CITY COUNCIL AGENDA ITEM
Meeting Date: June 26, 2007
Subject/Title: Adopt a resolution amending the Budget and Fiscal Policies
No. 10-5 and Repealing Resolution No. 2530
Prepared by: Denise Davies, Chief Financial Operations Officer
Submitted by: Pamela Ehler, City Treasurer/Director of Finance and
Adopt a resolution amending the Budget and Fiscal Policies No. 10-5 and
Repealing Resolution No. 2530.
On June 22, 1993, the City Council passed Resolution No. 93-65, adopting
Budget Policy No. 10-5, to help insure that the legal restrictions of the
budget are complied with and improve the Finance Department’s ability to
regulate cash flows and make investment decisions.
On April 24, 2001, by Resolution No. 2275, City Council updated Council
Policy No. 10-5, City of Brentwood Budget Policy and repealed Resolution No.
On February 24, 2005, the City Council passed Resolution No. 2004-38,
amending Budget and Fiscal Polices No. 10-5 to add the balanced budget,
recreation cost recovery, minimum fund balance/reserve, replacement fund
information and the capital financing and debt management section to the
On June 28, 2005, the City Council passed Resolution No. 2005-63, amending
Budget and Fiscal Policies No. 10-5 to add information that must be provided
when requesting a budget amendment and sections on uncollectible
receivables, minimum refund thresholds for overpayments and insurance and
facilities maintenance funds.
On October 24, 2006, the City Council passed Resolution No. 2006-269,
amending Budget and Fiscal Policies No. 10-5 to include authority to make
budget adjustments to Capital Improvement Projects and to add objectives for
funding public improvements in existing developments, neighborhoods and
The Budget and Fiscal Policies establish guidelines for budget development,
administration, and management as well as outline the City and Redevelopment
Agency’s fiscal policies in regard to user fee cost recovery goals and
capital financing and debt management. The current Budget and Fiscal Policy
has been updated in order to address issues that have arisen, provide
clarification as needed and has been expanded to include items that were not
previously addressed in the policy. A companion item is included on the
Redevelopment Agency consent calendar for this evening.
In order to facilitate your review, changes to the Policies have been
displayed in red. Some of the changes affecting the amendment to the
existing policy are language clarifications to better define the guidelines.
However, additions to the policy are highlighted below:
A Capital Improvement Program (CIP) Budget section has been added to the
policy to document the CIP budget adoption process.
Authority has been given to the City Manager and/or Director of Finance to
make budget adjustments associated with Council approved Debt Issuance.
Authority has been given to the City Manager and/or Director of Finance to
make budget adjustments for depreciation. Generally accepted accounting
principles (GAAP) require, in most cases, that capital assets be
depreciated. Depreciation is the systematic allocation of the historical
cost of a capital asset over its estimated useful life. The movement,
acquisition, and or change in the useful life of a capital asset will change
the depreciation amount within a fund during the fiscal year.
Language has been included to allow the fund to be used for unforeseen
expenses due to lawsuits.
Emergency Preparedness Fund
The City is self insured for earthquake coverage. The City contributes
approximately $100,000 to this fund each year in order to help fund the
portion not reimbursed by the Federal Emergency Management Agency (FEMA) and
the State Office of Emergency Services (OES).
Resolution 2530 was adopted by Council in April 2002 and established the
Emergency Preparedness Fund. The Emergency Preparedness Fund has grown to
included the items listed above and therefore must be repealed.
There is no fiscal impact associated with the adoption of this resolution.
Budget and Fiscal Policies No. 10-5
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AMENDING THE
BUDGET AND FISCAL POLICIES NO. 10-5 AND REPEALING RESOLUTION NO. 2530
WHEREAS, on June 22, 1993, the City Council passed Resolution No. 93-65,
adopting Budget Policy No. 10-5, to help insure that the legal restrictions
of the budget are complied with and improve the Finance Department’s ability
to regulate cash flows and make investment decision; and
WHEREAS, on April 24, 2001, by Resolution No. 2275, City Council updated
Council Policy No. 10-5, City of Brentwood Budget Policy and repealed
Resolution No. 93-65; and
WHEREAS, on February 24, 2005, the City Council passed Resolution No.
2004-38, amending Budget and Fiscal Polices No. 10-5 to add the balanced
budget, recreation cost recovery, minimum fund balance/reserve, replacement
fund information and the capital financing and debt management section to
the policy; and
WHEREAS, on June 28, 2005, the City Council passed Resolution No. 2005-63,
amending Budget and Fiscal Policies No. 10-5 to add information that must be
provided when requesting a budget amendment and sections on uncollectible
receivables, minimum refund thresholds for overpayments and insurance and
facilities maintenance funds; and
WHEREAS, on October 24, 2006, the City Council passed Resolution No.
