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Item 4.1 - First Qtr Budget Update for Fiscal Year 2014-15a �' 7N THE C DATE: City of Poway COUNCIL AGENDA REPORT October 21, 2014 APPROVED APPROVED AS AMENDED ❑ (SEE MINUTES) DENIED ❑ REMOVED ❑ CONTINUED Resolution No. +►-�— H-OW TO: Honorable Mayor and Members of the City Council Honorable Chairman and Members of the Housing Authority Honorable Chairman and Members of the Successor Agency to the Poway Redevelopment Agency FROM: Daniel Singer, City Manager /Executive Director, INITIATED BY: Scott Edwards, Director of Administrative Services Peter Moote, Assistant Director of Administrative Service4�4, Andrew White, Finance Manager4t SUBJECT: First Quarter Budget Update for FY 2014 -15 Summary: With FY 2014 -15 first quarter activity now complete, this first report identifies numerous adjustments completed under City Manager authority and also recommends appropriations for updated budget requirements. Additionally, staff has revised certain revenue projections based upon FY 2013 -14 year -end closing as well as FY 2014 -15 year -to -date activity. This results in a slight improvement to the General Fund revenue base for the current fiscal year. A full report on FY 2013 -14 year -end closing is scheduled for City Council consideration on November 18, 2014. Recommended Action: It is recommended the City Council receive this report and adopt the attached resolutions to approve the FY 2014 -15 first quarter adjustments. Backaround: On June 17, 2014, the City Council approved Resolution 14 -041 to adopt the FY 2014- 15 Proposed. Budget. As adopted, the budget included a balanced General Fund and reserves that significantly exceed the recommended minimum level identified in our Financial Policy. In addition to adopting the City's annual budget, Resolution 14 -041 authorized the City Manager to make changes in department operating, program, and capital improvement budgets during FY 2014 -15 as deemed desirable and necessary to meet the City's needs. 1 of 14 October 21, 2014 Item #4.1 FY 2014 -15 First Quarter Budget Update October 21, 2014 Page 2 Findings Revenues Based upon the FY 2013 -14 year -end closing as well as FY 2014 -15 year -to -date activity, staff anticipates a minor improvement to the City's FY 2014 -15 General Fund revenue base. Noteworthy first quarter revenue activity includes the following: Property Tax The FY 2014 -15 Adopted Budget's regular Property Tax revenue was based upon estimated FY 2013 -14 revenue of $8,126,532, with a 3% increase applied. Actual FY 2013 -14 Property Tax revenue ended higher at $8,162,461, an increase of $35,929 (or roughly $37,000 with a 3% increase applied for FY 2014 -15). Additionally, San Diego County recently reported the City of Poway's Assessed Value (AV) increased by 4.63 %. Although this exceeds original projections by 1.63 %, a revised Property Tax estimate is not included with this report. The City's projection for regular Property Tax revenue will be updated after the year's fourth and final apportionment is received from San Diego County in November. Property Tax In -lieu of Motor Vehicle Similar to the City's regular Property Tax, the FY 2014 -15 Adopted Budget projected Property Tax In -Lieu of Motor Vehicle revenue at 3% over FY 2013 -14 estimated. With the City's increase in AV of 4.63% (as reported by San Diego County), this revenue source is now projected to exceed the Adopted Budget estimate by $65,530. Sales Tax The Sales Tax projection included in the FY 2014 -15 Adopted Budget was based upon estimated FY 2013 -14 revenue of $12,027,114, with a 3% increase applied. Actual FY 2013 -14 Sales Tax revenue ended the year at $12,047,687, an increase of $20,573 (or roughly $21,000 with a 3% increase applied). At this time, the adopted estimate for FY 2014 -15 appears reasonable and no adjustment is recommended. Interest Earnings The City's Interest Earnings are beginning to rise. With rates at historic lows, even small increases significantly affect the City's overall earnings. For the FY 2014 -15 Adopted Budget, staff projected the General Fund's Interest Earnings to be roughly the same as FY 2013 -14. However, with rising rates, staff estimates FY 2014 -15 Interest Earnings will now exceed the Adopted Budget estimate by approximately $130,000. Revenue Outlook While it is still early in the fiscal year, there is sufficient first quarter information to confirm revenues are trending positively for FY 2014 -15. Considering Property Tax In- lieu of Motor Vehicle and Interest Earnings revenue alone, it appears reasonable to project an additional $200,000 in General Fund revenue. Consistent with prior years, staff will conduct a more comprehensive review with the City's FY 2013 -14 Year -End report in November, followed by the FY 2014 -15 Second Quarter update in early 2015. 2 of 14 October 21, 2014 Item #4.1 FY 2014 -15 First Quarter Budget Update October 21, 2014 Page 3 Expenditures — Transfers Pursuant to Resolution 14 -041, the City Manager has approved first quarter transfer adjustments using funds appropriated with the FY 2014 -15 Adopted Budget. The schedule of completed transfer adjustments is included with this report as Attachment 1, and includes the following notable item: Development Services The City's engineering team has experienced multiple vacancies this fiscal year. Development activity levels require ongoing engineering support (e.g., inspections, plan checking) while the City conducts recruitments to fill the vacancies. Year -to -date transfers include the use of $91,400 from salary and benefit accounts (due to vacancy savings) for outside professional services. Expenditures — Appropriations Recommended appropriations for the first quarter total $293,535, with a General Fund impact of $222,190. The schedule of prior appropriation adjustments is included as Attachment 2, which represents first quarter appropriations previously approved by the City Council (under separate action). Schedules of new appropriations are included as exhibits to the City's resolution (Attachment 3) and the Housing Authority's resolution (Attachment 4). Noteworthy items are as follows: Administrative Services The Human Resources Division (0101) requests $64,000 for several efforts, including: recruitment for the Public Works Director position; background reviews of prospective Safety Services employees; and an audit of the City's compensation practices for compliance with the Fair Labor Standards Act. The Finance Division (0103) recommends a $5,000 appropriation for additional audit services. New rules issued by the Governmental Accounting Standards Board (GASB) resulted in a change to the way pensions are reported in financial statements, which now require additional independent audit procedures. In order to obtain the information necessary to meet the new requirements, the City's current biannual actuarial valuation for the PARS retirement enhancement plan (a "closed" plan since 2012) will need to be performed on an annual basis. Additionally, $20,000 in appropriations is requested for Capital Replacement Equipment (0108) to replace the aging pool auto - chlorine system. The system was originally purchased in 2002 and has exceeded its useful life. Community Services An $18,000 appropriation is requested for Old Poway Park (0205) to fund the ongoing restoration of the Poway Midland Railroad cable car (to be completed by the Poway Midland Railroad Volunteers). By agreement, the City funds this restoration project, with roughly $69,000 contributed to the cable car restoration, to date. An additional appropriation would allow the volunteers to completely retrofit the car's axles to minimize the load on the drive system, motor, and batteries. 3 of 14 October 21, 2014 Item #4.1 FY 2014 -15 First Quarter Budget Update October 21, 2014 Page 4 Development Services Appropriations totaling $41,000 are recommended for Land Development Engineering (0305) and Engineering Inspection (0306). Additional funding would allow the department to continue outside professional engineering services while recruitments are conducted to fill multiple vacancies. An appropriation of $23,000 is recommended for Storm Water Engineering (0308) to complete an update of the City's Jurisdictional Urban Runoff Management Plan ( JURMP). Updating the JURMP is a requirement of the new Storm Water permit. Under Housing Programs (0309), an appropriation of $63,000 is recommended for additional legal and appraisal services. This includes $40,000 in legal support services related to the Next Stage U and Habitat for Heroes projects. Public Works For Water Supply, Treatment, and Storage (0402), staff recommends a $10,000 appropriation to complete electrical, irrigation, and landscaping improvements at Sagecrest reservoir. This project results from neighborhood input received during the CUP review process concerning additional cellular facilities at the reservoir. The City and cell carriers have agreed to improve the area's aesthetics by replacing a chain -link enclosure