Redding City Council - Regular Meeting

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Thank you. Thank you.

All right, we are coming out of closed session. We are in recess. Our intentions are we're going to go back in closed session at the conclusion of this meeting. We don't have any reportable action to report. And of course, if we have any action to report at the conclusion of closed session, we will come back and let you know. Just a reminder for public participation today, members of the public are invited to participate in the city council meetings either in person or remotely using the city's online public comment platform located on the city's website and instructions are also included on the agenda. The meeting agendas and staff reports are available at the website cityofredding.gov and also in the public view binder located on the podium on the north side of the chambers. We're going to call this meeting to order. We'll start with the Pledge of Allegiance and then our invocation by Gordon DeWitt. He's the chaplain for the Reading Police and Fire Departments after the Pledge of Allegiance, if you'll rise with me.

If you're willing, would you bow with me? Heavenly Father, thank you for your presence here. Thank you for all who are in this room tonight. Thank you for their commitment to our community. May all of our words and actions contribute to positive outcomes for this wonderful city. We pray for our council members that you would grant them wisdom and clarity as they serve and as they strive to make this city the pride of our region. May they not become weary in doing good. May you provide strength and courage to each of them. Father, bless us, this community, and protect all of those who work to keep us safe. Pray this in your holy name. Amen.

Amen. Thank you, Gordon. Thank you, Gordon. We're going to start with roll call.

Council Member Odette. Here. Vice Mayor DeNuca.

Present.

Council Member Munz.

Here.

Mayor Pro Tem Reisner. Present. And Mayor Lata.

Here. All right, welcome everybody. In light of the cooler weather, we're going to try to move this meeting along so you can go outside and enjoy it. So we have public comments. And again, public comment is also for non-agendized matters within the city's jurisdiction. Pursuant to the Brown Act, the City Council cannot take action on any public comment items. We have four people here today. We'll start with Robert, Sid, Margie Contrell, Nick, and Shasta County Watchdog, if you guys can make your way along the wall. We'll be ready to go after each speaker is done. So again, that's Robert Sid, Margie Cantrell, Nick, and Shasta County Watchdog.

Good evening, mayor and council members tonight and presenting an analysis prepared by Angela. A lake had resident former city council member and retired finance director. After reviewing council member debts report in the city's financial records, the evidence shows that neither side has told the complete story. Three of our debt's major accounting allegations do not withstand reconciliation with the adopted budget. The disputed $1.349 million in internal revenue is accounted for in the detailed tables. The allegedly missing $72,000 soccer field transfer appears under a different classification. The disputed $740,000 and $1.09 million in expenditures belong to separately funded grant and capital project accounts. Those findings do not prove that money was fabricated, hidden or removed from the budget. Serious accusations require evidence and the reviewed public record does not establish fraud. But Audette's accounting errors do not excuse the city conduct. Sales tax revenue repeatedly fell below projections. The 2023 compensation agreement added approximately $3.8 million in recurring general fund expenses. Yet the council was not consistently shown a complete 10-year analysis explaining how these raises, pensions, benefits, overtime, and staffing costs would affect reserves. The fiscal year 2025 third quarter report was presented after the new budget had already been adopted. That deprived the council and public of critical financial information before the vote. The city then declared the budget balanced and accurate while relying on an unaudited opening cash estimate, weakening sales tax revenue and increasingly thin reserves. A clean audit of historical financial statements does not prove that future forecasts are accurate. Later reports reduced the opening cash estimate and showed reserves falling below the City's own policy target. That does not prove intentional deception, but it shows the City expressed more certainty than the evidence justified. Accountability cannot stop with the Finance Director. Staff must explain the figures they present, City Manager must answer for the recommendations placed before the Council, and Council members must accept responsibility for their motions and votes. Audette deserves credit for raising important questions. However, she also supported compensation actions and accepted financial reports during the period she now criticizes. If she believes the warning signs were visible, she must explain what she verified, what document she requested, and why she voted as she did. Before approving major recurring expenses, the Council should require a 10-year affordability analysis. Reading residents deserve the complete financial picture before decisions are made, not accusations after the damage occurs. If staff presented it, staff must explain it. If management recommended it, management must defend it. If council members approved it, council members must own it. A budget vote is not ceremonial in a council seat. Thank you.

Thank you, Robert. The Cliff Notes version in three minutes, easy for us to understand. Thank you, Robert. Very well. All right, Margie. And then Erin, I did see your name pop up, if that was you, so you'll go fifth after Shasta County Watchdog.

Council members and public, my name is Marge Cantrell. I have lived here since I was four, leaving to go to college and different jobs for four years and always came back to Reading. I am here to ride my broom again. The Kutras McConnell lease was up on December 31st, 2021. The Kutras family and Les Moberg were ready to open the motel, the restaurant, and the Olaz Night Bar. They had plans to build buildings. They had numerous empty buildings because the McConnell Foundation left Park Marina Drive as it is now, and it was voted in a record searchlight poll ugly. Immediately when that lease was up, Odette, Munns, and Winter started the Park Marina Plan. It was supposed to be done in 2024. I have a stack of paper over a foot tall when that started and when it finally ended in 2025 and it went into an EIR. We have not received one report on how that is progressing and if it is ever frigging ever going to get done. And so we would like to make the council know that any information that comes out of that, if you would put it on the agenda once a month and report to those of us who care if it's what the final date's going to be. And that we can finally let the Cooters family who has had the job increases and the interest rate increases over with, so they can finally get started on the project. Number two, one of the biggest agendas on your budget is PERS. And you have a lot of supervisors that are coming up to retire. And as a number cruncher, as a comptroller at numerous businesses in Redding, Sierra Stationers, four retail stores in the downtown malls, Cypress Square and Red Bluff. And at Skyway Machine, Skyway Recreation Products for 13 years. I can tell you that you need to make sure that they have supervised and educated their department second head and thirds so that you don't have to double hire. So when they retire, they aren't going to get hired back like the previous councils have done for years. You've got to have smarter supervisors than that. And you're going to pay them seven years longer than you would.

