HomeMy WebLinkAboutFinance Committee - January 21, 2021CITY OF NEWPORT BEACH
FINANCE COMMITTEE MEETING WILL BE HELD VIA
ZOOM. PLEASE SEE SPECIAL NOTICE REGARDING
COVID-19 FOR PUBLIC COMMENT INFORMATION.
AGENDA - FinalThursday, January 21, 2021 - 3:00 PM
Finance Committee Members:
Will O'Neill, Chair
Brad Avery, Mayor
Joy Brenner, Council Member
William Collopy, Committee Member
John Reed, Committee Member
Joe Stapleton, Committee Member
Larry Tucker, Committee Member
Staff Members:
Grace K. Leung, City Manager
Scott Catlett, Finance Director/Treasurer
Steve Montano, Deputy Director, Finance
Marlene Burns, Administrative Specialist to the Finance Director
SPECIAL NOTICE REGARDING COVID-19
On March 4, 2020, Governor Newsom proclaimed a State of Emergency in California as a result of the threat of COVID-19.
On March 12, 2020, Governor Newsom issued Executive Order N-25-20, which allows Finance Committee Members to
attend Finance Commission meetings by electronic means. Please be advised that to minimize the spread of COVID-19,
Finance Committee Members may attend this meeting either electronically or telephonically.
Also, please be advised that on March 17, 2020, Governor Newsom issued Executive Order N-29-20, which allows for the
public to participate in any meeting of the Finance Committee telephonically or by other electronic means. Given the
health risks associated with COVID-19, the City of Newport Beach will conduct this meeting via Zoom. As a member of
the public, if you would like to participate in this meeting, you can participate via the following options:
1.You can submit your questions and comments in writing for the Finance Committee’s consideration by sending
them to Scott Catlett Finance Director/Treasurer, at scatlett@newportbeachca.gov. To give the Finance Committee
adequate time to review your questions and comments, please submit your written comments by Wednesday, January
20, 2021, at 5 p.m. All emails will be made part of the record.
2.You can connect with a computer by joining through Zoom. Use the link below to register for the meeting using a
valid email address. You will receive a confirmation email allowing you to join the meeting:
https://zoom.us/webinar/register/WN_8_dhVvdMTVuRNrnG-7GgDA.
3.Or you may connect by Phone/Audio Only by calling: 669-900-9128. The meeting ID is 961 8175 2405#
4.Attendees must raise their hand in the Zoom module if they would like to speak. If attending by phone, press *9 to
raise hand.
Please know that it is important for the City to allow public participation at this meeting. While the City does not expect
there to be any changes to the above process for participating in this meeting, if there is a change, the City will post the
information as soon as possible to the City’s website.
The City of Newport Beach thanks you in advance for continuing to take precautions to prevent the spread of the COVID
19 virus.
The Finance Committee meeting is subject to the Ralph M. Brown Act. Among other things, the Brown Act requires that
the Finance Committee agenda be posted at least seventy-two (72) hours in advance of each regular meeting and that
the public be allowed to comment on agenda items before the Committee and items not on the agenda but are within
the subject matter jurisdiction of the Finance Committee. The Chair may limit public comments to a reasonable amount
of time, generally three (3) minutes per person.
I.CALL MEETING TO ORDER
II.ROLL CALL
January 21, 2021
Page 2
Finance Committee Meeting
III.PUBLIC COMMENTS
Public comments are invited on agenda and non-agenda items generally considered to be
within the subject matter jurisdiction of the Finance Committee. Speakers must limit comments
to three (3) minutes. Before speaking, we invite, but do not require, you to state your name for
the record. The Finance Committee has the discretion to extend or shorten the speakers’ time
limit on agenda or non-agenda items, provided the time limit adjustment is applied equally to all
speakers. As a courtesy, please turn cell phones off or set them in the silent mode.
CorrespondenceA.
3A1_CORRESPONDENCE_01212021
IV.CONSENT CALENDAR
MINUTES OF NOVEMBER 19, 2020A.
Recommended Action:
Approve and file.
DRAFT MINUTES 11192020
V.CURRENT BUSINESS
BUDGET AMENDMENTS FOR THE QUARTER ENDING DECEMBER 31, 2020A.
Summary:
Staff will report on the budget amendments for the prior quarter.
Recommended Action:
Receive and file.
STAFF REPORT
ATTACHMENT A
CIP FUNDING STRATEGY NEXT YEAR BUDGETB.
Summary:
Staff will review actions taken to align the FY21 budget with reduced revenues,
review the list of deferred CIP projects, and discuss the potential of restoring project
funding should fiscal trends continue to improve.
Recommended Action:
Receive and file.
January 21, 2021
Page 3
Finance Committee Meeting
FACILITIES FINANCIAL PLAN UPDATEC.
Summary:
Staff will present a draft of Facilities Financial Plans reviewing the timing, means of
financing, and fiscal impacts associated with funding Council prioritized capital
projects.
Recommended Action:
Receive and file.
STAFF REPORT
ATTACHMENT A
ATTACHMENT B
WORK PLAN REVIEWD.
Summary:
Staff and Finance Committee to review the proposed work plan and adjust as
necessary.
Recommended Action:
Receive and file.
ATTACHMENT A
VI.FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS
WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR
REPORT (NON-DISCUSSION ITEM)
VII.ADJOURNMENT
From: Jacobs, Carol
Sent: Friday, January 15, 2021 4:54 PM
To: Burns, Marlene
Subject: FW: Finance Committee / Harbor Mooring Rates
Attachments: 01-13-21SubmissionToHarborCommission.pdf
For the Finance Committee.
Carol Jacobs | Assistant City Manager | City of Newport Beach
100 Civic Center Drive | Newport Beach, CA | 92660
cjacobs@newportbeachca.gov | Phone: (949) 644-3313 | Fax: (949) 644-3020
From: Brian H Ouzounian <brian.oci@sbcglobal.net>
Sent: Friday, January 15, 2021 4:13 PM
To: Jacobs, Carol <cjacobs@newportbeachca.gov>
Subject: Finance Committee / Harbor Mooring Rates
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content
is safe.
Dear Finance Committee:
I am a mooring permittee holder in the A Mooring Field (A171)
and have had it for about 45 years. I pay rent, pay mandatory
maintenance costs, pay insurance costs, and allow the City to
rent out the mooring for transient boaters who pay rent to the
City but no rent is sent to the mooring permittee.
I write this to you out of concern and my belief that currently,
I am being over-charged by a factor of ten (10) times the rates
that should be charged.
As you may be aware, the City acts as custodian for the State
Lands (and State Lands Commission) to properly manage the
State's property rental so as to charge fair rental rates up and
down the state so that no port over (gouges) or under charges
(gifts) relative to each location. We as Newport Beach cannot
charge more due to an assumption that we are more special than
other California benchmarks/sectors.
I have done extensive research with the State Lands Commission
(SLC) and found that they have index rates that make sense to
what our City should be charging. They update these rates on a
routine schedule. I have provided and personally discussed my
research with Ms. Carol Jacobs and Ms. Grace Leung, as well as a
majority of City Council Members. I have presented my case to
the City Council and to the Harbor Commission (on several
Item No. 3A1
Public Comments
Correspondence
January 21, 2021
occassions). I have not received a reply nor interest into my
issue.
Consequently, I bring this to your attention in hopes that you
may have concern in a "risk management" sense of being liable
for over charging renters both currently and for historical
liability should this issue elevate from less friendly
proponents. I trust that you could refer this issue to further
review and present it to the City staff as to warranted action.
I am willing to sit down with anyone of authority and discuss
the details of my research. If I am proven wrong, then sobeit.
If I am right, adjustments need to me made as soon as possible
to correct the over-charged rent.
Best Regards,
Brian H. Ouzounian
Finance Committee Meeting Minutes November 19, 2020
Page 1 of 7
CITY OF NEWPORT BEACH FINANCE COMMITTEE NOVEMBER 19, 2020 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:03 p.m. via teleconference. II. ROLL CALL PRESENT: Mayor/Chair Will O’Neill, Mayor Pro Tem Brad Avery (joined via telephone
4:07 p.m.), Council Member Joy Brenner, Committee Member William Collopy, Committee Member John Reed, Committee Member Joe Stapleton, and Committee Member Larry Tucker
ABSENT: None.
STAFF PRESENT: City Manager Grace K. Leung, Assistant City Manager/Interim Finance Director/Treasurer Carol Jacobs, Deputy Director/Finance Steve Montano, Administrative Specialist to the Finance Director Marlene Burns, Public Works Finance/Administrative Manager Angela Crespi, Human
Resources Director Barbara Salvini, Finance Revenue Manager Evelyn Tseng, Recreation and Senior Services Director Laura Detweiler, Fire
Senior Fiscal Clerk Lili Melero, Fire Administrative Manager Mary Locey, IT Supervisor Avery Maglinti, Payroll Specialist Rochelle Myers, Budget
Manager Shannon Espinoza, Budget Analyst Amy Lewis, and Senior Accountant Theresa Schweitzer
MEMBERS OF THE
PUBLIC: Riley Hayes, Charles Klobe, Terry Mag, Dan Matusiewicz, Jim Mosher, Wally Ritchie, and Nancy Scarbrough
III. PUBLIC COMMENTS
Jim Mosher inquired about Assistant City Manager/Interim Finance Director/Treasurer Carol
Jacobs’ qualifications to run the Finance Department. He also inquired why the Deputy Director was not acting as the Interim Finance Director/Treasurer since the role acts on behalf of the Finance
Director and noted succession plans should have identified this step. He acknowledged the decision to terminate Finance Director/Treasurer Matusiewicz was solely at the discretion of the
City Manager and commented the Treasurer position was one of four positions (4) that were to be appointed by the City Council which only happened during the first few years under the current City
Charter.
Charles Klobe seconded Mr. Mosher’s comments. He noted he was only able to see six (6) of the
Committee Members on the screen. He commented that he asked for a copy of the Moss Adams presentation at the last meeting and noted Mayor/Chair O’Neill commented a copy of the
presentation would be attached to the minutes but they are not attached and would still like a copy of the presentation.
Mayor/Chair O’Neill requested Mr. Klobe receive a copy of the presentation. Administrative Specialist to the Finance Director Marlene Burns confirmed she emailed the presentation to Mr. Klobe immediately following the presentation and will check the email she has on file for him.
Nancy Scarbrough commented the City of Costa Mesa voted to approve the homeless shelter on
November 18 and requested additional information regarding the budget source for the required $1.6 million payment to Costa Mesa for the public’s information.
Finance Committee Meeting Minutes November 19, 2020
Page 2 of 7
In response to Ms. Scarbrough’s inquiry, Mayor/Chair O’Neill reported the City Council agenda would be available today and would contain the financial breakdown of the $1.6 million payment to Costa Mesa. IV. CONSENT CALENDAR MINUTES OF SEPTEMBER 24, 2020 Recommended Action: Approve and file. Mayor/Chair O’Neill called for public comments and hearing none, closed the public comments. MOTION: Committee Member Reed moved to approve the minutes, as amended, seconded by Committee Member Stapleton. The motion carried 6 ayes – 0 noes – 1 absent (Avery, joined meeting at 4:07 p.m.). V. CURRENT BUSINESS A. CALPERS UPDATE Summary: Staff will present the latest actuarial valuation changes to actuarial assumptions, a review of investment returns, the potential impact of future rates, and the results of employee cost
sharing. Recommended Action:
Receive and file.
City Manager Grace Leung provided a brief overview of the CalPERS update and noted the Annual Valuation Report received in July has data as of June 30, 2019. She reported there is
a two-year gap and CalPERS uses that data to set up the rates utilized for FY 2021/22.
City Manager Leung reported the Investment return for June 2, 2019, was 6.7% and was just below the Assumed Rate of 7.0%. She presented CalPERS History of Investment Returns and
noted the Assumed Rate has been slowly stepping down since 2000. She reported CalPERS continues to look at their asset allocation and there may be a further adjustment downwards.
She noted the City’s CalPERS Actuary Kerry Worgan believes the Assumed Rate could come down to 6.75%.
In response to Committee Member Collopy’s inquiry, Budget Manager Espinoza reported
CalPERS is still completing the study to determine what is making up the potential 6.75% Assumed Rate. City Manager Leung noted there was general concern about the risk of their
portfolio and suspects CalPERS will be looking to lower the Assumed Rate to 6% incrementally.
City Manager Leung reported on the 3-year Unfunded Accrued Liability (UAL) and noted the City’s Accrued Liability went up 3.7% and reported the Funded Status also grew. She reported
on Plan Maturity Measures and noted the City is an older city with many employees which also means many more retirees. She advised the ratio of Retiree Accrued Liability to Total Accrued
Liability is 57% for Miscellaneous and 71% for Safety which falls in line with a mature plan. City Manager Leung reported on Pension Tiers over time and noted large growth in the number of employees enrolled in the Public Employees’ Pension Reform Act (PEPRA) pension plan.
She commented the PEPRA formula is much more financially sustainable as it is a lower formula calculation and noted Total Personal Wages are capped at $153,671 and grows with
Consumer Price Index (CPI). In response to Committee Member Tucker’s inquiry, City Manager Leung reported the cap on Total Personal Wages only applies to those in PEPRA.
Finance Committee Meeting Minutes November 19, 2020
Page 3 of 7
City Manager Leung reported on Discount Rate Sensitivity and noted if CalPERS reduces the assumed discount rate to 6%, the City’s UAL would grow by $137 million and would require approximately $19 million annually to pay down. She estimates the City will see a 2020 Expected Investment Loss of $16.52 million. She noted the City will see Unfunded Liabilities fully funded after 2034 and commented the City is in a good place with UAL due to maintaining the required payments.
City Manager Leung reported on Amortization Schedules and noted the UAL will largely be paid (97% funded) by 2034 if current assumptions hold. She also presented a variety of payment options to the Finance Committee. City Manager Leung presented Orange County Comparisons of UAL for other cities which
shows the Newport Beach was one of the few cities in which the UAL went down. City Manager Leung summarized that the Return Rate is the biggest area of concern for the City and is looking forward to receiving the details of the Experience Study. She noted the
CalPERS Actuary has seen a 16% increase in the Mortality Rate in the last year and commented she is interested to see the final rate. She recommends the City consider a $40
million total contribution as part of the budget development. Committee Member Collopy recommends starting the baseline at $40 million. Mayor/Chair O’Neill commented the Finance Committee would be discussing recommending the City
Council authorize the additional $5 million.
Mayor/Chair O’Neill clarified $5 million was held back this year as part of the City’s tiered approach in the event the economy was worse than anticipated. City Manager Leung advised
the $5 million was set up in a separate restricted Reserve Fund which would need to be appropriated as an additional UAL payment.
In response to Committee Member Collopy’s inquiry, City Manager Leung clarified $35 million
was paid to CalPERS and the remaining $5 million was placed in a restricted Reserve Fund. Committee Member Collopy inquired if the City could afford to pay $45 million next year.
Mayor/Chair O’Neill clarified the Finance Committee would be discussing whether to use the $5 million that is being held in the current fiscal year.
Mayor/Chair O’Neill clarified $35 million was budgeted and the $5 million is being held in
reserve and could be used to either to backfill General Fund revenue shortfall or used to supplement the planned UAL payment of $35 million this fiscal year. Committee Member
Collopy stated his recollection of the $5 million for the record.
Mayor/Chair O’Neill opened public comments.
Mr. Klobe recommends using the $5 million in this budget year if possible and continue at the recommended $40 million pace. He commented that State of California Auditor shows Newport
Beach as being ranked at 104th of 4,353 cities with the City’s Pension Funding, Pension Obligations, and Pension Costs being identified as high-risk. He expressed concern the City is painting a better picture to residents than what the State Auditor is presenting. Ms. Scarbrough inquired why Irvine is doing so much better than Newport Beach about the change in UAL from 2018 to 2019 depicted in the Orange County Comparison table in City Manager Leung’s report. She encouraged communication between the two cities for learning opportunities. Chair O’Neill opened public comments. In response to Mr. Kolbe’s comments, Mayor/Chair O’Neill commented the City is not painting a rosy picture of itself. He also noted Newport Beach cannot be compared to other cities that
Finance Committee Meeting Minutes November 19, 2020
Page 4 of 7
do not have the Fire Department or Sherriff Department’s Unfunded Liability on the books because they are contracted with Orange County Fire Authority (OCFA) or with the Orange County Sheriff’s Department (OCSD). He commented the City is getting ahead of it through Additional Discretionary Payments (ADP). In response to Ms. Scarbrough’s inquiry, City Manager Leung reported she worked in Irvine’s
Finance Department before coming to Newport Beach and reported they do ADP to pay down their UAL. She reported Irvine is a much younger plan than Newport Beach, did not go into CalPERS until 2000, and contracts out for many of its services such as Fire, Library, and Utilities. Committee Member Tucker requested City Manager Leung send the Finance Committee the
valuations for both the Safety and Miscellaneous Plans for June 30, 2019. Administrative Specialist to the Finance Director Marlene Burns reported they could be found on the City’s website.
There was no further action taken on this item. B. FISCAL YEAR 2019-20 AND FISCAL YEAR 2020-21 FINANCIAL UPDATES Summary: Staff will provide a fiscal year ending June 30, 2020, and first quarter FY 2020-21 budget performance update. Recommended Action: Receive and file.
Deputy Director/Finance Steve Montano provided a brief update of the fiscal year ending June
30, 2020, and first quarter FY 2020-21 budget performance. He reported the economy has improved in recent months and the City is exceeding its revenue expectations in absolute
terms, however, the City is realizing less revenue overall when compared to prior years. He reported General Fund Revenue actuals through September are $5.8 million which is $4 million
less than the same time in FY 2019 due to a sharp decline in spending on certain goods and services and specifically for Newport Beach, a decline in Leisure, Travel and Restaurant
sectors of the economy.
Deputy Director/Finance Montano reported FY 2019-20 General Fund Revenues at $229.8 million, $10.9 million higher than projected in almost all categories. He reported General Fund
revenues for the first quarter FY 2020-21 are $3.2 million higher than projected. He reported Property Taxes are the least affected revenue source by the pandemic and finished the year
strong at $5 million over the prior year. He reported FY 2020-21 Property Taxes are $292,000 less than projected for the quarter due to the first three unsecured property tax payments
coming in less than projected.
Deputy Director/Finance Montano reported Supplemental Taxes were down significantly for the first quarter. However, he noted the November payments are up 43% over the prior year
and feels it bodes well for secured property taxes over the next year. He advised the City will get a better sense of Property Tax when the tax receipts are realized in mid-late December.
In response to Committee Member Collopy’s inquiry, Deputy Director/Finance Montano reported the City has always relied on the first large payment of Property Taxes in December as a good indicator of how the budget is going to end up and noted it is probably the least
affected by the pandemic. He advised there is usually an 18-month lag from valuation assessment to when the City gets the money so the impact of COVID-19 will not be realized
for some time. Deputy Director/Finance Montano reported Sales Tax finished $1.8 million higher than projected and first quarter FY 2020-21 Sales Tax revenues are coming in approximately
Finance Committee Meeting Minutes November 19, 2020
Page 5 of 7
$824,000 higher than expected. He reported third-quarter 2020 Sales Tax clean-up payment came in at $2.5 million higher than expected. Deputy Director/Finance Montano reported Transient Occupancy Tax (TOT) was the most severely impacted revenue source, however, FY 2019-20 TOT receipts were $20.8 million which is $1.8 million higher than projected. He reported first-quarter FY 2020-21 revenues are
coming in approximately $1.7 million over the projected budget. He reported Short-Term Lodging receipts were stronger than expected. Deputy Director/Finance Montano reported on All Other General Fund Revenue ended FY 2019-20 were $6.6 million higher than projected and All Other General Fund Revenues through September 30, 2020, was $899,000 higher than expected.
Deputy Director/Finance Montano reported on COVID Relief Funds and reported the City has received $4 million through the Coronavirus Aid, Relief, and Economic Security (CARES) Act and reported the City has a claim in with the Federal Emergency Management Agency (FEMA)
for an additional $565,000.
Deputy Director/Finance Montano reported COVID-19 impacts to other funds that are subject to revenue volatility include Tidelands, Gas Tax, Measure M, SB1 RMRA (Road Maintenance and Rehabilitation Account), and the Water and Wastewater funds. He advised staff will monitor these funds and report back if significant changes are warranted.
Deputy Director/Finance Montano reported General Fund Expenditures ended FY 2019-20
$3.9 million lower than projected and reported expenditures through the first quarter of the year are $3.4 million lower than projected as well.
Deputy Director/Finance Montano provided a General Fund Sources and Uses overview and
reported the City realized Unrestricted General Fund Resources of $23.9 million. He reported $11.5 million was comprised of the FY 2018-19 Surplus and the $12.4 million was the FY 2019-
20 Surplus. He advised staff will be proposing that City Council restore the $2.3 million of the Contingency Reserve that was used to balance the FY 2020-21 budget.
In response to Council Member Collopy’s inquiry, Deputy Director/Finance Montano clarified
the Contingency Reserve is 25% of the City’s Operating Budget less the ADP.
Deputy Director/Finance Montano reported the City set aside a $5 million CalPERS reserve in anticipation of adverse investment results that would increase the City’s UAL contribution in
the FY 2020-21 budget. He reported staff will recommend the City Council allocate the $5 million to the Operating Budget to increase the annual UAL payment to $40 million total for the
Fiscal Year.
Deputy Director/Finance Montano provided a brief overview of the Proposed Partial Restoration of Funds through Tier Framework. He reported Tier 5 relied on a $2.3 million draw
from Contingency Reserves. He noted staff is looking to replenish the $2.3 million under City Council Policy. He reported staff recommends the replenishment of the $500,000 taken from
the Equipment Replacement Fund in Tier 4. He reported Tiers 1 through 3 relied on deferred Capital Funding, a temporary hiring freeze, and various operating reductions, and no proposed restorations are recommended this time.
Deputy Director/Finance Montano reported staff will continue to monitor the performance of the City’s budget in subsequent quarters and adjust as needed. He advised staff recommends the
Finance Committee review and discuss the report and provide recommendations for the City Manager and City Council consideration before the November 24, 2020, City Council meeting. Mayor/Chair O’Neill commended staff for a well-done staff report. He commented it is good to
see the numbers better than anticipated.
Finance Committee Meeting Minutes November 19, 2020
Page 6 of 7
In response to Mayor/Chair O’Neill’s inquiry, City Manager Leung reported she is in contact with other City Manager’s and she is hearing some positivity with TOT especially for cities that rely on tourism such as Huntington Beach. She also reported Costa Mesa has reported challenges with Sales Tax and Anaheim has reported challenges with TOT as they rely on Convention Center business for revenue. She reported Huntington Beach and Anaheim
recently put an early retirement incentive program in place, so they are working with a reduced workforce. Lastly, she reported many cities are challenged at this time. In response to Mayor/Chair O’Neill’s inquiry, Senior Accountant Theresa Schweitzer has not heard when Fashion Island Hotel and the Renaissance Hotel will reopen. City Manager Leung reported the $5 million payment for CalPERS, the return of the Contingency Reserve, and the
replenishment of Equipment Replacement Fund will be considered by City Council on November 24, 2020. Committee Member Collopy strongly recommends taking the recommendations to the City
Council.
Mayor/Chair O’Neill opened public comments. Mr. Mosher commented his understanding of the recent issuance of bonds to finance the fire station was motivated in part to preserve the City’s cash position. He inquired if these surpluses
suggest that borrowing is less urgent than it seems to be.
Mayor/Chair O’Neill closed public comments.
In response to Mr. Mosher’s inquiry, Deputy Director/Finance Montano reported the City was able to realize a 0.71% interest rate on the financing given its outstanding credit rating. He also
noted spreading the cost over the life of the asset seems like a good idea given the City is not necessarily out of the woods from the impact of the pandemic.
Mayor/Chair O’Neill also agreed it was a good idea. Committee Member Collopy cited his
comments from the last meeting that paying almost nothing to borrow money seems like a wise thing to do.
In response to Mayor Pro Tem Avery’s inquiry, Deputy Director/Finance Montano reported staff
reviews how well Internal Services Funds are funded annually and noted most are at or near 100%. He reported the Equipment Replacement Fund was funded at 66% so staff thought it
would be prudent to restore the funding.
City Manager Leung advised staff has been doing a lot of work over the past year between Finance staff and Fleet staff to make sure the fleet maintenance and replacement schedule is
appropriately laid out.
In response to Mayor Pro Tem Avery’s inquiry, City Manager Leung confirmed this speaks to equipment specific to the fleet.
There was no further action taken on this item. C. BUDGET AMENDMENTS FOR THE PREVIOUS QUARTER Summary: Staff will report on the budget amendments for the prior quarter. Recommended Action: Receive and file. There was no action taken on this item.
Finance Committee Meeting Minutes November 19, 2020
Page 7 of 7
D. WORK PLAN REVIEW Summary: Staff will review with the Committee the agenda topics scheduled for the remainder of the calendar year. Recommended Action: Review and discuss the reports and provide recommendations for City Manager consideration.
City Manager Leung reported no Work Plan has been laid out for 2021 and will be brought back to the Finance Committee in January. Committee Member Reed would like to see an update of the quarterly reporting on the Tier Framework.
Mayor/Chair O’Neill opened public comments. Mr. Mosher commented that he had looked for other cities that allow the public to access the
“Open Checkbook” of their open budget. He reported the City of Tribute, Iowa which is smaller than Newport Beach, has quite a different budget cycle. He provided a brief overview of their
budget cycle which includes more public input and suggested the Finance Committee review their model to determine if it has any merit. Ms. Scarbrough commented the fire truck chassis and bodies could be replaced separately
and is an option on the fire truck that is currently being purchased.
Mayor/Chair O’Neill closed the public hearing.
VI. FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON-DISCUSSION ITEM) None. VII. ADJOURNMENT The Finance Committee adjourned at 4:17 p.m. The next regular meeting of the Finance Committee
was not set at this time.
Filed with these minutes are copies of all materials distributed at the meeting.
The agenda for the Regular Meeting was posted on November 16, 2020, at 2:11 p.m., in the binder and on the City Hall Electronic Board located in the entrance of the Council Chambers at 100 Civic
Center Drive.
Attest:
___________________________________ _____________________
Will O’Neill, Chair Date Finance Committee
January 21, 2021, Finance Committee Agenda Comments
These comments on an item on the Newport Beach City Council Finance Committee agenda are submitted
by: Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229)
Item IV.A. MINUTES OF NOVEMBER 19, 2020
Changes to the draft minutes passages shown in italics are suggested in strikeout underline format.
Page 1 (agenda packet page 4), Item III, paragraph 1, last sentence: “He acknowledged the
decision to terminate Finance Director/Treasurer Matusiewicz was solely at the discretion of the
City Manager and commented the Treasurer position was one of four (4) positions (4) that were to
be appointed by the City Council which only happened during the first few years under the current
City Charter.” [Note: Rather than moving the “(4)”, I would prefer deleting it. For many years, the
City of Newport Beach managed to survive without reverting to this archaic legalism of repeating
numbers written in words with their Arabic numeral equivalents in parentheses. If this is the wave
of the future and it were to be applied consistently here, we would have the bizarre and even more
unnecessarily difficult-to-read “one (1) of four (4) positions.”
Page 1 (agenda packet page 4), last paragraph: “Nancy Scarbrough commented the City of Costa
Mesa voted to approve the homeless shelter on November 18 and, for the public’s information,
requested additional information regarding the budget source for the required $1.6 million payment
to Costa Mesa for the public’s information.”
Page 3 (agenda packet page 6), paragraph 4 from end, sentence 2: “He commented that State of
California Auditor shows Newport Beach as being ranked at 104th of 4,353 453 cities with the
City’s Pension Funding, Pension Obligations, and Pension Costs being identified as high-risk.”
[Without access to the audio, I don’t know what was said, but the “4,353” must be wrong. The State
Auditor ranked the risk of 453 cities for 2018-2019, with Newport Beach tied with Scotts Valley for
104th “worst.” For comparison, the State Controller has payroll reports from 481 California cities,
and Google defers to Ballotpedia, which believes there are 482.]
Page 4 (agenda packet page 7), Item B, paragraph 2, sentence 1: “Deputy Director/Finance
Montano reported FY 2019-20 General Fund Revenues at $229.8 million, $10.9 million higher than
projected, including in almost all categories.”
Page 5 (agenda packet page 8), paragraph 3 from end, last sentence: “He reported Tiers 1
through 3 relied on deferred Capital Funding, a temporary hiring freeze, and various operating
reductions, and no proposed restorations are recommended at this time.”
Page 6 (agenda packet page 9), paragraph 5, sentence 2: “He inquired if these surpluses suggest
that borrowing is less urgent than it seems seemed to be.”
Page 6 (agenda packet page 9), last line: “There was no action taken on this item The item was
received and filed.” [?? Was this item skipped? Or was the recommend action taken? There is a
Budget Amendments report on the present agenda, but it does not duplicate the earlier one in the
November agenda packet.]
Page 7 (agenda packet page 10), Item D, paragraph 4, sentence 2: “He reported the City of
Tribute Dubuque, Iowa which is smaller than Newport Beach, has quite a different budget cycle.”
[see their FY2022 budget planning website and their Open Checkbook]
CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 5A
January 21, 2021 TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE
FROM: Finance Department
Carol Jacobs, Assistant City Manager / Interim Finance Director / Treasurer 949-644-3313 or cjacobs@newportbeachca.gov SUBJECT: BUDGET AMENDMENTS FOR QUARTER ENDING DECEMBER 31, 2020
EXECUTIVE SUMMARY
The purpose of this memorandum is to report on the budget amendments for the second quarter of FY 2020-21. All budget amendments are in compliance with City Council Policy F-3, Budget Adoption and Administration.
DISCUSSION
City Council Policy F-3, Budget Adoption and Administration, identifies how appropriations can be transferred, increased or reduced. The Finance Committee reviews a quarterly report of City Council and City Manager budget amendments including
their effect on fund balance. Please find the list of budget amendments included as
Attachment A. Prepared by: Submitted by:
/s/ Walid Harding
/s/ Carol Jacobs
Walid Harding Carol Jacobs
Budget Analyst Assistant City Manager /
Interim Finance Director / Treasurer
Attachment:
A. Budget Amendments Fiscal Year 2020-21 Quarter Ending
December 31, 2020
ATTACHMENT A
BUDGET AMENDMENTS FISCAL YEAR 2020-21 QUARTER ENDING DECEMBER 31, 2020
BA #Date Amendment Type Fund Revenues Expenditures
Net Effect on Fund Balance
Increase/(Decrease)Department Explanation
012 10/13/2020 City Council General Fund 33,570.00 33,570.00 - Police To increase revenue estimates and expenditure appropriations
from the Police Donations Special Deposit Account. Funds will be allocated towards SWAT Supplies.013 10/27/2020 City Council General Fund 88,000.00 88,000.00 - Library To increase revenue estimates and expenditure appropriations to record a donation from the Newport Beach Public Library Foundation. The donation will be used toward funding library
materials and programs on the Library's Fiscal Year 2020-21
Wish List.015 10/1/2020 City Manager Contributions Fund 10,000.00 10,000.00 - Public Works To increase revenue estimates and expenditure appropriations for the Bonita Canyon Road Pavement Project. Costs related to the Irvine Ranch Water District (IRWD) work were estimated at the time of budget and final work has now been verified by IRWD.
016 10/13/2020 City Council Assessment Dist #117 - 122,671.00 (122,671.00) Public Works To increase expenditure appropriations in Assessment District 117 for the award of Contract 7753-2 to S&H Civilworks for the concrete alley and street rehabilitation project.017 10/13/2020 City Council Water Capital Fund - 1,347,500.00 (1,347,500.00) Public Works To increase expenditure appropriations from the Water Capital unappropriated fund balance for the award of Contract 7645-2 to
T.E. Roberts, Inc. for the Via Lido Soud and Nord Water Main
Replacement.General Fund 400,000.00 1,200,000.00 (1,200,000.00)
General Fund Capital Projects 1,200,000.00 1,600,000.00 (400,000.00)
019 11/24/2020 City Council General Fund 17,500.00 17,500.00 - Police To increase revenue estimates and expenditure appropriations
from the approval and acceptance of the California Department of
Alcoholic Beverage Control (ABC) 2020-21 Alcohol Policing Partnership Program (APP) Grant.020 11/24/2020 City Council Assessment Dist #113 - 100,000.00 (100,000.00) Public Works To increase expenditure appropriations for the Underground Assessment District #120 with an advance from General Fund unappropriated fund balance for the engineering and design work.
021 11/24/2020 City Council General Fund - 5,000,000.00 (5,000,000.00) Finance To increase expenditure appropriations from the PERS general fund reserve for the payment of PERS unfunded liability. This budget amendment also reinstates a transfer out to the Equipment Fund from unappropriated general fund balance that was originally part of the tiered budget reductions.
022 11/20/2020 City Manager General Fund 5,307.00 5,307.00 - Library To increase expenditure appropriations and revenue estimates
from the acceptance of the Santiago Library System grant check. Funds will be used towards the reimbursement of the current eBooks collection.
018 11/24/2020 City Council To increase expenditure appropriations in the Emergency Homeless Shelter project funded from the Affordable Housing Reserve and Hoag development agreement.
City Manager
City of Newport BeachFiscal Year 2020-21 Budget AmendmentsQuarter Ending December 31, 2020
CAPITAL IMPROVEMENTS
DISCUSSION
JANUARY 21, 2021
FINANCE
COMMITTEE
-To Refresh -Council Directed FY 2019-20 & 2020-21 Project Adjustmentsdue to Covid 19 Pandemic
-To Refresh -Council Directed FY 2019-20 & 2020-21 Project Adjustmentsdue to Covid 19 Pandemic
Questions
CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 5C January 21, 2021
TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE
FROM: Steve Montano, Deputy Finance Director 949-644-3240 or smontano@newportbeachca.gov
SUBJECT: FACILITIES FINANCIAL PLAN UPDATE
SUMMARY: The Finance Committee is charged with a variety of tasks including, but not limited to, reviewing with staff on an annual basis the timing, means of financing, and fiscal impacts
associated with funding the high-priority projects designated in the Facilities Financing
Plan (FFP). Staff welcomes input and recommends that the Committee receive and file the attached FFP update and provide staff with any input regarding the financial solvency of the FFP.
RECOMMENDED ACTION:
Staff welcomes input and recommends that the Committee receive and file the attached FFP update and provide staff any input regarding its financial solvency.
DISCUSSION:
Key Planning Highlights:
• The FFP relies mostly on front-loaded cash contributions for the near-term
projects, and no debt issuance over the 30-year planning period.
• Priority near-term projects include Sunset View Park with Pedestrian Bridges, Library Lecture Hall, Newport Coast Pickleball Court, Cliff Drive Community Room, Newport Jr. Guard Building, 15th Street Beach Restroom, Peninsula and
Library Fire Station 1, Bonita Creek Artificial Turf Replacement, Fire Station 6 (living area rebuild), and Newport Theatre Arts Center.
• The Police Facility project is assumed to start in 2032 at an estimated cost of
$69.5 million, funded entirely through cash contributions.
Facilities Financial Plan Update January 21, 2021 Page 2
• City Council (F-6), Debt Management Policy, restricts debt service as a percentage of General Fund revenues to remain below 8%. Debt service
reaches a maximum of 3.6%, and averages 1.8% over the 30-year planning
period.
• The remaining debt capacity, net of current debt service obligations, is nearly $158.5 million.
• Over the 30-year planning period, the maximum annual General Fund contribution to the FFP Reserve Fund (as a percent of revenue) reserve fund is 3.5% and averages 2.9% of General Fund revenues.
• The FFP Reserve Fund minimum target fund balance is maintained above the
Maximum Annual Debt Service (MADS), $8.9 million over the 30-year planning period.
Key Assumptions:
Projects Included in the Analysis Only General Fund projects are addressed, and new facilities are not included, unless specifically identified. One such project includes the potential land purchase/acquisition for the new Police Station. No cost is yet identified for this purchase as staff will seek
direction from the City Council.
Potential expenses for dredging are not included and are budgeted as part of the ongoing annual Harbor and Beaches Master Plan (HBMP). Building maintenance and operation costs are not included and are addressed in the Facilities Maintenance Plan (FMP).
General Fund Revenue General Fund revenues are assumed to increase, modestly, 3% to be consistent with a conservative approach to debt affordability.
Project Costs
Estimated project costs are based on current time-frame estimates by Public Works. Construction costs are projected to increase 2.5% annually. Project and cost projections are revised periodically and are assumed to include project management expenditures.
Debt Service Levels
Debt Service will be maintained at less than 8% of General Fund revenues. This is consistent with City Council (F-6), Debt Management Policy.
Facilities Financial Plan Update January 21, 2021 Page 3
Private Contributions Approximately $66 million in development/lease and private contributions are expected to be received over the next 10 years. Increased revenue will be derived from the
reassessment for fair market value of the long-standing Park In-Lieu Fee from $26,125 to
$38,400 per unit. This fee will be incrementally phased in over the next 2 years. As the result of these anticipated funding sources and the General Fund’s planned contributions to the FFP annually (no less than $8.5 million or 3% of General Fund
revenue), the FFP fund balance is projected to remain at or above $9 million for the
duration of the forecast period.
Prepared and Submitted by:
/s/ Steve Montano _____________________________
Steve Montano
Deputy Finance Director
Attachments:
A. Facilities Financial Plan B. Guide to Reviewing the FFP
ATTACHMENT A
Facilities Financial Plan
4 Last Updated 1/10/2021
Start Start
Est. Project Date Date
Near-Term Projects Cost (Design)(Construction)
25 Sunset View Park w/Ped Bridges(1)6,721,650 2019 2022
16 Library Lecture Hall (2)4,000,000 2020 2022
54 Newport Coast Pickleball Court 1,025,000 2021 2022
36 Cliff Drive Community Room (3)- 2021 2022
13 Newport Jr. Guard Building (includes 300k for site prep)(4)3,272,500 2021 2023
53 15th Street Beach Restroom 807,668 2022 2024
3 FS 1 - Peninsula 5,298,302 2022 2025
15 Library-Balboa (Construct w/ FS-1)2,152,435 2022 2025
29 Bonita Creek - Artificial Turf Replacement 993,432 2025 2025
47 FS 6 - Mariners (living area rebuild)2,715,380 2025 2026
22 Newport Theatre Arts Center 5,619,883 2027 2030
1 2 (1) Offset with private contributions of $2,349,600
(2) Offset with private contributions of $4,000,000
(3) Offset with private contributions of $400,000 ******
(4) Offset with private contributions of $1,750,000
Total 32,606,250
3 4
Key Metric Target Max
Debt Svc as % of Revenues NA < 8.0%
Minimum FFP Reserve Balance (000's)$8,771 NA
Key Statistics Min Max Avg
GF Contribution to FFP (000's)$0 $10,591 $8,560
Debt Service (000's)$7,459 $8,771 $8,264
GF Contributions to FFP as % Rev 0.00%3.5%2.9%
Debt Svc as % of Revenues 2.11%3.6%2.9%
5 6 FFP Balance (000's)$20,666 $72,310 $41,307
Key Statistics Min Max Avg
GF Contribution to FFP (000's)$0 $15,339 $10,769
Debt Service (000's)$0 $8,771 $5,610
GF Contributions to FFP as % Rev 0.00%3.5%2.9%
Debt Svc as % of Revenues 0.00%3.6%1.8%
FFP Reserve Balance (000's)$8,969 $136,640 $46,972
7 8
Remaining Debt Capacity (Dbt. Svc < or = 8% of GF Rev):158.5$ Million
CITY OF NEWPORT BEACH FACILITIES FINANCIAL PLANNING DASHBOARD
30 Year
Council Debt Mgmt Policy (F-6)
15 Year
0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%10.00%2021202320252027202920312033203520372039204120432045GF Contribution to FFP
as a Percent of GF Revenue
GF Contribution % Budget Debt Service - as % of Revenues
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
2021202320252027202920312033203520372039204120432045GF Contribution to FFP Compared
to Debt Service
GF Contribution to FFP Debt Service
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
2021202220232024202520262027202820292030203120322033203420352036203720382039204020412042204320442045FFP Reserve Balance
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
2021202320252027202920312033203520372039204120432045Project Funding
Cash Funded Construction Debt Funded Construction
- 5,000,000 10,000,000
15,000,000 20,000,000 25,000,000
30,000,000 35,000,000 40,000,000
45,000,000 50,000,000
2021202320252027202920312033203520372039204120432045Project Expenditures
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
2021202320252027202920312033203520372039204120432045Debt Service Capacity
Max Debt Service - 8% of Revenues Debt Service
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%2021202320252027202920312033203520372039204120432045Debt Service as % of GF Revenues
Debt Service - as % of Revenues
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
2021 2022 2023 2024 2025
Annual GF Contributions
Periodic GF or One-time Transfers
Private Contributions
Interest Earnings
Cash Contributions
Project Total Interest
Debt Service Description Year Proceeds COI Issue Rate Term Maturity
2010 Civic Center COPs 2011 123,000,000 1,289,442 124,289,442 4.4%30 2041
Fire Station COPs 2021 9,050,350 308,827 9,359,177 4.0%10 2031
Traunch 3 0 - - - 5.0%30 30
GF contributions equal to $8.5m/year (level dollar)
GF contributions equal to 3% of annual General Fund revenue
GF contributions equal to 5% of annual General Fund revenue
GF contributions equal to 3% GF Rev but not < than $8.5M
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Active Projects Current Age From:
Ref Function Project Yr Built Repl Sq Ft Est $/Sq Ft 2021
Useful
Life
Years to
Start
Cost Est.
Date Project Estimate FY Design Year
FY Const Start
Year
FV Cost Est @ 2.5%
Growth Private Contribtions Net Proposed Cost
1 Gen Gov Civic Center 2013 100,000 750 8 60 52 Dec-20 75,000,000 2070 2073 270,833,426 270,833,426
4 Gen Gov Council Chambers 2013 29,000 750 8 60 52 Dec-20 21,750,000 2070 2073 78,541,694 78,541,694
41 Gen Gov Civic Center Parking Structure 2013 450 22,000 8 60 52 Dec-20 9,900,000 2070 2073 35,750,012 35,750,012
53 Gen Gov 15th Street Beach Restroom 1961 1,000 750 60 60 3 Dec-20 750,000 2022 2024 807,668 807,668
2 Police Police Station 1973 60,000 800 48 60 14 Dec-20 48,000,000 2032 2035 67,822,743 67,822,743
52 Police Land Purchase for New Station (4 acres)174,000 230 **10 Dec-20 2028 2031 - -
3 Fire FS 1 - Peninsula 1962 6,000 800 59 60 4 Dec-20 4,800,000 2022 2025 5,298,302 5,298,302
5 Fire FS 2 - Fire Station No 2 2022 11,600 800 -1 60 61 Dec-20 9,280,000 2080 2082 41,850,800 41,850,800
6 Fire FS 3 - Santa Barbara 1971 10,000 800 50 60 14 Dec-20 8,000,000 2032 2035 11,303,791 11,303,791
7 Fire FS 4 - Balboa Island 1994 4,400 800 27 60 23 Dec-20 3,520,000 2041 2044 6,211,430 6,211,430
8 Fire and Library FS 5 and CDM Library 2019 10,313 760 2 60 49 Dec-20 7,837,880 2069 2070 26,282,581 26,282,581
9 Fire FS 6 - Mariners (apparatus bay only)2018 1,436 866 3 60 49 Jan-19 1,243,576 2069 2070 4,170,055 4,170,055
47 Fire FS 6 - Mariners (living area rebuild)1957 3,000 800 64 5 Dec-20 2,400,000 2025 2026 2,715,380 2,715,380
10 Fire FS 7 - SAH 2007 6,500 800 14 60 36 Dec-20 5,200,000 2054 2057 12,649,184 12,649,184
11 Fire FS 8 - Npt. Coast 1995 11,027 800 26 50 24 Dec-20 8,821,600 2042 2045 15,955,857 15,955,857
12 Fire Lifeguard HQ Replacement (major rehab)1988 3,000 800 33 25 19 Dec-20 2,400,000 2038 2040 3,836,760 3,836,760
13 Fire Newport Jr. Guard Building (includes 300k for site prep)TBD 5,600 875 50 1 Jan-21 4,900,000 2021 2023 5,022,500 1,750,000 3,272,500
15 Library Library-Balboa (Construct w/ FS-1)1962 3,000 750 59 60 4 Dec-20 1,950,000 2022 2025 2,152,435 2,152,435
17 Library Library-Mariners 2006 15,305 750 15 60 45 Dec-20 11,478,750 2063 2066 34,871,332 34,871,332
18 Library Library-Central 1997 65,000 750 24 60 31 Dec-20 48,750,000 2049 2052 104,812,830 104,812,830
16 Library Library Lecture Hall TBD 7,000 1,114 60 1 Dec-20 7,804,878 2020 2022 8,000,000 4,000,000 4,000,000
20 Rec Facility Marina Park 2015 22,000 750 6 50 44 Dec-20 16,500,000 2062 2065 48,902,833 48,902,833
21 Rec Facility Newport Coast Ctr 2007 16,865 750 14 60 36 Dec-20 12,648,750 2054 2057 30,768,531 30,768,531
22 Rec Facility Newport Theatre Arts Center 1973 12,000 750 48 60 9 Dec-20 9,000,000 2027 2030 11,239,767 5,619,883 5,619,883
23 Rec Facility OASIS Sr. Ctr 2010 43,232 750 11 60 39 Dec-20 32,424,000 2057 2060 84,937,083 84,937,083
25 Rec Facility Sunset View Park w/Ped Bridges TBD NA ∞1 Dec-20 8,850,000 2019 2022 9,071,250 2,349,600 6,721,650
29 Rec Facility Bonita Creek - Artificial Turf Replacement 2015 157,355 5.7 6 10 4 Jan-19 900,000 2025 2025 993,432 993,432
33 Rec Facility Community Youth Center (CYC) - Grant Howald 1988 5,146 700 33 60 18 Dec-20 3,602,200 2037 2039 5,618,203 5,618,203
34 Rec Facility Caroll Beek Center 1980 1,555 700 41 60 12 Dec-20 1,088,500 2030 2033 1,463,911 1,463,911
35 Rec Facility Bonita Creek Community Ctr.1988 2,876 700 33 60 17 Dec-20 2,013,200 2035 2038 3,063,322 3,063,322
36 Rec Facility Cliff Drive Community Room 1960 750 700 61 60 1 Dec-20 525,000 2021 2022 400,000 400,000 -
37 Rec Facility Girls & Boys Club (East Bluff Park) - Major Rehab 2019 11,800 700 2 50 48 Dec-20 1,500,000 2059 2069 4,907,234 4,907,234 -
38 Rec Facility Lawn Bowling Facility (San Joaquin Hills Park)1974 2,750 575 47 50 18 Mar-14 1,581,250 2036 2039 2,466,210 2,466,210
54 Rec Facility Newport Coast Pickleball Court TBD N/A 40 1 Dec-20 1,000,000 2021 2022 1,025,000 Donated Land 1,025,000
Potential Projects
Rec Facility Pool Complex (aquatic center)($5.5M) with Park($2.5M)Dec-20 8,000,000 8,000,000
Rec Facility Arroyo Park Synthetic Turf Field Dec-20 1,300,000 1,300,000
Harbor Balboa Yacht Basin Buildings 1950 18,080 600 71 60 3 Dec-20 10,848,000 2022 2024 11,682,110 11,682,110
Police Animal Shelter TBD
Municpal Operations Corporation Yard TBD
Municpal Operations Utilities Yard TBD
2 3 4 5 6 7 8 9 10 11 12
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
AFFORDABILITY ASSUMPTIONs
General Fund Revenues 236,830,597 243,935,514 251,253,580 258,791,187 266,554,923 274,551,571 282,788,118 291,271,761 300,009,914 309,010,211 318,280,518
GF Revenue Growth Assumption 3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%
FFP Contributions @ 3% of GF Revenues 7,104,918 7,318,065 7,537,607 7,763,736 7,996,648 8,236,547 8,483,644 8,738,153 9,000,297 9,270,306 9,548,416
GF Annual Contribution % of Revenue (assuming $8.5 M/yr)0.00%3.48%3.38%3.28%3.19%3.10%3.01%3.00%3.00%3.00%3.00%Debt Service as % of GF Revenues 3.25%3.60%3.48%3.37%3.25%3.15%3.05%2.95%2.85%2.76%2.67%
SUMARY FFP FUND SOURCES AND USES
8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,738,153 9,000,297 9,270,306 9,548,416 Beginning FFP Balance 17,046,840 28,164,234 29,005,030 27,856,142 27,745,055 27,350,347 24,559,058 20,762,965 20,665,957 21,813,709 59,786,418
SourcesAnnual GF Contributions - 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,738,153 9,000,297 9,270,306 9,548,416
Periodic GF or One-time Transfers In 11,333,252
Private Contributions 13,362,650 4,379,463 2,271,055 276,477 792,408 2,287,646 293,399 299,267 305,252 22,606,357 317,585 Park In Lieu 1,022,819 3,579,250 104,500 - - - - - - 14,540,245 -
Interest Earnings - 140,821 145,025 278,561 277,451 273,503 491,181 415,259 413,319 654,411 1,793,593 Debt Funding - - - - - - - - - - -
Total Sources:25,718,721 16,599,534 11,020,581 9,055,038 9,569,859 11,061,150 9,284,580 9,452,679 9,718,869 47,071,320 11,659,593
Uses
Debt Service (7,688,278) (8,770,625) (8,742,228) (8,715,608) (8,664,933) (8,642,924) (8,620,755) (8,588,304) (8,560,117) (8,525,622) (8,484,800) Other Fiscal Charges (11,750) (11,000) (11,000) (11,000) (11,000) (11,000) (11,000) (11,000) (11,000) (11,000) (11,000)
Project Uses (6,901,299) (6,977,112) (3,416,241) (439,517) (1,288,634) (5,198,514) (4,448,918) (950,383) - (561,988) (3,090,936)
Total Uses:(14,601,327) (15,758,737) (12,169,469) (9,166,125) (9,964,567) (13,852,439) (13,080,673) (9,549,687) (8,571,117) (9,098,611) (11,586,736)
Projected FFP Balance 28,164,234 29,005,030 27,856,142 27,745,055 27,350,347 24,559,058 20,762,965 20,665,957 21,813,709 59,786,418 59,859,275
Projected FFP Balance reserved for park in lieu 813,641 4,290,391 3,831,141 3,472,391 3,373,048 2,826,661 2,478,960 2,478,960 2,478,960 17,019,205 17,019,205
Sources and Uses Proforma
DEVELOPMENT AGREEMENTS AND PRIVATE
CONTRIBUTIONS 5 6 7 8 9 10 11 12 13 14
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Agreement
Miscellaneous
410-412 29th Sail House(4 units)(PA2017-059)104,500
1820 Ocean Front W (1 unit)(PA2017-233)25,871
416 Fernleaf (1 unit)(PA2017-112)
2510 Coast Hwy W (36 units)(PA2019-246)750,000
1501 Mesa Drive (6 units)(PA2017-218)156,750
20452 Santa Ana Ave (4 units)(PA2016-069)104,500
Residence at Newport Center(28 units)(PA2020-020)731,500
717 Marigold (1 unit)(PA2019-041)26,099
716 Heliotrope (1 unit)(PA2019-262)26,099
502 Marigold Ave( 1unit)(PA2019-26,125
Newport Bay Marina (27 units) (PA2001-210)
Via Lido Mixed Use(2 units) (PA2010-081)
2218 Channel Rd.Abell John & Helou Carol
Plaza CDM (6 Units) (PA2010-061)
Park Fees (One off)287,375 56,000
Friend of the Oasis
Subtotal 496,069 1,694,250 104,500 - - - - - - -
Uptown Newport
$32,500/Unit - 1244 Units
Phase I - 558 Units a) 460 b)30 Units c) 68 Units 1,152,120 2,611,472
Phase II - 686 Units 22,295,000
In Lieu Park Fees - Phase I PA2011-134
In Lieu Park Fees - Phase I.b 370,000
In Lieu Park Fees - Phase I.c - 840,000
In Lieu Park Fees - Phase II 14,540,245
Subtotal 1,522,120 3,451,472 - - - - - - - 36,835,245
Dunes Settlement 50,000
Dunes Settlement - 100,000
Dunes Settlement - 410,402
Dunes Settlement -
Subtotal - - - - 510,402 - - - - -
Harbor Point Senior Living
Harbor Point Senior Living 300,000
Subtotal 300,000 - - - - - - - - -
Vivante
Residential units 3,150,000
Santa Ana Cottages 156,750
Subtotal 3,306,750 - - - - - - - - -
O'Hill
Residential units - 465,000
Clubhouse - 37,250
In Lieu Park Fees- Residential units- 5 units @ 26,125 - 130,625
Subtotal - 632,875 - - - - - - - -
Newport Airport Village 2,000,000 2,000,000 2,000,000
Subtotal 2,000,000 - 2,000,000 - - 2,000,000 - - - -
Residences at 4400 Von Karman 6,500,000 1,000,000
Subtoal 6,500,000 1,000,000 - - - - - - - -
Mixed Use at 2510 W. Coast Hwy 914,375
Subtoal - 914,375 - - - - - - - -
Land Re Use Decisions
Monrovia Property Sale
Police Facility
West Newport Gym - Lease 260,530 265,741 271,055 276,477 282,006 287,646 293,399 299,267 305,252 311,357
Subtotal 260,530 265,741 271,055 276,477 282,006 287,646 293,399 299,267 305,252 311,357
GRAND TOTAL 14,385,469 7,958,713 2,375,555 276,477 792,408 2,287,646 293,399 299,267 305,252 37,146,602
Facilities Financial Plan - Comparison of Prior and Currently Proposed Project Construction Schedule
All Costs are Net of Private Contributions
2020 2021 2022 2023 2024 2025 2026 2030 2031 2033 2035 2038 2039 2040 2044 2045 2052 Grand Total
Fire 3,272,500 5,298,302 2,715,380 11,303,791 3,836,760 6,211,430 15,955,857 48,594,019
FS 1 - Peninsula 5,298,302 5,298,302
FS 3 - Santa Barbara 11,303,791 11,303,791
FS 4 - Balboa Island 6,211,430 6,211,430
FS 6 - Mariners (living area rebuild)2,715,380 2,715,380
FS 8 - Npt. Coast 15,955,857 15,955,857
Lifeguard HQ Replacement (major rehab)3,836,760 3,836,760
Newport Jr. Guard Building (includes 300k for site prep)3,272,500 3,272,500
Gen Gov 807,668 807,668
15th Street Beach Restroom 807,668 807,668
Library 4,000,000 2,152,435 104,812,830 110,965,265
Library Lecture Hall 4,000,000 4,000,000
Library-Balboa (Construct w/ FS-1)2,152,435 2,152,435
Library-Central 104,812,830 104,812,830
Police - 67,822,743 67,822,743
Land Purchase for New Station (4 acres)- -
Police Station 67,822,743 67,822,743
Rec Facility 7,746,650 993,432 5,619,883 1,463,911 3,063,322 8,084,413 26,971,611
Bonita Creek Community Ctr.3,063,322 3,063,322
Caroll Beek Center 1,463,911 1,463,911
Cliff Drive Community Room 538,125 538,125
Community Youth Center (CYC) - Grant Howald 5,618,203 5,618,203
Lawn Bowling Facility (San Joaquin Hills Park)2,466,210 2,466,210
Newport Theatre Arts Center 5,619,883 5,619,883
Sunset View Park w/Ped Bridges 6,721,650 6,721,650
Bonita Creek - Artificial Turf Replacement 993,432 993,432
Newport Coast Pickleball Court 1,025,000 1,025,000
Grand Total 11,746,650 3,272,500 807,668 8,444,169 2,715,380 5,619,883 - 1,463,911 79,126,534 3,063,322 8,084,413 3,836,760 6,211,430 15,955,857 104,812,830 255,161,307
2020 2021 2022 2024 2025 2030 2031 2033 2035 2038 2039 2040 2044 2045 2052 Grand Total
Fire 2,325,000 8,349,793 11,876,045 4,030,996 6,525,883 16,763,622 49,871,339
FS 1 - Peninsula 5,566,528 5,566,528
FS 3 - Santa Barbara 11,876,045 11,876,045
FS 4 - Balboa Island 6,525,883 6,525,883
FS 6 - Mariners (living area rebuild)2,783,264 2,783,264
FS 8 - Npt. Coast 16,763,622 16,763,622
Lifeguard HQ Replacement (major rehab)4,030,996 4,030,996
Newport Jr. Guard Building (includes 300k for site prep)2,325,000 2,325,000
Harbor 14,319,102 14,319,102
Balboa Yacht Basin Buildings 14,319,102 14,319,102
Library 4,000,000 2,261,402 110,118,979 116,380,382
Library Lecture Hall 4,000,000 4,000,000
Library-Balboa (Construct w/ FS-1)2,261,402 2,261,402
Library-Central 110,118,979 110,118,979
Police - 71,256,270 71,256,270
Land Purchase for New Station (4 acres)- -
Police Station 71,256,270 71,256,270
Rec Facility 6,849,999 551,578 7,180,882 1,043,724 5,904,390 1,538,022 3,218,403 8,493,686 34,780,684
Bonita Creek - Artificial Turf 1,043,724 1,043,724
Bonita Creek Community Ctr.3,218,403 3,218,403
Caroll Beek Center 1,538,022 1,538,022
Cliff Drive Community Room 551,578 551,578
Community Youth Center (CYC) - Grant Howald 5,902,624 5,902,624
Grant Howald Park Sport Field Rehabilitation (5/14/19 CC)6,849,999 6,849,999
Lawn Bowling Facility (San Joaquin Hills Park)2,591,062 2,591,062
Newport Theatre Arts Center 5,904,390 5,904,390
Sunset View Park w/Ped Bridges 7,180,882 7,180,882
Grand Total 6,849,999 6,876,578 7,180,882 14,319,102 11,654,919 5,904,390 - 1,538,022 83,132,315 3,218,403 8,493,686 4,030,996 6,525,883 16,763,622 110,118,979 286,607,777
Variance (Current - Prior)(6,849,999) (6,876,578) 4,565,768 3,272,500 (13,511,434) (3,210,750) 2,715,380 (284,507) - (74,111) (4,005,781) (155,081) (409,273) (194,236) (314,453) (807,765) (5,306,149) (31,446,470)
Table B: Net Proposed Cost by Construction Start Year as Reviewed by Finance Committee (February 2020)
Table A: Net Proposed Cost by Construction Start Year (Current)
ATTACHMENT B
Guide to Reviewing the FFP
Guide to Reviewing the Facilities Financial Plan (FFP)
Dashboard
1) Does the FFP Reserve Balance drop below $8.1 million (1 year’s annual debt service)?
2) Does the City’s annual debt service of bonded debt exceed 8% of General Fund Revenues?
3) Is the City setting aside at least 3% of General Fund revenues for the replacement of critical
facilities?
4) Do the “Near-Term” Projects appear consistent with Council Direction?
Project Planning Worksheet
5) Are all relevant facilities represented on the “Project Planning Worksheet”
6) Does the scope, cost and timing of “Active Projects” seem consistent with Council Direction?
7) Note: The “Potential Projects” listed on the “Project Planning Worksheet” are not funded.
1
2
2
3
3
Start Start
Est. Project Date Date
Near-Term Projects Cost (Design)(Construction
Sunset View Park w/Ped Bridges(1)6,721,650 2019 2022
Library Lecture Hall (2)4,000,000 2020 2022
Newport Coast Pickleball Court 1,025,000 2021 2022
Cliff Drive Community Room (3)- 2021 2022
Newport Jr. Guard Building (includes 300k for site prep)(4)3,272,500 2021 2023
15th Street Beach Restroom 807,668 2022 2024
FS 1 - Peninsula 5,298,302 2022 2025
Library-Balboa (Construct w/ FS-1)2,152,435 2022 2025
Bonita Creek - Artificial Turf Replacement 993,432 2025 2025
FS 6 - Mariners (living area rebuild)2,715,380 2025 2026
Newport Theatre Arts Center 5,619,883 2027 2030
(1) Offset with private contributions of $2,349,600
(2) Offset with private contributions of $4,000,000
(3) Offset with private contributions of $400,000 ******
(4) Offset with private contributions of $1,750,000
Total 32,606,250
1
4
FACILITIES FINANCIAL
PLANNING (FFP)
JANUARY 21, 2021
FINANCE
COMMITTEE
Facility Finance Plan (FFP) Proposed Adjustments for 2021-22
Proposed Pickleball Courts (8) in Newport Ridge Park
Budget Estimate Approx. $1,000,000
o HOA would provide the land in Private Park. City Constructs/Maintains Courts
Replace the 15th Street Beach Restroom
Budget Estimate Approx. $750,000
•Identified in Facility Major Maintenance Plan (FMMP) as needing replacement.
•Original structure built in 1961. Major Rehabs in 1987 and 2001.
Planned FY21 Capital Funding Pre-COVID
General Fund
General Fund CIPs
FFP
HBMPFMP
NEF $5.0M
$4.5M$1.5M
$8.5M$3.1M
Neighborhood Enhancement Fund (NEF)
Facilities Maintenance Plan(FMP)
Facilities Financial Plan (FFP)
Harbor & Beaches Master Plan (HBMP)
Deferred FY21 Capital Funding Post-COVID
General Fund
General Fund CIPs
FFP
HBMPFMP
NEF $5.0M
$0$1.0M
$0$0
Neighborhood
Enhancement
Fund (NEF)
Facilities
Maintenance
Plan(FMP)
Facilities
Financial Plan
(FFP)
Harbor & Beaches Master Plan (HBMP)
Fund Amount Deferred
FFP $8.5M
HBMP $4.5M
FMP $0.5M
NEF $3.1M
Total Deferral $16.6M
General Fund Sources and Uses
Facility Finance Plan (FFP) Proposed Adjustments for 2021-22
FFP Reserve Balance
The $8.0 million FFP Reserve Fund minimum target fund balance is
maintained above the Maximum Annual Debt Service (MADS)of $8.7
million over the 30-year planning period.
Debt Service Less Than 8% of General Fund Revenues
Debt Service will be maintained at less than 8% of General Fund revenues.
This is consistent with City Council (F-6), Debt Management Policy
General Fund Contributions 2021-2031
Over the 30-year planning period, the maximum annual General Fund contribution to
the FFP Reserve Fund (as a percent of revenue) reserve fund is 3.5% and averages
2.9% of General Fund revenues.
•FFP fund balance reflects a $2M receipt from Newport Airport
Village development in January 2021.
•There is a $6.5M receipt anticipated for the Residences at
4400 Von Karman development in 2021.
•The Park In-Lieu Fee of has been reassessed from $26,125 to
$38,400 per unit –implementation will be phased in
incrementally over the next 2 years.
•$66M in private contributions to the FFP are expected
between 2021-2031.
FFP Private Contributions
FFP Private Contributions 2021-2031
Private Contributions by Source 2021-2031
Questions
1/15/21
Scheduled Date Agenda Title Agenda Description
Thursday, January 21, 2021 Budget Amendments for Quarter Ending December 31, 2020 Staff will report on the budget amendments from the prior quarter.
CIP Funding Strategy Next Year Budget Staff will review actions taken to align the FY21 budget with reduced revenues,
review the list of deferred CIP projects, and discuss the potential of restoring project funding should fiscal trends continue to improve.
Facilities Financial Plan Update Staff will present a draft of Facilities Financial Plans reviewing the timing,
means of financing, and fiscal impacts associated with funding Council
prioritized capital projects. Work Plan Review Staff and Finance Committee to review the proposed work plan and adjust as
necessary. Saturday, January 30, 2021
Confirmed
Special Council Meeting - Council Planning Session Staff will present status and funding of major programs planned for the calendar year.
Finance Committee Attendance Optional
Thursday, February 18, 2021 Quarterly Budget Update Present results of quarter ending December 31.
Fee Study Update Staff will present the Master Fee Schedule to the Finance Committee and
subsequently will present to the City Council.
Long Range Fiscal Forecast (LRFF)Staff will provide an update to the latest version of the LRFF.
Deep Dive of Utilities Department Budget Discussion of Enterprise Fund and address how the masterplans inform the
budget development.
Tuesday, March 9, 2021 Council Study Session - Capital Improvement Plan Early Look
Finance Committee Attendance OptionalThursday, March 11, 2021 Financial Statement Audit Results and Related Communication The City’s external audit firm will meet with the Finance Committee to discuss
the audit findings for the fiscal year ending 6/30/2020. The Committee will have
an opportunity to discuss any potential areas of concern and the auditors can discuss any changes in accounting standards or disclosures that were relevant
for the audit year.Pension Update Provide the Finance Committee with an update on status of pension funding progress.Internal Audit Program Update (If necessary.)Staff will provide an progress to date of internal control and performance audit
program.Review of Post Employment Retiree Insurance Actuarial Valuation (AKA OPEB)The City's OPEB actuary will review the City's latest OPEB valuation and
liability.Discuss Revenue Assumptions Staff will provide of an overview of revenue assumptions for the FY 2021-22 Proposed Budget.
Thursday, April 15, 2021 Proposed FY 2021-22 Budget Overview Staff will provide an overview of the Proposed FY 2021-22 Operating Budget.
Budget Amendments for Quarter Ending March 31, 2021 Staff will report on the budget amendments from the prior quarter.
Thursday, April 29, 2021 Proposed FY 2021-22 Budget Overview (optional - if needed)Staff will provide an overview of the Proposed FY 2021-22 Operating Budget.
Thursday, May 13, 2021 Selection of New Audit Firm Review the proposed selection for a new annual financial audit firm.
April
May
Newport Beach Finance Committee Work Plan Calendar Year 2021
January
February
March
I:\Users\FIN\Shared\Admin\Finance Committee\WORK PLAN\2021\CY21 FC Workplan 1
1/15/21
Scheduled Date Agenda Title Agenda Description
Newport Beach Finance Committee Work Plan Calendar Year 2021
Quarterly Budget Update Present results of quarter ending March 31.
Proposed FY 2021-22 Follow-Up Meeting Staff will be available to answer follow-up questions on the proposed Fiscal Year 2021-22 budget. Finance Committee may discuss their impending recommendation(s) to Council.Internal Audit Program Update Staff will provide an progress to date of internal control and performance audit
program.
Tuesday, May 25, 2021 Joint City Council/Finance Committee Budget Study Session FY22 Proposed Budget Review
Thursday, June 10, 2021 Audit Entrance Conference (Optional)Auditors will contact members of the Finance Committee individually to discuss
the work plan for the fiscal year ending 6/30/2021 CAFR audit. Alternatively, the auditor may request an audience with the Finance Committee as a whole, in which case a meeting may be convened during this month. The committee will
have an opportunity to discuss any potential areas of concern they wish the auditors to review and the auditors can discuss any changes in accounting standards or disclosures that may be relevant for the audit year.
Committee Recess
Committee Recess
Thursday, September 16, 2021 Investment Performance Review Staff and/or one or more investment advisors will describe the performance of
the City's investment portfolio.Annual Investment Policy Review and Update In furtherance of Section K-2 of Council Policy F-1, Statement of Investment Policy (the Policy), the Finance Department has completed an annual review of the Policy to ensure its consistency with the overall objectives of preservation of
principal, liquidity and return, and its relevance to current law and financial and economic trends. Staff is proposing no modifications to the Policy at this time as recommended by Chandler Asset Management and supported by the City’s
Finance Director/Treasurer.
Quarterly Budget Update Present results of quarter ending June 30.
Budget Amendments for Quarter Ending June 30, 2021 Staff will report on the budget amendments from the prior quarter.
Internal Audit Program Update Staff will provide an progress to date of internal control and performance audit
program.
Thursday, October 14, 2021 Financial Statement Audit Results and Related Communication The City’s external audit firm, will meet with the Finance Committee to discuss the audit findings for the fiscal year ending 6/30/2020. The Committee will have
an opportunity to discuss any potential areas of concern and the auditors can
discuss any changes in accounting standards or disclosures that were relevant for the audit year.External Audit Updtae External audit update for transient occupancy tax (hotels, agents and residential owners), charter boat companies, waste haulers and vendor
agreements.Budget Amendments for Quarter Ending September 30, 2021 Staff will report on the budget amendments from the prior quarter.
June
October
November
September
July
August
I:\Users\FIN\Shared\Admin\Finance Committee\WORK PLAN\2021\CY21 FC Workplan 2
1/15/21
Scheduled Date Agenda Title Agenda Description
Newport Beach Finance Committee Work Plan Calendar Year 2021
Thursday, November 4, 2021 CalPERS Update Staff will present the latest actuarial valuation changes to actuarial assumptions, a review of investment returns, the potential impact of future
rates, and the results of employee cost sharing.Fiscal Year 2019-20 and Fiscal Year 2020-21 Financial Updates Staff will provide a fiscal year ending June 30, 2020, and first quarter FY 2020-
21 budget performance update.Budget Amendments for the Previous Quarter Staff will report on the budget amendments for the prior quarter.
Quarterly Budget Update Present results of quarter ending September 30.
Internal Audit Program Update Staff will provide an progress to date of internal control and performance audit
program.
Thursday, December 16, 2021 Committee Recess
December
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