2006-269, amending Budget and Fiscal Policies No. 10-5 to include authority
to make budget adjustments to Capital Improvement Projects and to add
objectives for funding public improvements in existing developments,
neighborhoods and subdivisions and
WHEREAS, the Budget and Fiscal Policies establish guidelines for budget
development, administration, and management as well as outline the City and
Redevelopment Agency’s fiscal policies in regard to user fee cost recovery
goals and capital financing and debt management. The current Budget and
Fiscal Policy has been updated in order to address issues that have arisen,
provide clarification as needed and has been expanded to include items that
were not previously addressed in the policy; and
WHEREAS, some of the changes to the Budget and Fiscal Policies are language
clarifications to better define the guidelines. Other changes include
additional budget administration authority given to the City Manager and
Director of Finance, documenting the CIP budget adoption process and
updating the Emergency Preparedness Fund and Insurance Fund uses.
NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood
1. Amend the Budget and Fiscal Polices No. 10-5 provided for in the attached
Exhibit A; and
2. Repeal Resolution No. 2530.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at
a regular meeting held on the 26th day of June 2007 by the following vote:
The purpose of this policy is to establish guidelines for budget
development, administration, and management as well as outline the City’s
fiscal policies in regard to user fee cost recovery goals and capital
financing and debt management.
1 BUDGET DEVELOPMENT
1.1 Operating Budget Objectives
The budget will adhere to the Council Goals and Objectives. Through its
Financial Plan, the City will link resources with results by:
1.1.1 Identifying community needs for essential services.
1.1.2 Organizing the programs required to provide these essential services.
1.1.3 Establishing program policies and goals, which define the nature and
level of program services required.
1.1.4 Identifying activities performed in delivering program services.
1.1.5 Proposing objectives for improving the delivery of program services.
1.1.6 Identifying and appropriating the resources required to perform
program activities and accomplish program objectives.
1.1.7 Setting standards to measure and evaluate the:
18.104.22.168 Output of program activities
22.214.171.124 Accomplishment of program objectives
126.96.36.199 Expenditure of program appropriations
1.2 Objectives for Funding Public Improvements in Existing Developments,
Neighborhoods and Subdivisions
1.2.1 City funding for new or improved public improvements in existing
developments, neighborhoods and subdivisions shall be the financial
responsibility of the adjacent or benefiting parcels. If the aforementioned
improvements are desired by the property owners, then they shall enter into
a financing mechanism, such as assessment or benefit district, that will
cover the full costs of the improvements to repay the City its full soft and
hard costs in a timeframe that is acceptable to the City.
1.3 Two-Year Budget
1.3.1 The City Council shall adopt a two-year budget for the ensuing fiscal
year no later than June 30 of each year.
1.3.2 The first year of the two-year budget, the City Council will conduct a
public hearing outlining consider the recommended budget for the two-year
period at a duly noticed public meeting. A copy of the budget will be made
available at the City Hall front counters and the Library.
1.3.3 The second year of the two-year budget, the City Council will consider
conduct a public hearing which focuses on changes being recommended for the
second year of the two-year budget at a duly noticed public meeting.
1.3.4 For each of the two years, The City Council will adopt a resolution
appropriating and approving the budget for the ensuing two fiscal years.
Benefits identified using a two-year financial plan:
188.8.131.52 Reinforcing the importance of long-range planning for managing the
City’s fiscal affairs.
184.108.40.206 Concentrating on developing and budgeting for the accomplishment of
220.127.116.11 Establishing realistic timeframes for achieving objectives.
18.104.22.168 Creating a pro-active budget that provides for stable operations and
assures the City’s long-term fiscal health.
22.214.171.124 Promoting more orderly spending patterns.
126.96.36.199 Reducing the amount of time and resources allocated to preparing
1.4 Measurable Objectives
The two-year financial plan will establish measurable program objectives and
allow reasonable time to accomplish those objectives.
1.5 Second Year Budget
Before the beginning of the second year of the two-year cycle, the Council
will review progress during the first year and approve amend appropriations
for the second fiscal year.
1.6 Operating Carryover
1.6.1 Operating Carryover:
188.8.131.52 Operating program appropriations supported by a Purchase or
Encumbrance Order, including Capital Equipment, may be carried over from one
budget year to the next with the approval of the Director of Finance
1.6.2 Department Expenditures:
184.108.40.206 The legal level of budgetary control is established at the fund
level, and adopted on a basis consistent with accounting principals
generally accepted in the United States of America.
220.127.116.11 All budget transfers require the approval of the Director of Finance
or designee except those affecting personnel which must be approved by the
18.104.22.168 Budget transfers required to hire additional permanent personnel
require the City Council’s approval.
1.7 Goal Status Reports
The status of major program objectives will be formally reported to the City
Council on an ongoing consistent basis.
1.8 Mid-Year Budget Reviews
The Council will formally review the City’s fiscal condition, and amend
appropriations if necessary, six months after the beginning of each year.
