City of Brentwood
Home PageContact Us!Back

City Administration

2010 Council Goals and Strategic Plan | City Council Members | Calendar of Events | Elections
eNotification | Sub-Committees| Pledge of Allegiance Sign Ups | Invocation Sign Up
Live Streaming Council Meeting | Streaming PC Help |
Streaming Mac Help |

Current Council Agenda and Past Meeting Information

CITY COUNCIL AGENDA ITEM NO. 7



Meeting Date: May 13, 2008

Subject/Title: Adopt a Resolution amending Council/Administrative Policy No. 10-5 Budget and Fiscal Policies to update the Emergency Preparedness Fund and Interfund Transfers and Loans portions of the Policy

Prepared by: Denise Davies, Chief Financial Operations Officer

Submitted by: Pamela Ehler, City Treasurer/Director of Finance and Information Systems


RECOMMENDATION
Adopt a Resolution amending Council/Administrative Policy No. 10-5 Budget and Fiscal Policies to update the Emergency Preparedness Fund portion of the Policy.

PREVIOUS ACTION
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24, 2001, by Resolution No. 2275, City Council updated Council Policy No. 10-5, City of Brentwood Budget Policy and repealed Resolution No. 93-65.

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.

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 subdivisions.

On June 26, 2007, the City Council passed Resolution No. 2007-140, amending the Budget and Fiscal Policies No. 10-5 and Repealing Resolution No. 2530.

BACKGROUND
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 Policies have been updated in order to include determinations within the Emergency Preparedness Fund, Section 6.5 of the Policy and to clarify Section 3.3 Interfund Transfers and Loans, 3.3.1 in which staff has removed a time constraint of 90 days to allow for additional time to collect grant funds that typically take longer then 90 days.

In order to facilitate your review, changes to the Policy have been displayed in red.

FISCAL IMPACT
There is no fiscal impact associated with the adoption of this resolution.

Attachment:
Resolution
Exhibit A - Council/Administrative Policy No. 10-5 Budget and Fiscal Policies






































RESOLUTION NO.


A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AMENDING COUNCIL/ADMINISTRATIVE POLICY NO. 10-5 BUDGET AND FISCAL POLICIES TO UPDATE THE EMERGENCY PREPAREDNESS FUND AND INTERFUND TRANSFERS AND LOANS PORTIONS OF THE POLICY

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, On June 26, 2007, the City Council passed Resolution No. 2007-140, amending the Budget and Fiscal Policy No. 10-5 and Repealing Resolution No. 2530.

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; and

WHEREAS, The current Budget and Fiscal Policy has been updated in order to include determinations within the Emergency Preparedness Fund Section 6.5 and to clarify Section 3.3 Interfund Transfers and Loans, 3.3.1 in which staff has removed a time constraint of 90 days to allow for additional time to collect funds.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood does hereby amend Council/Administrative Policy No. 10-5 Budget and Fiscal Polices provided for in the attached Exhibit A.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 13th day of May, 2008 by the following vote:
PURPOSE

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.

POLICY

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:

1.1.7.1 Output of program activities

1.1.7.2 Accomplishment of program objectives

1.1.7.3 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 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 changes being recommended for the second year of the two-year budget at a duly noticed public meeting.

1.3.4 The City Council will adopt a resolution appropriating and approving the budget for the two fiscal years.

Benefits identified using a two-year financial plan:

1.3.4.1 Reinforcing the importance of long-range planning for managing the City’s fiscal affairs.

1.3.4.2 Concentrating on developing and budgeting for the accomplishment of significant objectives.

1.3.4.3 Establishing realistic timeframes for achieving objectives.

1.3.4.4 Creating a pro-active budget that provides for stable operations and assures the City’s long-term fiscal health.

1.3.4.5 Promoting more orderly spending patterns.

1.3.4.6 Reducing the amount of time and resources allocated to preparing annual budgets.

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 amend appropriations for the second fiscal year.

1.6 Operating Carryover

1.6.1 Operating Carryover:

1.6.1.1 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:

1.6.2.1 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.

1.6.2.2 All budget transfers require the approval of the Director of Finance or designee except those affecting personnel which must be approved by the City Manager.

1.6.2.3 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 Library.

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 auditors’ opinion.

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 program.

2.1.3 The City will issue audited financial statements within 180 days after year-end.

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;

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 2.3.4.