Your time is up. Thank you. Thank you.

You're going to pay them seven years longer than you would if they were on Social Security.

Thank you for coming. Michael, for clarity, I think in the riverfront, we're expecting that to come back in December. Is that correct? Or do you want to make a comment to that?

Yes, Mr. Mayor, we're working with Director Pagan and his department to bring that back before you, hopefully here before the calendar year. Okay.

Margie, did you hear his answer to your question?

Margie, did you hear that comment that it's going to come back in December for the riverfront? We wanted to make sure you heard that. I know, we did it just for you.

Just to clarify, Mike, will there be public workshops before it comes to the open council meeting?

No.

No, we've already done all the workshops. No, I think there was going to be.

My understanding, there's a lease. It's under a lease, most of that current property.

Okay. Let's be careful we don't comment too much since it's not agendized, but okay. All right.

We don't want to comment too much. The public might know what's going on. I'm here because, as you probably well know, it's predicted we're going to have a real severe El Nino and a lot of precipitation here in reading. And after the flood, the big rainstorm we had, I think it was in December and all the flooding. I'm wondering why the city isn't jumping on the gun and cleaning out all of our storm drains. I live down off of Henderson ditch. And it flooded probably 12 houses down there because of neglect and no upkeep on the canal. And I've had Aaron down there, I've had other supervisors and city council members there, and nobody's cleaning that out and getting ahead of the gun. I'd you know that it turns into negligence when there's a problem and you don't solve it and it's brought to your attention. And I hate to see you get sued. You know, last time there was probably 10 or 12 houses that got flooded and they were looking to sue. But then they found out you don't have any money. So there's no sense suing it. I'm just guessing. But that segues into something else in your closed session here. I see all these people wanting raises. The firefighters, the electrical workers, the electrical workers, the electrical workers, clerical, technical, professional, employees, organizations, supervisors, confidential, police, police, peace officers, peace officers, electric professionals. It goes on and on and on. Why are they asking for a raise? We're broke. We're in the hole. Do you guys know we don't have any more money? I just thought I'd bring that to your attention.

Thank you, Nick. All right, Shasta County Watchdog, there you are. And then Erin, you are up after her. And if you wanted to save us time, Erin, you can line up on the wall and then spare us a few seconds.

Thanks. Mr. Mayor, this is to you. Uh, 2 meetings prior me coming up here, I don't even appreciate you mocking me. And when you speak and make certain comments towards when I say something regarding that, you shouldn't be rubber stamping like the board of supervisors. They're rubber stamping things. And when they don't even check to make sure their license of contractors make sure it's consistent or active. And for you to be mocking me or anything that is actually called retaliation against exercising my of my constitution, right? So I don't appreciate you doing that at all period. So, since you did that, I did a little research on you. I do believe that your wife sits on the board of the enterprise element. No, she does not district. Hello? This is regarding you. This is regarding you. This is about you. Okay, you actually your wife approved a lot of the money for Kevin cry ninja coalition. And also you were involved with your 1 of your business who actually did insurance is called a goose head. And actually that was under investigation. Wasn't it? And for fraud. Oh, yes, it was. I have the papers, your photos in here. So don't tell me if you're going to retaliate against me, you did that bad. Because you know what? I won't tolerate that kind of shit. Because if you're going to mock me in front of people thinking you know better and trying to make fun of me, I don't like that. So I am digging stuff off of you, what you've done. So don't try to do that again. Because I do have a constitutional right to actually file something against you for retaliation. My freedom of speech and I can file for you abusing your position under color of law under title 42 1983. So don't tell that's a federal that will be a federal lawsuit. So don't start pissing me off because I will come after you or anybody else who actually thinks that they're going to try to mock me and try to railroad me for my freedom of constitution. I have a right to address you. Even though I don't live here, I also pay taxes. Pay taxes when I go to these stores up here. I'm a taxpayer. I'm a homeowner. So I do have a right to address you. If you're doing something wrong, damn right I'm going to address you. We're tired of people like you who think they know better and come up here and sit on that position and they start treating people and citizens like they don't matter. We are the taxpayers. We are your boss whether you like it or not. When people get on that seat, they think they're the boss. You should be thanking those people, praising them because they got you on the seat where you get paid to represent the citizens, not the other way around. So that's where you have a problem, people. You think you're in charge of us. All right.

Your time is up. And this is the first I've heard that my wife is on the school board, by the way. So she's not on the school board, and she has not run for Congress. They're responsible. But to my wife out there, if you're on the school board, let's talk after this meeting. So thank you.

Good evening, council members. My name is Aaron Moreland. I live on Shasta Street, not far from the Manzanita Hills Elementary School. And this comment is on the Butte Street Boogie Project, which just issued the final initial study mitigated negative declaration environmental document. When that draft ISMND was circulated in May of this year, I left a comment on it discussing the infrastructure of the bike lane on Shasta Street. And when the final ISMND was released, it discussed All of the city's responses to a handful of comments made by myself and some of my neighbors as well. This particular comment I'm making is about one of the common responses that you gave to letter G, where another member of the community requested that the safety enhancements to the crosswalks and sidewalks outside of Manzanita Hills Elementary School be removed or reduced in lieu of their parking spaces in front of their home. And this project is funded in part by an active transportation grant by the state of California, which emphasizes the infrastructure go toward pedestrian and cyclist and other rolling type improvements. So the modifications in the city's response to this letter were that the bulb outs and crosswalks on the northeast side of Manzanita Hills Avenue will be eliminated. No new stop signs will be installed at the intersection of Manzanita Hills Avenue and Montebello. And the existing single stop sign on Montebello will remain. And a bulb out and crosswalk on the southeast side of Shasta Street and Manzanita Hills Avenue will be eliminated. These are three key infrastructure enhancements that are designed for pedestrian safety right outside of a school that the city's response is that those are going to be eliminated to preserve a few parking spots in an area, in my opinion, which has ample parking on the streets in front of everybody's homes. So my request to you is just please discuss with the city's engineering departments and review these infrastructure changes that were made that are different from what was in the active transportation grant application and make sure that they are protecting public safety, especially of the children who are attending Manzanita Hills Elementary School. Thank you.

Aaron, thank you. That was helpful. If you ever send us an email, we can follow up with you for sure, but I'd love to talk to you about that later.

Okay. Thank you.

That was wonderful. Thank you. All right, there's no more public comment. We have our consent calendar. So the consent calendar contains items considered routine and or which have individually been scrutinized by city council members and are anticipated to require no further deliberation. If a member of the public wishes to address an item on the consent calendar, please enter your name in the electronic kiosk located in the lobby before the consent calendar is considered. It shall be the prerogative of any council member before consent calendar is acted upon to 1. comment on an item, 2. respond to any public comment on an item, 3. request the record reflect an abstention or nay vote on an item, 4. remove an item and place it on the regular portion of the agenda for delivery of a staff report and or an extended discussion or deliberation. All right. Do we have any speakers? We don't have any.

There are no speakers online. We're calling in.

Okay. We would entertain a motion and a second or if any other council has any comments or anything.

I'll make a motion to approve. I just wanted to ask Council Member Audet if outside of on item 4.12a, which has to do with League of California Cities because she's our rep there. If outside of being pro-local control, if you have any other comments.

No, that's actually a good one for the league to actually pick up. I'm really actually quite delighted, and for the last several, there hasn't been any movement in that. So actually, this is the first time since I've been on that they actually have some amendments, and so I'm looking forward to it.

Awesome. I'll second the motion.

Aye. Without any further comments, all in favor? Aye. Aye. All opposed? That passes 5-0. All right, moving on to our regular items today. The City Manager 9.1B, it's an oral presentation regarding the quick wins associated with the efficiency study for the City of Reading. Michael, I'll turn that over to you.

Thank you, Honorable Mayor, and good evening. Good evening, council members, community, and staff. Give me one second here as the clerk pulls up the presentation. Thank you, Mrs. Tipton. So good evening again. This evening, I will be presenting an informational presentation regarding the quick wins that were identified within the efficiency study. However, before I get started, I'd like to introduce a few of our consultants that assisted us with this, Mr. Nathan Sprague and Ms. Amanda Ekman. I want to make sure that they can both hear us as we're discussing this item tonight and we can both hear them. So Mr. Sprague, are you able to hear us? Yes, loud and clear, Mr. Webb. All right, thank you. And Ms. Ekman?

Perfectly, thank you.

All right, thank you. So with that, just a gentle reminder to the council members here in talking with the clerk's office, when we do have folks participating through audio visual or phone, it definitely helps them if we make sure to turn our microphones on and talk into them during comments and questions. So if we could all please do that, I think it would help when Mr. Sprague and Ms. Ekman join us probably on the latter half of the presentation.

So without any further ado, we'll jump into it here.