1.9 Balanced Budget
The City will maintain a balanced budget over the two-year period of the
Financial Plan. This means that:
1.9.1 Each fiscal year, operating revenues must fully cover operating
expenditures, including debt service.
1.9.2 The City will strive to maintain 30% of the annual appropriations in
the General Fund’s Undesignated Fund Balance.
1.9.3 The City will strive to have cash reserves in the Enterprise Funds at
an optimal level of 30%.
1.10 Capital Improvement Program (CIP) Budget
Pursuant to Government Code Section 66002(b), the City Council will annually
conduct a public hearing to update and adopt the CIP Budget. Notice of the
hearing shall be given pursuant to Government Code Section 65090. A copy of
the budget will be made available at the City Hall front counters and the
2 FINANCIAL REPORTING AND BUDGET ADMINISTRATION
2.1 Annual Reporting
The City will prepare annual financial statements as follows:
2.1.1 The City will contract for an annual audit by a qualified independent
certified public accountant. The City will strive for an unqualified
2.1.2 The City will use Generally Accepted Accounting Principles (GAAP) in
preparing its annual financial statements, and will strive to meet the
requirements of the GFOA’s Award for Excellence in Financial Reporting
2.1.3 The City will issue audited financial statements within 180 days after
2.2 Interim Reporting
The City will prepare and issue timely interim reports on the City’s fiscal
status to the Council and staff. This includes:
1.2.1 On-line access to the City’s financial management system;
1.2.2 At a minimum, quarterly revenue and expenditure reports to the City
Council, City Manager and Department Directors Heads;
1.2.3 Mid-year budget reviews; and
1.2.4 Status report during budget review process.
2.3 Budget Administration
2.3.1 The City Council may, by majority vote, amend or supplement the budget
at any time after its adoption. The City Manager and/or Director of Finance
has the authority to make administrative adjustments to appropriations as
long as there is no funding source incompatibility and provided those
changes do not increase overall appropriations or will not have an affect on
budgeted year-end fund balances except as noted in section 2.3.2., 2.3.3 or
2.3.2 The City Manager and/or Director of Finance have the authority to make
adjustments to Capital Improvement Project funding sources as long as the
total commitment to the project does not change. Notification shall be made
to Council of funding sources changes.
2.3.3 The City Manager and/or Director of Finance have the authority to make
budget adjustments associated with Council approved Debt Issuance.
2.3.4 The City Manager and/or Director of Finance have the authority to make
budget adjustments for depreciation. Generally accepted accounting
principles (GAAP) require, in most cases, that capital assets be
depreciated. Depreciation is the systematic and rational allocation of the
historical cost of a capital asset over its estimated useful life. During
the fiscal year, the movement of capital assets from one fund to another,
the acquisition of capital assets, or a change in the useful life will
change the depreciation amount within a fund.
2.3.5 When requesting an amendment to the budget, the fiscal impact must
include the following information:
22.214.171.124 The total cost of the amendment and basis for the cost estimate.
126.96.36.199 Whether the cost is “one-time” or recurring.
188.8.131.52 Whether or not funds may be transferred from another source and if
so, what effect the transfer would have on that source.
184.108.40.206 Whether or not the purchase or contract will later require
additional resources and if so, how much and describe/outline how it will be
220.127.116.11 A summary of any revenue offsets that are expected due to the
amendment and when they will be received.
18.104.22.168 Whether there will be a future reduction of costs and if so, how
long it will take to recover the initial cost.
3 BUDGET MANAGEMENT
3.1 Diversified and Stable Base
The City will seek to maintain a diversified and stable revenue base to
protect it from short-term fluctuations in any one revenue source.
3.2 Long-Range Focus
The City Council will emphasize and facilitate long-range financial planning
through the development of a two-year budget, and a five-year capital
improvement plan and a ten year general fund fiscal model.
3.3 Interfund Transfers and Loans
In order to achieve important public policy goals, the City has established
various special revenue, capital project; debt service and enterprise funds
to account for revenues whose use should be restricted to certain
activities. Accordingly, each fund exists as a separate financing entity
from other funds, with its own revenue sources, expenditures and fund
Any transfers between funds for operating purposes are clearly set forth in
the budget. These operating transfers, under which financial resources are
transferred from one fund to another, are distinctly different from
interfund borrowings, which are usually made for temporary cash flow
reasons, and are not intended to result in a transfer of financial
resources. In summary, interfund transfers result in a change in fund
equity; interfund borrowings do not, as the intent is to repay the loan in
the near term.
From time-to-time, interfund borrowings may be appropriate; however, these
are subject to the following criteria in ensuring that the fiduciary purpose
of the fund is met:
3.3.1 The Director of Finance is authorized to approve temporary interfund
borrowings for cash flow purposes whenever the cash shortfall is expected to
be resolved within 90 days. The most common use of interfund borrowing under
this circumstance is for grant programs like the Community Development Block
Grant, where costs are incurred before drawdowns are initiated and received.
However, receipt of funds is typically received shortly after the request
for funds has been made.
3.3.2 Any other interfund borrowings for cash flow or other purposes require
case-by-case approval by the City Council.
3.3.3 Any transfers between funds where reimbursement is not expected within
one fiscal year shall not be recorded as interfund borrowings; they shall be
recorded as interfund operating transfers that affect equity by moving
financial resources from one fund to another.
4 USER FEE COST RECOVERY GOALS
4.1 Ongoing Review
Fees will be reviewed and updated on an ongoing basis to ensure that they
keep pace with changes in the cost-of-living as well as change in methods or
levels of service delivery.
4.2 User Fee and Utility Rates Cost Recovery
It is the intent of the City to collect user fees and/or utility rates for
services provided to the public, where applicable.
4.3 Annual Review
User fees and utility rates will be reviewed and updated annually to ensure
that they keep pace with the cost of providing the service.
4.4 Development Fees Review Program
The following cost-recovery policies apply to the development fees review
program. Services provided under this category include:
4.4.1 Planning (planned development permits, tentative tract and parcel
maps, re-zonings, general plan amendments, variances, use permits, etc.).
4.4.2 Engineering (public improvement plan checks, inspections, subdivision
requirements, encroachments, etc.).
4.4.3 Cost recovery for these services should generally be very high. In
most instances, the City’s cost recovery goal should be 100%. Exceptions to
this standard include appeals, where the fee is set very low to provide
adequate opportunity for due process.
4.4.4 The City will clearly establish and articulate standards for reviewing
developer applications to ensure that there is “value for cost.”
4.5 Other User Fees
Other User Fees include:
4.5.1 City Clerk (Agenda mailings, U.S. Passport Services, Public Record
Requests, Municipal & Zoning Code Supplements, Manuals and other documents,
4.5.2 Police (DUI recovery costs, fingerprinting, arrest report copies,
4.5.3 Other (Graffiti removal, copying costs, cost for documents published
by the City, costs for damaged property, or other costs reasonably
anticipated to be covered by user fees).
4.6 Utility Fees and Rates
Water, Solid Waste and Sewer Enterprises: The City will set utility fees and
rates at levels which fully cover the total direct and indirect costs,
including operations, capital outlay, capital replacement and debt service.
4.7 Recreation Programs
The following cost recovery policies apply to the City’s recreation
4.7.1 Cost recovery levels as recommended in the Cost of Services Study
report prepared by Maximus and accepted by City Council on February 11,
4.7.2 Cost recovery goal of 50% for youth programs.
4.7.3 Cost recovery goal of 75% for adult programs.
4.7.4 All programs that were above the recommended cost recovery as reported
to Council on February 11, 2003 will continue a goal of 100% cost recovery.
4.7.5 Programs that were under the cost recovery percentage as reported on
February 11, 2003, with the exception of the aquatic center, will recover
direct costs, and set as a goal, within three years of the report, to meet
the cost recovery percentage as approved by Council.
4.8 Uncollectible Receivables
It is the intent of the City to reflect the value of its receivables and
ensure that resources are used efficiently and not devoted to the recovery
of uncollectible receivables. The timely identification of losses is an
essential element in appropriately measuring the value of the City’s assets.
The write-off process is a critical component in valuing receivables. The
City Manager and/or Director of Finance have the authority to write-off
uncollectible receivables not to exceed $5,000 per transaction. Any
uncollectible account exceeding $5,000 per transaction will require the City
4.9 Minimum Refund Threshold for Overpayments
It is the intent of the City to ensure that resources are used efficiently.
The cost to process a refund check exceeds $25.00. Therefore, refunds of
overpayments shall not be issued for amounts less than $25.00.
5 APPROPRIATIONS LIMITATION
5.1 The City Council will annually adopt a resolution establishing the
City’s appropriations limit calculated in accordance with Article XIIIB of
the Constitution of the State of California, Section 7900 of the State of
California Government Code, and any other voter approved amendments or state
legislation that affect the City’s appropriations limit.
5.2 The supporting documentation used in calculating the City’s
appropriations limit and projected appropriations subject to the limit will
be available for public and City Council review at least 10 days before
consideration of a resolution to adopt an appropriations limit. The City
Council will generally consider this resolution in connection with final
approval of the budget.
5.3 The City will strive to develop revenue sources, both new and existing,
which are considered non-tax proceeds in calculating its appropriations
subject to limitation.
5.4 The City will annually review user fees and charges and report to the
City Council the amount of program subsidy, if any, that is being provided
by the General or Enterprise Funds.
5.5 The City will actively support legislation or initiatives sponsored or
approved by League of California Cities which would modify Article XIIIB of
the Constitution in a manner which would allow the City to retain projected
tax revenues resulting from growth in the local economy for use as
determined by the City Council.
