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06-19-2018 Agenda Item 16 Supplemental Budget Adoption
Meeting Date: 6/19/2018 FROM: Derek Johnson, City Manager Prepared By:Shelly Stanwyck, Parks and Recreation Director Brigitte Elke, Interim Finance Director Alex Ferreira, Budget Manager SUBJECT:APPROVING THE 2017-19 FINANCIAL PLAN SUPPLEMENT, ADOPTING THE 2018-19 BUDGET AND AMENDING THE FUND BALANCE AND RESERVE POLICIES RECOMMENDATIONS 1. Adopt a resolution (Attachment A) establishing the City’s appropriation limit for 2018-19 in compliance with Article XIII B of the State Constitution, Gann Spending Limitation Initiative; and . 2. Adopt a resolution (Attachment B) approving the 2017-19 Financial Plan Supplement and 2018-19 Budget and amending the City’s Fund Balance and Reserve Policies. DISCUSSION Two actions are requested to be taken by Council with this agenda item. 1. Adopt the 2018-19 Appropriations Limit. The first recommended action is to adopt an appropriations limit (“Limit”) under Article XIII B of the California Constitution as amended, which the City is required to do each year. As a result of the City’s appropriations subject to the Limit being below the Limit for 2018-19, no adjustments are required to be made to the proposed expenditures contained within the 2018-19 Budget. Appropriations Limit 2017-18 $72,562,034 Increase in Non-Residential Assessed Valuation Due to New Construction 20.40% Population Factor: County Population Growth 0.35% Compound Percentage Factor (multiplicative not additive)1.208% Appropriations Limit 2018-19 $87,667,937 2. Adopt the 2018-19 Budget and Amend Fiscal Policies. The second action for Council is to adopt the 2018-19 Budget Supplement and amend fiscal Packet Pg. 239 Item 16 policies. a. Adopt the 2018-19 Budget. Consistent with the City’s two -year budgetary process, the 2018-19 Budget presented for forma l Council adoption was prepared using the adopted 2017-19 Financial Plan as its foundation with guidance by the adopted Fiscal Health Response Plan to achieve operating reductions consistent with the Plan. Based on available fund balance, actual revenues received, the Five-Year Fiscal Forecast, the adopted Fiscal Health Response Plan, and Council adopted polices to address long-term unfunded liabilities, the proposed 2018-19 Financial Plan Supplement contains $1,372,000 in operational reductions and new ways of doing business reducing the overall operating budget and addressing long-term financial impacts related to pension cost increases. It also uses General Fund allocations for the following: Capital Improvement Plan (CIP) Increase of $1,492,477, Long-Term Unfunded Liability Reduction of $4,200,000, and Fiscal Health Response Plan Revenue Stabilization Fund $1,000,000. The resolution additionally appropriates unexpended legal funds in the City Attorney’s Office and provides the authority to the City Manager to execute agreements for the City Attorney’s Office to contract for outside legal support. This support is for code enforcement, limited supplemental legal staffing approved in conjunction with the Motion project, potential elections support,and future comments for Cal Poly’s revised EIR for the Master Plan. b.Amend the City’s Fiscal Policies Regarding Fund Balances, Reserves and Long Term Financial Planning. With the 2018-19 Supplement staff has proposed several amendment s to fiscal policies related to fund balances and reserves. Those amendments focus on continued efforts to mitigate the impacts of changes in the financial position given that they can negatively impact the City’s ability to address its fiscal obligations related to the unfunded CalPERS liabilities. Stated more plainly, the City has significant annual and future “balloon” costs that must be made to CalPERS and volatility in revenues and expenditures could have a great impact on the City’s ability to pay these liabilities. The policy amendments proposed are consistent with the adopted Fiscal Health Response Plan and like the Plan are aimed at achieving long-term fiscal sustainability so that budget reductions do not have to be made on an annual basis. Two new fiscal policies are proposed to mitigate the impacts of changes in economic conditions and to minimizing future risks to the City related to pension cost. The three specific topics addressed in the policies include: a proposed revenue stabilization fund to address variances in revenues; a capital projects reserve to address changes in conditions and costs associated with capital projects; and a policy to address how allocations should be made toward the unfunded CalPERS liabilities. c. Add A General Fund Revenue Stabilization Reserve. As discussed above,the General Fund’s largest revenue streams include sales and transient occupancy taxes. Both of which are based on consumer confidence at the local, state, national, and international level. Many externalities can therefore have profound impacts on these Packet Pg. 240 Item 16 revenues. Although it is and cannot be known, when a recession will occur, predictions are that one will come during the term of this Forecast given the current economic climate. Additionally, given the uncertainties with projected Cannabis revenues as well as the ability to quickly increase cost recovery in some areas, and their role as a key component to the Fiscal Health Response Plan, staff is proposing the creation of a revenue stabilization reserve. Council should be familiar with this concept as both the Water and Sewer Funds have rate stabilization reserves for the same purpose –addressing unanticipated fluctuations in revenues. It is proposed that the following be added to the City’s adopted Financial Policies section Fund Balance and Reserves as letter “J”. 1.General Fund Revenue Stabilization Fund.The City will maintain a reserve for the purposes of offsetting unanticipated fluctuations in general fund revenues to provide financial stability. The funding target for the Revenue Stabilization Reserve will be $1,000,000 during the term of the adopted Fiscal Health Response Plan. Use and allocations of funds of the Revenue Stabilization Fund will be made upon Council approval of the Financial Plan or as necessary during any fiscal year. d. Add A Capital Improvement Project Reserve. The continued investment in the maintenance of City infrastruct ure is an adopted Council policy. The Fiscal Health Response Plan acknowledged and accounted for that and included increased investment in infrastructure and continued maintenance and capital project investment since maintaining and enhancing the City’s aging infrastructure present s capital needs which far exceed available funds. The City presently plans for capital projects on a five-year timeframe. As projects are designed and construction begins additional work is often identified due to changes in known conditions or increases in costs of supplies and equipment. Staff proposes to amend the Fiscal Policies and add a Capital Improvement Projects Reserve with the 2018-19 Supplement. The funding target for the Capital Improvement Project is $1,000,000 during the term of the adopted Fiscal Health Response Plan. Use of the Fund would require Council approval with the Financial Plan or as necessary during any fiscal year. It will be used for unanticipated costs associated with price escalations and funding for urgent and unanticipated projects associated with CIP projects including Fleet, Information Technology, and Major Facility Replacement. It is proposed that the following be added to the City’s adopted Financial Policies section Fund Balance and Reserves as letter “K”. 1.Capital Projects Reserve Fund.The City will maintain a reserve for the purposes of offsetting unanticipated cost increases, unforeseen conditions, and urgent unanticipated projects to provide continued investment in infrastructure maintenance and enhancement. Use and allocations of funds from the Capital Projects Reserve Fund will be made to Capital Projects including Fleet, Information Technology, and Major Facility Replacement upon Council approval of the Financial Plan or as necessary during any fiscal year; Packet Pg. 241 Item 16 e. Long Term Financial Planning: Prepayment and/or Trust Formation for CalPERS Unfunded Liabilities. The City’s existing Financial Planning Policy provides guidance that priority should be given to applying unassigned fund-balances to pay down long-term unfunded liabilities. As Council is aware, the unfunded liability issue that the Fiscal Health Response Plan addresses is one which has added to the City’s long -term pension obligation. In addition to the City’s “Normal” CalPERS obligation there is an obligation to also pay “Unfunded Liability Costs”. Staff has analyzed paying these costs more aggressively when possible and putting aside monies to either continue to pay directly to CalPERS or to place in a Section 115 Trust. By addressing this problem in this way, a two-part strategy, over the three years of the Fiscal Health Response Plan, the City will save significant monies, will stabilize its expenditures, and will not have to consider reductions every year to address continued increases to this unfunded liability. It is proposed that the following be added to the City’s adopted Financial Policies section Long - Term Financial Planning Letter “B”.In applying unassigned fund balances to pay down long-term unfunded liabilities a two-part strategy will be used to address the liability to the greatest extent possible. One, annual payments to CalPERS for unfunded liabilities will address interest and principal. Two, analysis of a Section 115 Trust as mechanism to address future pension obligations and uncertainties will continue and a recommendation about formation of the same will be made during the term of the adopted Fiscal Health Response Plan.;and Continued analysis of establishing a pension trust is important for the General Fund which as discussed faces significant demands on its resources and is most sensitive to swings in its revenue sources. The Section 115 Trust Program is a vehicle that allows local governments and agencies to pre-fund their respective unfunded liabilities for both Pension and Other Post Retirement Benefits (OPEB) costs. This provides an alternative to sending additional funds to CalPERS to avoid its inherent market volatility risks. A Sectio n 115 Trust once formed could be dedicated toward pension obligations. However, it could serve multiple purposes including. 1. Act as a reserve fund to offset potential volatility in CalPERS annual contribution or rate requirements. 2.Realize higher investment returns than the City’s portfolio that is restricted by State regulations to fixed income instruments. 3. Diversifies investments in pension and trusts. 4. Act as a set-aside and is available at any time for use in reducing the City’s pension obligations. Staff will continue to evaluate the formation of a Section 115 Trust and will return to Council in the Fall to issue a request for proposals during the term of the Fiscal Health Response plan to better understand the cost and benefits associated with formation. Council will continue to be updated on this topic during budgetary meetings and will review and approve any actions associated with a Trust’s formation. f. New Street Lighting Funding Augmentation At the June 5, 2018 City Council meeting, the Council determined that additional funding to Packet Pg. 242 Item 16 facilitate the installation of new street lighting was warranted, and additional emphasis should be placed on trimming street trees that are blocking street lights. Council proposed doubling the previously approved annual funding allocation to street lighting from $20,000 in 2018-19 to $40,000. Based on Council direction and intent, staff recommends reallocating $30,000 of funding from the Downtown Renewal to New Street Lights. This reallocation is based on the assumption that, depending on the location, the total cost of one new street lig ht could cost up to $30,000. To ensure that at least two lights can be installed this coming fis cal year, staff recommends an additional allocation in 2018-19 of $30,000. As noted below, given that the 2017-18 Funding has not yet been expended, this will result in at total of $70,000 being available for New Street Lights in 2018-19. Proposed Reallocation of Funds The Downtown Renewal project was funded for construction in Fiscal Year 2017-18 and focuses work at 858 Higuera Street where the sidewalk also acts as the roof for an underlying basement. Currently, the design work is largely complete. Additional work required before bidding a construction contract includes adjacent property coordination, Downtown Association coordination and construction permitting. With the recent number, scale, and duration of downtown construction projects; this project is recommended for deferral by one year. The construction budget for the Downtown Renewal project will be included in the 2019-21 Financial Plan for consideration. Given this timing, partial funds from the Downtown Renewal project were recommended for reallocation to the Laurel Lane Complete Streets project at the June 5th Supplemental Budget meeting. This action ut ilizes additional funds from that project for reallocation to the Street Light Program. New Street Light Reallocation of Funds 2017-18 2018-19 Total Funding Available Current Budget New Street Lights $20,000*$20,000 $40,000 Downtown Renewal Funding Reallocation $30,000 $30,000 Total Funding for New Street Lights CIP 2018-19 $70,000 *The 2017-18 Funding has not yet been spent. Proposed Scope of Work Since the New Street Light Project was initiated by Council, staff has analyzed needs around the city and determined 12 priority locations. The top priority installation is on Hathway along the Cal Poly frontage. Two street lights, one on Hathway near Via Carta and the second on Hathway near Longview are anticipated for installation by the end of 2018.It should be noted timing could be impacted by neighborhood process or PG & E’s installat ion schedule. As discussed above, the costs of installing street lighting varies based on location. Installing a street light on new standard poles cost approximately $23,000 plus $100 per foot to install the underground electrical services. The two top priority locations on Hathway require new poles and electrical installation. In address tree growth which obscures street lights, staff recommends utilizing any remaining Packet Pg. 243 Item 16 6/19/2018 1 1 2017‐19 Financial Plan Supplement Adoption of the 2018‐19 Budget Picture courtesy of Laura Schwoerer - Instagram @wildflowerfolie Recommendations 2 2018-19 Budget 1.Adopt a resolution establishing the City’s appropriation limit for 2018-19 in compliance with Article XIII B of the State Constitution, Gann Spending Limitation Initiative; and 2.Adopt a resolution of the City Council of the City of San Luis Obispo, California, approving the 2017-19 Financial Plan Supplement and 2018-19 budget and amending the City’s Fund Balance and Reserve policies. Staff Presentation - Item 16 6/19/2018 2 3 The 2018-19 Supplemental Budget Includes; 1.MCG/OIO and Performance Measure Progress Reports 2.The 5-Year General Fund Forecast; 3.The proposed changes to the 2018-19 Budget Supplement 4.The proposed changes to the 2018-19 Capital Improvement Program 5.Enterprise Funds Overviews On June 5th, the City Council received and discussed the 2018-19 Supplemental Budget. 2018-19 Budget 42018-2019 Budget Overview Budget is balanced; aligns revenues and expenditures to account for increased payments to CalPERS. Budget affirms City’s commitments to essential services and funding high priority maintenance projects. Fiscal Forecast shows the City will be able to make approximately $20 million in payments to unfunded liabilities over the next 5 years. Budget accomplishes the 1st year target of savings/revenue necessary to meet the 3-year target of $8.9M of the FHRP. Sets foundation for years 2 and 3. 2018-19 Budget Staff Presentation - Item 16 6/19/2018 3 Implementation FHRP with the 2018-19 Budget 1.The FHRP has guided the preparation of the 2018-19 Budget Supplement. 2.All Departments have provided operating reductions and new ways of doing business as have the Enterprise Funds. 3.No reductions to CIP are proposed. 4.The reductions proposed are those: 1.With the least amount of service level impacts 2.That are achievable in the first year of the Plan 5 2018-19 Budget The FHRP is a Balanced Approach to Budget Reductions 6 30 - 40% 20 - 30% 30 - 40% General Fund Revenues New Ways of Doing Business Operating Reductions Concessions 2018-19 Budget Staff Presentation - Item 16 6/19/2018 4 5-Year Fiscal Forecast – Revenues and Expenditures 7 $15,000 $25,000 $35,000 $45,000 $55,000 $65,000 $75,000 $85,000 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 5-Year Forecast Revenues Expenditures Projection($000s) 5-Year Forecast Discussion of New Street Lighting Funding Augmentation At the June 5, 2018 Council Meeting, Council determined that additional funding to facilitate the installation of new street lighting was warranted and additional emphasis should be placed on trimming street trees that are blocking street lights. 82018-19 Budget Staff Presentation - Item 16 6/19/2018 5 Proposed New Street Lighting Reallocation of Funds 9 2018-19 Budget 2017-18 2018-19 Total Funding Available Current Budget New Street Lights* $20,000 $20,000 $40,000 Downtown Renewal Funding Reallocation $30,000 - $30,000 Total Funding for New Street Lights CIP 2018-19 $70,000 Council discussion suggested doubling the previously approved annual funding allocation to street lighting from $20,000 to $40,000 Staff proposes an allocation in 2018-19 of $70,000 to new street lighting * The 2017-18 Funding has not yet been spent. Proposed Scope of Work Staff has analyzed needs around the City and determined 12 priority locations. First priority is on Hathway along the Cal Poly frontage. Two locations identified for installation by year end 2018 Hathway near Via Carta and Hathway near Longview Costs vary based field conditions. Lights installed on new pole is roughly $23,000, plus $100 per linear foot for electrical services. To address tree growth obscuring street lights, staff recommends utilizing any remaining funds from the Street Light program for tree trimming contract services. Staff will evaluate alternative technologies and determine if more cost effective systems (solar, etc) can be installed. 