HomeMy WebLinkAbout2019-11 - Adopting Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28RESOLUTION NO. 2019-11
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH, CALIFORNIA, ADOPTING REVISED
CITY COUNCIL POLICIES F-3, F-4, F-7, F-8, F-11, F-13,
F-14, F-15, F-25 and F-28
WHEREAS, the City of Newport Beach ("City") is governed, in part, by its Charter,
Municipal Code and adopted City Council Policies;
WHEREAS, the Finance Committee is charged with a variety of tasks including,
but not limited to, reviewing and monitoring events and issues that may affect the financial
status of the City and making recommendations to the City Council regarding
amendments to financial and budgetary policies;
WHEREAS, the Finance Committee recently completed its review of select City
Council financial policies and recommends changes as shown in the revised policies
attached hereto as Exhibit 1; and
WHEREAS, the City Manager has reviewed the recommended revisions to the
policies suggested by the Finance Committee and recommends the City Council adopt
the revised City Council policies to promote efficiencies, and ensure smooth
administrative operations.
NOW, THEREFORE, the City Council of the City of Newport Beach hereby
resolves as follows:
Section 1: The City Council hereby approves and adopts City Council Policies
F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28, which are attached hereto as
Exhibit 1 and incorporated herein by this reference.
Section 2: All prior versions of City Council Policies F-3, F-4, F-7, F-8, F-11,
F-13, F-14, F-15, F-25 and F-28 are hereby repealed.
Section 3: The recitals provided in this resolution are true and correct and are
incorporated into the operative part of this resolution.
Resolution No. 2019-11
Page 2 of 2
Section 4: If any section, subsection, sentence, clause or phrase of this resolution
is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the
validity or constitutionality of the remaining portions of this resolution. The City Council
hereby declares that it would have passed this resolution, and each section, subsection,
sentence, clause or phrase hereof, irrespective of the fact that any one or more sections,
subsections, sentences, clauses or phrases be declared invalid or unconstitutional.
Section 5: The City Council finds the adoption of this resolution is not subject to
the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the
activity will not result in a direct or reasonably foreseeable indirect physical change in the
environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)
of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it
has no potential for resulting in physical change to the environment, directly or indirectly.
Section 6: This resolution shall take effect immediately upon its adoption by the
City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 12th day of February, 2019.
lane B. Dixon
Mayor
ATTEST:
BrownW1111, I I Mum PJ rrrr MA
Leilani 1.
City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Aaron C. Harp
City Attorney
Attachments: Exhibit 1— Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13,
F-14, F-15, F-25 and F-28
Exhibit 1
Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F28
BUDGET ADOPTION AND ADMINISTRATION
PURPOSE
F-3
To establish the policy for the preparation, adoption, and administration of the City's
Annual Budget.
POLICY
A. Budgeting Philosophy.
The City shall prepare and adopt an annual budget by June 30, of each year, as
required by Section 1104 of the City Charter. To the extent practicable, the budget
shall be prepared to generate a surplus in most years by conservatively estimating
projected revenues and liberally estimating projected expenses. Surpluses will be
allocated by the City Council pursuant to Policy F-5 or as otherwise determined
by the City Council.
The City has a wide variety of obligations associated with its activities and shall
establish appropriate reserves for such obligations based upon the best available
information at the time each budget is prepared. The City Council shall direct and
control the planned use of reserves through the budget appropriation process.
Appropriations for operating expenditures shall generally be balanced with
current revenue sources and absent compelling, unexpected circumstances, will
generally not rely on one-time revenue sources or reserves. However, this
constraint is not intended to limit the periodic use of financial resources that were
accumulated over time for a specific purpose or use of reserves consistent with
their intended purpose.
The City Council shall maintain a contingency reserve that shall be a "safety net"
to address exigent circumstances consistent with Council Policy F-2 section E. 1.
This reserve will generally not be used for other purposes. The contingency
reserve will be invested in short-term readily liquid assets so they can be utilized
on short notice.
The budget may be developed with one or more contingency plans to protect
against volatility or unexpected events. When significant uncertainty exists
concerning revenue volatility or threatened/ pending obligations, the City Council
and City Manager reserve the right to impose any special fiscal control measures,
including a personnel hiring freeze, and other spending controls, whenever
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circumstances warrant. The City Council may authorize the use of contingency
reserves for any purpose as set forth by Council Policy F-2.
B. Organization of the Budget.
The Budget shall consist of two volumes: the Budget Detail and the Capital
Improvement Program (CIP).
The Budget Detail is an Operating Budget, which shall also provide historical
trends of summary level information and contains line -by-line detail regarding
operating expenditures and revenue estimates for the prior year, current year and
budget year. Operating expenditures are categorized into five classifications
within the Operating Budget. These are Salaries and Benefits, Maintenance and
Operations, Capital Outlay, Debt Services and Interfund Transfers.
The CIP document provides a summary of current and future planned projects,
basic descriptions of each project, the anticipated funding source and the scope of
work to be performed. CIP improvements are generally major facility or
infrastructure improvement projects managed by the Public Works Department.
The Finance Committee generally will not make a recommendation on the CIP
Budget because it is within the purview of the City Council alone to determine
how best to spend the City's resources. However, to the extent needed capital
improvements or repairs come to the attention of the Finance Committee and the
failure to construct those improvements or make those repairs may expose the City
to financial risk, the Finance Committee may make a recommendation that such
improvements be installed in the coming fiscal year(s). Because of the nature and
scope of the CIP improvements, in most instances, the construction of such
improvements will take place over more than one fiscal year.
The final and complete versions of both budget volumes will be published and
available on the City's website by no later than September 30th.
C. Budget Process.
In November of each year, the Finance Department will prepare a budget calendar
and issue budget instructions to each department for use in preparing the budget.
During December of each year, the Finance Department will prepare updated
revenue estimates and fund balance projections for the current year and prepare
preliminary revenue projections for the next fiscal year. Included in these
instructions will be budget guidelines and, if deemed necessary, appropriation
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targets for each department. These guidelines will be developed by the Finance
Director and approved by the City Manager.
After further refinements of revenue estimates and the completion of Department
proposed expenditure appropriation requests, the Finance Department will
summarize department requests for review by the City Manager. After the City
Manager has reviewed and amended the Department Directors requests, the
Finance Department will prepare the City Manager's proposed budget for the next
fiscal year and shall submit it to the City Council and to the Finance Committee.
The Finance Committee should have the opportunity to question staff and discuss
the Budget Detail on at least two occasions.
The City Council shall hold as many budget study sessions as it deems necessary.
The City Council and the Finance Committee should have a joint meeting (which
may be in a Study Session) not later than the second Council meeting in May to
discuss the Budget Detail. After the joint meeting, the Finance Committee shall
make a recommendation to the City Council on the Budget Detail. Such
recommendation need not include any recommendation on items on the Proposed
Budget Revisions unless the Finance Committee is specifically asked to do so by
the City Council.
All proposed Council changes to the City Manager's proposed budget shall be
itemized in a document referred to as the Proposed Budget Revisions. The City
Council shall hold a budget hearing and adopt the proposed budget with any
desired Proposed Budget Revisions on or before June 30 by formal budget
resolution. When adopted, the proposed budget as supplement by the finalized
Proposed Budget Revisions shall become the final budget.
D. Long -Range Financial Forecast (LRFF).
Strategic planning begins with determining the City's fiscal capacity based upon
long-term financial forecasts of recurring available revenues and future financial
obligations. Prior to the adoption of the annual budget, the Finance Department
will prepare and present to the Finance Committee a Long -Range Financial
Forecast that evaluates known internal and external issues impacting the City's
financial condition. The LRFF is intended to help the City achieve the following:
1. The City can attain and maintain financial sustainability;
2. The City has sufficient long-term information to guide financial decisions;
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3. The City has sufficient resources to provide programs and services for the
stakeholders;
4. Identify potential risks to on-going operations in the long-term financial
planning process and communicate these risks on an annual basis;
5. Establish mechanisms to identify early warning indicators; and
6. Identify changes in expenditure or revenue structures needed to deliver
services or to meet the goals adopted by the City Council.
The LRFF will forecast revenues, expenditures, and the financial position of the
General Fund Contingency Reserve at least five years into the future or longer
where specific issues call for a longer time horizon. The LRFF will identify issues
that may challenge the continued financial health of the City, and the plan will
identify possible solutions to those challenges. Planning decisions shall be made
primarily from a long-term perspective and structural balance is the goal of the
planning process.
E. Administration of the Annual Budget.
During the budget year, Department Directors and their designated
representatives may authorize only those expenditures that are based on
appropriations previously approved by City Council action, and only from
accounts under their organizational responsibility. Any unexpended
appropriations, except valid encumbrances such as commitments already made,
expire at fiscal year-end unless specifically reappropriated by the City Council for
expenditure during the ensuing fiscal year. Department Directors shall not
authorize expenditures above budget appropriations in any given expenditure
Classification within their purview, without additional appropriation or transfer
as specified below. Appropriations may be transferred, amended or reduced
subject to the following limitations:
1. New Appropriations. During the Budget Year, the City Council may
appropriate additional funds, as it deems appropriate, by a City Council
Budget Amendment. The City Manager has authority to approve requests
for budget increases not to exceed $10,000 in any Budget line item or
activity or Capital Project. The ability of the City Manager to approve such
requests must be specifically included in each year's Budget Resolution to
remain valid.
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2. Grants & Donations. The City Manager may accept grants or donations of
up to $30,000 on behalf of the City, but shall refer any such grant or
donation to the City Council for consideration if a condition of such grant
or donation entails any duty of the City to contribute and/or expend a sum
in excess of $10,000 not covered by such grant or donation, or that carries a
future obligation to maintain and/or insure any improvement. The City
Council will be formally notified of all grants or donations on a quarterly
basis by way of a "receive and file" or other Council meeting agenda item.
This ability of the City Manager to accept grants or donations must be
specifically included in each year's Budget Resolution to remain valid.
Additionally, grant related appropriations approved by City Council may
be carried forward to the following fiscal year(s) as long as the grant terms
remain valid, the expenditures are consistent with the previous Council
authorization, and the funds would otherwise need to be returned to the
granting or donor agency. Also, see Council Policy F-25 for specific grant
acceptance and administration procedures.
Grant agreements and restricted donations in excess of $30,000 must be
specifically approved by the City Council. Occasionally, the terms and
conditions of a grant are approved by City Council in a year prior to when
the program activity will take place and therefore, the funds are not
appropriated to carry out the grant at that time. In such cases, the City
Manager may appropriate the funds when they are received, provided the
expenditures clearly meet the amount, terms, nature and intent of the grant
or donation previously approved by City Council.
3. Assessment District Appropriation. Assessment district projects are
typically funded by property owner contributions and bond financing
secured by property assessments. City staff will initially seek appropriation
to advance City resources for the assessment engineering and the design
work related to a proposed assessment district. Since the City's advance is
at risk until a district is formed at a public hearing, the appropriation
related to advanced resources shall be subject to the normal budget policies.
However, once the district has been formed at a public hearing, the City
Council will adopt a "project -length" budget for the assessment district and
City staff will be allowed to roll the appropriations forward into future
fiscal years without rebudgeting the project through the formal CIP
process.
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When assessment bonds are issued to finance the improvements, the bond
issuance costs will be estimated at the maximum amount that would be
required to complete the improvements because it is not known how many
property owners will opt to pay the assessment in full during the cash
collection period, thereby reducing the size of the bond. Finance staff will
also have the authority to reduce Council appropriations (related to bond
issuance costs) after bonds are resized and sold. Money advanced by the
City will be included in the assessment amount and be reimbursed to the
City when the assessment district is formed except to the extent otherwise
agreed to by City Council resolution.
4. Transfers within Departments. During the fiscal year, actual expenditures
may exceed budget appropriations for specific expenditure line items
within departmental budgets. If a departmental budget within a specific
Classification is not exceeded, the Finance Director has the authority to
transfer funds elsewhere within that Classification and Department to
make the most efficient use of those funds appropriated by the City
Council.
5. Transfers between Departments. Further, funds may be realigned between
one Department and another, within the same Classification, with City
Manager approval. For example, if a Fire Department function and the
employee who accomplishes it are replaced by a slightly different function
assigned to the Police Department, the City Manager may authorize the
transfer of appropriated funds to support this function.
6. Transfers between Expenditure Categories. Any reprogramming of funds
(i.e. movement) of funds among the five Classifications within the General
or other Fund(s) requires the City Manager's approval. Any budget
revision that changes the total amount budgeted for any fund (other than
the minor provisions contained in paragraphs E.1. and E.7.b.) must be
approved by the City Council.
7. Transfers between Capital Improvement Projects (CIP). Budget Transfers
between Capital Improvement Projects shall be subject to the following
parameters:
a. Excess Project Appropriations or savings should be closed out and
returned to the project's fund balance. Funds may then be
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reappropriated to a new or existing project with the approval of City
Council.
b. Excess Project Appropriations may also be transferred from one CIP
project to another, if the projects utilize the same funding source and
are for substantially the same project purpose and physical location.
Project appropriation transfers of this nature shall require the
approval of the City Manager.
All proposed budget amendments and transfers will be submitted to the Finance
Director for review and processing prior to City Manager or Council
authorization.
All unexpended and unencumbered appropriations for the operating budget will
be canceled on June 30 of each fiscal year. All appropriations in the Capital
Improvement Budget for projects currently underway and remaining unexpended
at June 30111, as approved by the City Manager, will be appropriated to those
projects in the following fiscal year CIP Budget. Incomplete projects may be
reappropriated by the City Council during the Budget process or by separate
Council action.
F. Management Authorization and Responsibilities. Once the final Budget has been
approved by the City Council, specific City Council approval to make
expenditures consistent with the Budget will not be required except as provided
by other Council Policies and Administrative Procedures. It is the responsibility of
the City Manager and management to administer the City's budget within the
framework of policy and appropriation as approved by the City Council.
1. The Finance Director is responsible for checking purchase requests against
availability of funds and authorization as per the approved Budget.
2. Unless otherwise directed, routine filling of vacancies in staff positions
authorized within the Budget will not require further City Council
approval. However, new position, not addressed by the adopted budget
shall require City Council approval.
3. At fiscal year end, the Finance Director is authorized to record accruals and
transfers between funds and accounts in order to close projects or the books
of accounts of the City in accordance with generally accepted governmental
accounting principles as established by the Government Accounting
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Standards Board, Government Finance Officers Association, and other
appropriate accounting pronouncements. Any net shortage within a Fund
will be recorded as a decrease in Fund Balance. Any net excess will be
recorded as an increase to one or more appropriate Reserve Accounts as
recommended by the Finance Director and approved by the City Manager
or as is otherwise dictated by Council Reserve Policy (F-2). The net change
in fund balances will be reported to City Council through various
documents including Quarterly Financial Reports, the Comprehensive
Annual Financial Report (CAFR), Budget Documents and other financial
presentations. Funds that exceeded appropriations during the year or
ended the year with a deficit fund balance are reported annually in the
CAFR notes to the financial statements. (Information regarding the policy
parameters and administration of City Reserves is contained in City
Council Policy F-2.)
Adopted - January 24,1994
Amended - February 27,1995
Corrected - February 26, 1996
Amended - May 13,1996
Amended - May 26,1998
Amended - August 8, 2000
Amended - May 8, 2001
Amended - April 23, 2002
Formerly F-10, F-11, F-12, and F-21
Amended - April 8, 2003
Amended - April 13, 2004
Amended - September 13, 2005
Amended - October 10, 2006
Amended - August 11, 2009
Amended - September 27, 2011
Amended - February 12, 2019
REVENUE MEASURES
PURPOSE
F-4
In consideration of long-term fiscal sustainability and to establish a basis for staff
recommendations on revenue matters, the following revenue policies are established.
A. Revenue measure changes may be processed at any time during the fiscal year.
B. Special services, which can be identified with the recipients, will be self -supported
from service fees to the maximum extent practicable. Service fees shall be
established by City Council resolution, and can be found in the Schedule of Rents,
Fines and Fees in compliance with applicable State law, and shall be periodically
reviewed and updated for compliance with applicable State law.
C. Reasonable effort will be made to establish revenue measures which will cause
transient and recreation visitors to Newport Beach to carry a fair portion of the
expenses incurred by the City as a result of their use of public facilities.
D. The City will establish appropriate cost -recovery targets for its fee structure and
will periodically adjust its fee structure to ensure that the fees continue to meet
cost recovery targets. When requested by the Finance Director, or his/her
designee, each Department shall provide the Finance Department with a listing of
the services and the respective fees imposed by Department. This listing shall
identify the estimated costs to the City in providing the product or service
associated with each fee as well as any recommended revision in the fee. The
Finance Department may study, internally or using an outside consultant, the
costs of providing such services and recommend fees to each Department.
E. The Finance Department, with the assistance of the initiating Department, shall
present any new or revised revenue measures to the Finance Committee for
review. The purpose of the review of the Finance Committee will be to confirm
that increases in existing fees or any new fees are intended to recoup costs being
incurred by the City, or revisions in proposed taxes or other charges are fairly
charged. Any revised fees or new revenue measures will be referred to the City
Council for review and action. The Finance Department shall endeavor to consult
with private individuals, business groups and individual business persons on the
economic impact any recommended revenue measure changes may have on them.
Their response, the estimated costs to the City in providing the product or service
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or service and the recommended revision to the revenue measure shall be included
in the information forwarded to the City Council.
F. The City will proactively seek to protect and expand its tax base by encouraging a
healthy underlying economy.
G. The City will work to enhance and protect the property values of all Newport
Beach residents and property owners.
H. The City will encourage shopping, dining, and visiting at Newport Beach stores,
restaurants and hotels.
I. The City will oppose efforts of the State and County governments to divert
revenues from the City or to increase unfunded service mandate of City taxpayers.
J. The City will seek additional intergovernmental funding and grants, with a
priority on funding one-time capital projects. Grant -funded projects that require
multi-year financial support of the City will be reviewed by City Council, to the
extent required by Council Policy F-3. Also, see Council Policy F-25 for specific
grant acceptance and administration procedures.
K. The City will not rely on one-time revenue sources to fund operations. One-time
revenues sources, whenever possible, will be used to fund one-time projects,
augment reserve balances or fund unfunded liabilities.
Adopted - August 26, 1968
Reaffirmed - November 12,1968
Reaffirmed - March 9,1970
Reaffirmed - February 14,1972
Reaffirmed - December 10, 1973
Reaffirmed - November 11, 1974
Amended - January 24,1994
Formerly F-13
Amended - February 27,1995
Corrected - February 26, 1996
Amended - May 26,1998
Amended - May 8, 2001
Amended - April 13, 2004
Amended - September 27, 2011
Amended - February 12, 2019
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INCOME AND OTHER PROPERTY
The City owns and manages an extensive and valuable assortment of property including
streets, parks, beaches, public buildings and service facilities. The City also owns or
ground leases and/or operates a yacht basin, resort hotel and apartment property, a
luxury residential development and various other income-producing properties. Much
of the income property is tidelands, filled tidelands or waterfront. Unencumbered fee
value of income property is substantial.
As owner/manager of property, the City is the steward of a public trust, and state law
requires the City to maximize its returns on state -managed property or be subject to a
charge of making a gift of public funds. Nevertheless, the City Council recognizes the
importance of this property not only as a revenue generator, but also as a means to
provide otherwise financially less feasible uses and facilities that benefit the community.
In managing its property, the City will continually evaluate the potential of all City
owned property to produce revenue. This may include leasing or licensing unused land,
renting vacant space, and establishing concessions in recreation areas or other similar
techniques. The City Council will evaluate the appropriateness of establishing new
income generating opportunities on City controlled areas using sound business
principles and after receiving input from neighbors, users and the public.
The policy of the City Council is that income and other property be held and managed in
accordance with the following:
A. Whenever a lease, license, management contract, concession or similar action
regarding income property is considered by the City, an analysis shall be
conducted to determine the maximum or open market value of the property. This
analysis shall be conducted using appraisals or other techniques to determine the
highest and best use of the property and the highest income generating use of the
property.
B. All negotiations regarding the lease, license, management contract, concession, or
similar action regarding income property shall include review of an appraisal or
analysis of the use being considered for the property conducted by a reputable and
independent professional appraiser, real estate consultant, or business consultant.
C. The City shall seek, whenever practical and financially advantageous, both in the
short and long term, to operate or manage all property and facilities directly with
City staff or contractors, provided staff have the expertise needed to competently
do so, or to oversee the work of contractors.
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D. In most negotiations regarding the lease, license, management contract,
concession, or similar action regarding an income or other property, the City shall
seek revenue equivalent to the open market value of the highest and best use; and,
whenever practicable the City shall conduct an open bid or proposal process to
ensure the highest financial return.
E. However, in some circumstances the City may determine that use of a property by
the public for recreational, charitable or other nonprofit purpose is preferred and
has considerable public support, in which case the City may determine that non-
financial benefits justify not maximizing revenue from such property. In such
circumstances, the City has a vested interest in ensuring that the lessee of such
property operates the activities conducted on or from the property in the manner
that has been represented to the City throughout the duration of any lease or
contract with the City.
F. Whenever less than the open market or appraised value is received or when an
open bid process is not conducted, the City shall make specific findings setting
forth the reasons thereof.
Such findings may include but need not be limited to the following:
1. The City is prevented by tideland grants, Coastal Commission guidelines
or other restrictions from converting the property to another use.
2. Redevelopment of the property would require excessive time, resources,
expertise and costs, which would outweigh other financial benefits.
3. Converting the property to another use or changing the operator, manager,
concessionaire, licensee, or lessee of the property would result in excessive
vacancy, relocation or severance costs, real estate commissions, tenant
improvement allowances, expenses or rent concessions which would
outweigh other financial benefits.
4. Converting residential property to another use or opening residential leases
to competitive bid would create recompensable liabilities and other
inequities for long-term residents.
5. The property provides an essential or unique service to the community or
a clearly preferred use that enjoys substantial support in the community
that might not otherwise be provided were full market value of the
property be required.
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6. The property serves to promote other goals of the City such as affordable
housing, preservation of open space, uses available to the public or marine
related services.
7. If the lessee is not (a) a statewide or national nonprofit organization, or (b)
a public entity or subdivision thereof, then the City finds that the By -Laws
and charter documents of such lessee (i) establishes a procedure wherein
the election of directors of such lessee is accomplished by an open,
democratic and transparent process that allows members to vote, (ii) has a
governance and operational structure that is consistent with best practices
for non-profit public benefit corporations as determined by the City
Council, and (iii) cannot be amended to affect subparts (i) or (ii) without the
prior written consent of the City as lessor.
G. Generally, lengths of licenses, leases, management contracts, concessions, or
similar agreements will be limited to the minimum necessary to meet market
standards or encourage high quality improvements and will contain appropriate
reappraisal and inflation protection provisions. Also, all agreements shall contain
provisions to assure complete audits periodically through their terms.
H. All negotiations regarding the license, lease, management contract, concession or
similar action regarding income property shall be conducted by the City Manager
or his/her designee under the direction of any appropriate City committees.
I. To provide an accurate accounting of actual net revenues generated by the City's
income property, all costs directly attributable or allocable to the management of
a specific income property shall be charged against the gross revenues collected
on that property in the fiscal year the costs are incurred. Costs so chargeable
include, but are not limited to, property repairs and maintenance, property
appraisals, and consultant fees, as authorized by the City Council, City Manager,
or by this Income Property Policy.
J. The City Manager or his/her designee is authorized to sign a license, lease,
management contract, concession, or similar agreement or any amendment
thereto, on behalf of the City. Notwithstanding the foregoing, the City Manager
or his/her designee, or a City Council member, may refer any license, lease,
management contract, concession or similar agreement or any amendment
thereto, to the City Council for its consideration and/or action.
K. The City's portfolio of quality income producing properties adds an element of
diversification to a portfolio otherwise invested primarily in financial assets.
Certain of those income properties are restricted from sale by their terms of grant,
state agency regulations or rules, other federal and state guidelines, private
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covenant or agreement or otherwise. For those properties not so restricted from
sale, an analysis shall be prepared to determine the following prior to such
income producing property being offered for sale:
1. The maximum open market value of the City's interest in the property in
its as is condition.
2. If the property is in an important location, a determination of the possible
future consequences of the City no longer controlling that property.
3. If the current rent is contractually low and significant rent increases are
likely within a finite period.
4. The likelihood of significant increases in the ability of the property to
generate income after the expiration of any current lease of the property.
5. The likelihood of a lease extension being requested by the tenant and the
ability to substantially increase rents or require significant improvements
to enhance the utility and the value of the property as consideration for
granting such an extension.
6. The value of the revenue stream from (i) lease income over the life of an
existing lease and/or (ii) likely lease revenue if an existing lease were to be
renewed or the property re -let to a different tenant; and/or (iii) lease
income from the property if it were to be converted to its highest and best
use, compared with the financial benefits of the use of the proceeds of a sale
and if, considering the totality of the circumstances, such use of the
proceeds of a sale is preferable to retaining the property in question.
Adopted - July 27,1992
Amended - January 24,1994
Amended - February 27,1995
Amended - February 24,1997
Amended - May 26,1998
Amended - August 11, 2009
Amended - May 14, 2013
Amended - February 12, 2019
Formerly F-24
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CITY TRAVEL POLICY STATEMENT
PURPOSE
WRZ
To set forth the policy for official City travel for reimbursement of expenses incurred by
City Council members, appointed officials, members of special boards, commissions,
committees, and employees while traveling overnight on official City business. This
policy will not apply for commuter (local) training seminars and local City business
expenses, nor is it intended to supersede Police Officer Standard Training reimbursable
travel policies established by the State of California or the Newport Beach Police
Department. The governing rule for all City travel expenses will be availability,
economy, convenience, and propriety.
TRAVEL POLICY
A. The City will provide reimbursement for expenses directly related to attendance
at approved conferences, seminars, meetings, and other official functions/
purposes.
B. Official travel is planned, approved, and budgeted at the Department level.
C. All official travel must be approved prior to the time of the travel by the Finance
Director.
D. The City Manager will adopt and enforce administrative procedures that assure
that all City authorized travel is:
1. Paid directly by the City or reimbursed to the traveler based on actual,
itemized expenses or should be covered by per diem payment.
2. The City's per diem rate for Meals and Incidental Expenses (M&IE) will be
equal to the U.S. General Services Administrations (GSA) M&IE rates.
(www.GSA.gov).
PROCEDURE
A. Each Department Director will include all planned trips in the Department's
annual budget requests. The Travel Authorization Form will be used as a
planning/cost estimation guide. For unbudgeted, unplanned travel, the same
form will be prepared at the time travel is requested.
1
B. All requests for travel advances will include the original Travel Authorization
Form signed by the Department Director.
C. The Travel Expense Claim Form will be used to file the final travel claim with the
Finance Director. A copy of the Travel Authorization Form must be attached.
SPECIAL REIMBURSEMENT RULES RELATED TO CITY COUNCIL
California Government Code Section 53232, et seq., provides restrictions on expense
reimbursements paid to members of legislative bodies. Members of a legislative body
may only be reimbursed for actual and necessary expenses incurred in the performance
of official duties and their travel claims must be accompanied by the receipts
documenting each expense.
CONTINUITY OF CITY GOVERNMENT POLICY
With the advent of different modes of rapid transportation, there is the possibility of
accidents injuring or killing several people simultaneously. Since Council Members are
required to attend conferences, conventions and meetings outside City Hall, it is
desirous to require that whenever possible, no more than three members of the City
Council use the same transportation at the same time.
When it comes to the Council's attention that a conference, convention, or meeting in
which transportation is required, Council Members shall make an effort to arrange their
itinerary so that no more than three members of the City Council use the same
transportation. The City Clerk will be utilized to provide alternate travel arrangements
where necessary in order to comply with this policy.
This policy will help insure that there will be a continuity of City government and that
there is always a majority of Council members capable of fulfilling the responsibilities
placed upon them by the City.
In addition, the City Manager, Department Directors and other key personnel should
use the same guidelines in traveling separately on official business whenever
practicable.
Adopted - June 8,1992
Amended - January 24,1994
Amended - February 26,1996
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Amended - April 23, 2002
Amended - October 10, 2006
Amended - August 11, 2009
Amended - September 27, 2011
Amended - February 12, 2019
Formerly F-25
IM
Kj
CUSTODY AND DISPOSAL OF CONTROLLED PROPERTY
PURPOSE
F-11
To set forth the City's policy concerning custody and disposal of controlled property.
DEFINITION
Controlled Property is generally defined as City -owned materials, equipment, tools
and furniture subject to theft, loss or misuse. Conversely, major capital assets with no
potential for theft, such as buildings, land and other infrastructure assets affixed to the
earth are exempted from this policy. For further discussion of "Controlled Property"
and property control procedures, see Administrative Procedures concerning
Controlled Property.
PROPERTY CONTROL RESPONSIBILITIES
The Finance Director shall establish and maintain citywide property acquisition and
disposal procedures. However, the ultimate accountability for Controlled Property, along
with the responsibility for maintaining reasonable safeguards to secure Controlled
Property, lies with the Director of the Department that acquired the property until such
time the item has been formally transferred to another Department or has been formally
approved by the Finance Department for sale/ disposal. Procedures for acquisition,
transfer, sale/ disposal of controlled property vary by property type and value and are
addressed through Administrative Procedures. As property custodians, Departments
Directors are also responsible for a periodic inventory of their Controlled Property in
accordance with Administrative Procedures. At the discretion of the Finance Director,
material losses or discrepancies in Controlled Property will be reported to the Finance
Committee.
Adopted - January 24,1994
Corrected - February 26, 1996
Amended - August 12,1996
Amended - April 23, 2002
Amended - April 13, 2004
Amended - September 27, 2011
Amended - February 12, 2019
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F-13
DISTRIBUTION OF PUBLIC INFORMATION IN MUNICIPAL SERVICES
STATEMENTS AND BUSINESS LICENSE RENEWALS
PURPOSE
The purpose of this Policy is to establish guidelines for the distribution of written
materials with the Municipal Services Statement and Business License Tax Renewal
forms.
Periodically, material is distributed to residents through the Municipal Services
Statement and Business License Renewal form. This material shall be approved by the
Finance Director using the guidelines below as criteria for approval. Material not
completely consistent with the guidelines below will not be distributed with Municipal
Services Statements or Business License Tax Renewal forms without specific Council
authorization. All costs associated with the inclusion of such material must be paid by
the Department submitting the request for inclusion.
Mailing may include the following:
A. Notification of schedules or procedures affecting City services.
B. Notification of any changes in procedure or process affecting business license
holders.
B. Information on the availability and scope of City services and facilities.
C. Information concerning the functions and responsibilities of City departments
and financial aspects of City operations.
D. Information on municipal projects or future programs where a reaction from the
community, business, or a neighborhood is desired.
E. Information on recommended courses of action to protect the public or property
from fire, theft, damage, and related hazards.
F. Other materials which are designed to keep the public informed on the activities
of its government.
Mailings shall not contain information: of a commercial nature; from a commercial
entity; or that promotes political candidates or causes. Mailings may include factual
financial information except if the topic of such financial information pertains to a ballot
measure in an upcoming election unless otherwise determined by the City Council.
With the approval of the City Manager, information from community based, non-
commercial organizations may be included in the Municipal Services Statement and
Business License Renewal. The primary purpose of any such material should be to
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provide information of a public service nature. The material must not contain direct
solicitation for contributions or promotions of events whose primary purpose is fund
raising (such as $200 per plate dinners). However, announcements of other events are
generally appropriate, even if a nominal fee or "bake sale" type activity is an incidental
part of the function. All costs associated with the inclusion of such material must be
paid by the non-commercial organization.
The Municipal Services Statement subscribers list shall not be made available for any
private or organizational use. The City Manager may authorize exceptions to this
restriction.
Adopted - December 9,1968
Amended - October 25,1977
Amended - May 13,1991
Amended - January 24,1994
Amended - February 27,1995
Corrected - February 26,1996
Amended - April 13, 2004
Amended - September 27, 2011
Amended - February 12, 2019
Formerly G-2
2
AUTHORITY TO CONTRACT
Purpose and Limitation
F-14
The purpose of this policy is to set out the City's policy establishing authority for City
contracts. This policy applies to all contracts, whether entered into through standard,
emergency, or other procedures, including, but not limited to, professional services,
purchase requisitions, acquisition of goods, supplies, equipment, and materials,
settlements, right of entry agreements, cost sharing agreements, joint defense
agreements, cooperative agreements, reimbursement agreements, grant agreements,
audit services, legal and investigative services, independent instructional and recreation
services, former employee services, on-call and emergency services, temporary labor
services, training services, public works projects, and public property maintenance,
installation, custodial, and repair services.
General Authority to Enter Into Contracts
Provisions of the Charter govern the methods through which the City may be bound by
contracts. The Charter states that the City shall not be bound by any contract or
amendment thereto, unless the same shall be made in writing, approved by the City
Council and signed on behalf of the City by the Mayor and City Clerk or by such other
officer or officers as shall be designated by the City Council (Charter § 421). The City
Attorney shall approve the form of all contracts made by or amendment thereto and all
bonds given to the City, endorsing his or her approval thereon in writing (Charter
§ 602(e)).
The City Manager has final authority to approve any contract within the City Manager's
approval limit and may make exceptions to the City's standard contract terms, including
but not limited to, insurance and indemnification requirements, based on operational
considerations and weighing the particular risks involved. When deciding whether to
modify standard contract terms, the City Manager shall consult with the City Attorney,
Risk Manager, and Department Directors, as necessary. This authority shall not be
delegated below the Assistant City Manager level.
Contracts may not be written to circumvent any of the authority limits described herein.
Delegation of Authority to Enter Into and Amend Contracts
The City Council hereby delegates its authority to contract to the City Manager and
through him or her to the Assistant City Manager, Department Directors, and to the City
Attorney as set out below. All formalities required under the provisions of the Charter
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shall be applied to these contracts. As such, the City Attorney shall review, approve and
sign all such contract documents prior to contract award and execution and the City Clerk
shall sign all such contracts attesting to their being entered into by the City. Additionally,
the City Manager shall adopt and enforce administrative procedures that assure all
contracts are: (1) entered into at a reasonable, fair and competitive price to the City; (2)
all necessary formalities are followed and the requirements of federal, state, and local
laws, including Council policies, are met; (3) best accounting practices are followed; and
(4) the contracting process of the City is open and transparent, and provides
accountability.
A. Authority to Enter into Contracts
The authority to enter into original contracts is delegated as set out below.
1. The City Manager.
The City Manager is authorized to award and sign all contracts and
agreements for services or purchase requisitions for the acquisition of
goods, materials or equipment, without prior Council approval, in an
amount not in excess of $120,000, provided funding for the contract was
approved by the City Council as part of the annual approved budget. With
the exception of grants and donations, which are covered in City Council
Policies F-3, F-25 and B-17, the City Manager is authorized to sign all
contracts without prior Council approval where the City is receiving or
expending an amount not in excess of $120,000. This authority shall not be
delegated below the Assistant City Manager level.
2. Department Directors.
Department Directors, including the City Attorney and City Clerk, are
authorized to award and sign contracts and agreements for services or
purchase requisitions for the acquisition of goods, materials or equipment,
without prior City Manager or Council approval, in an amount not in
excess of $75,000, provided that the services and funds were approved by
the City Council or City Manager as part of the annual approved budget.
This authority may not be delegated below the Assistant or Deputy Director
level. The City Manager has authority to approve requests for budget
increases without City Council approval at the level set forth in Policy F-
3, Section E-1 ("Budget Adoption and Administration').
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3. City Attorney.
The City Attorney is authorized to award and sign contracts for all services
for outside counsel, investigators, and experts related directly to and
necessary for prosecution and defense of pending litigation as defined in
the Brown Act, and for services for outside counsel, investigators, and
experts necessary to address other pending or potential legal claims or
legal issues so long as funds for outside counsel, investigators, experts and
related legal services were approved by the City Council as part of the
approved annual budget. The City Attorney shall keep Council informed
regarding any such expense that exceeds $120,000 on not less than a
quarterly basis and shall seek budget updates, if needed, within a timely
fashion.
4. Human Resources Director.
The Human Resources Director shall have authority to enter into contracts
to resolve claims, litigation and other legal disputes where the City is
receiving or expending an amount not in excess of $75,000. This authority
may not be delegated below the Department Deputy Director or Risk
Manager level.
B. Authority to Amend Contracts
If circumstances arise that were are not reasonably foreseeable by the parties at
the time of contracting which make extra work or material necessary for the
proper completion of the service originally contracted for, a contract amendment
and corresponding increase in total contract amount may be necessary. Under
those circumstances, the City Manager, Department Directors, City Clerk and
City Attorney are authorized to amend contracts as set out below. For purposes
of this policy, "total contract amount" shall be defined as the total consideration
paid over the term of the agreement, including any previous amendments to the
contract. "Original contract amount" shall be defined as either the amount of
compensation agreed upon when the contract was first entered into or the
amount of compensation most recently approved by the City Council by
amendment, whichever is greater.
1. Cites Manager.
Contracts zvithin the City Manager's Contracting Authority
The City Manager may sign and award any contract amendment,
including but not limited to, amendments to extend the term of a contract,
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so long as the total contract amount as amended does not exceed $120,000.
Contracts approved by City Council
The City Manager may sign and award any contract amendment, including
but not limited to, amendments to extend the term of a contract, so long as
the total contract amount does not exceed 125% of the original contract
amount or the original contract amount plus an additional $120,000,
whichever amount is less.
2. Department Directors.
Contracts within the Contracting Authority of the Department Director
The Department Director, including the, City Clerk, or City Attorney, who
entered into the contract, or whose department is designated as the contract
administrator in the contract, may sign and award any contract
amendment, including but not limited to, amendments to extend the term
of a contract, so long as the total contract amount as amended does not
exceed $75,000.
3. Amendments in Cases of Possible Work Stoppage or Undesirable Delay.
In certain situations, a contract amendment may be needed that will cause
the total contract amount to exceed the City Manager's amendment
signature authority, and the timing is such that a work stoppage or other
undesirable consequence will result if approval of the change is delayed
until the next City Council meeting. In these situations, the City Manager
may approve an amendment that increases the total contract amount up
to 150% of the original contract amount. Within twenty-four (24) hours,
the City Manager shall notify the City Council Members of any such
amendment.
4. Amendments Necessary to Address Emergency Situations
In event of emergency work that requires an amendment to an existing
contract, the emergency contracting policy outlined below may be
followed.
Types of Contracts and Method of Award
It is recognized that by their nature, service contracts cannot always be awarded as a
result of a competitive bid process. However, competitive proposals should be obtained
whenever possible before resorting to negotiated awards.
F,
L
F-14
A. Professional Services Contracts
Professional consultant services differ from other services in that they are of a
professional nature, and due to the ethical codes of some of the professions
involved, as well as the nature of the services provided, do not readily fall within
the competitive bidding process. Professional consultants should be individually
selected through a qualifications -based selection process for a specific project or
service based on demonstrated competence and qualifications for the types of
services to be performed and with the objective of selecting the most qualified
consultant at a fair, reasonable and verifiably appropriate cost. The procedures
for achieving this goal shall be adopted and applied by the City Manager in the
Administrative Procedures Manual.
This section shall include, but not be limited to, procurements for services in the
following fields: Engineering (civil, mechanical, electrical, structural,
traffic, geotechnical, etc.); Building plan review and grading plan review and/or
inspection services; Architecture; Landscape Architecture; Construction Project
Management Firms; Environmental; Planning; Economic Analysis; Property
Appraisals; Land Surveying; Financial Services; Data Processing Services; Legal
Services not otherwise authorized in the section titled Authority to Enter into
Contracts, A (3), of this policy; and Training and Temporary Labor Services.
B. Services Contracts (Non -Professional)
Non -Professional Services Contracts that are not public works under Charter
Section 1110, are used where services are not strictly professional in nature but
where such services are needed by the City. Examples include, but are not limited
to janitorial services, printing services, closed circuit television services, steam
cleaning, window washing and refuse collection.
The City shall select services contractors though a Request for Proposal or a
Request for Bid process, whichever serves the City's best interest. Contracts
through a Request for Bid process shall be awarded based solely on pricing and
minimum qualifications to determine the most responsive and responsible bidder.
Contracts through a Request for Proposal process shall be awarded based on both
qualifications and pricing to determine the best value to the City.
C. Maintenance and Repair Contracts
Maintenance and Repair Contracts are used where services are not strictly
professional in nature but where such maintenance and repair services extend the
life of City assets, facilities and/or infrastructure. Examples include, but are not
limited to: pavement patching, plumbing and facilities maintenance services.
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If a contract for these types of services is under $120,000 the City shall select
services contractors though a Request for Proposal or a Request for Bid process,
whichever serves the City's best interest based on the service to be provided.
Contracts through a Request for Bid process shall be awarded based solely on
pricing and minimum qualifications to determine the most responsive and
responsible bidder. Contracts through a Request for Proposal process shall be
awarded based on both qualifications and pricing to determine the best value to
the City.
Service contracts for maintenance or repair over $120,000 are considered a Public
Work and thus need to be requisitioned as a Public Works Contract.
D. Public Works Contracts
Contracts for Public Works where the total expenditures for the project exceed
$120,000, shall be awarded consistent with the provisions of Charter Section 1110
and Chapter 15.75 of the Newport Beach Municipal Code and relevant provisions
of the California Public Contract Code. Public Works contracts are used for the
construction or improvement of public buildings, works, streets, drains, sewers,
utilities, parks or playgrounds, and every purchase of supplies or materials for
any such project, as well as all projects for the maintenance or repair of such
facilities intended to extend their useful life.
E. Procurements and Contracts Involving Federal or Pass -Through Funding
Procurements expending funds from federal grants or awards received directly
by the City or from a pass-through agency such as the State of California, must
comply with the provisions of Title 2 of the Code of Federal Regulations ("CFR")
§200.318 through §200.326. To ensure the City's adherence to the Federal
guidelines related to these procurements and contracts, the City Manager has
adopted procurement procedures for such projects in the Administrative
Procedures Manual.
F. Independent Instructional and Recreation Contractors
Department Directors are authorized to award and sign contracts with
independent contractors for instructional, educational, cultural, or recreational
purposes where the fees paid by the City are based upon either a percentage of
fees collected by City for a program or on a flat rate basis for tasks performed by
the contractor. Contracts with such independent contractors may be up to five (5)
years in duration but must include a termination clause granting the City the
right, at its sole discretion and with or without cause, to terminate the contract at
C:7
F-14
any time by giving seven (7) calendar days' prior written notice to the Contractor.
Should fees paid to any contractor exceed $75,000 during the term of the contract,
the Department Director shall provide written notice to the City Manager
identifying the program and independent contractor. The City Manager shall
give written notice to the City Council should fees paid exceed $120,000.
G. On -Call Contracts for Services
The City Manager and Department Directors are authorized to enter into on-call
agreements for obtaining services on an as needed basis, including, but not limited
to, professional services, repair and maintenance services and emergencies, that
are needed from time to time where the size of the job does not warrant the
expense of entering into individual agreements for each service. On-call
agreements must be within the authority of the individual entering into the
agreement on behalf of the City and the initial term cannot exceed five (5) years.
The City Manager is authorized to extend the term of an on-call agreement for up
to six (6) months if work has been authorized or encumbered during the initial
term but not completed. On -Call agreements must include a termination clause
granting the City the right, at its sole discretion and with or without cause, to
terminate the contract at any time by giving seven (7) calendar days' prior written
notice to the Contractor. Procedures for entering into on-call agreements shall be
prescribed by the City Manager in the Administrative Procedure Manual.
H. Emergency Contracts
If a contract for services is necessary under the provisions of Newport Beach
Municipal Code Section 2.20.020, the City Emergency Procedures shall be
followed.If the contract amount exceeds the signing authority of the City Manager
or Department Director as authorized in this policy, then that contract shall be
brought to the City Council at its next regularly scheduled meeting for review or
authorization, if the contract constitutes a Public Works, in accordance with
Charter Section 1110.
Whenever possible, the City shall enter Emergency Contracts with contractors or
consultants who can be relied upon to assist the City in advance of any actual
emergency.
Emergency Contracts, that are entered into prior to an emergency, shall be
submitted to Council for approval after being reviewed and approved by the
Office of the City Attorney. After the Emergency Contract is approved, services
provided on an emergency basis under an Emergency Contract may be retained
by oral commitment of the City Manager (or, in the case of an emergency
described by Municipal Code Section 2.20.020, the Director or Assistant Director
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of Emergency Services), to be memorialized in a Letter Agreement between the
parties as soon as possible thereafter. When a written contract has been entered
into in order to address an emergency, a copy of the written contract shall be
provided to the City Clerk as soon as possible.
I. Contracts with Former Council Members and City Employees
When not more than five (5) years has passed since a person who is a former
Council Member or City employee has left service with the City:
1. All professional services contracts with former Council Member or City
employees shall require approval of the City Council; and
2. City Council approval shall also be required for professional services
contracts with a corporation or other business entity owned or operated by
a former Council Member or City employee or that employs a former
Council Member or City employee.
J. Purchase Orders for Goods, Materials or Equipment
Departments shall submit requests for the purchase of goods, materials or
equipment through a Purchase Requisition that is approved by the proper
approval authority described in this policy, based on the purchase amount.
The Finance Department shall conduct the necessary and proper bidding or
proposal process for each purchase request and issue Purchase Orders to procure
goods, materials or equipment.
K. Purchase Orders for Services
While typically used for the procurement of goods, materials or equipment,
Purchase Orders may be used for services, subject to the following conditions:
1. Purchase Orders for services may be issued to a vendor not in excess of
$7,500 per Purchase Order and $15,000 per vendor, per fiscal year.
2. The $7,500 per Purchase Order and $15,000 per vendor, per fiscal year limit
shall apply to each Department separately.
L. Commodities and Unique Services
Certain commodities and service types are not subject to traditional procurement
and bidding procedures. The City Manager shall prescribe in the Administrative
F-14
Procedures Manual procedures to ensure that pricing involved in these
transactions is competitive.
General Procedures
A. Contract Retention
The City Clerk shall retain all original executed contracts in accordance with the
City's current adopted Records Retention Schedule. Contracts shall be posted
into the City's electronic document database in order to maintain transparency in
contracting.
B. Insurance
All contracts shall be accompanied by proof of the appropriate level of insurance
at the time of execution. The insurance level required shall be in accordance with
the City's published Contract Templates (or as otherwise approved by the City
Manager or Risk Manager).
C. Reporting
At least once annually, the City Manager shall report to the Council the summary
of all contracts entered into by the City Manager and Department Directors. The
summary shall include the vendor, the department responsible that will oversee
the contract, the purpose of the contract, and the contract amount.
Future Amendments to Policy
Any future changes in the provisions of this policy shall be made by
resolution of the City Council.
History
Adopted F-14 - 09-22-1969 (Purchase Authority for Goods & Materials)
Reaffirmed F-14 - 03-09-1970
Reaffirmed F-14 - 02-14-1972
Amended F-14 -11-11-1974
Amended F-14 -11-24-1975
Amended F-14 -12-08-1975
Amended F-14 -11-24-1986
Amended F-14 - 05-26-1987
Adopted F-14 - 01-24-1994 (new F-14) (Authority for Contracts)
Amended F-14 - 01-24-1994 (old F-14) (changed to F-5)
Go
Amended F-5 - 02-26-1996
Amended J-1 -11-10-1997 (Contracts with Former Employees)
Amended J-1 - 03-09-1998
Amended J-1 - 03-22-1999 (changed to F-20)
Amended F-5 - 03-14-2000
Amended F-20 - 04-08-2003
Amended F-14 - 04-13-2004
Amended F-5 -11-22-2005
Amended F-14 - 05-09-2006
Amended F-14 & F-5 - 01-25-2011
Amended F-14 - 05-12-2015
Amended F-14 - 02-23-2016 (incorporating F-5 & F-20 and renaming "Authority to
Contract")
Amended F-14 - 06-26-2018
Amended F-14 - 02-12-2019
F-14
IN
F-15
EXTERNAL FINANCIAL AND COMPLIANCE REPORTING DISCLOSURE &
ANNUAL AUDITS
PURPOSE
To establish City policy regarding external financial reporting, financial disclosure
filings and contracting for annual audit services by an external accounting firm.
POLICY
Accounting standards boards and regulatory agencies set the minimum standards and
disclosure requirements for annual financial reports and continuing disclosure
requirements associated with municipal securities. The City places a high value on
transparency and full disclosure in all matters concerning the City's financial position
and results of operations. To this end, the City endeavors to make superior disclosure
in the City's Comprehensive Annual Financial Report and Continuing Disclosure filings
by going above and beyond the minimum reporting requirements including certificate
of achievement programs and voluntary event disclosure filings.
The City prepares its financial statements in conformance with Generally Accepted
Accounting Principles (GAAP). Responsibility for the accuracy and completeness of the
financial statements rests with the City. However, the City retains the services of an
external accounting firm to audit the financial statements on an annual basis. The
primary point of contact for the auditor is the Finance Director, but the auditors will
have direct access to the City Manager, City Attorney, Finance Committee or City
Council on any matters they deem appropriate.
The financial statement audit and compliance audits will be conducted in accordance
with the United States Generally Accepted Auditing Standards (GAAS), standards
applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller of the United States, and standards set by regulatory agencies if
applicable.
After soliciting and receiving written proposals from qualified independent accounting
firms, the Finance Director shall submit a recommendation to the Finance Committee
and City Council. Under the premise that multiyear audit agreements are more cost
efficient, allow for greater continuity and reduce audit disruption, the City may engage
auditors in multi-year contracts, but the term of each contract shall not exceed five
years. Generally, the City will request proposals for audit services every five years.
However, the Finance Committee may make an exception to the competitive proposal
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requirement if extraordinary circumstances exist and a change in auditors may not be
prudent. If the City Council is satisfied with the performance of the auditors, the
independent accountant firm may submit additional proposals through a competitive
selection process, but it is the City's policy to require mandatory audit firm rotation
after ten years of consecutive service.
After audit results have been communicated to the City, the Finance Department is then
responsible for responding to all findings within six months to the Finance Committee
and appropriate regulatory agencies, if applicable.
Adopted - January 24,1994
Amended - February 27,1995
Corrected - February 26, 1996
Amended - September 13, 2005
Amended - September 27, 2011
Amended - February 12, 2019
Formerly A-14
2
GRANT ADMINISTRATION
PURPOSE
F-25
To establish guidelines for the application, acceptance, administration, and financial
reporting of grants including, but not limited to federal, state, local, and restricted
donations (also considered grants for the purpose of this policy).
POLICY
A. Grant Application and Responsibility
Individual departments are encouraged to investigate sources of funding
relevant to their respective departmental activities.
The individual Department applying for a grant or receiving a restricted
donation will generally be considered the Program Administrator of the grant.
The Financial Planning Division in the Finance Department may assist in the
financial administration and reporting of the grant, but the Program
Administrator is ultimately responsible for meeting all terms and conditions of
the grant, ensuring that only allowable costs are charged to the grant program
and is responsible for adhering to City budgeting and fiscal procedures.
Individual Departments and Program Administrators are not authorized to
execute grant contracts. Grant contracts shall be reviewed by the City Attorney's
office and executed by the City Manager and/or the Mayor on behalf of the City
Council.
B. Grant Acceptance & Appropriation by City Council
Even though the funding source for an activity may be provided by a
grantor/ donor, only City Council can appropriate funds for official City
activities except as authorized by Council Policy F-3 (Budget Adoption and
Administration). Therefore, prior to the acceptance of a grant, the City Manager
or City Council, as provided for in Council Policy F-3, will:
1. Approve the terms and conditions of the proposed grant including the
specific City obligations that may be created by the grant contract in terms
of required City matching expenditures or staff activities, even if the
expenditures were previously appropriated through the budget adoption
process.
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2. Approve budget appropriations for the grant expenditures and City
matching expenditures unless previously appropriated through the
budget adoption process.
3. Approve and execute the Grant Contract(s).
City Council review and approval of items 1 and 3 are not required if the grant is
under $30,000, however, Council expenditure appropriation is required for all
new appropriations in excess of $10,000 or as otherwise specified by Council
Policy F-3. If the grant or gift terms require that the City spend money and seek
reimbursement from the grant or gift, the City will need to appropriate the
expenditure and then seek reimbursement or draw -downs in accordance with
the terms of the grant or gift.
Any budget amendments requested by the Program Administrator or operating
Department will be reviewed by the Financial Planning Division of the Finance
Department and submitted as a staff report to the Council for its review and
approval. The Financial Planning Division of the Finance Department along
with the Program Administrator will determine the proper amount of the
appropriation request during the current and future fiscal year(s).
C. Timely Reimbursement
The Program Administrator is responsible and should pursue and/or request
grant reimbursements or draw -downs on a timely basis. If requested, the
Financial Planning Division of the Finance Department will assist with grant
reimbursements or draw -downs. All checks will be made payable to the City of
Newport Beach.
Grant checks must be forwarded to the Revenue Division of the Finance
Department for immediate deposit and include supporting documentation.
The Program Administrator will keep the Financial Planning Division of the
Finance Department apprised of the annual estimated grant revenues and
expenditures and a tentative schedule of cash -flows for the grant program.
Whenever practicable, the Program Administrator shall seek to receive the grant
or gift funds prior to the expenditure of any sums by the City.
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D. Financial and Grant Reporting
Grant reporting requirements vary widely by grant and sometimes include
monthly, quarterly, and or annual reporting. Subsequent to the approval of a
grant application, and during the project period, any required reports will be the
responsibility of the Program Administrator, or if requested by the Program
Administrator, the Financial Planning Division of the Finance Department.
Program Administrators submitting their own reports will forward a copy of
each report to the Financial Planning Division of the Finance Department.
E. Grants Containing Direct Federal Assistance and/or Federal "Pass -Through"
Funds
Program Administrators acknowledge that Federal Funds or Federal Funds that
"pass-through" state and local programs are required to be reported on the
City's Schedule of Expenditures of Federal Awards and included in the City's
annual Single Audit (compliance audit of all Federal Funds). Program
Administrators will identify and keep the Financial Planning Division of the
Finance Department apprised of those grant programs that contain direct Federal
Funding or Federal pass-through funds identifying the Catalog of Federal
Domestic Assistance (CFDA) number when at all possible.
F. Record Keeping & Retention Requirements
For the purpose of Grantor inquiries and grant specific compliance audits,
Program Administrators are responsible for maintaining adequate records as
evidence that program activities and expenditures met the terms and conditions
of the grant and that all grant reporting requirements were met timely. Record
retention requirements vary by grant, but it is recommended that original grant
records should be maintained in a manner and duration consistent with the
City's Records Retention Policy, unless otherwise specified by the grant contract.
G. Documents to be forwarded to the Finance Department:
Information received from a granting or donor agency or private party or entity
that is pertinent to the terms, conditions, approval, extension, denial, revocation,
and administration of a grant will be forwarded to the Financial Planning
Division of the Finance Department including but not limited to:
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Grant Award Notification
Expenditure Authorization Date (if applicable)
Grant Contracts
Grant Extension Letters
Grant Termination Letter
Program and or Financial Reports
Notices of Questioned Costs or instances of non-compliance
Any Document setting or modifying terms and conditions of the grant
Adopted - September 13, 2005
Amended - September 27, 2011
Amended - February 12, 2019
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FACILITIES AND HARBOR AND BEACHES FINANCIAL PLANNING PROGRAMS
PURPOSE
To establish the policy for the administration of the City of Newport Beach's ("City")
Facilities and Harbor and Beaches Financial Planning Programs ("Programs").
DISCUSSION
In addition to the annual Capital Improvement Program ("CIP"), the City has established
a long-term plan for major renovation or replacement of aging facilities and installation
of new infrastructure. The emphasis is on structures and adjacent grounds, rather than
transportation, environmental, or other projects funded either in whole or in part by the
General Fund.
OBJECTIVES
A. To insure that long-term programs addressing large, non-recurring projects for
replacement of facilities is part of the budget process each year.
B. To insure that development fees and proceeds derived from redevelopment or
redeployment of existing land and capital assets owned by the City, and other non-
recurring revenues are dedicated to the replacement of infrastructure facilities,
rather than ongoing operating expenses.
C. To provide a consistent, level funding plan to the extent practicable so as to
minimize the peaks' and valleys' in General Fund support levels for elements of
the Programs.
D. To insure that projects are properly prioritized and scheduled, taking into
consideration the relative age, condition, and functional viability of current
facilities; pairing of projects implementation where prudent; and cost implications
of immediate projects for the overall long-term Programs.
E. Spreading or matching the costs of facilities over the useful life of such facilities
should be a goal of all long-term capital project financings. Debt financing that
extends beyond the useful life of the assets the debt was borrowed to finance
should be avoided.
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SOURCES AND USES OF FUNDS
Funding for the Programs comes from development fees and proceeds derived from
redevelopment or redeployment of existing land and capital assets owned by the City
contributions from individuals and organizations within the community, annual budget
allocations from the General Fund, incremental rent or fees originating from harbor
activity received by the City, net proceeds of Certificates of Participation or other
financing instruments, and investment earnings on temporarily idle funds.
Funds for both Programs are used for actual site acquisition, design, construction, and
directly related costs. as well as debt service expenses.
POLICY AND PROCEDURE
A. In advance of the budget process, staff shall prepare an update of the Facilities
Financial Planning Tool and the Harbor and Beaches Capital Financial Plan for
review, modification, and approval by the City Council.
B. If requested by the City Council, the Finance Committee will review the fiscal
impacts associated with, and recommend the most advantageous methods to fund
the high-priority projects in, the Facilities Financial Planning Tool and the Harbor
and Beaches Capital Financial Plan. The City Manager will consider these
recommendations in the preparation and presentation of the City Manager's
annual budget to the City Council.
C. Unless otherwise specified in individual development agreements, other
governing documents, or as otherwise specifically directed by the City Council, all
development fees received by the City will be credited to the Facilities Financial
Planning Reserve fund.
D. Prudent assumptions regarding revenue and expenditure growth, inflation, and
all relevant factors will be included in each year's update of the Facilities Financial
Planning Tool and the Harbor and Beaches Capital Financial Plan
E. General Fund contributions to the Facilities Financial Plan shall generally not be
less than three percent (3%) of the total General Fund Revenue Budget. However,
if there is a shortfall in General Fund revenue due to a decline in economic activity
or other unexpected circumstances and it is necessary to reduce expenditures,
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General Fund contributions to the Facilities Financial Planning Program and the
Harbor and Beaches Capital Financial Plan can be temporarily reduced to under
the three percent (3%) threshold.
F. The financing duration for any borrowed funds shall not exceed thirty (30) years
or the projected life of the new facility, whichever is less.
G. The Facilities Financial Planning Tool and Harbor and Beaches Capital Financial
Plan may be amended by City Council action in the event of a natural disaster or
financial crisis.
Adopted - August 11, 2009
Amended - May 14, 2013
Amended - June 9, 2015
Amended - February 12, 2019
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STATE OF CALIFORNIA }
COUNTY OF ORANGE } ss.
CITY OF NEWPORT BEACH }
I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the
whole number of members of the City Council is seven; the foregoing resolution, being Resolution
No. 2019-11 was duly introduced before and adopted by the City Council of said City at a regular meeting
of said Council held on the 121h day of February, 2019; and the same was so passed and adopted by the
following vote, to wit:
AYES: Council Member Brad Avery, Council Member Joy Brenner, Council Member Jeff
Herdman, Council Member Kevin Muldoon, Mayor Pro Tem Will O'Neill,
Mayor Diane Dixon
NAYS: None
ABSENT: Council Member Duffy Duffield
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of
said City this 13'h day of February, 2019.
r
Leilani I. Brown
City Clerk
Newport Beach, California