether to leave the pier’s end open or to build a new restaurant. In 2016, a fire destroyed the Ruby’s Diner building on the pier although the restaurant had been shuttered since 2013.

“There may be a hybrid solution as well,” Gallegos said noting that people have suggested putting food trucks on the pier or a small cafe. Gallegos said consultant Moffatt & Nichol would be assisting the city in how to best engage the community on this question.

Another objective is about the community pool. The pool objective read: “Receive outreach information, receive presentation on preliminary scope, project cost and options to finance Community Pool.”

The plan is to replace the pool at J.H. McGaugh Elementary school with a new one at the Naval Weapons Station. The current estimated price tag for a 50-meter pool is $22.7 million. The city hosted two public meetings in February about the pool. A study session could be held next month.

At the planning meeting, District Five Councilwoman Sandra Massa-Lavitt said she wants to know what kinds of financing options are available before she makes a decision about moving forward with a new pool. Councilman Varipapa said he wants to explore fundraising, sponsorship and grant opportunities. Councilman Moore said people he talked to would like a new pool but don’t really want an Olympic-sized competitive one. “I’d like to see an option that matches the same size as McGaugh or a lesser expensive option,” Moore said.

Information Technology improvements and communicating with Seal Beach community

The city has two objectives related to improving technology. The first: “Development of IT Masterplan Needs assessment.” The other is to “assess existing phone system, identify deficiencies, propose replacement.”

“An upgrade to our city’s technology system is also badly needed, so that we will not be vulnerable to another ransomware attack,” Mayor Sustarsic wrote in an email. The City of Seal Beach was hit with a ransomware attack in December 2019 after the city’s IT service provider was targeted.

“The IT strategy is important to help provide software and tools to make the City more efficient,” Councilman Moore wrote. “For example, if a contractor submits plans to the City, there is software out there that can allow City staff to review the plans, mark things up and send back to the person along with signing documents electronically.”

Lastly, the city has a goal to improve communication with the community through enhanced use of social media. City leaders expressed a desire to get more “good news” out but say they have limited resources to do that.

Under the leadership of Chief Gonshak, the Seal Beach Police Department has expanded its use of social media. The SBPD Facebook page and Instagram account have thousands of followers and offer frequent posts about everything from arrests to winter storm preparations to a profile of a banjo-playing police volunteer. Chief Gonshak agreed to help other departments utilize social media.

“The best part about being on this executive team is that we all want to make each other’s jobs easier,” Chief Gonshak wrote in a text message to the Sun. “If the police department can do that by helping our teammates build a presence on social media, we’re all in!”

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