with a block wall as well as enhancing landscaping and lighting. Including this action, a total of $60,000 is appropriated for this purpose. An appropriation of $12,400 is requested in Parks, Trails, and Maintenance (0418) for the Kumeyaay Ipai Interpretive Center. Funding includes $7,400 to re- establish City responsibility for landscape maintenance services (more recently performed by volunteers) and $5,000 for irrigation repair. An additional $7,600 is required to replace damaged plants. However, funds are available in the Kumeyaay Ipai project account (1671) for this purpose. Considering all funding sources, the total budget for the project is $20,000. Safety Services While there are no material adjustments to report at this time, it is important to highlight an early trend in the department's overtime expenses. Safety Services has experienced increased overtime, primarily attributable to a heightened number of vacancies and employee injuries (both industrial and non - industrial). As of first quarter -end, overtime expenses excluding mutual aid activity total approximately $508,200, or 36% of available appropriations. At this level, the department's overtime exceeds average year -to -date activity for the past three fiscal years by roughly 30 %. Staff does not recommend additional appropriations at this time. However, this expense will be closely monitored going forward. The City Council will receive updates via upcoming quarterly reports should adjustments be needed. 4 of 14 October 21, 2014 Item #4.1 FY 2014 -15 First Quarter Budget Update October 21, 2014 Page 5 Capital Improvement Projects For Veteran's Park, staff recommends appropriating $10,225 from the Veteran's Memorial Fund (777- 1189A). The appropriations would re- establish a $20,000 funding baseline for the fiscal year, which supports tile replacement and ongoing maintenance. The appropriations also include $3,500 to replace existing plastic trash cans with sturdier cast iron trash cans. Successor Agency $75,000 is requested for legal services associated with the dissolution of redevelopment. This includes $65,000 for pending litigation and $10,000 concerning the pending repayment of former Redevelopment Agency loans. General Fund Summary Staff has prepared a revised General Fund summary (Attachment 5) to reflect the FY 2014 -15 Adopted Budget, as amended through the first quarter. The summary identifies the net change in revenues and allocated expenditures, with a revised projection for the change in fund balance of $53,876. Reserve Balances With the FY 2014 -15 budget adoption, the projected General Fund balance was $20.4 million. Staff is not revising the projected General Fund balance for this report. A more thorough review of General Fund revenues and expenditures will take place for the FY 2013 -14 Year -End Report as well as the FY 2014 -15 Second Quarter update. The projected General Fund balance may be adjusted at that time. Additional reserves, which are comprised of unrestricted General Fund monies, include the Economic Uncertainty Fund at $3.1 million, the Street Maintenance Fund at $4.5 million, and the Pension Stabilization Fund at $2.4 million. Fiscal Impact: The attached resolutions confirm the City Manager approved budget transfers and authorize appropriations for the proposed First Quarter budget amendments. Environmental Review: None required. Public Notification: None. Attachments: 1. Schedule of First Quarter Completed Transfers 2. Schedule of First Quarter Prior Approved Appropriations 3. City Resolution for First Quarter Recommended Appropriations 4. Housing Authority Resolution for First Quarter Recommended Appropriations 5. General Fund Summary 5 of 14 October 21, 2014 Item #4.1 First Quarter Completed Transfers to City Financial Program for Fiscal Year 2014 -15 Operating Budgets Development Services Division Transfer From Account Transfer To Account Amount Engineering Inspection (0306) Regular Salaries (1110) Other Professional Fees (1799) 39,000 Engineering Inspection (0306) Benefits (1300) Other Professional Fees (1799) 22,000 Land Development Eng (0305) Regular Salaries (1110) Other Professional Fees (1799) 19,400 Land Development Eng (0305) Benefits (1300) Other Professional Fees (1799) 11,000 Public Works Division Transfer From Account Transfer To Account Amount Street Maintenance (0411) Sidewalk & Barricades R & M (4324) Other Equipment (4899) 3,005 Attachment 1 6 of 14 October 21, 2014 Item #4.1 First Quarter Completed Appropriations to City Financial Program for Fiscal Year 2014 -15 Capital Improvement Projects /Programs Operating Budgets Project Description Fund Source Fund /Prof. # Development Services Water Corrosion Repair Water Fund (510) 510 -1760A Water Conservation Program Water Fund (510) 510 -1167A (60,238) 90,238 Division Fund Account I Description Amount Planning (0301) General Fund (100) 4120 Other Contractual Services 2,835 Total Development Services 2,835 Public Works Division Fund Account Description Amount Utility Systems Op & Maint. (0401) Water Fund(510) 1726 Special Studies (60,000) Total Public Works (60,000) Capital Improvement Projects /Programs Project Description Fund Source Fund /Prof. # Amount Water Corrosion Repair Water Fund (510) 510 -1760A Water Conservation Program Water Fund (510) 510 -1167A (60,238) 90,238 Total Multi -Year Programs & Capital Improvements 30,000 Attachment 2 7 of 14 October 21, 2014 Item #4.1 RESOLUTION NO. 14- A RESOLUTION OF THE CITY COUNCIL, HOUSING AUTHORITY, AND SUCCESSOR AGENCY TO THE POWAY REDEVELOPMENT AGENCY OF THE CITY OF POWAY, CALIFORNIA APPROVING AMENDMENTS TO THE CITY'S FINANCIAL PROGRAM FOR THE FIRST QUARTER FISCAL YEAR 2014 -2015 WHEREAS, on June 17, 2014, the City Council of the City of Poway adopted the Poway Financial Program for Fiscal Year 2014 -15; and WHEREAS, a review of revenue and expenditure activity at first quarter end has determined that certain amendments to the Fiscal Year 2014 -15 Poway Financial Program are necessary. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway that the additional appropriations and transfers attached hereto as Exhibit "A" and incorporated herein by this reference are approved. PASSED, ADOPTED, AND APPROVED by the City Council of the City of Poway at a regular meeting this 21St day of October, 2014. Don Higginson, Mayor ATTEST: Sheila Cobian, CMC, City Clerk 8 of 14 Attachment 3 October 21, 2014 Item #4.1 Resolution No. 14- Page 2 STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO) I, Sheila Cobian, CIVIC, City Clerk of the City of Poway, do hereby certify under penalty of perjury that the foregoing Resolution No. 14- was duly adopted by the City Council at a meeting of said City Council held on the 21St day of October 2014, and that it was so adopted by the following vote: AYES: NOES: ABSENT: DISQUALIFIED: Sheila Cobian, CIVIC, City Clerk City of Poway Attachment 3 9 of 14 October 21, 2014 Item #4.1 Exhibit A First Quarter Recommended Appropriations to City Financial Program for Fiscal Year 2014 -15 Operating Budgets Legislative & Administrative Division Fund Account Description Amount City Manager (0013) General Fund (100) 1110 Regular Salaries 3,230 City Manager (0013) General Fund (100) 1300 Benefits 1,520 Total Legislative & Administrative 4,750 Administrative Services Division Fund Account Description Amount Human Resources (0101) General Fund (100) 1799 Other Professional Services Human Resources (0101) General Fund (100) 4934 Recruitment Finance (0103) General Fund (100) 1799_ Other Professional Services Capital Replacement Equip (0108) Capital Replacement (611) 6122C Computer Software 18,000 46,000 5,000 20,000 Total Administrative Services 89,000 Community Services Division Fund Account I Description Amount Old Poway Park (0205) General Fund (100) 4904 Community Relations 18,000 Recreation (0201) General Fund (100) 6199 Other Equipment 1,600 Total Community Services 19,600 Development Services Division Fund Account I Description Amount Planning (0301) General Fund (100) 4908 Education & Training Land Development Eng. (0305) General Fund (100) }117 -99 — !Other Professional Services Land Development Eng. (0305) General Fund (100) 13311 ICell Phone Engineering Inspection (0306) General Fund (100) 1799�;Other Professional Services Storm Water Engineering (0_308) General Fund (100) '4120 ?Other Contractual Services Successor Agency Admin (0310) General Fund (100) 1702B Fees- Outside Attorney Successor Agency Admin (0310) General Fund (100) 1702D -, Litigation - Outside Attorney 1,260 32AM 200 9,000 23,000 10,000 65,000 Total Development Services 140,460 Public Works Division Fund Account Description Amount Public Works (Dist. across 13 divisions) 4120 Other Contractual Services 41000 Water Supply & Treatment (0402) Water Fund (510) 4120 Other Contractual Services 10,000 Parks, Trail & Landscape Maint (0418) General Fund (100) 4116 Landscape Maintenance 12,400 Total Public Works 26,400 Safety Services Division Fund Account Description Amount Law Enforcement (0504) General Fund (100) 4120 Other