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water and sewer fees, have not been increased for some time and staff has prepared an analysis to update these fees. Staff will also update expenditure forecasts to reflect CaIPERS increases as well as the impacts from new facilities such as the Firehouse Arts Center. Staff will return to the Council with the mid -year budget in January and February 2011 as well as the audited financial report. Councilmember McGovern confirmed with Ms. Wagner that staff across all departments, worked diligently to spend less than was anticipated and asked what that amount was. Mr. Fialho stated each department reduced revenues by approximately 15% without any reduction in service levels. Councilmember McGovern asked if replacement of some larger items has been delayed, as well. Mr. Fialho said it was decided, with adoption of the operating budget, not to unnecessarily fund capital projects. The last of the major projects were completed this year with the Firehouse Arts Center and he doubted they would see any projects of a similar magnitude in the next few years. Necessary items such as basic street maintenance, water infrastructure improvements and sewer infrastructure improvements will continue to be funded. Councilmember McGovern noted these changes have impacted the development of Bernal property park. Mr. Fialho said the park was anticipated to cost over $260 million over build -out. Staff had assumed that, over a 17 -year period, approximately $5 million could be transferred into that program to either fund the projects in the different phases or to leverage some debt to accomplish the improvements. Most of the projections from even two years ago have really not materialized. The City's two major indicators of economic health, sales and hotel tax, are down considerably and this reflects that. Councilmember McGovern asked if unused vacation would be looked at in the scope of pension reform discussions and if staff believes there would be new financial policy coming out after reviewing these issues. Mr. Fialho said yes, accumulated leave balances are an obligation from an accounting perspective. The more that is reduced, the more long -term liability is reduced. Councilmember Sullivan asked when staff would return with the five year forecast and fee adjustments. Mr. Fialho said each has to go through the Finance Committee first, but staff is anticipating sometime in early 2011. He noted the adjustment of development fees is really more of a policy issue and could take more time. Ms. Wagner added that the first quarter of 2010 -11, which has some good news, would be brought forward in January. Mayor Hosterman noted there were not speakers. Councilmember Sullivan said managing the City's finances is a much broader picture than most people realize, and also thanked Ms. Wagner, Mr. Fialho, and staff for everything they do. He said that while certain parts of the economy are improving, unemployment is not. Councilmember Thorne commended staff on their work and guessed many municipalities from across the country would be incredibly pleased to have received a report such as this. Motion: It was M/S by Sullivan/Thorne to adopt Resolution No. 10 -413 accepting the 2009 -10 Year -end Financial Report for the Operating Budget and amending the Fiscal Year 2009 -10 Operating Budget. Motion carried by the following vote: City Council Minutes Page 6 of 16 December 7, 2010