Pleasanton council to discuss $6.3M in expected budget losses from COVID-19

The Pleasanton City Council is set for a special meeting on Wednesday to talk about how to adjust the city’s budget to account for an estimated $6.3 million drop in revenues due to economic impacts of the novel coronavirus pandemic and resulting shelter order.

Council members will also discuss a resolution in support of state and county efforts to protect residents and businesses from eviction during the COVID-19 crisis, as well as a new city program to provide assistance to Pleasanton businesses hit hardest by the economic slowdown.

“COVID-19 and the related order have led us into uncertain times on many fronts but particularly for the city’s finances. There is speculation that the current worldwide shutdown of travel and much of commercial activity will result in a recession, the length and magnitude of which is unclear,” city finance director Tina Olson wrote in a staff report to the council ahead of its teleconference meeting.

“The city’s practice of using budget surpluses to increase operating, capital, and repair and replacement reserves, as well as a conservative approach towards budgeting, provides flexibility in addressing revenue shortfalls without decreasing critical city services,” Olson added.

The anticipated budget fallout from the COVID-19 crisis and shelter order appears swift.

Olson estimates city revenues for fiscal year 2019-20, which ends June 30, will be down approximately $6.3 million compared to the midyear budget update approved by the council at its regular meeting March 3, just days before the crisis arrived.

The revenue reductions are estimated to include $3.03 million less in sales tax revenue, $1.5 million in transient occupancy tax, $985,683 in city recreation fees and $787,000 in development services fees.

Overall, city general fund revenues are expected to drop to just under $123.6 million, compared to the $129.9 million estimated on March 3. The revenue estimates assume the shelter order will be extended to May 31, beyond the current May 3 end date, for a total of 2-1/2 months of impact, according to Olson.

In response, city staff recommend decreasing expenditures and reducing or reversing budget surplus allocations approved on March 3.

Expenditures would drop by $2.9 million to $117.1 million, primarily from reductions in repairs and maintenance, and materials and supplies. No personnel decreases are recommended at this point, according to Olson.

The plan also involves reversing surplus allocations of $1 million to the capital improvement program (CIP) and $980,923 in the repair and replacement fund, as well as reducing the original transfer to CIP reserves by just over $2.4 million.

“As a result of these changes, staff currently anticipates the city’s general fund will be balanced at the end FY 2019-20,” Olson said.

City staff does not recommend changing the plan to transfer $2 million to the general fund reserve, keeping that at $30.6 million, or 26% of operating expenses.

The budget moves also call for allocating $100,000 from the CIP reserve fund to support a COVID-19 mobile response in partnership with Stanford-ValleyCare hospital by providing funding to purchase test swabs and other lab materials required to test people for the novel coronavirus. Staff expects those expenses to be eligible for FEMA reimbursement, Olson said.

The budget discussion is the lead item for Wednesday’s special meeting, scheduled to start at 5 p.m. and be held entirely online with council members participating via teleconference.

To watch the meeting live, go to Tri-Valley Community Television’s Channel 29 or visit the city website. Residents who want to speak should complete a speaker card — available on the city website — by 3:30 p.m. Wednesday (April 15).

In other business

* The council will consider a resolution “supporting the statewide and countywide efforts that have been taken to protect residential and commercial tenants from being evicted during the COVID-19 national, state and local emergency.”

That would be instead of enacting local eviction-prevention regulations in the city of Pleasanton, in light of wide-ranging protections already provided by state actions, according to City Manager Nelson Fialho and city attorney Dan Sodergren.

“The California Judicial Council approved a temporary emergency order which essentially stops all unlawful detainer actions in the state. At the same time, the Judicial Council also approved another temporary emergency order suspending judicial foreclosures,” they wrote in a joint staff report. “Many believe that this is the widest-reaching state action taken during the crisis so far.

“Given the far-reaching scope of the Judicial Council’s order, staff is not recommending that the City Council enact a separate citywide eviction moratorium at this time but does recommend adopting the attached resolution supporting the county of Alameda and state actions,” they added.

* Council members will consider signing off on staff’s recommendation for a multi-tiered program to help Pleasanton businesses negatively impacted by the COVID-19 crisis and shelter order.

“To assist in retaining businesses that are experiencing financial loss of income due to the COVID-19 pandemic, the city has developed a framework for a Business Assistance Program designed to share information and resources, and provide relief to local businesses so they can bridge the gap until allowed to re-open and fully operate,” deputy city manager Pamela Ott wrote in her staff report.

The program concept calls for establishing a $3 million business support loan fund, allowing for transient occupancy tax payments to be deferred for up to four months without penalty, and waiving city utility fines, penalties and interest while also suspending required city utility deposits.

To be created using existing city reserves, the $3 million special fund would offer zero-interest, unsecured, short-term loans of up to $2,500 to independently or locally owned micro-enterprises (businesses with two to 10 employees), restaurants or retail businesses in Pleasanton.

There are approximately 1,100 eligible businesses in operation in Pleasanton, Ott said.

The loans are designed to help those businesses stay solvent during the COVID-19 emergency, according to Ott. “The loan funds may be used for operating capital including lease and mortgage payments and payroll toward retaining employees,” she said.

If approved by the council on Wednesday, the loan program would need to be implemented within 30 days. Funds would be disbursed until the $3 million runs out.

Loans would be repaid in 24 monthly installments starting when the local emergency declaration is lifted.

City staff have also been working since the crisis hit to support business communication and promotion, including business support webpages, business newsletter and promotion of inPleasanton.com, according to Ott.

* Fialho, who also serves as the city’s emergency services director, will end the meeting with a comprehensive update on other aspects of the city’s response to the COVID-19 emergency and shelter-in-place order.