Seawall, fire services get priority in Belvedere’s draft budget

Belvedere’s draft budget prioritizes funding for an upcoming three-year seawall repair project while allocating more money toward ballooning costs of litigation and the city’s service contract with the Tiburon Fire Protection District.

For fiscal 2024-2025, which begins July 1, the city is planning for $12 million in total appropriations — including fund transfers for future expenses — against about $10.7 million in total revenue. The overall budget makes use of this year’s oversized general-fund reserves for long-term smoothing, according to Director of Administrative Services Helga Cotter.

City policy is to maintain general-fund reserves of at least 50% of expected expenditures plus the cost of fire and pension-debt service, which combine for about $8.26 million for the current fiscal year. However, Belvedere is expected to finish the year on June 30 with a 68% reserve, leaving an excess of about $1.3 million heading into fiscal 2025.

Belvedere will draw that down by about $1.2 million, to $4.4 million next fiscal year, for critical infrastructure and capital improvements, its pension trust and equipment replacement, leaving about $110,000 in excess general-fund reserves. Doing so will bring the city back to roughly 50% reserves annually through fiscal 2028-2029 under Cotter’s five-year projections.

The Belvedere City Council reviewed the draft budget at its May 13 meeting, where the annual May hearing allows the council — and the public — to review revenue and expenses before the council provides direction to staff for revisions. The budget is expected to return for final approval at the council’s June 10 meeting.

The overall budget includes an operating budget for salaries, departmental funding, fire services and pension debts; a capital budget for infrastructure improvements and equipment; and dedicated reserve funds for future pension and infrastructure expenses.

Operating expenses will be about $9.9 million, up 9.1% over the current year, with the biggest costs being salaries and the fire contract. The $10.3 million in operating revenues comes mostly from property taxes and is up about 3%, leaving an operating surplus of about $489,000.

Capital expenditures are about $1.1 million, down 29%, going mostly toward infrastructure and streets, with anticipated six-figure cuts each to public walking lanes, parks and open space and community buildings. Capital revenue is about $379,000, down 7.1%, mostly coming from city shares of state and county road-impact fees, sales taxes and gas taxes; that will be supplemented with the operating surplus and excess general-fund reserves.

Building up pension, infrastructure funds

To build up its dedicated reserve funds, Belvedere plans to transfer about $950,000 from the general fund to make an annual installment of $300,000 toward the pension trust, plus $650,000 — up from $450,000 this year — to its critical-infrastructure fund in anticipation of a planned $2.2 million Beach Road stabilization project.

The seawall project aims to fortify a long-troubled section of Beach Road threatened by erosion by installing sheet piles about 40 feet below the southern sidewalk along the Belvedere Cove side of the street near 20 and 26 Beach Road, across from Cove Road, and near the China Cabin, across from Peninsula Road, where there’s a visible separation at the sidewalk at all three sites.

The city anticipates spending $205,000 in the coming fiscal year to fund design, engineering and mitigation. Construction is planned for fiscal 2026-2027 and is projected to cost about $1.9 million.

Meanwhile, the pension trust was created in early 2021 to address rising costs and unfunded liabilities, with an initial savings goal of $3 million. At the time it was seeded with $1.2 million in excess general-fund reserves and $300,000 from the city’s pensions fund. Starting in fiscal 2022, it was then to be allocated $300,000 annually for five years, using savings created by deferring a police officer vacancy and suspending an initiative to improve the city’s public walking lanes. However, the latest budget projects the allocation will continue at least through fiscal 2029 — keeping the officer hiring and lane initiative on hold with it.

Costly litigation

More immediately, Belvedere is putting another $200,000 in operating expenses into replenishing its fund for legal damages and settlements beyond its insured risk. While City Manager Robert Zadnik said officials hope to spend only a fraction of that, drawdowns have required Belvedere to contribute an extra $200,000 this fiscal year and $114,863 last year — or more than half a million over three years to replenish the fund. The city didn’t require any extra money in fiscal 2021 and 2022.

The city is also budgeting for $225,000 in attorney fees, as it did this fiscal year, though estimated actual fees this year are about $422,000.

All told, that’s at least $730,000 in additional budget adjustments for legal expenses over three years.

Belvedere has faced a number of challenges recently, bringing in outside help to consult on the contentious redevelopment of the Mallard Pointe property between City Hall and the Belvedere Lagoon while fighting a lawsuit over its 2023-2031 housing element. A nonprofit pro-housing group sued the city in January 2023 for adopting its draft housing plan before the state completed its initial review, as required by law. But after a Marin judge declined to expedite the case, the suit became moot when the state review was completed, so the nonprofit withdrew it.

In November, the city won a suit filed in 2019 by resident Anthony Piazza, who accused two councilmembers of bias and prejudice against him in their decision to allow his neighbor to build a pier.

The city is still involved in a lawsuit with Yema Khalif and Hawi Awash, owners of Yema clothing boutique in downtown Tiburon, after an alleged racial profiling incident at the shop by Tiburon and Belvedere police in 2020. While Tiburon settled out of court, Belvedere took the allegations of federal and state civil-rights violations to trial in 2022. The federal complaints were dismissed, and the state complaints were remanded to a lower court, but Khalif and Awash have appealed.

Belvedere’s also still involved in a suit filed in 2022 by residents David and Julia Flaherty, who are fighting a $300,000 construction time-limit penalty on their home-renovation project. They allege due process and other constitutional violations. David Flaherty last week said a settlement couldn’t be reached and the case appears headed to trial.

Operating: Salaries, fire, police and Martha

Salaries and benefits make up most of the $9.9 million in operating expenses, as Belvedere will spend a projected $4.7 million there in fiscal 2025, up nearly 11% from the current fiscal year. That accounts for a 3% cost-of-living increase for all staff and added costs for health insurance to accommodate more staff members with families, Cotter said, as well as an increase in the city’s required contribution toward the California Public Employees’ Retirement System, or CalPERS.

Total Police Department expenses are projected at about $1.7 million. As in each of the past four years, the city said it will defer hiring an additional sworn officer, with the savings going toward the pension trust.

The department is considered fully staffed at six officers but, with the deferral, it had been operating with only five. However, last year, the department shrank to just three on active duty after one left for another agency and a second went on long-term medical leave. The council filled the vacancy and authorized hiring a sixth officer to bring the city back to five active-duty cops by pulling funds from other planned projects, officially leaving the deferral in place so the city can continue funding the trust.

For fiscal 2025, the sixth officer is again being funded by trims elsewhere. The officer on medical leave could retire or, if he returns, the city could exercise its option to eliminate one of the two new officers without cause during their 18-month probationary periods, either of which would keep the department at five active officers with the sixth on a deferred vacancy.

Some $1.4 million each will go to the planning and building department, public works and general administration and about $69,000 in allocations for The Ranch, Belvedere and Tiburon’s independent joint recreation agency. The city will also pay $129,000 in member dues to the Richardson Bay Regional Agency.

Belvedere’s contract for service from the Tiburon Fire Protection District is the next biggest expense after salaries at about $2.4 million next year, up nearly 12% from the current year.

The city is expected to raise about $1.1 million from its parcel tax for fire services, but annual cost increases are outpacing revenue from the tax, meaning a greater share must be drawn from the general fund. Next year the gap to be covered is about $1.3 million, up about a quarter-million dollars from the current year.

The trend of costs outpacing tax revenue is projected to continue, raising concerns from city officials. The tax revenue has grown an average about 4% each year since 2000, while the contract costs have increased an average of about 6% annually, according to city figures.

While the tax originally paid for more than the entire contract when it was enacted in 1981, that share dropped to 79% by fiscal 2001 and is 47% today, according to city figures, forcing Belvedere officials to dip into the general fund of the annual budget each year to make up the difference.

Fire spending currently accounts for 22% of the city’s budget, up from 14% in fiscal 2021. It’s projected to account for 35% by fiscal 2051.

Officials last year mulled potentially asking voters to increase the tax but dropped the idea after early polling showed minimal support.

Councilmember Sally Wilkinson, who sits on the finance committee, said the group is investigating ways to increase revenues without taxation and expects to report to the council in coming months.

Other notable operating expenditures in the draft budget include a $125,000 contribution to help Marin County purchase and preserve the 110-acre Martha Property on the Tiburon Ridge as open space, a deal that’s expected to be finalized in June, and $100,000 on a consultant-led study to improve the planning department’s fee structure. However, Councilmember Nancy Kemnitzer flagged that number during last week’s meeting as a bit high. She said estimates from a few years ago were $25,000-$30,000 and requested staff take a closer look.

Capital: Paving, equipment and maintenance

Among the notable capital expenditures are a projected $320,000 toward the city’s pavement improvement program; $172,500 to investigate horizontal cracks that have appeared in a concrete retaining wall opposite 172 Beach Road and make appropriate repairs or replacements; and $111,000 in equipment replacement, including $61,000 toward replacing a public works vehicle with a new electric car and $20,000 to upgrade sound systems and laptops for the council chambers.

Smaller projects include $65,000 to remodel the kitchen at the Belvedere Community Center, $35,000 toward general lane maintenance, $30,000 for a storm-drain assessment and $25,000 to repair and refurbish city tennis courts.

Kemnitzer asked staff to look into upgrading the Community Center’s Founders Room to be used as a heating and cooling center in the event of citywide loss of power or an emergency. She said she has requested heating and cooling infrastructure for multiple years and still thinks it is a priority.

A project to improve the Founders Room, including upgrading the heating and cooling system, was first identified in the fiscal 2020-2021 budget following Pacific Gas and Electric Co. power shutoffs in October 2019.

Public Works Director Antony Boyd said PG&E will do an inspection to see if the city qualifies for an incentive that would pay for a heating and cooling unit.

Reach Naomi Friedland at 415-944-4627.

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