5.6 The City shall seek a vote of the public to amend its appropriation
limit at such time that tax proceeds are in excess of allowable limits.
6 FUND BALANCE, RESERVES AND INTERNAL SERVICE FUNDS
6.1 Minimum Fund Balances/Reserves
The City will strive to maintain 30% of annual appropriations in the General
Fund’s Undesignated Fund Balance and cash reserves in the Enterprise Funds
at an optimal level of 30%. This is considered the minimum level necessary
to maintain the City’s credit worthiness and to adequately provide for:
6.1.1 Economic uncertainties, local disasters, and other financial hardships
or downturns in the local or national economy.
6.1.2 Contingencies for unseen operating or capital needs.
6.1.3 Cash flow requirements.
6.2 Equipment Replacement
For assets, the City will establish and maintain an Equipment Replacement
Fund to provide for the timely replacement of vehicles and capital equipment
with an individual replacement cost of $10,000 or more or as determined by
the Director of Finance. The annual contribution to this fund will generally
be based on the annual use allowance which is determined based on the
estimated life of the vehicle or equipment and its original purchase cost.
Interest earnings and sales of surplus equipment as well as any related
damage and insurance recoveries will be credited to the Equipment
6.3 Information Systems Replacement
The City will maintain an Information Systems Replacement Fund to provide
for the timely replacement of items such as, servers, computers, printers,
phones, faxes, scanners, and digital cameras. The annual contribution to
this fund will generally be based on the annual use allowance which is
determined based on the estimated life of the equipment and its original
purchase cost. Interest earnings and sales of surplus equipment will be
credited to the Information Systems Replacement Fund.
6.4 Facilities Replacement
The City will maintain a Replacement Fund to provide a funding source for
repair of existing facilities. The annual contribution to this fund will
generally be based on square footage. Interest earnings will be credited to
the Facilities Replacement Fund.
6.5 Emergency Preparedness Fund
The City will maintain an Emergency Preparedness Fund to enable the City to
be financially prepared to respond to a critical incident or catastrophic
event. The City is self insured for earthquake coverage. In order to help
fund the portion of the cost that the Federal Emergency Management Agency
(FEMA) and the State Office of Emergency Services (OES) would not reimburse
in the case of an earthquake, approximately $100,000 per fiscal year will be
contributed to this fund. This fund will be maintained at a level consistent
with estimated needs for overtime, rent for office space, supplies and
services in the case of an emergency. Interest earnings will be credited to
the Emergency Preparedness Fund.
6.6 Tuition Fund
The City will maintain a Tuition Fund to provide a funding source for
employees to continue their education in order to either maintain or improve
knowledge, skills and professional growth in their current position.
Interest earnings will be credited to the Tuition Fund.
6.7 Insurance Fund
The City will maintain an Insurance Fund to provide a funding source for
future insurance costs. This fund consists of the savings realized from
Public Employees Retirement System (PERS) due to prepayment of the employer
portion of retirement costs. The PERS Retirement, Liability and Worker’s
Compensation Insurance savings associated with having unfilled positions or
better rates are also included in this fund. These savings may be used to
pay for PERS Retiree Medical benefits and unforeseen expenses due to
lawsuits. Departments are also charged for Property and Liability Insurance
which funds the payments made to our insurance authority. Interest earnings
will be credited to the Insurance Fund.
6.8 Facilities Maintenance Services Fund
The City will maintain a Facilities Maintenance Services Fund to provide for
the custodial and maintenance needs of the City’s buildings. The annual
contribution for this fund will generally be based on square footage.
Interest earnings will be credited to the Facilities Maintenance Services
6.9 Fleet Maintenance Service Fund
The City will maintain a Fleet Maintenance Service Fund to provide for the
on-going maintenance of all City vehicles and equipment, other than Police.
The annual contribution for this fund will generally be based on type of
vehicle or equipment. Interest earnings will be credited to the Fleet
Maintenance Service Fund.
6.10 Information Services Fund
The City will maintain an Information Services Fund to provide for the
development and coordination of the City’s information systems’ needs. The
annual contribution for this fund will generally be based on type of
information systems equipment. Interest earnings will be credited to the
Information Services Fund.
6.11 Parks and LLD Replacement Fund
The City will maintain a Parks and Lighting and Landscape Districts (LLD)
Replacement Fund to provide for the accumulation of funds and associated
expenditures related to landscaping, equipment and facilities in the
Citywide Parks and Lighting and Landscape Districts. The annual contribution
for this fund will be based on the City Council adopted annual engineers
report. Interest earnings will be credited to the Parks and LLD Replacement
7 CAPITAL IMPROVEMENT MANAGEMENT
7.1 CIP Projects - $10,000 or More
Construction projects and equipment purchases which cost $10,000 or more
will be included in the Capital Improvement Plan (CIP); minor capital
outlays of less than $10,000 will be included with the operating program
7.2 CIP Purpose
The purpose of the CIP is to systematically plan, schedule, and finance
capital projects to ensure cost-effectiveness as well as conformance with
established policies. The CIP is a five-year plan organized into the same
functional groupings used for the operating programs. The CIP will reflect a
balance between capital replacement projects which repair, replace or
enhance existing facilities, equipment or infrastructure; and capital
facility projects which significantly expand or add to the City’s existing
7.3 Project Manager
Every CIP project will have a project manager who will prepare the project
proposal, ensure that required phases are completed on schedule, authorize
all project expenditures, ensure that all regulations and laws are observed,
and periodically report project status.