So first slide here, as council likely recalls, we've jumped into this effort as the city's general fund budget is in significant financial distress. I don't think that's any news to any of you that are up there. And in response to that financial distress, The city's taken a proactive and responsible approach by engaging in independent analysis to help the city inform our future financial decisions with a goal of understanding where we are today to help us also identify our opportunities to become stronger and a more sustainable organization in the future. So this was the main nexus of why Mr. Tarbo and I decided to enter into this agreement. So, Council may also recommend, or excuse me, recall that we entered into this contract with Circle 6 just as a recursor in the middle of March. I believe it was March 13th to be specific. And this whole activity or engagement, if you will, is really a four phase activity. With phase one being a rapid assessment that included, I believe it was over 70 interviews of staff, council members, community members, leaderships, and other folks. A dozen or so site visits where Circle 6 was here in person, went out to a number of our facilities and spent time with staff, as well as a review of over 300 documents. And quite honestly, that number's pretty old now. I'd be willing to bet that we're probably approaching 400 to 500 documents that have been reviewed. That really being the first phase. However, the second phase, the immediate quick wins, that's what we're here very specifically to talk about tonight. And we'll dive into that here in a second. But I would be remiss if I didn't remind council that, again, this really was a four-phase engagement with the third phase being the opportunity development and the fourth page being execution and governance. i would also be remiss if i didn't point out that most of the opportunity that has been identified through this engagement really lies within phases three and four which will be covered in detail right now we're targeting and very likely bringing to council the balance of this presentation on the 15th so our next council meeting That way our consultant. Mr. Sprague can be here in person to make sure that we don't lose anything through communications I mean he's able to really present their findings and recommendations of phase three. So again this evening We're really going to be focusing on phase two which were the immediate quick wins that were identified and ran to ground While the circle six team in combination with city staff. We're still completing activities or phases three and four So with that, I'm gonna jump right into the quick wins. Council very likely recalls that Believe it was about four to five weeks ago we shared with staff and council members a a one-page summary of the engagement and one of the the biggest Opportunities there was that the the screening that was undertaken by circle six identified just under 83 million dollars of potentially releasable capacity I want to pause here for a second and make sure that I'm explaining that correctly because in a number of situations words really do matter and When I talk about screening amounts that is raw unfiltered data that was provided to our consultant for them to analyze and look over and then send back to us with things for city staff to work with them to validate so the eighty two point six million dollars that you see on the top of the the left most box those were the screened potential releasable capacity or is the potential leaseable capacity excuse me that was identified to be validated in combination with them and city staff And there were four main areas that encompassed the $82.6 million that included one-time releases associated with encumbrance cleanup, carryover cleanup, project closeouts. And then it also included what we deemed ongoing relief through salary savings associated with vacant positions. So when you boil that $82.6 million down to the primary fund groups within the city, that 82.6 boils down to $4 million of releasable capacity within the general fund, just under 80 within the enterprise funds, which again, those are your utilities, approximately $800,000 within special revenue funds, and approximately $200,000 within internal service funds. And again, like I mentioned on the previous slide, we're going to cover in detail on the 15th the future opportunities that Mr. Sprague will run through in detail for us at the next meeting. And that will include governance things such as policy reviews. We'll talk about bond refinancing, TOT opportunities, credit card fees, development services fees, overtime. I don't have to read them off to you, but there are a number of things that were identified through the engagement that are worthy of having a conversation about. So moving forward here... Again, one of the main categories of the $82.6 million was a review of our vacant positions that were associated with the hiring freezes that had been put into place at the city. Council may recall that in January of 2025, a general fund hiring freeze was put into play by then City Manager Tippin. And in January of 2026, a citywide hiring freeze was implemented, again, citywide. I do want to stress that when hiring freezes are enacted, what that means is that for departments to fill vacant positions, it requires the approval of the city manager. So most positions that are becoming vacant are not being allowed to be backfilled other than positions that are deemed to be essential or mission critical. In a further definition that I'd like to point out, budgeted personnel funding that is not spent while an authorized position remains vacant. That is the definition of a vacancy savings. And so, again, I'm sure I don't need to read that to you, but the definitions matter here. So through the screening process, again, when Circle 6 was reviewing the raw unfiltered data, there was approximately, if I recall correctly, 16 general fund positions that were vacant at the time. Now, those positions, upon them being vacated, either from someone resigning, someone retiring, someone taking another job, Based on when they left the position within the fiscal year and the remaining value of their salary, those 16 positions were worth approximately $1 million, as you can see there before you. When those individuals left the positions, the city was required to cash out any accrued PTOs that they had through vacation time or other accruals that resulted in that million dollars being whittled down, for lack of a better term, to approximately $780,000. So you can see by those 16 positions being vacated, there is savings associated with those positions. But I do want to be very, very clear to council, this is a snapshot of those 16 positions. This is not a snapshot of the entire personnel budget within the general fund. And those are two drastically different things. But for the 16 positions that were vacant within the general fund, when the data was screened, these are the numbers that are associated with them. And I would also be remiss if I didn't share with Council that, to date, we have a number of additional positions that are currently being held vacant that have a potential salary savings of upwards of $4 million. So as we continue to have that hiring freeze in place, as positions become vacant and they're not being filled, that number continues to grow. So moving over to stale encumbrances. So again, quickly on the definitions. An encumbrance is a reservation or a portion of a budget that is set aside to pay for a specific future obligation, such as an approved contract or a purchase order. And so one of the exercises that occurred with Circle 6 when they did their screening was that they flagged just under a million dollars of encumbrances that hadn't had activity on them for a little bit of time. And I believe the benchmark was 12 months. And after city staff and coordination with Circle 6 validated that, we were able to release approximately $800,000. You'll see the number there in the fifth column from the right. It's titled Amount Released. So $797,000 went back to their home departments. And you can see the breakup of the dollar amounts that went back to each department. For instance, the general fund received $270,000 back, the enterprise funds $339,000, special revenue $63,000, and internal service $125,000. And so those funds that are being released back to those departments can be considered new programming capacity within those specific funds as long as the programming activity is allowable within them. So in other words, the enterprise funds, we couldn't take that $339,000 and spend it on a general fund activity, nor could we take the special revenue or internal service funds. They go back to those fund types, and then they can be used for future allowable activities within those funds. Similar to stale encumbrances, Circle 6 flagged a pretty large number. It was just over $80 million for validation regarding carryovers. And again, I want to hit home on the definitions because I think that's really, really important. A carryover is a process for moving prior fiscal year obligations from one fiscal year to another. And so each year, city staff go through a process of working through carryovers to figure out how much funds need to be taken from one fiscal year to the next. And this is a very common practice, specifically with our very large capital infrastructure projects. Because as council very well knows, those projects do not both get initiated nor completed in one fiscal year, let alone two or three. Most of the projects take four to five years to get from completion until ultimate, excuse me, from initiation to completion. So therefore, carryovers are a very standard process that happens. However, through the screening process, again, Circle 6 identified almost $81 million that didn't seem like it needed to be carried forward. And after we went through the data with Circle 6, again, through the validation process, we did validate that approximately $65 million, predominantly tied to the enterprise utilities or the wet utilities in this instance, did not need to be carried over and was actually rejected and goes back to those funds outside of the capital infrastructure program. Now, that is really important because that money then goes back to those accounts that will sit in those reserve accounts and ultimately is used when the utilities go through their rate study process here in the near future. My analysis of that again in working with Mr. Sprague and his team as well as city staff is really what's happening there is the assumptions that are being made within our utility master plans on the rate at which projects can actually be designed and then constructed is more aggressive than what we're actually able to occur. or actually able to get out the door in combination that when projects that have ultimately got to construction and they get to completion, if there are funds left on those individual projects, those funds hadn't been swept and gone back to the reserve accounts in the past. So by sweeping those funds that no longer are needed for the completed projects, as well as Stopping transferring money from the reserve account into the project accounts unless it's needed that will result in making sure that we only have funds within the accounts for the projects when we need them this is this is a big change from my understanding of how the city's operated for years. And a number of staff and I sat down and went through the carryovers with a very fine-tooth comb. And we intend to continue this into the future, as well as to update policies and procedures to make sure that as we're moving funds from the utility reserve accounts into project accounts, that we're only transferring the dollar amount that is needed for those fiscal years. So you can see here as we walked through that, that $80.6 million was screened through identification. We realized that 65 needs to be put back, so 65 was removed. Then we validated, went through the validation process for approximately $16 million, released another 12.8, and ultimately landed with $3.3 million of the 80.6 needing to actually stay because it was associated with the project activity that was going to occur within the next fiscal year. So with that, I'll keep moving on and there will definitely be time for questions and answers at the end. Similar to carryovers for capital improvement projects, we also had a subset category of that, if you will, that we titled Dormant Capital Project Review. Again, this is with CIPs. So these are projects that have got to the finish line excuse me real quick, that had got to the finish line and we needed to clean them up and finalize the project. And so you can see here that there was approximately $260,000 screened for validation that after we went through the validation process, we identified that $18,000 could go back and $244,000 was needed to actually finish authorized and needed projects. Now, there were a few quick wins that were identified by Circle 6 that we definitely, both Circle 6 and city staff, feel like we need to continue to push forward on. However, we hadn't had adequate time to run them to Completely to ground as we did the previous Opportunities I ran through one of those are some refinancing some callable bonds that the city's general fund has there is an opportunity to refinance the 2013 general fund lease revenue bonds and save anywhere from fifteen to fifty thousand dollars annually The recommendation at this time is to continue to monitor it and revisit as market conditions potentially improve. And you might be asking why do we not want to do this right now? Well, the interest rate market has changed a little bit over the last couple months, and so we still need to validate that and make sure that it makes sense financially, as well as we did receive notification from the city JPA's S&P global rating that the city's credit score was downgraded from an A-plus to an A-minus a few weeks ago. This is a big thing, and they cited negative outlook, diminishing revenues, and a general fund 10-year plan that is in a state of disrepair. And so for those two things in combination that it would very much likely take us two to three months to actually process that, this is something that we definitely want to continue to monitor and track and move on. It just wasn't something that we couldn't run to ground in the last two to three weeks. Similar to that another quick when was identified titled pension obligations as Council very much knows the city pays both normal costs and you will payments were associated with purge and there are a number of opportunities to concern or to consider here. with the pension obligations. Obviously, one option could be to stay the course where the city continues to pay both the normal and the UAL costs on an annual basis. Another option could be to do what's referred to potentially as a 15-year or a 10-year fresh start. I'm not going to pretend to be a financial expert. That is not my bailiwick. However, I would akin these two options very much to myself refinancing my home to a shorter term with a higher interest rate and I'm essentially signing on the dotted line to pay a higher monthly payment for a shorter period of time, which would save me money long run, but I have to be able to afford the higher payment now. That's very much what options two and three are, and I'm not suggesting that they're bad. They just involve us potentially paying a little bit more Initially and during the middle but there is savings over the lifetime of it that we do need to consider and evaluate similar to that we could definitely need to look at a fifteen year or potentially ten or twenty year targeted pension obligation bond. These are opportunities as well and something that we need to spend a little bit more time and run to ground. And similar to that, there's a Section 115 trust option, which may, in my opinion, be most attractive to Council once we run these scenarios to ground because this would give us the most flexibility to make deposits into that account when the When the city could afford it and then use those funds specifically for purge costs at a later date it gives us flexibility without walking us into a potentially higher payment. These are all great things and these are things that we definitely need to run the ground we just hadn't had time to run them completely to ground in advance of this presentation. So this might look a little bit like an intermission. That's not meant to, for what this is, that is not what this is meant to be. The information that I just walked through essentially summarizes the quick wins that were identified as part of the second phase of that rapid engagement with Circle Six. And it was meant very specifically to tie back to their ultimate findings and recommendation. That way we had the ability to reconcile and make sure that nothing was missed. What the next series of slides is going to do is going to show council and the community what those releasable and recovered funds actually mean and where they're going to go. So kind of turn that information into what happens to the four fund types that I identified in the very beginning of the presentation. So first we'll focus on the general fund. And so, Council, you may recall that of the 82.6 total screened opportunities, 4 million of that number was identified specifically within the general fund. And so what you'll see is you're going to see two columns on the right-hand side of your slide. The leftmost column, or purple, Those are the screened opportunities, again, from Circle 6. And then you're going to see the blue column, which are the validated numbers by the Circle 6 and staff, city staff. And those numbers represent what was actually released. So for example, we identified $4 million of opportunity within the general fund as a whole. And $1.2 million was actually found through the validation project to be able to be released. And you can see the breakup of that between carryovers. There were 2.6 identified through screening. And through carryover cleanup, 188 were let go. And so you can see... the breakup between what was screened within each category, again, carryovers, encumbrance cleanup, and then personnel vacancies. Now there are a few notes here that I wanna point out because within the general fund, the engineering and streets teams live there. So when those funds are released, they they are not released back to the general fund for true blue general fund new expenditures they are going to go back to the streets reserve account which is in a lot of ways very similar to one of the enterprise utility accounts so that's why you see asterisks is there to try and delineate that those are not funds that could be repurposed for anything within the general fund They're going to go back to the streets account for streets-eligible activities. And then you'll also notice that some grants fees were identified to be able to be swept as well, and obviously those would not be eligible for any general fund activity, only activities that were associated with that grant. So again, $4 million was screened as an opportunity, and $1.2 million were identified and actually released through the validation process. So moving forward or moving on to the enterprise funds, again, this was the lion's share of the 82.6 that was identified. You can see on this slide there's actually three columns here. Again, we have the purple, which are the Circle 6 screened opportunities. Then you're going to see in the middle the green, the validated errors. And then you'll see over on the right, the blue, the actual released amounts. So what's happening here is we're breaking out, and you can see the amounts, the $64.5 million in green, that was a combination of approximately $19 million and $45 million of wastewater and water utility funds that was determined through the validation process to not be needed at this time. and to be returned to those enterprise funds reserve accounts. And so after we pulled that $64.5 million out, there was roughly $12.5 million that was further identified for release going through the validation process. So $12.5 million of the ultimate $77.6 was released back to, you can see the numbers there, $30,000 to the airport, roughly $5 million to water, $7.4 to wastewater. And then you can see down below the encumbrances as well. So again, this is a combination of carryover as well as encumbrance screening and then validation. And then special revenue funds. This is where Circle 6 identified just under $800,000, 782 to be specific. And ultimately, $480,000 was released here. And again, you can see the breakup where we have the screened opportunities again in purple and the actual released amounts there in the blue. And you can see the breakup of the different categories between the carryovers and the encumbrances. So trying to use the same theme as we run through each slide. I'm going to go back for a second. There is one thing I wanted to point out here. Apologies. There was approximately $53,000 that through the screening process was associated with general fund savings that when we went through the validation process turned out to actually be grants and impact fees. So you'll see in some of the previous slides, I forgot to mention that, but I caught it here. So if you're wondering in the previous slides why you saw some of those asterisks or the The $53,000 was shown that way because it was moved from the general fund into grants and impact fees through the validation process. So the last fund type here, the internal service funds. A $152,000 was identified for screening opportunities, went through the validation process, and $125,000 was identified to be returned back to the home units. And you can see the breakup there, a little bit with an IT, communication, building maintenance, risk and employer services. So again, 152 identified, 125 released. So the balance there would have been determined to have been needed for actual ongoing activities. So This slide here is meant to really combine everything that I've walked through over the last 10 or 12 slides. And you'll see that in purple, again, trying to stay with the same things, the purple numbers were the screened amounts and then the blue amounts were the validated and either the released or realized or vacancy savings. And so again, in summary, through the quick wins and running those to ground, $82.6 million was identified, went through the validation process, $14.3 million was released, realized, or recovered. And you can see the breakout by fund type through or within the middle slide of what each fund gets. And then, again, the total is $14.3 with $1.2 to the general fund and the balance to enterprise funds, special revenue, and the internal service fund. So at this point, I thought it would be appropriate to turn the presentation over to Mr. Sprague and let him say a few things, and then I would be happy to take any questions that you have, and I'm sure that Mr. Sprague and his team would as well.

Thank you, Mr. Webb, Mayor Littell, members of the council, city staff, everyone in the Reading community joining us either in the chamber online, good evening. As Mr. Webb said, Amanda and Ekum and I are joining you remotely on behalf of Circle Six. And I'll just take a couple of minutes just to put tonight's discussion in context. First, I'd like to thank Mr. Webb and the city's leadership team, department leaders, the many employees who have worked with us. They've all been very candid about difficult issues. They've been responsive to our questions, willing to dig into details, and that cooperation has made a real difference. And I also appreciate the community's interest in this work. Also, as Mr. Webb said, there are four connected parts to the engagement. And I just want to go over those again. First was to understand phase one was where's the city losing time, money, organizational capacity. Phase two was through that deep dive, identify practical quick wins and hopefully implement those quickly. And you saw some of the results of that. Next was to build a prioritized roadmap for the larger improvements and put the ownership, government and controls in place so that those improvements actually happen and last, which is the most important part. And again, tonight's mostly about the quick wins, and they matter, but they're not the whole story. We really believe the greatest long-term value is going to come from the more complex operational and structural changes that you'll see us discuss on the 15th. We'll present those recommendations along with the trade-offs involved and a practical path to implementation. We're also working with the city leadership on organizational design. So we have several scenarios under review. Each of those has its own advantages and trade-offs, and we're not starting with a predetermined organizational chart or some target number of positions. Rather, we're starting with the services the city must deliver the work that's required to deliver them and where the accountability and decision-making really should sit. It's our philosophy that the structure should follow the work, not the other way around. One final point, and I think you saw that there, but we're being very careful to separate verified savings from potential opportunities. So that's why you saw that two-step process there. Nothing really should be counted as savings until a few things happen. Finance needs to validate the amount and the fund impact. And the other important part of this for sustainability is that no initiative should be considered complete until the control needed to sustain it is operating. You know, all in all, Reading has some meaningful challenges to address, but our work also shows a credible path forward, so I'm excited about that. And that path is going to require some clear choices. It's going to require disciplined execution and sustained follow-through, not a one-time action or, you know, some report that sits on a shelf. So Amanda and I appreciate the opportunity to work with the city, and we look forward to presenting a full roadmap on September 15th. Thank you.

Thank you, Mr. Sprague. So at this time, honorable mayor, I'd love to entertain any questions that you or the council have.

We have a couple here to speak on public comments, so maybe we can get through a public comment and then we'll go to council questions. So I see Robert Sid. Welcome back. And also Shasta County Watchdog. Welcome back.

Good evening again. Apropos of the Circle 6 efficiency study and the $300,000 the City Council authorized, Reading already has a city manager's office, department directors, managers, supervisors, analysts, accountant, and a finance department responsible for financial management, budget, monitoring, internal controls, financial analysis, and long-term planning. The current budget includes approximately $176 million in citywide personnel costs, including $81 million in the general fund. So taxpayers deserve to ask a very simple question. Why are we paying an outside consultant up to 300,000 to identify financial and management issues that our existing management structure should already be identifying? Look at some of the findings presented. Circle 6 identified between $300,000 and $500,000 in aged encumbrances that may be available for release, approximately $250,000 in potentially idle capital project balances and personnel vacancy savings. Those issues should certainly be addressed, but releasing an old encumbrance is not permanent savings. Closing an inactive capital project does not reduce next year's operating expenses and a vacant position saves money only until that position is filled. Even Mayor Lata acknowledged that the May presentation that some of these could be useful one-time fixes while ongoing reductions were still needed. That brings us to what the taxpayers really need to see. Where are the permanent recurring annual savings? Where is the analysis of the management layer staffing level spans of control over time, administrative overhead and duplicated functions? Where are the measurable improvements? showing what a process cost today, what Circle Six proposes changing, and exactly how much that change will save taxpayers every year. And where is the 10-year financial analysis? Reading already uses a 10-year financial planning framework. Every major Circle Six recommendation should be inserted into that model so Council and the public can see whether these recommendations actually solve Reading's structural financial problems or simply make the next budget look better. There is another question that cannot be ignored. If hundreds of thousands of dollars were sitting in stale encumbrances, why wasn't city management already identifying and correcting that? Finding old money is one thing. Identifying management failure that allowed it to sit there and fixing that failure permanently is what I would expect from an efficiency study. Ultimately, this responsibility belongs to the City Council. You approve the contracts, you approve the budgets, you approve the spending. Taxpayers should demand measurable results. Show us the numbers, show us the permanent savings, and show us the 10-year results. Then let taxpayers decide whether they got their $300,000 worth. I'll look forward to the meeting on the 15th where long-term solutions are promised to be presented. Thank you.

