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LTC 143-2020 Response to COVID-19 - Financial Impact and Cost SavingsM IAM I BEACH 143-2020 OFFICE OF THE CITY MANAGER LTC # LETTER TO COMMISSION TO: FROM: DATE: SUBJECT: Mayor Dan Gelber and Members of the City Commission Jimmy L. Morales, City Manager £;uè ~ for March 26, 2020 Response to COVID-19 - Financial Impact and Cost Savings This letter is to advise the City Commission on the financial impact to date on the City of Miami Beach services and workforce due to the recent spread of COVID-19 and the associated local, county and state executive orders due to this public health emergency. I recognize that I should have reported on this sooner, but this crisis has unfolded so rapidly that I had to make rapid decisions to avoid serious financial consequences. Please note that I am doing everything within my power to steer our organization through this crisis while at the same time responding to a difficult and dynamic reality. Our workforce is the heart of providing services, whether it be for residents, businesses or visitors, and it is my top priority to address this crisis effectively and collectively as a community. While the City of Miami Beach is highly dependent on the tourism and hospitality industry, we have planned in advance for shocks like this through our overall efforts to build resilience through reserves and real experiences like the downturn from Zika. While the impact of COVID-19 will likely be very significant, due to prudent financial planning, we have strong reserves in place that will help us navigate this crisis. We are committed to paying the city's debt and other vendor obligations. Like many cities across the country, we will be requesting an infusion of funding from the State and Federal Governments to help offset revenue losses that are critical to providing continued services during this time. Financial Impact Our reserves are in place to provide continuity of service during emergencies. The General Fund has a reserve of $80.6 million. The Resort Tax Fund reserve is $15.2 million. Due to COVID-19, we are carefully tracking the impacts to our Resort Tax, Parking, Water & Sewer, and General Fund revenues. Cumulative revenue losses in these funds total approximately $3.6 million per week. We expect these losses to continue over the upcoming weeks and months until the COVID- 19 emergency is behind us. To help mitigate the loss of revenue, the city is aggressively pursuing cost saving opportunities. To proactively limit spending in parallel with the State of Emergency regarding the Coronavirus (COVID-19) issued on March 12, 2020, I have taken the following actions: • Issued a hiring freeze (including reclassifications) and a budget freeze for all non- essential, non-capital (construction) expenditures simultaneously with the declaration of emergency. • Placed a hold on al l non-C O VI D -re late d exp en di ture s over $5,000, requiring an additional layer of review by a fo ur-person oversight com m ittee report ing to m e sim ultaneously w ith th e d e c la ra t io n o f e m e r g e n c y . • C a n c e ll e d a ll c ity -re la t e d tra v e l o n M ar ch 1 0, 2 0 2 0 . • R e v ie w in g a n d s u s p e n d in g a ll c o n tra c tu a l s e rv ic e s s o th a t w e a r e m a in ta in in g o n ly w h a t is n e c e s s a ry d u r in g th is e m e r g e n c y . • S u s p e n d e d th e la b o r c o n t ra c ts w it h A F S C M E , C W A , a n d G S A to g iv e u s g re a t e r fle x ib ility in s c h e d u lin g a n d a s s ig n m e n ts d u r in g th is e m e r g e n c y (t h is d o e s n o t im p a c t c o m p e n s a tio n o r b e n e fit s ). • C e a s e d o v e rt im e fo r a ll d e p a rt m e n t s e x c e p t P o lic e a n d F ire . If a n e m e r g e n c y a r is e s s u c h th a t o v e rt im e is n e c e s s a ry , it w ill re q u ir e m y a p p ro v a l. I h a v e a s k e d th e P o lic e a n d F ire C h ie f s to s t u d y th e u s e o f o v e rt im e in p u b lic s a f e t y a n d b r in g m e re c o m m e n d a t io n s a s s o o n a s p o s s ib le o n h o w to d r a m a tic a ll y re d u c e it o r e lim in a te it. Personnel Impacts As the emergency has continued and unfolded, the city has significantly reduced services and has closed all beaches, parks and recreation facilities and programs, public bathrooms, garages and parking lots, and the Building Department's North office. Furthermore, the nearly complete closure of our hospitality and entertainment sector has significantly reduced demand for many of our services. The need for parking enforcement and trolley services has dramatically declined as our visitor numbers have dropped. On March 26th, trolley services will be suspended. Our staffing needs have changed with these reductions in services. Administration has released one hundred ninety-two (192) part-time and eleven (11) temporary employees. Fifty-five (55) temporary agency employees have also been released. First responders from the Police and Fire Departments are not impacted. These impacted part-time and temporary employees are from the following departments: • Finance • Human Resources • Planning • Property Management • Sanitation • Parks and Recreation • Ocean Rescue • Parking • Police ( civilian only) In most cases, the work being performed by these individuals was no longer needed as a result of the closures (i.e, Ocean Rescue, Parks, and Parking). Employee Assistance I take any reduction in employment very soberly and seriously and have mobilized any and all support for these part-time and temporary employees. All affected part-time employees who have accrued leave are being allowed to use their leave balances (vacation and sick) before going into unpaid status. Temporary employees do not accrue leave. H um an Resources (HR ) has pro vided all im pacted em ployees info rm ation on how to apply for unem ploym ent assistance thro ugh the State of Florida and reemployment benefits available thro ugh C areerSource South Florida. The city will also continue to offer the Employee Assistance & W ork/Li fe Support Pro gram (EA P) benefit pro vided by Cigna to all impacted employees and their household mem bers. O nce we set up our in-house case management office as discussed yesterday, we w ill offer those serv ices to our displaced employees as well. All released employees are encouraged to apply fo r re-assignm ent opportunities thro ugh HR as this situation unfolds and the personnel needs of the city may change. T hese serv ice reductions are difficult but necessary and as the CO VID-19 public health em ergency continues to evolve, I do anticipate that additional cost reduction strategies will be needed. I com m it to discuss those with you on our daily morn ing calls as we move forw ard.