7.4 CIP SubCommittee
Headed by the City Engineer or designee, this Committee will review project
proposals, determine project phasing, recommend project managers, review and
evaluate the draft CIP budget document, and report CIP project progress on
an ongoing basis.
7.5 CIP Phases
The CIP will emphasize project planning, with projects progressing through
at least two and up to ten of the following phases:
7.5.1 Designate. Appropriates funds based on projects designated for funding
by the Council through adoption of the Financial Plan.
7.5.2 Study. Concept design, site selection, feasibility analysis, schematic
design, environmental determination, property appraisals, scheduling, grant
application, grant approval, specification preparation for equipment
7.5.3 Environmental and development review. EIR preparation, other
environmental studies, and development review processing as required by the
municipal code and state law.
7.5.4 Real property acquisitions. Property acquisition for projects, if
7.5.5 Site preparation. Demolition, hazardous materials abatements, other
7.5.6 Design. Final design, plan and specification preparation, and
construction cost estimation.
7.5.7 Construction. Construction contracts.
7.5.8 Construction management. Contract project management and inspection,
soils and material tests, other support services during construction.
7.5.9 Equipment acquisitions. Vehicles, heavy machinery, computers, office
furnishings, other equipment items acquired and installed independently from
7.5.10 Debt service. Installment payments of principal and interest for
completed projected funded through debt financings. Expenditures for this
project phase are included in the Debt Service section of the Financial Plan
and Operating Budget.
Generally, it will become more difficult for a project to move from one
phase to the next. As such, more projects will be studied than will be
designed, and more projects will be designed than will be constructed or
purchased during the term of the CIP.
7.6 CIP Appropriation
The City’s annual CIP appropriation for study, design, acquisition and/or
construction is based on the projects designated by the Council through
adoption of the budget. Adoption of the budget CIP appropriation does not
automatically authorize funding for specific project phases. This
authorization generally occurs only after the preceding project phase has
been completed and approved by the Council and costs for the succeeding
phases have been fully developed.
Accordingly, project appropriations are generally made when contracts are
awarded. If project costs at the time of bid award are less than the
budgeted amount, the balance will be inappropriate and returned to fund
balance or allocated to another project. If project costs at the time of bid
award are greater than budget amounts, five basic options are available:
7.6.1 Eliminate the project.
7.6.2 Defer the project for consideration to the next Financial Plan period.
7.6.3 Rescope or change the phasing of the project to meet the existing
7.6.4 Transfer funding from another specified, lower priority project.
7.6.5 Appropriate additional resources as necessary from fund balance.
7.7 Program Objectives
Project phases will be listed as objectives in the program narratives of the
programs, which manage the projects.
8 CAPITAL FINANCING AND DEBT MANAGEMENT
8.1 Capital Financing
8.1.1 The City will consider the use of debt financing only for one-time
capital Improvement projects and only under the following circumstances.
22.214.171.124 When the project’s useful life will exceed the term of the
126.96.36.199 When project revenues or specific resources will be sufficient to
service the long-term debt.
8.1.2 Debt financing will not be considered appropriate for any recurring
purpose such as current operating and maintenance expenditures. The issuance
of short-term instruments such as revenue, tax, or bond anticipation notes
is excluded from this limitation. (See Investment Policy).
8.1.3 Capital improvements will be financed primarily through user fees,
service charges, assessments, special taxes, or developer agreements when
benefits can be specifically attributed to users of the facility.
Accordingly, development impact fees should be created and implemented at
levels sufficient to ensure that new development pays its fair share of the
cost of constructing necessary community facilities.
8.1.4 Transportation impact fees are a major funding source in financing
transportation system improvements. However, revenues from these fees are
subject to significant fluctuation based on the rate of new development.
Accordingly, the following guidelines will be followed in designing and
building projects funded with transportation impact fees:
188.8.131.52 The availability of transportation impact fees in funding a specific
project will be analyzed on a case-by-case basis as plans and specification
or contract awards are submitted for Council approval.
184.108.40.206 If adequate funds are not available at that time, the Council will
make one of two determinations:
220.127.116.11.1 Defer the project until funds are available.
18.104.22.168.2 Based on the high-priority of the project, advance funds from the
General Fund, which will be reimbursed as soon as funds become available.
Repayment of General Fund advances will be the first use of transportation
impact fee funds when they become available.
8.1.5 The City will use the following criteria to evaluate pay-as-you-go
versus long-term financing in funding capital improvements
22.214.171.124 Factors Favoring Pay-As-You Go Financing
126.96.36.199.1 Current revenues and adequate fund balances are available or
project phasing can be accomplished.
188.8.131.52.2 Existing debt levels adversely affect the City’s credit rating.
184.108.40.206.3 Market conditions are unstable or present difficulties in
220.127.116.11 Factors Favoring Long Term Financing
18.104.22.168.1 Revenues available for debt service are deemed to be sufficient
and reliable so that long-term financings can be marketed with investment
grade credit ratings.
22.214.171.124.2 The project securing the financing is of the type which will
support an investment grade credit rating or the bonds are a suitable no
rated credit in the case of land secured financings.
126.96.36.199.3 Market conditions present favorable interest rates and demand for
188.8.131.52.4 A project is mandated by state or federal requirements, and
resources are insufficient or unavailable.
184.108.40.206.5 The project is immediately required to meet or relieve capacity
needs and current resources are insufficient or unavailable.
8.1.6 Debt Management
220.127.116.11 The City will not obligate the General Fund to secure long-term
financings except when marketability can be significantly enhanced.
18.104.22.168 An internal feasibility analysis will be prepared for each long-term
financing which analyzes the impact on current and future budgets for debt
service and operations. This analysis will also address the reliability of
revenues to support debt service.
22.214.171.124 The City will conduct financings on a competitive basis for revenue
and general fund debt obligations. Negotiated financing will be used when
there is market volatility, the bonds are non rated, or the financing
entails the use of complex security or structure.
126.96.36.199 The City will seek a rating on any direct debt and will seek credit
enhancements such as letters of credit or bond insurance when it will
improve marketing and is cost effective.
188.8.131.52 The City will monitor all forms of debt annually coincident with the
City’s Financial Plan preparation and review process and report concerns and
remedies, if needed, to the Council.
184.108.40.206 The City will diligently monitor its compliance with bond covenants
and ensure its adherence to federal arbitrage regulations.
220.127.116.11 The City will maintain good, ongoing communications with bond rating
agencies about its financial condition. The City will follow a policy of
full disclosure on every financial report and bond prospectus (Official
8.1.7 Debt Capacity
18.104.22.168 General purpose debt capacity. The City will carefully monitor its
levels of general purpose debt. Because our general purpose debt capacity is
limited, it is important that the City only use general purpose debt
financing for high-priority projects where the City can not reasonably use
other financing methods: funds borrowed for a project today are not
available to fund other projects tomorrow; and funds committed for debt
repayment today are not available to fund operations in the future.
22.214.171.124 Enterprise fund debt capacity. The City will set enterprise fund
rates at levels needed to fully cover debt service requirements as well as
operations, maintenance, administration and capital improvement costs. The
ability to afford new debt for enterprise operations will be evaluated as an
integral part of the City’s rate review and setting process.
8.1.8 Land-Based Financings
126.96.36.199 Public purpose. There will be a clearly articulated public purpose
in forming an assessment or special tax district in financing public
infrastructure improvements including why this form of financing is
preferred over other funding options such as impact fees, reimbursement
agreements or direct developer responsibility for the improvements.
188.8.131.52 Active Role. Even though land-based financings may be a limited
obligation of the City, we will play an active role in managing the
district. This means that the City will select and retain the financing
team, including the financial advisor, bond counsel, trustee, appraiser,
disclosure counsel, assessment engineer, bond insurer, LOC provider and
underwriter as necessary. Any costs incurred by the City in retaining these
services will be the responsibility of the property owners or developer, and
will be advanced via a deposit or will be paid on a contingency fee basis
from the proceeds from the bonds.
184.108.40.206 Credit quality. When a district is requested by a developer, the
City will carefully evaluate the applicant’s financial plan and ability to
carry the project, including the payment of assessments and special taxes
during build-out. This may include detailed background, credit and lender
checks, and the preparation of independent appraisal reports and market
220.127.116.11 Reserve fund. A reserve fund should be established in the lesser
amount of: the maximum annual debt service; 125% of the annual average debt
service; or 10% of the bond proceeds.
18.104.22.168 Value-to-debt-ratios. The minimum value of the property in the
district, with the public improvements, should be at least three times the
amount of the assessment or special tax debt.
22.214.171.124 Capitalized interest during construction. Decisions to capitalize
interest will be made on a case-by-case basis, with the intent to fund
interest in cases were the payment cannot be posted to the tax roll for that
126.96.36.199 Maximum burden. Annual assessments (or special taxes in the case of
Mello-Roos or similar districts) should generally not exceed 1% of the sales
price of the property; and total property taxes, special assessments and
special tax payments collected on the tax roll should generally not exceed
188.8.131.52 Benefit apportionment. Assessments and special taxes will be
apportioned according to a formula that is clear, understandable, equitable
and reasonably related to the benefit received by – or burden attributed to
– each parcel with respect to its financed improvement.
184.108.40.206 Special tax district administration. In the case of Mello-Roos or
similar special tax districts, the total maximum annual tax should not
exceed 110% of annual debt service. The rate and method of apportionment
should include a back-up tax in the event of significant changes from the
initial development plan, and should include procedures for prepayments.
220.127.116.11 Foreclosure covenants. In administration of the district, the City
shall structure foreclosure covenants in such a way as to insure the
delinquency data is available from the county or the administrator prior to
having to commence foreclosure proceedings.
18.104.22.168 Disclosure to bondholders. In general, each property owner who
accounts for more than 25% of the annual debt service or bonded indebtedness
must provide ongoing disclosure information annually as described under SEC
8.1.9 Conduit Financings
22.214.171.124 The City will consider requests for conduit financing on a
case-by-case basis using the following criteria:
126.96.36.199.1 The City’s bond counsel will review the terms of the financing,
and render an opinion that there will be no liability to the City in issuing
the bonds on behalf of the applicant.
188.8.131.52.2 There is a clearly articulated public purpose in providing the
184.108.40.206.3 The applicant is capable of achieving this public purpose.
220.127.116.11 This means that the review of requests for conduit financing will
generally be a two-step process: first asking the Council if they are
interested in considering the request, and establishing the ground rules for
evaluating it; and then returning with the results of this evaluation, and
recommending approval of appropriate financing documents if warranted. This
two-step approach ensures that the issues are clear for both the City and
applicant, and that key policy questions are answered.
18.104.22.168 The work scope necessary to address these issues will vary from
request to request, and will have to be determined on a case-by-case basis.
Additionally, the City should generally be fully reimbursed for our costs in
evaluating the request; however, this should also be determined on a
9 HUMAN RESOURCE MANAGEMENT
9.1 Regular Staffing
9.1.1 The budget will fully appropriate the resources needed for authorized
regular staffing and will limit programs to the regular staffing authorized.
9.1.2 Regular employees will be the core work force and the preferred means
of staffing ongoing, year-round program activities that should be performed
by full-time City employees rather than independent contractors. The City
will strive to provide competitive compensation and benefit schedules for
its authorized regular work force. Each regular employee will:
22.214.171.124 Fill an authorized regular position.
126.96.36.199 Be assigned to an appropriate bargaining unit, or otherwise
designated with at-will status.
188.8.131.52 Receive salary and benefits consistent with labor agreements or
other compensation plans.
9.1.3 To manage the growth of the regular work force and overall staffing
costs, the City will follow these procedures:
184.108.40.206 The City Council will authorize all regular positions.
220.127.116.11 Adjustments to employee allocations will only be made in conjunction
with the first or second year of the two-year budget process unless
authorized by the Director of Finance.
18.104.22.168 The Human Resources Division will coordinate and oversee the hiring
of all regular and temporary employees.
22.214.171.124 All requests for additional regular positions will include
126.96.36.199.1 The necessity, term and expected results of the proposed activity.
188.8.131.52.2 Staffing and materials costs including salary, benefits,
equipment, uniforms, clerical support and facilities.
184.108.40.206.3 The ability of private industry to provide the proposed service.
220.127.116.11.4 Additional revenues or cost savings, which may be realized.
9.1.4 Periodically, and before any request for additional regular positions,
programs will be evaluated to determine if they can be accomplished with
fewer regular employees.
9.2 Limited Service
9.2.1 The hiring of limited service employees will not be used as an
incremental method for expanding the City’s regular work force.
9.2.2 Limited service positions include all employees other than regular
employees, elected officials, and volunteers. Limited service positions will
generally augment regular City staffing as hourly, temporary, limited
part-time, intermittent, student, intern, emergency, and seasonal positions.
9.2.3 The City Manager and Department Directors Heads will encourage the use
of limited service rather than regular employees to meet peak workload
requirements, fill interim vacancies, and accomplish tasks where less than
full-time, year-round staffing is required. Under this guideline, limited
service employee hours will generally not exceed 50% of a regular, full-time
position (1,000 hours per fiscal year). There may be limited circumstances
where the use of limited service employees on an ongoing basis in excess of
this target may be appropriate due to unique programming or staffing
requirements. However, any such exceptions must be approved by the City
9.2.4 Contract Limited term employees are defined as limited service
employees with written contracts time specific offer letters approved by the
City Manager who may receive approved benefits depending on hourly
requirements and the length of their employment contract. Contract Limited
term employees will generally be used for medium-term (generally between six
months and two years) projects, programs or activities requiring specialized
or augmented levels of staffing for a specific period. The services of
contract limited term employees will be discontinued upon completion of the
assigned project, program or activity. Accordingly, limited term contract
employees will not be used for services that are anticipated to be delivered
on an ongoing basis.