Contractual Services 3,100 Total Safety Services 31100 Grand Total - Year -end Operating Budget Adjustments 283,310 Capital Improvement Projects /Programs Project Description Fund Source Fund /Prof. # Amount Veteran's Park Maintenance Veteran's Memorial Fund (777) 777 -1189A 10,225 Total Multi -Year Programs & Capital Improvements 10,225 Attachment 3 10 of 14 October 21, 2014 Item #4.1 RESOLUTION NO. 14- A RESOLUTION OF THE CITY COUNCIL, HOUSING AUTHORITY, AND SUCCESSOR AGENCY TO THE POWAY REDEVELOPMENT AGENCY OF THE CITY OF POWAY, CALIFORNIA APPROVING AMENDMENTS TO THE CITY'S FINANCIAL PROGRAM FOR THE FIRST QUARTER FISCAL YEAR 2014 -2015 WHEREAS, on June 17, 2014, the Housing Authority of the City of Poway adopted the Poway Financial Program for Fiscal Year 2014 -15; and WHEREAS, a review of revenue and expenditure activity at first quarter end has determined that certain amendments to the Fiscal Year 2014 -15 Poway Financial Program are necessary. NOW, THEREFORE, BE IT RESOLVED by the Housing Authority of the City of Poway that the additional appropriations and transfers attached hereto as Exhibit "A" and incorporated herein by this reference are approved. PASSED, ADOPTED, AND APPROVED by the City Council of the City of Poway at a regular meeting this 21St day of October, 2014. Don Higginson, Chairman ATTEST: Sheila Cobian, CMC, Secretary Attachment 4 11 of 14 October 21, 2014 Item #4.1 Resolution No. 14- Page 2 STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO) I, Sheila Cobian, CIVIC, Secretary of the Poway Housing Authority, do hereby certify under penalty of perjury that the foregoing Resolution No. 14- was duly adopted by the Members of the Housing Authority at a meeting of said Authority held on the 21 st day of October 2014, and that it was so adopted by the following vote: AYES: NOES: ABSENT: DISQUALIFIED: Sheila Cobian, CIVIC, Secretary City of Poway Attachment 4 12 of 14 October 21, 2014 Item #4.1 Exhibit A First Quarter Recommended Appropriations to Housing Authority Financial Program for Fiscal Year 2014 -15 Attachment 4 13 of 14 October 21, 2014 Item #4.1 Operating Budgets Development Services Division Fund Account I Description Amount Housing Programs (0309) Housing Programs (0309) Housing Authority (416) 17028 Fees - Outside Attorney Housing Authority (416) 1799 Other Professional Fees 45,000 18,000 Total Development Services 63,000 Attachment 4 13 of 14 October 21, 2014 Item #4.1 General Fund Summary FY 2014 -15 1 st Quarter Review FY 2014 -15 FY 2014 -15 REVENUES: ADOPTED 1st Qtr. Update Adjustment Operating Property Tax 9,188,330 9,188,330 - Property Tax - Allocation ABXI 26 Trust Fund 2,600,000 2,600,000 - Admin. Allowance ABXI 26 Trust Fund 690,000 690,000 - Sales Tax 12,387,930 12.387 930 Interest Income /Rental of Property 1,536,770 1,666,770 130,000 State Subventions 4,121,550 4,187,080 65,530 Franchise Fees 2,264,520 2,264,520 - Fines & Penalties 144,000 144,000 - Development Fees 1,512,030 1,512,030 - Community Services Fees 1,873,870 1,873,870 - Safety Services Fees 1,523,700 1,523,700 - Transient Occupancy Tax 535,410 535,410 - AII Other Revenue Items 374,130 374,130 - Subtotal Operating Revenues 38,752,240 38,947,770 195,530 Non -Operating Sources: Fire Protection Fees 625,000 625,000 - COPPS Grant 100,000 100,000 Library Fund Interest Income 1,150 - Grand Total Revenues 39,478,390 39,673,920 195,530 EXPENDITURES: Operating: Legislative & Administration 1,080,190 1,082,140 1,950 Administrative Services 2,136,357 2,183,108 46,751 Community Services 5,156,270 5,175,870 19,600 Development Services 3,754,656 3,894,351 139,695 Public Works 3,317,251 3,328,346 11,095 Safety Services - Fire 10,768,660 10,768,660 - SafetyServices - ........................................ _ ........................................._......... ............................... ._....._ Subtotal General Fund Expenditures 36,843,085 37,065,274 222.190 Street Maintenance 1,000,000 1,000,000 - General Fund Operating Expenditures 37,843,085 38,065,274 222,190 Non - Operating Expenditures City Office Building Debt Service 628,520 628,520 - Facilities Replacement 357,300 357,300 General Fund Share - LMDs & Street Lights 356,950 356 91;0 - Grand Total Expenditures 39,185,855 39,408,044 222,190 Net Operating 292,535 265,876 (26,660) One -Time Distributions from RDA Property Tax Trust Fund - Capital Projects /Transfer to Trusts (187,000) Other Non - Operating (25,000) Net Change to General Fund Balance 80,535 53,876 (26,660) 14 of 14 Attachm 7 5 October 21, 2014 Item #4.1