HomeMy WebLinkAbout20 - Fiscal Sustainability Plan ResolutionCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 20
January 12, 2010
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: City Manager's Office
Dave Kiff, City Manager
949/644 -3002 or dkiff @newportbeachca.gov
SUBJECT: Resolution 2010 -_: Fiscal Sustainability Plan
ISSUE:
Should the Council refine or adopt specific guidelines to help ensure the City's fiscal
sustainability?
RECOMMENDATION:
Adopt Resolution 2010 -_ relating to a Fiscal Sustainability Plan for the City of Newport
Beach.
DISCUSSION:
The City's FY 2009 -10 General Fund deficit is roughly $5.8 million as of the date of this
staff report. That equates to about 5% of the City's General Fund operations. In the
short- and medium -term, addressing this structural deficit without significantly impacting
reserves is a primary goal of our office. If we cannot effectively reduce expenditures
and reasonably increase revenues, the long -term fiscal future for the City is uncertain,
given obligations like the Facilities Replacement Plan (FRP) and burgeoning retirement
costs associated with Cal -PERS losses in Fall and Winter of 2009.
Mayor Curry has proposed elements of what he refers to as a "Fiscal Sustainability
Plan" that would guide the City Council and the City Manager in examining City
operations, expenditures, and revenue opportunities. A short synopsis of his Plan
follows, along with strategies suggested by the City Manager to help accomplish each of
the elements. Mayor Curry asks that the Council consider adopting the elements and
Plan via resolution, allowing further details to be added to the Plan over the coming few
months with the advice and assistance of the Administrative Services Director.
Resolution 2010- Fiscal Sustainability Plan
January 12, 2010
Page 2
ELEMENTS OF A FISCAL SUSTAINABILITY PLAN
1. The City will proactively seek to protect and expand its tax base by encouraging a healthy
underlying local economy. STRATEGIES: EDC, Economic Development staff, support of
the NB Chamber of Commerce, CDM Chamber, and VisitNB.com, support of Business
Improvement Districts, a business- friendly permit approach to businesses wishing to start or
expand businesses in town; support of the Harbor's economic base.
2. The City will work to enhance and protect the property values of all Newport Beach
residents and property owners. STRATEGIES: Strong City services, including public
safety, code enforcement, library, public works, recreation, and general services. An
emphasis on beautification opportunities and effective advanced planning in areas selected
by the City Council each time the Council adopts its budget.
3. The City will encourage shopping, dining, and visiting at Newport Beach stores, restaurants,
and hotels. STRATEGIES: EDC, support of the Restaurant BID, support of the NB and
CDM Chambers of Commerce and VisitNB.com; support of Restaurant Week, the Film
Festival, and more.
4. The City will establish and maintain appropriate cash reserves. STRATEGY, Regular
compliance review and update by the City Council of Council Policy F -2
(Reserves/Designations of Fund Balance),
5. The City will manage its Facilities Replacement Plan to not exceed the 5% of General Fund
expenditures threshold. STRATEGY.- Maintain the limits in Council Policy F -2B.
6. City revenue performance will be reviewed no less than quarterly and appropriate budget
adjustments will be made in advance of the end of a budget year if revenue performance is
not meeting projections. STRATEGY: Provide more frequent and detailed budget
presentations to the City Council,
7. The City will initiate a `results -based budgeting" approach that allows the public and the City
Council to prioritize City expenditures strategically rather than simply adjusting legacy
expenditures to reflect inflation. STRATEGY. Begin a practice of building departmental
budgets from the base up, with a more detailed discussion of programs within each budget
unit including examining where the City should position itself 3 -5 years from now.
8. The City will implement a Performance Measurement/Management Strategy as part of an
ongoing effort to ensure high - quality and efficient performance. STRATEGY.: Incorporate
performance measurements into the City's budget documents and City management, and
report back to the Council accordingly.
9. The City will consider competitive contracting of services and equipment when appropriate
and where clear, cost - effective alternatives exist. STRATEGY: Begin a continuous review
Resolution 2010 = Fiscal Sustainability Plan
January 12, 2010
Page 3
of all City operations and programs, conducting studies or analyses of 3 -5 programs each
year to examine whether a program could be more effectively done in another manner.
Encourage City departments to submit their own proposals to improve a program.
10. The City will make it a priority to be energy efficient in its provision of public services.
STRATEGIES: Seek LEED certification (or equivalent energy savings if the City chooses
not to pay LEED fees) for new facilities on the Facilities Replacement Plan. Examine and
implement the most energy - efficient (if cost - effective) ways to light, heat, and cool existing
city facilities and to provide street lighting and traffic signal lighting.
11. The City will establish appropriate cost- recovery targets for its fee structure and will annually
adjust its fee structure to ensure that the fees continue to meet cost recovery targets.
STRATEGY: Continuously review the City's fee structure, including harbor fees, and
discuss with Council at least annually via the adoption of the Master Fee Resolution.
12. The City will oppose efforts of the State and County governments to divert revenues from
the City or to increase the unfunded service mandate of City taxpayers. STRATEGY.'
Remain engaged in intergovernmental relations with our State Legislators and with the
County Board of Supervisors to ensure minimal cost impacts from the State and County as
they may relate to un- or under - funded mandates.
13. The City will work in partnership with its employees to ensure fair compensation and that
costs related to pension and other benefits are appropriately allocated between employer
and employees. STRATEGIES: Work with the bargaining units to establish retirement
options that may include greater employee payment of the employee's share of PERS costs,
a defined contribution plan or plans, and/or hybrids that blend defined benefit and defined
contribution plans — provided that such plans enable the City to continue to attract and retain
qualified candidates for jobs. Work with other municipalities and our legislators to enact a
more sustainable retirement system statewide.
14. The City will vigorously defend itself and its taxpayers against frivolous lawsuits and other
shakedown schemes. STRATEGY. Develop strategic approach to liability risks and
implement it on an ongoing basis; encourage and support risk management initiatives in
areas of significant exposure; and Allocate enough staff time and resources to the Risk
Management function and in the City Attorney's Office to effectively address areas of risk at
the management level and fight lawsuits and other claims that unfairly target the City and its
taxpayers as deep pockets.
The attached Resolution (Resolution 2010 -_) would memorialize the fourteen (14)
elements as the formal guidance of the City Council from this point forward.
Environmental Review: None required.
Resolution 2010 -_ Fiscal Sustainability Plan
January 12, 2010
Page 4
Communication with Key Stakeholders: Stakeholder communication regarding this item
included:
1. E- mailing this staff report to members of the Economic Development Committee
(EDC); to the Newport Beach Chamber of Commerce and to Visit NB.com.
2. E- mailing the staff report to members of the Finance Committee.
3. E- mailing the staff report to the City's major labor groups.
4. Public notice as required by the Brown Act.
5. A comment and link posted by me to readers of the City's Facebook page.
Submitted by:
Dave Kiff
City Manager
Attachment: Resolution 2010 -_ relating to elements of a Fiscal Sustainability Plan
Resolution 2010- Fiscal Sustainability Plan
January 12, 2010
Page 5
RESOLUTION 2010-
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF NEWPORT BEACH RELATING TO A
FISCAL SUSTAINABILITY PLAN FOR NEWPORT
BEACH CITY GOVERNMENT
WHEREAS, the City of Newport Beach has remained a fiscally responsible municipality
since its inception in 1906, carefully balancing its budget year -to -year despite changes in the
regional and national economy;
WHEREAS, the current economic recession has impacted the City's General Fund
operations in a significant manner, causing reductions in sales tax and hotel bed tax revenue,
among other sources of revenue; and
WHEREAS, the City's preparation for the downturn, including budget reductions and the
City's prudent reserve policies have assisted the City in weathering the current downturn,
ensuring the continuation of the strong provision of essential services; and
WHEREAS, even as the City and the region may slowly return to a period of economic
growth, the City is cognizant of its responsibility to continuously improve the organization and its
services to maximize efficiency and cost - effectiveness; and
WHEREAS, even as the region may see new economic growth, the City faces significant
and costly obligations in the future, including rapid increases in retirement costs and the
maintenance, repair, and replacement of City facilities via the Facilities Replacement Plan and
the City's capital improvement program; now, therefore be it
RESOLVED by the City Council of the City of Newport Beach that it hereby adopts the
following fourteen (14) elements of a Fiscal Sustainability Plan and directs that the Plan be the
policy of the City Council going forward into 2010 and beyond:
ELEMENTS OF THE CITY'S FISCAL SUSTAINABILITY PLAN
1. The City will proactively seek to protect and expand its tax base by encouraging a
healthy underlying local economy.
2. The City will work to enhance and protect the property values of all Newport Beach
residents and property owners.
3. The City will encourage shopping, dining, and visiting at Newport Beach stores,
restaurants, and hotels.
4. The City will establish and maintain appropriate cash reserves.
5. The City will manage its Facilities Replacement Plan to not exceed the 5% of General
Fund expenditures threshold.
Resolution 2010 — Fiscal Sustainability Plan
January 12, 2010
Page 6
6. City revenue performance will be reviewed no less than quarterly and appropriate
budget adjustments will be made in advance of the end of a budget year if revenue
performance is not meeting projections.
7. The City will initiate a "results -based budgeting" approach that allows the public and the
City Council to prioritize City expenditures strategically rather than simply adjusting
legacy expenditures to reflect inflation.
8. The City will implement a Performance Measurement/Management Strategy as part of
an ongoing effort to ensure high - quality and efficient performance.
9. The City will consider competitive contracting of services and equipment when
appropriate and where clear, cost - effective alternatives exist.
10. The City will make it a priority to be energy efficient in its provision of public services.
11. The City will establish appropriate cost- recovery targets for its fee structure and will
annually adjust its fee structure to ensure that the fees continue to meet cost recovery
targets.
12. The City will oppose efforts of the State and County governments to divert revenues
from the City or to increase the unfunded service mandate of City taxpayers.
13. The City will work in partnership with its employees to ensure fair compensation and that
costs related to pension and other benefits are appropriately allocated between
employer and employees.
14. The City will vigorously defend itself and its taxpayers against frivolous lawsuits and
other shakedown schemes.
ADOPTED this 12.' day of January, 2010.
KEITH CURRY
Mayor of Newport Beach
ATTEST:
LEILANI BROWN
City Clerk
COUiJ it ACENDA
NO. IUD
! PL-10
RESOLUTION 2010-
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF NEWPORT BEACH RELATING TO A
FISCAL SUSTAINABILITY PLAN FOR NEWPORT
BEACH CITY GOVERNMENT
WHEREAS, the City of Newport Beach has remained a fiscally responsible municipality
since its inception in 1906, carefully balancing its budget year -to -year despite changes in the
regional and national economy;
WHEREAS, the current economic recession has impacted the City's General Fund
operations in a significant manner, causing reductions in sales tax and hotel bed tax revenue,
among other sources of revenue; and
WHEREAS, the City's preparation for the downturn, including budget reductions and the
City's prudent reserve policies have assisted the City in weathering the current downturn,
ensuring the continuation of the strong provision of essential services; and
WHEREAS, even as the City and the region may slowly return to a period of economic
growth, the City is cognizant of its responsibility to continuously improve the organization and its
services to maximize efficiency and cw-effactiveness; and
WHEREAS, even as the region may see new economic growth, the City faces significant
and costly obligations in the future, including rapid i ncreases in retirement costs and the
maintenance, repair, and replacement of City facilities via the Facilities Replacement Plan and
the City's capital improvement program; now, therefore be it
RESOLVED by the City Council of the City of Newport Beach that it hereby adopts the
following fourteen (14) elements of a Fiscal Sustainability Plan and directs that the Plan be the
policy of the City Council going forward into 2010 and beyond:
ELEMENTS OF THE CITPS FISCAL SUSTAINABILITY PLAN
1. The City will proactively seek to protect and expand its lax base by encouraging a
healthy undedying local economy.
2. The City will work to enhance and protect the property values of all Newport Beach
residents and property owners.
3. The City will encourage shopping, dining, and visiting at Newport Beach stores.
restaurants, and hotels.
4. The City will establish and maintain appropriate cash reserves.
5. The City will manage its Facilities Replacement Plan to not exceed the 5% of General
Fund expenditures threshold.
6. City revenue performance will be reviewed no less than quarterly and appropriate
budget adjustments will be made in advance of the end of a budget year if revenue
performance Is not meeting projections.
7. The City wit initiate a'resutts -based budgeting" approach that allows the public and the
City Council to prioritize City expenditures strategically rather than simply adjusting
legacy expenditures to reflect inflation.
6. The City will implement a Performance MeasurementfManagement Strategy as part of
an ongoing effort to ensure high- quality and efficient performance.
9. The City will consider competitive contracting of services and equipment when
appropriate and where clear, cost -effective alternatives exist.
10. The City will make it a priority to be energy effrdent in its provision of public services.
11. The City will establish appropriate cost- recovery targets for its fee structure and will
annually adjust its fee structure to ensure that the fees continue to meet cost recovery
targets.
12. The City will oppose efforts of the State and County governments to divert revenues
from the City or to increase the unfunded service mandate of City taxpayers.
13. The City will work in partnership with its employees to ensure fair compensation and that
costs related to pension and other benefits are appropriately allocated between
employer and employees.
14. The City will vigorously defend itself and its taxpayers against frivolous lawsuits -and
14 .15 The City will seek additional intergovernmental funding and grants, with a priority ...... Fo : (oefmk) Arai
on funding one -time capital proiects. Grant- funded proiects that require multi -Year
support will be reviewed by the Finance Committee.
ADOPTED this 12° day of January, 2010.
KEITH CURRY
Mayor of Newport Beach
ATTEST:
LEILANI BROWN
City Clerk