Thank you, Robert. Shasta County Watchdog.

Sounds like you guys need an audit. I just can't understand why is this so hard for as many as you are business owners and everything. For the city to be in this situation, that tells me that somebody's not doing their work or nobody's paying attention and you're covering up a lot of things. I just had an email last week. From an agency actually just granted another audit. Here in Shasta County, I can't say it because it's a confidential, but I'm telling you, you will be my next agency that I will report for them to do on audit because there's some other things that I know that I will look into. And you as business owners, like I said, should have some experience, but I know some of sometimes men are like a box. All they could do is think 1 thing at a time. Women could do a lot of things all at once. But sometimes men are just saying, oh, okay, that's fine. We can't have that. This is a city. You need to run it like a business. But you also need to care about the taxpayers money. It's not your money. You treat it like no big deal. That's why you don't have that many people coming in here because they're tired. But I their people are watching. And Mr Mr Mike, the mayor, like I said, I know you had a business. And you actually are the owner of Goosehead. And there was fraud involved and you said, I didn't know anything. I wasn't aware that was happening. How can you not know? You're doing the same thing here as the mayor. It's all in here. You didn't know? How can you not know? You were the owner of the business. You're doing the same thing. That's why I can't get it. Why are you running for? Why don't you let somebody else take over? You're not doing a good job. What do you need the job for? What do you want to do, move up to a better position? Seriously, you're not doing the people any good. See the finance? Those are just numbers. They're not the real numbers. I can tell you that right now. So why are we not doing something else, something different? I mean, I know you took over, but unfortunately we don't have all the information, but I could tell you, I know what's been happening in behind the scenes. I understand somebody provided two boxes with information, the information's in there. So I will be going through those two boxes and I am gonna find out and I will provide that to the state.

All right, thank you. Council Member Reznor.

I know that our report said that September 15th, the full Circle Six slide deck that council was provided will be that that's when we are assuming that we are bringing this to council. When will the public have access to that? Are we assuming the Thursday before that's the 10th by 4 p.m., or is there any opportunity for the public to have access to some of those slides prior to that?

So that's a great question, Council Member Reznor. The plan right now is when we prepare the staff report for the 15th, that the Circle 6 findings and recommendations will be made as an attachment to that. And when the agenda is posted and the staff reports are out there, that it will be there for all.

I just want to make it really clear that Thursday by 4 p.m. is when it is that that really needs to be posted because I... believe that the community really would like some time to digest some of the... If it's the same amount of slides that we looked at, we're talking about 50 plus slides, and I want to make sure that people have time to look through that.

Duly noted, and I'm sure the clerk will remind me of that. Thank you.

Just to clarify for the public, I know you told us that for the reason to split this in two parts was so that Circle 16 could be here in person for September 15th presentation.

Yeah, that is correct, Councilmember DeNuke. I think that it's imperative that Mr. Sprague's here to provide that information. Sometimes things just get lost in translation over audiovisual and It didn't work out for today, and I thought it was pertinent to bring this portion, which, as Mr. Sprague outlined, this is just a small tidbit of the overall engagement. So the real meat and potatoes are with what is remaining, and we'll talk about and cover on the 15th.

So I just want the public to understand the reason of putting that in September 15th the most often.

the quick wins that you have been brought to our attention today um understand these are already being implemented now it's not requiring action of the council today because these things are already in in the works that is correct mr mayor um with the exception of the the salary savings i mean they're technically being realized because those positions are still um

available, I'm just not allowing them to be backfilled. So we are realizing savings there, but we could realize them into the future if we decided that those vacant positions were no longer needed. But all the other ones, the carryovers, the dormant CIP projects, the stale encumbrances, all of those have gone through the screening process, joint validation, and the funds have either been realized or released.

That is correct. I'll have a few more comments later, but Council Member Audet.

Will there be any limitations to what's released to the public from Circle 6's report?

Yeah, that's a great question, Council Member Audet. There will be some slides or portions of slides that will have information redacted because some of the information will pertain to ongoing bargaining that the city is currently working through with a number of bargaining units. Absolutely. We're going to release everything that we can, but some information is tied to ongoing contract negotiations and will be redacted for those purposes.

Council member months.

I just want to let the public know and others know that a lot of those things, encumbrances and close out contracts were happening before Circle six got here. probably at least a year or more before. So some of that was already happening. And thanks to Michael, because we had talked about it like at least two years ago.

So just some fair comments. We could not afford to do Circle 6 every single year. If they're listening, I'm sorry, but we can't. afford to do this every single year and i'm sure circle six went into any government agency they would be able to find things just like they're finding for us um so in fairness what are we putting any kind of measures in place for the future that would allow us to be able to find stuff like this in the future or have they recommended some uh protocols for us to do in the future be able to catch this stuff so we don't have to hire them every single year and spend this money so that's another great question mr mayor i think mr sprague really touched on it um when he chatted a few minutes ago

There's a lot of governance and policy and procedural things that need to be taken into consideration and updated. And that is where a lot of the lion's share of the effort really will come to fruition. Obviously, there are other things that we'll touch on the 15th, but a lot of our policies and procedures are just, they're ready to be updated. They're maybe 15 or 20 years old. As council may know we've obviously transitioned from the AS 400 financial system to the Oracle financial system a lot of our policies and procedures were drafted in accordance with the Limitations of AS 400 and it would be very prudent for us to revise those and update those as well as just with the times things have changed And so a term that mr. Sprague uses pretty often I'm gonna steal it here is we need to ring-fence those savings and those things that we've identified to prevent them from happening in the future and And we absolutely are prioritizing that and we're doing it in many ways, specifically with the carryovers and stale encumbrances. We're doing it ahead of updating policy and procedure just by the fact of going through the process. I should also kind of mention that. There is a lot of value in having an independent company come in. A lot of times your staff are very busy with their day-to-day activities, and it becomes very difficult to pull them away from their routine daily activities and have them do extra work. And so a lot of times if we want something done at a rapid or a faster pace, that is when you bring on a consultant. And then obviously someone that hasn't been here very long or is new or is a consultant, they're going to ask a lot of questions, they're going to have good perspective, and they have experience working with other companies, which obviously Circle 6 does, government, and a whole slew of other companies. That really is how you have someone else come in and take a hard look at operations and make suggestions. And I really want to commend, obviously, Circle 6, but city staff as well, because Mr. Sprague hit the nail on the head. City staff went into this with open arms. We helped as much as we could. All the information that was provided to Circle 6 was raw and unfiltered. That was a very critical decision that Mr. Tarbo and I discussed at length before files were created, because it did not seem appropriate to modify, fix, or adjust information before we provided it to the consultant. And so I do think that I would be remiss if I didn't share that with Council, that we intentionally gave raw, unfiltered data to go through the screening process to make sure that we were getting the biggest bang for our buck for the effort. I think it's very, very important to understand that.

Vice Mayor DeNuco? Oh, I just want to... share my experience with the medical field most of the medical institutions like hospitals have every two to three years or so what we call accreditation cycle and an external body comes in hospital actually pay for pays for it and the idea is to go through the operations because just like any big machine with time it needs servicing So you've got to clean the filters, change the oil, look at everything, do the inspections. Think of a car. So I think this exercise, we should have something not this scale, not this expensive, but smaller one. I would say that it's useful for any big machine every few years to have those external people come in and look at the things. and with different eyes thinking outside the box that we cannot see because we are used to doing things certain way.

Good. That was really good feedback. Thank you. Does anybody else have any questions or comments at this time? I see a shake, so we need to accept this presentation here.

I accept.

So you'll accept it? Thank you to the manager, as well as the entry manager, as well as the staff, as well as Circle 6 for bringing this. Okay.

All right. Do we have to make a motion to accept this or no? We just get a verbal? I'm sorry. We're good to go? All right. So we'll move on to the big one, our council travel reports. Anything? Anybody has to report? No? Okay. Okay, any suggestions from council members relative to potential topics for the future? I'm sorry, so we're on to line item 12, suggestions from council members relative to potential topics.

did see a name pop up but maybe that's off so i don't see anything else uh we are gonna you do have one i do um i'm sorry i have reviewed minutes from meetings where we discussed to the finance committee and i've reviewed my notes and attempted to gather as best as i can put together the specific direction that we gave to the finance committee and It feels discouraging because I'm not sure that I could show if someone from the public said what is the line items of topics that the Finance Committee is supposed to bring forward, what specifically we directed, what was handed to the Finance Committee in terms of these are your directives. And I'm not sure if that's a me problem, but I would be discouraged if I was the general public. trying to look at what their job was since we had so many discussions about it. But I would like one, I would like a detailed list of specifically what we voted on so that that's really clear to the public and to this council. And then I also would like to potentially bring back to council a consideration of in the next year, the committee or a timeframe that they had time that felt reasonable that they would potentially bring back any sort of best practices policies for reviewing and approving the budget so council member resner if i could i just want to read back my notes and make sure i captured them correctly first what i heard was a request to essentially be briefed on

what the financial advisory committee was established for kind of what they're supposed to be doing and make sure that that is in alignment with council's direction and then second what i heard was a what i believe is a potential agenda item for the financial advisory committee which is input and recommendations on reporting type of information intervals did i capture that correctly

Yes, some sort of best practices. Once they've had time to digest and review what our current process looks like, give us some feedback, do they have any policy suggestions so that future councils, because this council will look differently next year and so forth, any suggestions, best practices, hey, I see this weakness here, those sort of things.

Okay.

That's it.

Okay. Were you gonna say something, Michael, or no? Michael, were you going to say something? Nope, I think I'm good. Thank you. You're good to go. Okay.

Can it be possible that it comes back at the next meeting in conjunction with some of the stuff that Circle 6 is going to suggest? Because part of my notes was, what is the mechanism by which we actually change policies? And maybe one of those, because if we don't have something scheduled, it's probably not going to happen. So if we... If the Finance Committee can be part of that mechanism, then maybe from the Circle Six's report, we make some suggestions from that of what the Council is amenable to going back to the Finance Committee to target, maybe? I would be amicable to that idea. But I do think that, to her point, there should be regular updates that the Council gets as to what the Finance Committee is doing to make sure we're staying

track and the council's aware of what we're working on we really love a good ad hoc feedback well they may not need to come back and report but it all you and I are also on that Commission so if it is an agenda item in the future either you or I or both of us can also speak to that without requiring them to come but They may or may not want to come, but you and I will be there.

Well, but an agenda item probably makes sense.

Okay.

I don't know the rhythm yet, but we can talk about that.

Sure.

At the committee.

Yeah, okay.

Mayor Littow, is there consensus on that from the council that you want that to come back? Yes. Yes. Okay.

Thank you. So we are going to adjourn, but we're going to go back to closed session, and if we have any reportable action, we will come back and report that out. So this particular meeting is adjourned.