10 2018-19 Budget Staff Presentation - Item 16 6/19/2018 6 New Street Lighting Funding Augmentation Staff estimates approximately 1/3 of city neighborhoods were developed prior to current Street Light standards. From that basis it is estimated shortfall is approximately 250 locations. Staff recommends the following: Annual Capital Program to install new lights in Residential Areas Continue Police Department work with Student Affairs, ASI, and Cal Poly Administration on public education, outreach and information on self-protective measures Police Department Community Planning Through Environmental Design (CPTED) analysis to determine any potential cost-effective interventions Explore lower cost options such as solar lighting. 2018-19 Budget 12Fiscal Policy Direction Fund Balances and Reserves Staff Presentation - Item 16 6/19/2018 7 Policy Changes: Revenue Stabilization Reserve J. General Fund Revenue Stabilization Fund. The City will maintain a reserve for the purposes of offsetting unanticipated fluctuations in general fund revenues to provide financial stability. The funding target for the Revenue Stabilization Reserve will be $1,000,000 during the term of the adopted Fiscal Health Response Plan. Use and allocations of funds of the Revenue Stabilization Fund will be made upon Council approvals of the Financial Plan or as becomes necessary during any fiscal year. 13Policy Policy Changes: Future Capital Project Reserve K. Capital Projects Reserve Fund. The City will maintain a reserve for the purposes of offsetting unanticipated cost increases, unforeseen conditions, and urgent unanticipated projects to provide continued investment in infrastructure maintenance and enhancement. Use and allocations of funds of the Capital Projects Reserve Fund will be made to Capital Projects including Fleet, Information Technology, and Major Facility Replacement upon Council approvals of the Financial Plan or as becomes necessary during any fiscal year. 14Policy Staff Presentation - Item 16 6/19/2018 8 Policy Changes: Unfunded Liabilities Aggressive Payment B. In applying unassigned fund balances to pay down long-term unfunded liabilities a two-part strategy will be used to address the liability to the greatest extent possible. One, annual payments to CalPERS for unfunded liabilities will address interest and principal. Two, analysis of a Section 115 Trust as a mechanism to address future pension obligations an uncertainties will continue and a recommendation about formation of the same will be made during the term of the adopted Fiscal Health Response Plan. 15Policy 16Proposed 2018-19 General Fund Budget Appropriations Staff Presentation - Item 16 6/19/2018 9 2018-19 General Fund Appropriations 17 Recommended Appropriations of excess Reserve Public Safety CIP (Downtown bollards) $1,300,000 Revenue Stabilization $1,000,000 Infrastructure Investment Fund $ 250,000 Principal Prepay CalPERS $4,200,000 2018-19 Budget 2018-19 General Fund Budget Appropriations 18 Allocation Type Governmental Funds Operating Programs $68,722,687 CIP $24,758,084 Debt Service $3,185,500 Total $96,666,271 2018-19 Budget Staff Presentation - Item 16 6/19/2018 10 QUESTIONS? 19 Enterprise Funds 20 Water Sewer Parking Transit Enterprise Funds Staff Presentation - Item 16 6/19/2018 11 Enterprise Funds 21 Water Fund Enterprise Funds 2018-19 Water Fund Budget Appropriations 22 Allocation Type Governmental Funds Operating Programs $16,505,033 CIP $935,850 Debt Service $2,626,172 Total $20,067,054 2018-19 Budget Staff Presentation - Item 16 6/19/2018 12 Water Fund: 5-Year Forecast 23 Enterprise Funds $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Revenue Expenditures Enterprise Funds 24 Sewer Fund Enterprise Funds Staff Presentation - Item 16 6/19/2018 13 2018-19 Sewer Fund Budget Appropriations 25 Allocation Type Governmental Funds Operating Programs $8,930,062 CIP $16,082,583 Debt Service $1,431,006 Total $26,443,651 2018-19 Budget Sewer Fund: 5-Year Forecast 26 Enterprise Funds $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Revenue Expenditures Staff Presentation - Item 16 6/19/2018 14 Enterprise Funds 27 Parking Fund Enterprise Funds 2018-19 Parking Fund Budget Appropriations 28 Allocation Type Governmental Funds Operating Programs $3,129,081 CIP $650,000 Debt Service $967,500 Total $4,746,581 2018-19 Budget Staff Presentation - Item 16 6/19/2018 15 Parking Fund: 5-Year Forecast 29 Enterprise Funds $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Revenue Expenditures Enterprise Funds 30 Transit Fund Enterprise Funds Staff Presentation - Item 16 6/19/2018 16 2018-19 Transit Fund Budget Appropriations 31 Allocation Type Transit Fund Operating Programs $3,993,809 CIP $173,000 Debt Service $0 Total $4,166,809 2018-19 Budget Revised Transit Five Year Forecast 32 Enterprise Funds - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 FY 17-18 Adopted 18-19 Revised 18-19 FY 19-20 FY 20-21 FY 21-22 Revenues Expenditures Staff Presentation - Item 16 6/19/2018 17 QUESTIONS? 33 All Funds Appropriations 34 Allocation Type Governmental Funds Enterprise & Other Funds Total Operating Programs $68,722,687 $33,800,168 $102,522,854 CIP $24,758,084 $17,877,433 $42,635,517 Debt Service $3,185,500 $5,024,678 $8,210,178 Total $96,666,271 $56,702,278 $153,368,549 2018-19 Budget Staff Presentation - Item 16 6/19/2018 18 Recommendations 35 2018-19 Budget 1.Adopt a resolution establishing the City’s appropriation limit for 2018-19 in compliance with Article XIII B of the State Constitution, Gann Spending Limitation Initiative; and 2.Adopt a resolution of the City Council of the City of San Luis Obispo, California, approving the 2017-19 Financial Plan Supplement and 2018-19 budget and amending the City’s Fund Balance and Reserve policies. QUESTIONS? 36 Staff Presentation - Item 16 6/19/2018 19 Recommendations 37 2018-19 Budget 1.Adopt a resolution establishing the City’s appropriation limit for 2018-19 in compliance with Article XIII B of the State Constitution, Gann Spending Limitation Initiative; and 2.Adopt a resolution of the City Council of the City of San Luis Obispo, California, approving the 2017-19 Financial Plan Supplement and 2018-19 budget and amending the City’s Fund Balance and Reserve policies. Staff Presentation - Item 16 funds from the Street Light program to fund a contractor to perform that work. Most neighborhoods in the city could be seen as lacking adequate lighting due to the changes in light pole spacing design. This, therefore, is a challenge which will exist for years given other city infrastructure needs. Consequently, staff recommends the following strategy. 1. Continue and report on progress of Street Light Program 2. Utilize any additional funding for tree trimming in impacted areas 3. Continue with Police Department Neighborhood Outreach Manager program working with ASI, Student Affairs and the Cal Poly President office relative to outreach, education, and safety measures to enhance pedestrian safety in impacted neighborhoods. The Outreach Manager currently is engaged in education efforts with students on use of porch lights, motion lights, traveling in groups, limiting alcohol use and other techniques to enhance safety. In addition, the position works with property owners on trimming trees and landscaping to improve visibility. 4. Conduct Police Department CPTED (Community Planning through Environmental Design) initiative to review specific locations and suggest site specific interventions. 5. Analyze potential low-cost solutions, including solar, utilizing existing fixtures and other techniques. 6. Provide Council with updates at Budget Mid-Year and Budget Supplement ENVIRONMENTAL IMPACT There is no environmental impact associated with the adoption of the 2018-19 Budget Supplement. Notably, components of the Budget and savings proposed in it are focused on increased sustainability and the use of less consumable goods in an ongoing effort by the City to address long-term environmental concerns. FISCAL IMPACT Fiscal impact of the proposed 2018-19 Budget Supplement is a balanced budget. Due to these changes and changes to CIP for Enterprise funds that were incorrectly reported in prior versions, revised pages have been included in Attachment C that reflect updated CIP budget numbers. Attachments: a - Attachment A Resolution Adopting Appropriations Limit for 2018-19 and Gann Spending Limitation Initiative b - Attachment B Resolution Approving the 2017-19 Financial Plan Supplement and 2018- 19 Budget and amending the City’s Fund Balance and Reserve Policies c - 2018-19 Supplemental Budget Reivsed Pages Packet Pg. 244 Item 16 Resolution No. _________ (2018 Series) Page 1 R ______ RESOLUTION NO. ### (2018 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, ADOPTING THE APPROPRIATIONS LIMIT FOR 2018-19. WHEREAS, the voters approved the Gann Spending-Limitation Initiative o n November 6, 1979 and Proposition 111 on June 5, 1990, which establish and define annual appropriation limits on state and local government agencies; and WHEREAS, regulations require that the governing body of each local agency establish its appropriations limit and annual adjustment factors by resolution; and WHEREAS, the required calculations to determine the City’s appropriations limit, and estimated appropriations subject to limitation for 2018-19, have been performed by the Finance Department and are available for public review. NOW THEREFORE, BE IT RESOLVED, that the Council of the City of San Luis Obispo hereby adopts the City’s appropriations limit and annual adjustment factors for 2018-10 as follows: Appropriations Limit 2018-19 $72,562,034 Increase in Non-Residential Assessed Valuation Due to New Construction 20.40% Population Factor: County Population Growth 0.35% Compound Percentage Factor (multiplicative not additive)1.208% Appropriations Limit 2018-19 $87,667,937 Upon motion of Council Member __________________, seconded by ____________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted on this 19th Day of June 2018. ____________________________________ Mayor Heidi Harmon Packet Pg. 245 Item 16 Resolution No. _________ (2018 Series) Page 2 R ______ ATTEST: Teresa Purrington City Clerk APPROVED AS TO FORM: J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, _________. ____________________________________ Teresa Purrington, City Clerk Packet Pg. 246 Item 16 R _______ RESOLUTION NO. ### (2018 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING THE 2017-19 FINANCIAL PLAN SUPPLEMENT, ADOPTING THE 2018-19 BUDGET, AND AMENDING THE FUND BALANCE AND RESERVE POLICIES. WHEREAS, the Council adopted the 2017-19 Financial Plan on June 20, 2017, which established comprehensive financial and policy guidelines for fiscal years 2017-18 and 2018-19; and WHEREAS, the 2017-19 Financial Plan included appropriations for fiscal year 2017-18; and WHEREAS, the City Council on April 17, 2018 adopted a Fiscal Health Contingency Plan in response to rising CalPERS pension costs; and WHEREAS,the City Council has reviewed proposed changes to the 2017-19 Financial Plan that are guided by the adopted Fiscal Health Response Plan and are to be effective for fiscal year 2018-19 resulting in operating program reductions, new ways of doing business, and new revenues; and WHEREAS, the 2017-19 Financial Plan includes budget and fiscal policies that provide for direction on Financial Plan Objectives, Financial Reports, Budget Administration, General Revenue Management, User Fee Cost Recovery Goals, Enterprise Fu nd Fees and Rates, Revenue Distribution, Investments, Appropriations Limitation, Fund Balance and Reserves, Capital Improvement Project Management, Capital Financing and Debt Management, Human Resource Management, Productivity, and Contracting for Services; and WHEREAS, it is proposed that the following be added to the City’s adopted Financial Policies section Fund Balance and Reserves as letter “J”. J. General Fund Revenue Stabilization Fund. The City will maintain a reserve for the purposes of offsetting unanticipated fluctuations in general fund revenues to provide financial stability. The funding target for the Revenue Stabilization Reserve will be $1,000,000 during the term of the adopted Fiscal Health Response Plan. Use and allocations of funds of the Revenue Stabilization Fund will be made upon Council approvals of the Financial Plan or as becomes necessary during any fiscal year.;and WHEREAS, it is proposed that the following be added to the City’s adopted Financial Policies section Fund Balance and Reserves as letter “K”. K. Capital Projects Reserve Fund. The City will maintain a reserve for the purposes of offsetting unanticipated cost increases, unforeseen conditions, and urgent unanticipated projects to provide continued investment in infrastructure maintenance and enhancement. Use and allocations of funds from the Capital Projects Reserve Fund will be made to Capital Projects including Fleet, Information Technology, and Major Facility Replacement upon Council approvals of the Financial Plan or as necessary during any fiscal year;and Packet Pg. 247 Item 16 Resolution No. _______ (2018 Series) Page 2 R 10904 WHEREAS,it is proposed that the following be added to the City’s adopted Financial Policies section Long-Term Financial Planning Letter “B”.In applying unassigned fund balances to pay down long-term unfunded liabilities a two-part strategy will be used to address the liability to the greatest extent possible. One, annual payments to CalPERS for unfunded liabilities will address interest and principal. Two, analysis of a Section 115 Trust as mechanism to address future pension obligations and uncertainties will continue and a recommendation about formation of the same will be made during the term of the adopted Fiscal Health Response Plan.;and WHEREAS, The City Council will, with this 2017-19 Financial Plan Supplement and the 2018-19 Budget, appropriate: funds to the Infrastructure Invest ment Fund; grant funds to the Mid Higuera Bypass project; Development Services Fees to the Electronic Plan Review project; General Fund monies to design and construct a Park at 533 Broad Street; and reallocate various funds from several projects to accomplish the Laurel Lane “Complete Street”. WHEREAS, the City Manager submitted the 2017-19 Financial Plan Supplement and the 2018-19 Budget to the City Council for its review and consideration at a duly noticed meeting. NOW THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis Obispo that: 1. The above recitals are true and correct. 2. The following shall be added to the City’s adopted Financial Policies section Fund Balance and Reserves as letter “J”. J. General Fund Revenue Stabilization Fund. The City will maintain a reserve for the purposes of offsetting unanticipated fluctuations in general fund revenues to provide financial stability. The funding target for the Revenue Stabilization Reserve will be $1,000,000 during the term of the adopted Fiscal Health Response Plan. Use and allocations of funds of the Revenue Stabilization Fund will be made upon Council approvals of the Financial Plan or as becomes necessary during any fiscal year. 3.The following shall be added to the City’s adopted Financial Policies section Fund Balance and Reserves as letter “K”. K. Capital Projects Reserve Fund. The City will maintain a reserve for the purposes of offsetting unanticipated cost increases, unforeseen conditions, and urgent unanticipated projects to provide continued investment in infrastructure maintenance and enhancement. Use and allocations of funds from the Capital Projects Reserve Fund will be made to Capital Projects including Fleet, Information Technology, and Major Facility Replacement upon Council approvals of the Financial Plan or as necessary during any fiscal year. Packet Pg. 248 Item 16 Resolution No. _______ (2018 Series) Page 3 R 10904 4.The following shall be added to the City’s adopted Financial Policies section Long -Term Financial Planning as Letter “B”. In applying unassigned fund balances to pay down long- term unfunded liabilities a two-part strategy will be used to address the liability to the greatest extent possible. One, annual payments to CalPERS for unfunded liabilities will address interest and principal. Two, analysis of a Section 115 Trust as mechanism to address future pension obligations and uncertainties will continue and a recommendation about formation of the same will be made during the term of the adopted Fiscal Health Response Plan. 5. That the 2017-19 Financial Plan Supplement and the 2018-19 Budget is hereby adopted as presented in the Budget Supplement Document. 6. Appropriate $129,000 in unspent funds in the 2017-2018 fiscal year in the City Attorney’s Office for code enforcement, limited supplemental legal staffing support approved in conjunction with the Motion project, for the same purposes approved in the 2018-2019 budget, as well as for legal services to support future comments for Cal Poly’s revised EIR for the Master Plan and any necessary elections support, and authorize the City Manager to enter any necessary agreements within the appropriations amount to provide these legal services. Upon motion of Council Member __________________, seconded by ____________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted on this 19th Day of June 2018. ____________________________________ Mayor Heidi Harmon ATTEST: Teresa Purrington City Clerk Packet Pg. 249 Item 16 Resolution No. _______ (2018 Series) Page 4 R 10904 APPROVED AS TO FORM: J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this ______ day of ______________, _________. ____________________________________ Teresa Purrington, City Clerk Packet Pg. 250 Item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Equipment Replacement $80,000 $80,000 $0 5 Electronic Plan Submittal $0 $59,477 $59,477 6 North Broad Street Neighborhood Park $0 $75,000 $75,000 Total $425,000 $529,477 $104,477 COMMUNITY SAFETY Fire Safety 7 Fire Station 4 Emergency Backup Generator $72,500 $72,500 $0 Police Protection 8 Police Department Space Improvements $89,000 $89,000 $0 9 Police Station Replacement $0 $0 $0 Stormwater 10 Silt Removal $100,000 $100,000 $0 11 Storm Drain System Replacement $317,100 $0 ($317,100) 12 Mid Higuera Bypass $0 $376,000 $376,000 Total $578,600 $637,500 $58,900 CULTURE & RECREATION Cultural Services 13 City/County Library Major Maint. & ADA Compliance $0 $0 $0 14 Public Art Fund $51,700 $51,700 $0 15 Public Art Master Planning Initiatives $75,000 $75,000 $0 Recreational Services 16 Parks and Recreation Interior Office Rehabilitation $111,000 $50,000 ($61,000) 17 Pickleball Courts (formerly New Park Amenities) $0 $0 $0 18 Sinsheimer Park Tennis Court Lighting $179,000 $179,000 $0 Total $416,700 $355,700 ($61,000) G-8 Packet Pg. 260 Item 16 2018-19 Financial Plan Proj ID FUNCTION, CATEGORY, & PROJECT NAME Adopted Revised Change ENVIRONMENTAL HEALTH & OPEN SPACE Environmental Protection 19 Green Fleet Vehicle Charging Stations $75,000 $75,000 $0 20 Ongoing Open Space Maintenance $60,000 $60,000 $0 21 Water Resource Recovery Facility Project $56,500,000 $14,327,203 ($42,172,797) 22 Water Treatment - Energy Efficiency $8,500,000 $0 ($8,500,000) 23 Water Treatment - Major Facility Maintenance $163,000 $163,000 $0 24 Water Treatment - Tank Maintenance $0 $0 $0 OpenSpace 25 Laguna Lake Dredging and Sediment Management Project Implementation $200,000 $0 ($200,000) 26 Open Space Acquisition $2,600,000 $2,600,000 $0 Total $68,098,000 $17,225,203 ($50,872,797) INFRASTRUCTURE & TRANSPORTATION Facilities 27 City Facility Parking Lot Maintenance $120,000 $120,000 $0 28 Corporation Yard TI $50,000 $50,000 $0 29 Major Facility Replacement $695,100 $695,100 $0 Information Technology 30 IT Replacement $1,600,247 $1,619,147 $18,900 Multimodal Transportation 31 2015 Traffic Safety Report Implementation $175,000 $175,000 $0 32 Active Transportation Plan $0 $0 $0 33 Bicycle Facility Improvements $100,000 $75,000 ($25,000) 34 Bob Jones Trail Prefumo Creek Connection to Oceanaire $1,060,000 $1,060,000 $0 35 Broad Street Bicycle Boulevard $180,000 $180,000 $0 36 Broad Street Corridor Access Improvements $45,000 $45,000 $0 37 California & Taft Roundabout $1,000,000 $1,000,000 $0 38 Higuera St. Widening - Bridge to Elks & Fontana to Chumash $330,000 $330,000 $0 39 Marsh Street Parking Structure Maintenance $0 $0 $0 40 Neighborhood Traffic Improvements $75,000 $75,000 $0 41 Orcutt & Tank Farm Roundabout $0 42 Palm - Nipomo Parking Structure $0 $0 $0 43 Parking Access Revenue Control System $650,000 $650,000 $0 G-9 Packet Pg. 261 Item 16 2018-19 Financial Plan Proj ID FUNCTION, CATEGORY, & PROJECT NAME Adopted Revised Change 44 Pedestrian and Bicycle Pathway Maintenance $60,000 $60,000 $0 45 Penny Lane Bridge at Union Pacific Railroad (UPRR) $0 $0 $0 46 Prado Road Bridge & Road Widening $9,750,000 $9,750,000 $0 47 Prado Road Interchange $840,000 $840,000 $0 48 Railroad Safety Trail (RRST) - Pepper Street to the Train Station $30,000 $30,000 $0 49 Safe Routes to School Implementation Foothill Crossing $0 $0 $0 50 Transit - Automatic Vehicle Location System $0 $173,000 $173,000 51 Transit - Bus Shelter Replacement $25,000 $0 ($25,000) 52 Transportation Safety & Operations $90,000 $90,000 $0 53 Fleet Replacement $2,287,000 $952,100 ($1,334,900) 54 Farmers Market Security Bollards $0 $1,288,000 $1,288,000 Roadway Infrastructure 55 Bridge Replacement - Chorro Street $0 $0 $0 56 Bridge Replacement - Madonna Road $0 $0 $0 57 Bridge Replacement - Nipomo Street $0 $0 $0 58 Bridge Maintenance $50,000 $0 ($50,000) 59 Downtown Renewal $0 $0 $0 60 New Street Lights $20,000 $20,000 $0 61 Sidewalk Replacement and Installation $50,000 $50,000 $0 62 Street Reconstruction & Resurfacing $1,600,000 $2,233,100 $633,100 63 Traffic Signs & Striping Maintenance $25,000 $25,000 $0 Utility Services 64 LAN Tablet System $34,100 $34,100 $0 65 Wastewater Collection System Improvements $1,564,000 $1,564,000 $0 66 Wastewater Collection Telemetry System Improvements $38,000 $38,000 $0 67 Wastewater Lift Station Replacement $0 $0 $0 68 Water Distribution System Improvements $380,000 $380,000 $0 69 Water Distribution Telemetry System Improvements $50,000 $50,000 $0 70 Water Storage Reservoir Replacement $200,000 $200,000 $0 71 Whale Rock Pipeline Reliability Assessment $0 $0 $0 72 Whale Rock Reservoir Automatic Control Valve Replacement $36,000 $36,000 $0 Total $23,209,447 $24,162,447 $953,000 GRAND TOTAL $92,727,747 $42,638,427 ($50,092,320) G-10 Packet Pg. 262 Item 16 CAPITAL IMPROVEMENT PLAN - SUMMARY BY FUND & FUNDING SOURCE Fund 2018-19 Financial Plan Adopted Revised Change Airport Area Impact Fee Airport Area Impact Fee $750,000 $750,000 $0 Airport Area Impact Fee Total $750,000 $750,000 $0 Community Development Block Grant (CDBG) Fund State or Federal Grant $0 $0 $0 CDBG Fund Total $0 $0 $0 Fleet Replacement Fund Debt Financing $624,000 $624,000 $0 Fleet Replacement Fund $75,000 $75,000 $0 General Capital Outlay $0 $0 $0 Fleet Replacement Fund Total $699,000 $699,000 $0 General CIP Grant Fund State or Federal Grant $13,327,453 $13,327,453 $0 SB-1 $180,000 $180,000 $0 Zone 9 - County Grant $100,000 $476,000 $376,000 General CIP Grant Fund Total $13,607,453 $13,983,453 $376,000 General Purpose CIP Developer Contribution $97,547 $97,547 $0 General Capital Outlay $261,000 $1,293,000 $1,032,000 Development Services $0 $59,477 $59,477 CIP Reserves $0 $0 $0 General Purpose CIP Total $358,547 $1,450,024 $1,091,477 Information Technology Replacement Fund General Capital Outlay $1,078,977 $1,078,977 $0 Parking Fund $18,854 $18,854 $0 Sewer Fund $71,780 $71,780 $0 State or Federal Grant $0 $0 $0 Transit Fund $56,570 $56,570 $0 Water Fund $52,150 $52,150 $0 G-11 Packet Pg. 263 Item 16 CAPITAL IMPROVEMENT PLAN - SUMMARY BY FUND & FUNDING SOURCE Fund 2018-19 Financial Plan Adopted Revised Change Whale Rock Fund $15,963 $15,963 $0 Information Tech. Replacement Fund Total $1,294,294 $1,294,294 $0 Local Revenue Measure Sub-Fund Measure G Revenue $3,539,600 $3,489,600 ($50,000) Measure G Revenue - Information Technology $182,023 $182,023 $0 Measure G Revenue - Major Facility Replacement $507,700 $507,700 $0 Measure G Revenue - Fleet Replacement $508,000 $508,000 $0 Local Revenue Measure Sub-Fund Total $4,737,323 $4,687,323 ($50,000) Major Facility Replacement Fund General Capital Outlay $101,000 $101,000 $0 Sewer Fund $21,600 $21,600 $0 Water Fund $21,600 $21,600 $0 Major Facility Replacement Fund Total $144,200 $144,200 $0 Parking Fund Debt Financing Parking Fund $650,000 $650,000 $0 Parking Fund Total $650,000 $650,000 $0 Parkland Development Fund Park In-Lieu Fees $179,000 $254,000 $75,000 Parkland Development Fund Total $179,000 $254,000 $75,000 Public Art Fund Art In Lieu Fee $15,000 $15,000 $0 General Capital Outlay $111,700 $111,700 $0 Public Art Fund Total $126,700 $126,700 $0 Sewer Fund Sewer Fund $58,255,380 $16,082,583 ($42,172,797) Sewer Fund Total $58,255,380 $16,082,583 ($42,172,797) G-12 Packet Pg. 264 CAPITAL IMPROVEMENT PLAN - SUMMARY BY FUND & FUNDING SOURCE Fund 2018-19 Financial Plan Adopted Revised Change Transit Fund Transit Fund $1,085,000 $173,000 ($912,000) Transit Fund Total $1,085,000 $173,000 ($912,000) Transportation Impact Fee Debt Financing $0 $0 $0 Transportation Impact Fee - Fund Balance $1,119,000 $1,119,000 $0 Transportation Impact Fee $250,000 $250,000 $0 Transportation Impact Fee Total $1,369,000 $1,369,000 $0 Water Fund Water Fund $9,435,850 $935,850 ($8,500,000) Water Fund Total $9,435,850 $935,850 ($8,500,000) Whale Rock Fund Whale Rock Fund $36,000 $36,000 $0 Whale Rock Fund Total $36,000 $36,000 $0 Grand Total $92,727,747 $42,635,427 ($50,092,320) G-13 Packet Pg. 265 THENewspaper of the Central Coast MBUNE 3825 South Higuera • Post Office Box 112 • San Luis Obispo, C In The Superior Court of The State of California In and for the County of San Luis Obispo AD #3703643 CITY OF SAN LUIS OBISPO COM4L1,IITY DEVELOPMENT STATE OF CALIFORNIA ss. County of San Luis Obispo I am a citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen and not interested in the above entitled matter; I am now, and at all times embraced in the publication herein mentioned was, the principal clerk of the printers and publishers of THE TRIBUNE, a newspaper of general Circulation, printed and published daily at the City of San Luis Obispo in the above named county and state; that notice at which the annexed clippings is a true copy, was published in the above-named newspaper and not in any supplement thereof — on the following dates to wit;; JUNE 9, 2018 that said newspaper was duly and regularly ascertained and established a newspaper of general circulation by Decree entered in the Superior Court of San Luis Obispo County, State of California, on June 9, 1952, Case #19139 under the Government Code of the State of California. I certify (or declare) under the penalty of perjury that the foregoing is true and correct. (Sii6ature of Principal Clerk) DATE: JUNE 9, 2018 AD COST: $414.12 EIVED JUN 13 2018 SLQ CITY CLERK SAN LUIS OBISPO CITY COUNCIL NOTICE OF PUBLIC HEARING rune San Luis Obispo City Council invites all interested persons to attend a public hearing on Tuesday, June 19, 2018, at 6:00 p.m. in the City Hall Council Chamber, 990 Palm Street, San Luis Obispo, California, relative to the following: 2018.19 WATER 1, SEINER RATE STRUCTURE AND RATE 14DOPMON public hearing to consider adopting: 1. A Resolution of the Council of the City of San Luis Obispo, California, Establishing the Water Rate Structure and Water Rates for Fiscal Year 2018-19. 2. A Resolution of the Council of the City of San Luis Obispo, California, Establishing the Sewer Rate Structure and Sewer Rates for Fiscal Year 2018-19. On April 30, 2018, all property owners and customers of record re- ceived a form to protest the proposed water and sewer rate struc- ture and the proposed water and sewer rates, as required under Proposition 218. Signed protests must be received by the City Clerk, 990 Palm Street, San Luis Obispo CA 93401, at or before the time of the protest hearing (June 19, 2018). For more information please contact Jennifer Metz of the City's Utilities Department at (805) 781-7239 or by email at'mi etz@ sfocity.oro- A©OIzTION OF 2017-19 FINANCIAL PLAN AND 2019-19 BUDGET A public hearing to consider adopting a Resolution enfilled "A Res- at ulion of the City Council of the City of San Luis Obispo, Califor- nia, approving Ute 2017-19 Finarrcfal Plan and 2018-1 s Budget:' For more informatton, you are invited to contact Alex Ferreira of the City's Finance Department at (805) 761-7125 or by email at As recommended by the Cultural Heritage COMrnM60. adopt a res oiubon adding the properties at 1568 Higuera Street to the Master List of Historic Resoumes as "The Miles Fitzgerald Home," and adding the property at 1582 & 1592 Higuera Street, and 1601 Grove Street, tc the Contributing Properties List of Historic Re - For more information, you are invited to contact Walter Oetzell of the City's Community Development Department at (805) 781-7593 or by email at woetzell@slocity.org The City Council may also discuss other hearings or business items before or after the items listed above. If you challenge the grppo5ed project in court, you may be limited to raising only those issues you or someone else raised at the public hearing descri- bed in this notice, or in written correspondence delivered to the City Council at, or prior to, the public hearing. ,Reports for this meeting will be available for review in the City Cler- k's Office and online at www.slocity.org on Wednesday. June 13, 2018. Please call the City Clerk's Office at (805) 781-7100 for mpre:information. The City Council meeting will be televised live on Charter Cable Channel 20 and live streaming on www.slo Teresa Purrington City Clerk City of San Luis Obispo 3703643 June 9. 2018