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City budget writers predict 'structural balance' in 2005

Friday, April 16, 2004 by

Austin's budget gap now projected at $19 million, not the $29 million originally forecast

The gradual economic turnaround will help bring the City of Austin’s annual budget back into structural balance by fiscal year 2006. City Manager Toby Futrell and Budget Officer Rudy Garza outlined the factors impacting the city’s revenues and expenses over the next three budget cycles on Thursday as part of a financial forecast for Council members, and explained how they should be able to stop relying on transfers from reserves to balance the budget in the near future.

Futrell reminded the Council how the economic decline of the past few years, following on the heels of the rapid growth of the late 1990s, left the city facing increasing obligations for new facilities, public safety costs, employee benefits and indigent health care at the same time sales tax revenues went into a tailspin. While the Council has taken several cost-cutting measures over the past two budget cycles, these have been used in combination with increased transfers from the electric utility and other one-time fund transfers. These measures, Futrell said, were not in the city’s best long-term interest. “We are committed to a course of financial accountability and stability,” she said. “We are committed to reaching structural balance and that required overcoming a number of barriers.”

The 2004-05 budget cycle has been a pivotal turning point in the city’s five-year economic plan, and Futrell said that had not changed. Due to improvements in sales tax returns and a slight projected increase in the overall property tax base, revenues for the city will likely be $5.6 million ahead of earlier projections. That improvement, combined a drop in expenditures totaling $4.4 million, will mean the city is facing only a $19 million dollar budget gap heading into next year instead of $29 million. “That’s the good news,” Futrell concluded, “but I don’t want to minimize the over-$19 million gap that has to be closed in 2005. Closing the 2005 gap will certainly affect the provision of direct services.”

And while she cautioned against relying on dipping into the city’s fund balance as a quick fix for that gap, she did advise Council members that limited use of reserve funds would be acceptable. “If we rely on contingency funds or one-time dollars, you don’t actually close the gap. Your balanced budget is an illusion . . . You’re compounding the real problem in future years,” she said. But because of better times on the horizon, the City Manager’s office is advising the Council to consider a final use of contingency funds to purchase new equipment in 2005.

By taking $8 million from the city’s ending balance from the current budget cycle, the Council could purchase new equipment and make capital outlays that have been delayed for several years while still keeping on track for 2006. “It’s important to recognize the significance of 2005,” she said. “This is it. This is the pivotal year. This is the year. If we do it right, we’ve reached our goal of structural balance.” If current projections hold true, the difference between revenues and expenditures in the 2006 and 2007 budget years will be less than 2 percent, which Futrell said was not statistically significant in a budget the size of Austin’s.

Futrell’s presentation was followed by an outline by Garza on some of the assumptions in the city’s financial forecast. Garza’s data shows a gradual economic recovery that has been predicted by both city staff and outside economic consultants. After nearly two straight years of declining sales tax revenue, the city has noticed an increase in the past four months. Garza’s office is projecting a 4 percent increase for the 2005 budget year, followed by increases of 4.5 percent and 5 percent in 2006 and 2007.

The projected rebound in property values is not quite as strong. The latest figures provided by the Travis Central Appraisal District show a 1.3 percent increase in overall property value for the upcoming fiscal year, followed by increase of 3.5 percent and 4 percent in the two subsequent years. The city’s projections also call for maintaining the effective tax rate for those three years, maintaining the current transfer rates from the water and electric utilities and increasing revenues from user fees and other sources. Thursday’s presentation was strictly focused on the financial forecast. The Council will officially kick off discussions of the 2004-05 budget with a discussion of the Draft Policy Budget on May 27.

With furniture purchase, City Hall moves one step closer to opening

On Thursday, the City Council approved about $1.9 million to purchase furniture for the 285-300 employees expected to fill the new City Hall by next January. Mayor Will Wynn wanted to make sure that the city was getting the best deal for the money and asked Acting Director of Financial and Administrative Services Vicky Schubert to make a presentation.

Schubert told the Council that in addition to the desks, credenzas and other furniture for city staff, the purchase includes conference tables and seating for public areas, a board and commission meeting room, a media room and executive session room. She explained that the original furniture budget, approved in early 2001, was for $3.2 million. It was first revised downward to $2.5 million, and the final figure is $1,925,674.62—a 40 percent reduction from the original figure.

She said that the city was able to get a better price, 45 to 67 percent below list price, through cooperative purchasing with other public entities.

The modular furniture “provides flexibility in reuse” if staffing needs change in the future, Schubert said. “All of the components we are purchasing meet the LEEDS standards and will help the city in obtaining our LEEDS certification. Not only is the furniture sustainable itself, it is manufactured in a sustainable way.” LEEDS stands for Leader in Energy Efficiency Standards.

As for frugality, Schubert related a conversation with a representative of one of the furniture manufacturers. The company rep said, “In all of her 18 years selling furniture she’s never worked with an entity that redesigned and reengineered so many times to get the best value engineering out of the work. And I thank our team for that—they did a very good job,” Schubert concluded. The Mayor responded, “Did you tell her she would love our zoning process then?”

Who will be where in City Hall

After the vote, City Hall Project Manager Nathan Schneider, who has been working on the new City Hall since 1999, was clearly elated. “We wanted an icon. We got an icon,” he told In Fact Daily. The icon is scheduled for grand opening activities on November 20, with move-in taking place throughout December. Schneider said the goal is to have the new City Hall up and running by the date of the first Council meeting in 2005, scheduled for January 6.

The ground floor will include Council Chambers and adjacent executive session room, a kitchen, media room, staff meeting room and a board and commission room. That will allow two meetings to take place simultaneously and be televised live or taped for later broadcast, he said. City Clerk Shirley Brown’s offices will also be on the first floor.

Offices for the Mayor and City Council will be on the second floor. The Mayor’s Office will be connected to the Council chambers via a private stairway that leads into what has been called a ceremonial conference room. Schneider said that could lead the Council to change the way they do business, if they prefer, by moving to the second floor room for executive sessions. The City Auditor’s Office will also be located on the second floor.

Third floor offices are reserved for the City Manager’s Office, Public Information Office, Budget and Financial and Administrative Services, according to Schneider. The Law Department will occupy the fourth floor.

When everyone scheduled to move has done so, he said, the city will have vacated rental space at Norwood Towers, Commodore I and Commodore II, and at 1011 San Jacinto.

Planning Commission sticks with Montopolis plan

Affordable housing project can't locate next to industrial land

The Montopolis Neighborhood Plan has trumped efforts of a Dallas developer to put an affordable single-family development on Riverside Drive.

Approved in Sept. 2001, the neighborhood plan sets zoning and land use for a 17-acre triangular piece of property that was part of a 90-acre tract zoned as commercial and industrial property. Almost as soon as the zoning was approved, however, two developers showed an interest in developing the Steiner tract as single-family housing, John Joseph Jr. told the Planning Commission on Tuesday night.

One more factor complicated the request. The 17-acre property was in the Airport Overlay zone, or AO-3 zone, because it sits in the Austin Bergstrom Airport flight path. Under the city’s land use regulations, the AO-3 property is located in an area that has a yearly day-night average of less than 65 decibels.

Affordable housing was a top priority for the Montopolis plan, the topic of much impassioned testimony when the neighborhood plan was approved. Joseph told commissioners the proposal by Dallas-based Centex would provide that housing. Centex also agreed to sound proof houses at a cost of up to $1,800 per home.

Planner Sonya Lopez told the Planning Commission that Montopolis neighbors were hesitant to support the affordable housing development. Neighbors were supportive of an increase in single-family residential additions—even for the remainder of the Steiner tract—but they were hesitant to recommend residential so close to industrial. They also expressed concerns about the location in the airport overlay.

Joseph represented Robert Steiner, the owner of the property. He dismissed the problem of the property’s location next to industrial zoning. He said those issues could be addressed by mitigation measures such as setbacks or vegetative buffers.

Planner Annick Beaudet, who handled the accompanying zoning case, said the approval of the Centex project would be inconsistent with prior decisions of the Planning Commission. Approval of the zoning change also would deny “the consistently recognized need for the airport to expand in a responsible way while not hurting the quality of life of the citizens who could be living there.”

Respect for the neighborhood planning process resonated with the commissioners. Commissioner Niyanta Spelman said the zoning change to residential housing should have happened at the time that the neighborhood plan was approved.

Commissioner Dave Sullivan said he could see the case from both sides but added that the fundamental question came down to land use principles. Affordable housing is necessary, but it cannot be laid down “willy nilly” anywhere.

Commissioner John-Michael Cortez told his colleagues it would be the first time he would vote against an affordable housing project. The major issue for Commissioner Maggie Armstrong was not airport noise but the proximity to industrial zoning.

On the other hand, Commissioner Matt Moore said he had visited the site and saw no serious issue with airport noise.

The final vote was 5-2-1, with Armstrong, Spelman, Sullivan, Cortez and Commissioner Jerome Newton voting against the zoning change. Moore and Chair Chris Riley supported it, while new Commissioner Cid Galindo abstained from the vote.

Playing in traffic . . . Mayor Will Wynn will be flagging rush hour traffic on Monday morning to help promote use of San Antonio Street as a two-way thoroughfare. The idea is to demonstrate how changing the traffic flow on San Antonio can facilitate traffic movement throughout the downtown rush hour. “I asked city staff to look at several possibilities to solve our traffic problems. This particular suggestion comes from the fact that I take Cesar Chavez in the morning almost every day and I’ve had a lot of time to sit in traffic and wonder if changing San Antonio will alleviate some of the mind-boggling traffic congestion on this critical arterial,” Wynn said. Traffic on San Antonio between West 3rd and Cesar Chavez will change from one-way southbound to two-way on Sunday . . . Soifer joins Brim law firm . . . Attorney Jan Soifer, who recently ran for a District Judge seat, has joined the law firm of Brim, Arnett, Robinett, Hanner & Conners. She will become a named shareholder, the firm announced, and will concentrate on business, consumer and general litigation . . . Waterloo Ice House open at ABIA . . . Waterloo burgers, sandwiches and other home-style Austin food is now available near gate 8 at the Austin-Bergstrom International Airport. The restaurant, which opened in Austin in 1976, now has 5 locations throughout the city. It will be open regularly from 4:30 am to 7pm . . . Today’s street closures. . . Avoid Congress between 9th Street and 11th Street and 10th Street between Lavaca and Congress, since those streets will be closed. On Saturday Congress will be closed between 7th and 11th Streets and from 15th Street to MLK . . . Appointments . . . Council Member Brewster McCracken yesterday appointed Joseph Hughes to the Parks and Recreation Board. Jessie Cleveland was appointed by consensus to the Federally Qualified Health Center Board and Austin Dulling was reappointed by consensus to the Human Rights Commission. Council Member Raul Alvarez reappointed Patricia Valls-Trelles to the Animal Advisory Commission.

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