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:

2.3.5.1 The total cost of the amendment and basis for the cost estimate.

2.3.5.2 Whether the cost is “one-time” or recurring.

2.3.5.3 Whether or not funds may be transferred from another source and if so, what effect the transfer would have on that source.

2.3.5.4 Whether or not the purchase or contract will later require additional resources and if so, how much and describe/outline how it will be funded.

2.3.5.5 A summary of any revenue offsets that are expected due to the amendment and when they will be received.

2.3.5.6 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, 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 equity.

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, certifications, etc.)

4.5.2 Police (DUI recovery costs, fingerprinting, arrest report copies, etc.).

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 programs:
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, 2003.

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 Council’s approval.

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 Replacement Fund.

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 as determined by the City Manager or his/her designee. 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 if needed, as determined by the Director of Finance, to ensure sufficient funds are available. 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 Fund.

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 Fund.

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 budgets.

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 fixed assets.

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 purchases.

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 necessary.

7.5.5 Site preparation. Demolition, hazardous materials abatements, other pre-construction work.

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 construction contracts.

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 budget.

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.

8.1.1.1 When the project’s useful life will exceed the term of the financing.

8.1.1.2 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:

8.1.4.1 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.

8.1.4.2 If adequate funds are not available at that time, the Council will make one of two determinations:

8.1.4.2.1 Defer the project until funds are available.

8.1.4.2.2 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

8.1.5.1 Factors Favoring Pay-As-You Go Financing

8.1.5.1.1 Current revenues and adequate fund balances are available or project phasing can be accomplished.

8.1.5.1.2 Existing debt levels adversely affect the City’s credit rating.

8.1.5.1.3 Market conditions are unstable or present difficulties in marketing.

8.1.5.2 Factors Favoring Long Term Financing

8.1.5.2.1 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.

8.1.5.2.2 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.

8.1.5.2.3 Market conditions present favorable interest rates and demand for City financing.

8.1.5.2.4 A project is mandated by state or federal requirements, and resources are insufficient or unavailable.

8.1.5.2.5 The project is immediately required to meet or relieve capacity needs and current resources are insufficient or unavailable.

8.1.6 Debt Management

8.1.6.1 The City will not obligate the General Fund to secure long-term financings except when marketability can be significantly enhanced.

8.1.6.2 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.

8.1.6.3 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.

8.1.6.4 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.

8.1.6.5 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.

8.1.6.6 The City will diligently monitor its compliance with bond covenants and ensure its adherence to federal arbitrage regulations.

8.1.6.7 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 Statement).

8.1.7 Debt Capacity

8.1.7.1 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.

8.1.7.2 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

8.1.8.1 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.

8.1.8.2 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.

8.1.8.3 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 absorption studies.

8.1.8.4 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.

8.1.8.5 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.

8.1.8.6 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 tax year.

8.1.8.7 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 2%.

8.1.8.8 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.

8.1.8.9 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.

8.1.8.10 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.

8.1.8.11 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 Rule 15(c)-12.

8.1.9 Conduit Financings

8.1.9.1 The City will consider requests for conduit financing on a case-by-case basis using the following criteria:

8.1.9.1.1 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.

8.1.9.1.2 There is a clearly articulated public purpose in providing the conduit financing.

8.1.9.1.3 The applicant is capable of achieving this public purpose.

8.1.9.2 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.

8.1.9.3 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 case-by-case basis.

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:

9.1.2.1 Fill an authorized regular position.

9.1.2.2 Be assigned to an appropriate bargaining unit, or otherwise designated with at-will status.

9.1.2.3 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:

9.1.3.1 The City Council will authorize all regular positions.

9.1.3.2 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.

9.1.3.3 The Human Resources Division will coordinate and oversee the hiring of all regular and temporary employees.

9.1.3.4 All requests for additional regular positions will include evaluations of:

9.1.3.4.1 The necessity, term and expected results of the proposed activity.

9.1.3.4.2 Staffing and materials costs including salary, benefits, equipment, uniforms, clerical support and facilities.

9.1.3.4.3 The ability of private industry to provide the proposed service.

9.1.3.4.4 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 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 Manager.

9.2.4 Limited term employees are defined as limited service employees with time specific offer letters approved by the City Manager who may receive approved benefits depending on hourly requirements and the length of their employment. 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 limited term employees will be discontinued upon completion of the assigned project, program or activity. Accordingly, limited term employees will not be used for services that are anticipated to be delivered on an ongoing basis.

 
City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov