HomeMy WebLinkAboutFinance Committee Agenda Packet 03.16.2023CITY OF NEWPORT BEACH
FINANCE COMMITTEE AGENDA
Community Room - 100 Civic Center Drive
Thursday, March 16, 2023 - 3:00 PM
Finance Committee Members:
Will O'Neill, Chair
Noah Blom, Mayor
Joe Stapleton, Council Member
Allan Cashion, Committee Member
William Collopy, Committee Member
Keith Curry, Committee Member
Nancy Scarbrough, Committee Member
Staff Members:
Grace K. Leung, City Manager
Jason Al-Imam, Finance Director/Treasurer
Michael Gomez, Deputy Finance Director
Amy Byrne, Administrative Assistant
NOTICE REGARDING PRESENTATIONS REQUIRING USE OF CITY EQUIPMENT
Any presentation requiring the use of the City of Newport Beach’s equipment must be submitted to the Finance
Director/Treasurer 24 hours prior to the scheduled Finance Committee meeting.
NOTICE REGARDING PUBLIC PARTICIPATION
Questions and comments may also be submitted in writing for the Finance Committee’s consideration by sending them
to Jason Al-Imam, Finance Director/Treasurer, at jalimam@newportbeachca.gov. To give the Finance Committee
adequate time to review your questions and comments, please submit your written comments by no later than 5 p.m.
the day prior to the Finance Committee meeting. All correspondence will be made part of the record.
NOTICE TO THE PUBLIC
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.
It is the intention of the City of Newport Beach to comply with the Americans with Disabilities Act (“ADA”) in all respects.
If, as an attendee or a participant at this meeting, you will need special assistance beyond what is normally provided, the
City of Newport Beach will attempt to accommodate you in every reasonable manner. If requested, this agenda will be
made available in appropriate alternative formats to persons with a disability, as required by Section 202 of the
Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal rules and regulations adopted in
implementation thereof. Please contact the City Clerk’s Office at least forty-eight (48) hours prior to the meeting to
inform us of your particular needs and to determine if accommodation is feasible at (949) 644-3127 or
jalimam@newportbeachca.gov.
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March 16, 2023
Page 2
Finance Committee Meeting
I.CALL MEETING TO ORDER
II.ROLL CALL
III.PUBLIC COMMENTS
Public comments are invited on agenda items. 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 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.
IV.CONSENT CALENDAR
MINUTES OF FEBRUARY 16, 2023A.
Recommended Action:
Approve and file.
DRAFT MINUTES 02.16.2023
V.CURRENT BUSINESS
OVERVIEW OF REVENUE PROJECTIONSA.
Summary:
Staff will present to the Committee an overview of the assumptions utilized to
prepare revenue projections for the City's major funds as part of the FY 2023-24
budget preparation process.
Recommended Action:
Receive and file.
HARBOR DEPARTMENT OPERATIONS AND FINANCESB.
Summary:
Staff will present to the Committee an updated overview of the status of the Harbor
Department's budget and staffing, as well as possible future budget enhancements
for the Department.
Recommended Action:
Receive and file.
WORK PLAN REVIEWC.
Summary:
Staff will report on the upcoming Finance Committee items.
Recommended Action:
Receive and file.
ATTACHMENT A
VI.ADJOURNMENT
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Finance Committee Meeting Minutes February 16, 2023
Page 1 of 5
CITY OF NEWPORT BEACH FINANCE COMMITTEE FEBRUARY 16, 2023 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:00 p.m. II. ROLL CALL PRESENT: Will O’Neill, Chair
Noah Blom, Mayor Joe Stapleton, Council Member William Collopy, Committee Member Keith Curry, Committee Member
Nancy Scarbrough, Committee Member
ABSENT: Allen Cashion, Committee Member (excused)
STAFF PRESENT: City Manager Grace K. Leung, Finance Director Jason Al-Imam, Deputy
Finance Director Michael Gomez, Budget Manager Shelby Burguan,
Senior Budget Analyst Amber Haston, Budget Analyst Jessica Nguyen,
Accounting Manager Trevor Power, Public Works Director Dave Webb,
Deputy Public Works Director Jim Houlihan, Public Works Manager Chris
Miller, Deputy Community Development Director Jim Campbell,
Administrative Assistant Amy Byrne
MEMBERS OF THE PUBLIC: Jim Mosher, Resident; Charles Klobe, Resident; TJ Rokos, Student/Resident OTHER ENTITIES: Marc Davis, Auditor for Davis Farr, LLP Don Yahn, Secretary of Harbor Commission III. PUBLIC COMMENTS Chair O’Neill opened public comments. Seeing none, Chair O’Neill closed public comments. IV. CONSENT CALENDAR A. MINUTES OF JANUARY 12, 2023 Recommended Action: Approve and file. Chair O’Neill provided recommended changes to the January 12, 2023 minutes. Chair O’Neill opened public comments. Seeing none, Chair O’Neill closed public comments. MOTION: Chair O’Neill moved to approve the minutes of January 12, 2023 as amended, seconded by Mayor Blom. The motion carried as follows: AYES: Blom, Collopy, Scarbrough, O’Neill NOES: None ABSENT: Cashion ABSTAIN: Curry, Stapleton
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Finance Committee Meeting Minutes February 16, 2023
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V. CURRENT BUSINESS A. FINANCIAL STATEMENT AUDIT RESULTS AND RELATED COMMUNICATION Summary: The City’s external auditors will meet with the Finance Committee to discuss the
results of their audit for the fiscal year ending June 30, 2022. Recommended Action: Receive and file. Finance Director Al-Imam introduced the item and reported that the City recently completed the audit for the Fiscal Year Ending June 30, 2022. Finance Director Al-Imam explained that
the City received an unmodified or clean audit opinion, and introduced Marc Davis, the audit partner from Davis Farr LLP. Marc Davis provided the Finance Committee with a PowerPoint Presentation, which outlined
the scope of the audit engagement, management’s responsibilities, the auditor’s responsibilities, and the results of the audit. Mr. Davis explained that there were no significant
unusual transactions, no significant difficulties encountered in connection with the performance of the audit, no material corrected or uncorrected misstatements, no disagreements with management, and no other audit findings or issues.
Mr. Davis noted that the Single Audit, a compliance audit of federally assisted grant programs, is still ongoing.
Committee Member Curry inquired whether the City could expect any “claw back” as it relates
to the risk related to Federal Grant Requirements.
Mr. Davis indicated that there was no indication of such vulnerability at this time.
Committee Member Collopy inquired whether the areas of risk that were identified by the auditors related to the new lease standard, construction in progress and compliance with
Federal Grant Requirements were unique to the City of Newport Beach.
Mr. Davis confirmed that the risk associated with the implementation of the new lease standard applies to all agencies, however the other two areas of risk were identified by the auditors as
part of the auditor’s risk assessment of the City of Newport Beach.
Chair O’Neill opened public comments. Jim Mosher suggested that the wording in the Independent Auditor’s Report should state the audit covers the Fiscal Year Ending June 30, 2022, and indicated that the Other Governmental Funds outlined on page 165 of ACFR were not individually audited. He also questioned how park development fees are accounted for, and questioned how funding for Culture and Arts is funded pursuant to Council Policy I-10. Chair O’Neill indicated that he believed that park development fees are segregated in the Facilities Financial Plan (FFP) Fund. City Manager Leung and Finance Director Al-Imam confirmed park development fees are accounted for in the FFP Fund. Chair O’Neill inquired with staff about how funding for Culture and Arts is funded pursuant to Council Policy I-10.
City Manager Leung indicated that the funding for Culture and Arts will be reviewed at the next City Council meeting on February 28, 2023. Seeing no other speakers, Chair O’Neill closed public comments.
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Finance Committee Meeting Minutes February 16, 2023
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The item was received and filed. B. FACILITIES FINANCIAL PLAN (FFP) AND HARBOR & BEACHES MASTER PLAN Summary: The Facilities Financial Plan (FFP) and Harbor & Beaches Master Plan (HBMP)
are long-term planning tools that are used to analyze the means of financing, timing of expected cash flows and funding requirements associated with the projects that are prioritized based on need and community goals. The FFP and HBMP have been updated to reflect the current estimated cost to fund the construction and or renovation of City facilities and harbor-related capital projects, which are presented to the Finance Committee for feedback and consideration.
Recommended Action: Receive and file. Deputy Finance Director Gomez introduced the agenda item and provided the Finance
Committee with a PowerPoint Presentation on the Facilities Financial Plan (FFP) and Harbor & Beaches Master Plan (HBMP), which have been updated to reflect the projected costs to
fund the construction and/or renovation of City facilities and harbor-related capital projects. It was pointed out that the Harbor Commission reviewed the HBMP on January 11, 2023. Deputy Finance Director Gomez explained that the dashboard presentations of the FFP and
HBMP reflect a five-year outlook and also include a “future” column on applicable charts that captures the remaining projects beyond the first five years. In addition, a complete summary of
projects – including the project estimates and timeframes – are included within the respective project planning worksheets for each plan. Since there is considerable variability in the cost
estimates and timing in which the projects in the outer years of both plans may be completed, the dashboards are primarily focused on the fiscal impact of the nearer-term projects that are
projected to occur in the next five-years.
Deputy Finance Director Gomez stated the FFP includes updates to the project list and corresponding project costs to reflect inflation-indexed unit costs.
Chair O’Neill inquired whether the inflation related increases would require an increase in the
contributions set forth in the budget for Fiscal year 2023-24.
City Manager Leung indicated that the Public Works Department is currently working on revising costs and the related funding requirements for projects reflected in the capital
improvement program, which will be presented to the City Council prior to the budget hearings.
Deputy Finance Director Gomez continued with his presentation and explained that the FFP is well positioned to fund all proposed projects for the near future. He noted that the annual
contribution from the General Fund to the FFP is set at $8.6 million. However, in Fiscal Year 2024-25, the annual contribution will increase and remain indexed to 3% of General Fund
revenues.
Committee Member Collopy inquired whether this is a policy. Deputy Finance Director Gomez responded affirmatively, acknowledging it is Council Policy F-28. Deputy Finance Director Gomez continued with his presentation and explained that the HBMP
has been updated to reflect inflationary factors and project costs, which has resulted in a $100 million increase over the lifetime of the model.
Chair O’Neill inquired how did the City get to the point of a $100 million increase. He noted the agenda report reflected inflation as a primary source of the increase. He inquired if any items were added to the list of proposed projects. Public Works Director Webb stated that inflationary
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Finance Committee Meeting Minutes February 16, 2023
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factors were a primary driver of the increases to project costs. However, Public Works Director Webb also pointed out that the two piers were added to the HBMP model this year. Deputy Finance Director Gomez continued with the presentation and reported that there is adequate funding for the next five to six years for the proposed projects included in the plan for that time frame. He presented an update on the Facilities Maintenance Management Plan
(FMMP) which includes smaller scale improvements to the City’s facilities, which is funded from a $2.5 million annual contribution from the General Fund. The proposed expenditures for the upcoming Fiscal Year are approximately $2 million. He concluded the presentation and requested feedback from the Finance Committee. Chair O’Neill offered a reminder that there are projects in the CIP, such as storm drainage
system improvements, which were not presented as part of today’s agenda report which are still planned to be completed, but not funded through the plans reviewed at this meeting. Chair O’Neill opened public comments. Seeing none, Chair O’Neill closed public comments.
The item was received and filed.
C. SECOND QUARTER BUDGET UPDATE Summary: The Finance Department prepares quarterly financial reports to review the status
of revenues and expenditures for the City’s General Fund and to monitor budgetary trends in other City funds. This report contains information on revenues, expenditures, and estimated
fund balance for the second quarter of Fiscal Year 2022-23. Recommended Action: Receive and file.
Budget Manager Burguan introduced the agenda item and provided a PowerPoint Presentation that summarized the status of General Fund revenues, expenditures and estimated fund
balance for the second quarter of Fiscal Year 2022-23. Based on the second quarter update, a $12.4 million operating surplus is projected for the General Fund for Fiscal Year 2022-23.
Approximately $10 million of the budget surplus is expected to be utilized to set-aside funds for the Contingency Reserve (pursuant to City Council Policy F-2), and to replenish the FFP and
General Fund CIP Fund for amounts attributable to the Dove Street Property Purchase.
Chair O’Neill confirmed it appears the City is tracking at a projected ending unrestricted fund balance of $2.4 million at June 30, 2023. Budget Manager Burguan confirmed this is accurate.
Committee Member Curry inquired whether the City would be in a negative position due to the
loss of pandemic-related grant funds. Staff indicated that the City would not be in a negative financial position since ARPA has only been used to fund one-time projects.
Council Member Stapleton inquired whether sales tax is projected to decrease in the third
quarter. Budget Manager Burguan stated that it would not be decreasing but rather slowing down. City Manager Leung stated the sales tax growth coming out of the pandemic was in the
double-digits and it is likely to level off to a more typical rate. Committee Member Collopy inquired about how many positions are currently unfilled. City Manager Leung indicated the City has 60 positions currently under recruitment.
Chair O’Neill inquired whether the 60 vacancies included full-time and part-time positions. City
Manager Leung confirmed the number included both full-time and part-time positions. Chair O’Neill opened public comments. Seeing none, Chair O’Neill closed public comments.
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Finance Committee Meeting Minutes February 16, 2023
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Chair O’Neill commented on the positive position the City finds itself in at this time as compared to where other cities are finding themselves. The item was received and filed. D. WORKPLAN REVIEW Summary: Staff will report on the upcoming Finance Committee items. Recommended Action: Receive and file. Chair O’Neill reviewed the proposed Workplan included in the agenda report.
Chair O’Neill inquired as to the source of the difference between the internal audit review update and report. Deputy Finance Director Gomez noted the update is the quarterly update on internal audit work and the report is the first level findings from the audits performed. Chair
O’Neill suggested the Committee combine the two into one item.
Chair O’Neill reported the Finance Committee should see the initial draft of the Fiscal Year 2023-24 budget at their April meeting. The May meeting will feature a review of the third quarter financial reports and follow up on the proposed budget. A joint City Council and Finance Committee meeting is scheduled for May 23rd. Also, at the May 25th Finance Committee meeting, the Committee will finalize their recommendations on the proposed budget to the City Council. The Committee will then recess in June, July, and August.
Chair O’Neill opened public comments. Seeing none, Chair O’Neill closed public comments. The item was received and filed. VI. ADJOURNMENT The Finance Committee adjourned at 3:55 p.m. to the next regular meeting of the Finance Committee on March 16, 2023 at 3:00 p.m. The agenda for the Regular Meeting was posted on February 10, 2023, at 3:34 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
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INTENTIONALLY BLANK PAGE
FY 2023-24
Overview of Revenue Projections
Finance
Committee
Meeting
March 16, 2023
City of Newport Beach –Finance Department 2
Historical General Fund Revenues
2021-22 Actual*$ 284.1 million
2022-23 Projected $ 293.7 million
2023-24 Projected $ 303.2 million
•$9.5 million of pr0jected revenue growth
•Drivers of revenue growth
•Property Tax + $4.5 million
•TOT + $1.5 million
•Parking & Property Income + $2.2 million
•Transfer from Tidelands (CAP) + $1.7 million
$-
$50
$100
$150
$200
$250
$300
$350
FY 2021-22
Actuals
FY 2022-23
Projected Year End
FY 2023-24
ProjectionMillions
Property Tax Sales Tax TOT Transfers Others
City of Newport Beach –Finance Department 3
Property Tax Revenue
•The City receives 17.2% of the 1% property tax
•Each City’s percentage of the 1% varies
•Newport Beach has the third highest share of the 1% property tax
in Orange County behind Santa Ana and Laguna Beach
•Assessed value has a significant impact on revenue
•Having a higher percentage of the total tax and higher assessed
values than many surrounding cities is a significant contributor to
the City’s fiscal stability
•The City’s assessed valuation is the second largest in Orange County
(behind Irvine and ahead of Anaheim).
•The assessed valuation is projected to be $73 billion in FY 2023-24
17.15%
67.21%
7.02%8.61%
City of Newport Beach
Schools
County of Orange
Special Districts
City of Newport Beach –Finance Department 4
Property Tax Revenue by Category and Residential Sales Trend
10.70%
85.20%
1.60%
2.40%
Commercial Residential
Other Unsecured
City of Newport Beach –Finance Department 5
Property Tax Revenue Projection Methodology
•City staff works in collaboration with the City’s property tax consultant
HdL to develop the secured property tax revenue projection
•Accounts for the majority of the City’s property tax revenue
•Includes the State’s recently-released CPI factor for allowable
assessment growth under Proposition 13 (2.0% for FY 2023-24)
•Projects the impact of changes of ownership on assessed values
•Projects the impact of rising property values on remaining
Proposition 8 adjustments from prior fiscal years
•HdL also provides a projection of the City’s property tax in lieu of VLF
allocation each year
•Staff calculate appropriate growth factors for other types of property
tax revenue based on historical information and advice from HdL
City of Newport Beach –Finance Department 6
Property Tax Revenue Projection
•Represents approximately 50% of General Fund revenues
•Growth has been accelerating based on strong assessed value growth and sales activity
•3.4% growth projected for FY 2023-24 for property tax revenue
$94.4 $101.6
$108.4 $113.3
$120.4 $126.0
$133.5 $138.0
$85
$95
$105
$115
$125
$135
$145
2016-17
Actual
2017-18
Actual
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Projected
2023-24
ProjectedMillions+7.7%
+6.7%
+4.6%+6.3%
+4.6%
+5.9%
+3.4%
City of Newport Beach –Finance Department 7
Property Tax Revenue Growth History
1.8%-0.4%-0.1%
13.4%-2.1%5.6%8.0%6.2%7.7%6.7%4.6%6.3%4.6%5.9%3.4%
$ M
$20 M
$40 M
$60 M
$80 M
$100 M
$120 M
$140 M
$160 M
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY 23Projected FY 24Projected
City of Newport Beach –Finance Department
Sales Tax Revenue
•The City receives 12.9% of the
7.75% sales tax (1% of sale)
•Historically most of the City’s sales
tax revenue comes from:
•Autos & Transportation
•Restaurants & Hotels
•General Consumer Goods
•County Pools
12.9%
50.8%
23.4%6.5%
6.5%
City of Newport Beach
State General Fund
County of Orange
Proposition 172
OCTA
8
City of Newport Beach –Finance Department 9
Projected Sales Tax Revenue
Major Industry Groups
$0
$2
$4
$6
$8
$10
$12
$14
$16
Autos &
Transportation
Restaurants &
Hotels
General Consumer
Goods
State & County
PoolsMillions2022/23 2023/24 2022/23 2022/23 2022/232023/24 2023/24 2023/24
Pre-Pandemic Level Adjusted for Inflation
Previous Forecast
(Based on 3Q22)
Current Forecast
(Based on 4Q22)
Autos & Transportation (0.6%)(1.4%)
Restaurants & Hotels 4.0%5.7%
General Consumer Goods (2.4%)(3.3%)
State & County Pools 4.5%3.0%
City of Newport Beach –Finance Department 10
Sales Tax Revenue Projection Methodology
•City staff works in collaboration with the City’s sales tax consultant HdL to analyze historical
sales tax data and to identify material necessary adjustments
•New and closed retailers
•Misallocated revenues
•HdL develops a statewide revenue forecast by industry category with assistance from
Beacon Economics
•Adjusted for regional or agency trends
•Historically HdL’s forecasts tend to be conservative
City of Newport Beach –Finance Department 11
Sales Tax Revenue Projection
•4.8% growth anticipated for FY 2022-23. Relatively flat growth projected for FY 2023-24
•Revenue was down in the second quarter partly due to the economy slowing more quickly than
anticipated, and partly due to a mix of aberrations.
•A few large retailers shifted more online revenue to individual store locations or fulfillment centers.
•New car sales were up less than 1%. Several luxury auto dealerships were down.
$33.7 $35.0
$38.5
$36.2
$39.0
$46.2
$48.4
$48.5
$30
$34
$38
$42
$46
$50
2016-17
Actual
2017-18
Actual
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Projected
2023-24
Projected
+3.9%
+9.8%-5.8%+7.5%
+18.5%
+4.8%
+0.3%
City of Newport Beach –Finance Department 12
Sales Tax Revenue Growth History
-14.9%
-13.6%12.6%7.6%4.6%10.8%6.5%12.0%-8.4%4.0%
9.9%-5.9%7.5%
18.5%4.8%0.3%
$ M
$10 M
$20 M
$30 M
$40 M
$50 M
$60 M
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY 23
Projected
FY 24
Projected
•The City charges a 10% tax
•Same rate as 41% of California jurisdictions
•Lower than 32% of California jurisdictions
•Higher than 27% of California jurisdictions
•Revenue is generated from commercial (hotel)
and residential (short-term rental) stays
•The City has access to a variety of data sources
to monitor trends that impact leisure and
business travel
13
Transient Occupancy Tax Revenue
City of Newport Beach –Finance Department
City of Newport Beach –Finance Department 14
TOT Revenue Projection Methodology
•Staff has spent a significant amount of time refining the projection methodology through
collaboration with industry experts and more careful evaluation of the data at the category,
and, in the case of hotel TOT, the individual property level
•Evaluating residential TOT and hotel TOT trends and developing appropriate projections
•Analyzing actual cash receipts for trends month over month, and compared to the
comparable period a year ago
•Monitoring hotel closures, sales, and remodeling for impacts on revenues
•Seeking input from Visit Newport beach and evaluating data from VNB and Visit California
•Collectively validating assumptions amongst the Finance Department leadership team
City of Newport Beach –Finance Department 15
Transient Occupancy Tax Revenue Projection
•5.0% growth projected for FY 2023-24, including 5.0% for residential revenue and 5.0% for hotel revenue
•Hotel-related revenues exceed pre-pandemic levels and short-term rental-related revenues are growing
well beyond the already-reached record high level
•Projection does not include the Pendry Newport Beach (former Fashion Island Hotel), which is expected to
open in the Summer of 2023
$22.3 $22.8 $24.7
$20.8
$16.9
$26.7
$30.5
$32.0
$14
$18
$22
$26
$30
2016-17
Actual
2017-18
Actual
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Projected
2023-24
ProjectedMillions+5.0%
+2.4%+8.2%-15.6%
-19.0%
+58.0%
+14.2%
City of Newport Beach –Finance Department 16
Transient Occupancy Tax Revenue Growth History
0.7%15.7%13.2%12.0%10.2%
12.0%3.5%5.8%2.4%8.2%
-15.6%
-19.0%
58.0%
14.2%
5.0%
$ M
$5 M
$10 M
$15 M
$20 M
$25 M
$30 M
$35 M
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Projected
FY24
Projected
City of Newport Beach –Finance Department 17
Other Revenues
•Property tax, sales tax, and transiency occupancy tax revenues make up almost 75% of
the City’s General Fund revenues
•Other revenues include the following material additional categories of revenue
•Service Fees and Charges / Licenses and Permits (10% of General Fund revenues)
•Property income (5% of General Fund revenues)
•Other Taxes (4% of General Fund revenues)
•The remainder of other revenues (3% of General Fund revenues) includes:
•Intergovernmental revenues (primarily Proposition 172 revenue)
•Fines and penalties (primarily parking fines)
•Investment income and other minor revenues
City of Newport Beach –Finance Department 18
Service Fees and Permits Revenue Projection
•This category of other revenue primarily includes:
•Building and planning fees
•Recreation class and Junior Lifeguard program fees
•The revenue projection is developed by Finance staff in collaboration with the subject matter experts in the
City Departments responsible for each of these programs
•Growth due to increased recreation program activity and Jr Lifeguard Program participation
$25.5 $25.4 $25.7
$23.5
$28.9 $29.1
$29.4
$20
$24
$28
$32
2017-18
Actual
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Projected
2023-24
ProjectedMillions-0.54%+1.16%-8.57%
+23.3%
+0.6%+0.96%
•Paramedic service fees
•Recycling fees
City of Newport Beach –Finance Department 19
Property Income Revenue projection
•This category of other revenue primarily includes:
•Leased property income –generated from non-Tidelands property leases
•Parking income –generated from non-Tidelands parking lots and meters
•The revenue projection is developed by Finance staff in collaboration with the subject matter experts in
the City Departments responsible for each of these programs
•Growth due to higher percentage-based rents and parking revenues
$9.9 $9.9 $10.4
$12.2
$14.0 $13.8
$16.0
$8
$10
$12
$14
$16
2017-18
Actual
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Projected
2023-24
ProjectedMillions-0.65%+5.54%
+17.05%
+15.29%
-1.60%
+15.59%
City of Newport Beach –Finance Department 20
Other Taxes Revenue Projection
•This category of other revenue primarily includes:
•Business license tax revenue
•Property transfer tax revenue
•Franchise fees (solid waste, cable, and utility)
•The revenue projection is developed by Finance staff
•Business License revenue has steadily decreased since FY21 however inflation contributing to increase
$11.9
$11.3
$11.8
$12.8 $13.3
$12.2
$12.3
$10
$12
$14
2017-18
Actual
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Projected
2023-24
ProjectedMillions-4.5%+4.58%
+8.46%
+3.19%-8.17%
+1.34%
City of Newport Beach –Finance Department 21
Tidelands Fund Revenues
•The Tidelands Fund is a special revenue fund
used to account for revenues related to the
Tidelands areas under the City’s jurisdiction
•Funds are deposited into either the
operating or capital fund from all revenue-
generating activities within the Tidelands
•The operating fund has had an annual
deficit ranging from $7 million to $10
million in recent fiscal years that is
supported by the General Fund
•The General Fund will transfer $4.75
million to the capital fund in FY 2023-24
to support capital needs. In 2022,
Council approved this transfer to be
adjusted based on CPI.
City of Newport Beach –Finance Department 22
Tidelands Fund Revenues
Top Ten Tidelands Revenue Producers
City of Newport Beach –Finance Department 23
Tidelands Fund Revenue Projection
•96% of revenues are generated from property income
•Leased property income –generated from Tidelands property leases, slips, and moorings
•Parking income –generated from Tidelands parking lots and meters
•Oil well income –generated from the City’s oil field in West Newport
•4% of revenues are generated by investment income (primarily from capital reserves)
$14.7
$16.3 $15.9
$17.1
$19.6 $18.1
$19.8
$12
$14
$16
$18
$20
$22
$24
2017-18
Actual
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Projected
2023-24
ProjectedMillions+14.9%
+10.4%-2.1%
+7.5%
-7.7%+9.3%
City of Newport Beach –Finance Department 24
Water Utility Revenue Projection
•98% of revenues are generated by service fees and charges from customers
•1% of revenues are generated by investment income
•Various other sources account for the final 1% of revenues
•2020 Rate plan provides for one last annual increase on January 1, 2024
•Staff has begun a rate study with a consultant
$27.1 $27.5 $27.8
$31.2 $32.5 $33.3
$34.8
$22
$26
$30
$34
$38
2017-18
Actual
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Projected
2023-24
ProjectedMillions+1.4%+1.0%
+12.5%
+4.20%
+2.4%+4.65%
City of Newport Beach –Finance Department 25
Wastewater Utility Revenue Projection
•98% of revenues are generated by service fees and charges from customers
•Various other sources account for the final 2% of revenues
•Rate plan in place with annual increases through January 2022 -No new rates currently scheduled.
•Staff has begun a rate study with a consultant
$3.5
$4.1 $4.2
$4.7 $4.9 $4.9 $4.7
$2
$3
$4
$5
$6
2017-18
Actual
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Projected
2023-24
ProjectedMillions+19.6%
+1.14%+11.3%
+4.23%+1.64%-4.03%
City of Newport Beach –Finance Department 26
Questions?
Harbor Department
Operations and Finances
Finance
Committee
Meeting
March 16, 2023
City of Newport Beach –Harbor Department 2
Harbor Department Operations
A Brief History of the Department
•July 2017 ‐the City assumed
responsibility for mooring management
from the OC Sheriff’s Dept.
•Harbor Operations Division initially
assigned to the Public Works Dept.
•Jan. 2018 ‐Harbor Operations Division
transferred to the City Managers Office.
•July 2018 ‐City Council created a
standalone Harbor Dept.
•2020 -Title 17 updated to reflect new
arrangement/responsibilities
City of Newport Beach –Harbor Department 3
Harbor Department Operations
Harbor Department Mission
•Clean
•Safe
•Well Enjoyed
•Services delivered in favor of:
1.Residents
2.Businesses
3.Visitors
City of Newport Beach –Harbor Department 4
Harbor Department Operations
Harbor Department Services
•Mooring Management
•Code Enforcement
•Commercial Marine Activity and
Harbor Events Permitting
•Safety/Rescue Operations
•Marina Park/Hospitality
•Pump out equipment
maintenance and upgrades
•Impounds and auctions
•Public Relations/Concierge
City of Newport Beach –Harbor Department 5
Harbor Department Operations
Service Statistics
City of Newport Beach –Harbor Department 6
Harbor Department Operations
Revenues Over Which We Have Significant Influence
Reservation Revenue Totals by Fiscal Year
FY18-19 FY19-20 FY20-21 FY21-22
$ 785,033 $ 778,481 $ 1,083,554 $ 1,437,005
FY18-19 FY19-20 FY20-21 FY21-22
$ 785,033 $ 778,481 $ 1,083,554 $ 1,437,005
City of Newport Beach –Harbor Department 7
Harbor Department Operations
4.5
4.6
4.6
4.7
4.7
4.8
4.8
4.9
4.9
5.0
5.0
2021 2022
Marina Park Guest Survey Results
Average of Satisfaction
Average of Value
Average of Condition
Average of Staff
Average of Recommend
City of Newport Beach –Harbor Department 8
Harbor Department Operations
Challenges
•Diverse constituency
-Residents versus visitors versus businesses
-Waterfront residents versus harbor users
-Sail versus power versus manual (crew, SUP, kayak)
-Large versus small
•Ever-growing traffic and opportunities for harbor use
•Balance between commercial and recreational uses
•Water quality and environmental concerns (eelgrass,
Caulerpa, dredging)
•Competing agencies of authority (SARWQB, AQMD,
CARB, Army Corp, CCC, USCG)
•Noise
•Speed
City of Newport Beach –Harbor Department 9
Harbor Department Budget
Revenues
•Harbor Department revenues have grown steadily in recent years
•2021-22 Revenues reached an all-time high
Revenue Type 2019 Actual 2020 Actual 2021 Actual 2022 Actual 2023 Budget
Balboa Yacht Basin Slips 1,144,570$ 1,189,478$ 1,232,185$ 1,253,463$ 1,257,250$
Mooring Permits - Off Shore 1,100,072 1,135,389 1,150,122 1,166,795 1,148,171
Marina Park Slips 223,735 252,576 406,973 479,712 300,000
Guest Moorings 242,623 171,650 235,217 331,810 280,000
Mooring Permits - On Shore 144,234 159,302 160,759 164,188 139,546
Mooring Transfers 52,384 47,130 78,083 76,424 60,000
Other Revenues 71,872 56,944 80,948 121,428 85,771
Total 2,979,489 3,012,469 3,344,287 3,593,820 3,270,738
City of Newport Beach –Harbor Department 10
Harbor Department Budget
Expenditures
Expenditure Category 2019 Budget 2019 Actual 2020 Budget 2020 Actual 2021 Budget 2021 Actual 2022 Budget 2022 Actual 2023 Budget
Salaries and Benefits 685,187$ 533,414$ 696,739$ 650,444$ 1,052,317$ 962,728$ 1,194,822$ 1,094,641$ 1,055,646$
Contract Services 203,322$ 275,995$ 281,272$ 183,972$ 271,672$ 249,916$ 291,193$ 250,917$ 282,720$
Maintenance and Repair 20,000$ 140,046$ 130,000$ 56,453$ 140,000$ 31,157$ 141,547$ 83,180$ 131,547$
Other Non-Personnel Expenses 127,000$ 96,451$ 149,250$ 112,197$ 148,850$ 101,206$ 129,042$ 159,619$ 178,582$
Internal Service Charges 90,906$ 105,697$ 85,086$ 85,517$ 141,478$ 141,478$ 170,311$ 139,986$ 273,888$
Capital Purchases 5,000$ 4,625$ 5,000$ 129$ 5,000$ 1,086$ 5,000$ 15,711$ 10,000$
Total 1,131,415$ 1,156,228$ 1,347,347$ 1,088,712$ 1,759,317$ 1,487,571$ 1,931,915$ 1,744,055$ 1,932,382$
Cost of Loan Code Supervisor 154,880$ 145,380$ 160,778$ 149,293$ -$ -$ -$ -$ -$
Total 1,286,295$ 1,301,608$ 1,508,125$ 1,238,005$ 1,759,317$ 1,487,571$ 1,931,915$ 1,744,055$ 1,932,382$
City of Newport Beach –Harbor Department 11
Harbor Department Staffing
Position Classification FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23
Full-Time Harbormaster 1.00 1.00 1.00 1.00
Part-Time Harbor Services Workers 8.14 7.39 7.39 7.39
Part-Time Department Assistant 0.75 0.50 0.50 0.50
Full-Time Code Enforcement Supervisor (CDD)1.00 - - -
Full-Time Code Enforcement Supervisor (Harbor)- 1.00 1.00 1.00
Part-Time Code Enforcement Trainees - 1.50 1.50 1.50
Full-Time Permit Technician - - 1.00 1.00
Total 10.89 11.39 12.39 12.39
City of Newport Beach –Harbor Department 12
Harbor Department Staffing
Harbormaster
(1)Department
Assistant
(0.5 FTE)
Code
Enforcement
Supervisor (1)
Harbor
Services Leads
(1.6 FTE)
Permit
Technician (1)
Harbor Services
Workers
(4.4 FTE)
Code
Enforcement
Officers (1.5 FTE)
Dockmasters
(1.4 FTE)
-Full-time Positions
-Part-time Positions
City of Newport Beach –Harbor Department 13
Harbor Department Staffing
Turnover Analysis
Total Department Part-Time Hires since Inception: 64
Total Department Part-Time Separations Since Inception: 44
Percentage Who Separated Within 1 Year: 43.2%
Year Hires Separations
2017 15 1
2018 7 5
2019 8 10
2020 7 7
2021 14 11
2022 13 7
2023 3
Totals 64 44
City of Newport Beach –Harbor Department 14
Harbor Department Staffing
Turnover Analysis
City of Newport Beach –Harbor Department 15
Harbor Department Program Enhancements
Program Enhancement Request #1 –Convert 6 FTEs of Current
Part-Time Staff to Full-Time Positions
•elevate the professional status of the team members
•improve connection to the City as an employer
•reduce the time, effort and costs to recruit and train new team
members
•Estimated annual costs : $109,845
City of Newport Beach –Harbor Department 16
Harbor Department Program Enhancements
Program Enhancement Request #2 –
Extended Hours of Operation
•code Enforcement, general patrol, and hospitality
at the Marina Park marina
•better response to waterfront residents when
there are late/overnight complaints of noise,
disruption, and unpermitted activities
•better response to late-arriving mariners
•8 am to 6 pm daily →8 –8 May thru Sept
•after hours rescue anecdote
•Estimated annual costs: $55,103
City of Newport Beach –Harbor Department 17
Harbor Department Program Enhancements
Represented by Position
Position Classification FY 2022-23 Enhancement
Request 1
Enhancement
Request 2
Full-Time Harbormaster 1.00 1.00 1.00
Full-Time Harbor Services Workers/Leads - 6.00 6.00
Part-Time Harbor Services Workers/Leads 7.39 1.39 2.19
Part-Time Department Assistant 0.50 0.50 0.50
Full-Time Code Enforcement Supervisor (Harbor)1.00 1.00 1.00
Part-Time Code Enforcement Trainees 1.50 1.50 1.60
Full-Time Permit Technician 1.00 1.00 1.00
Total Full-Time FTEs 3.00 9.00 9.00
Total Full-Time FTEs 9.40 3.40 4.30
Total FTEs 12.39 12.39 13.29
City of Newport Beach –Harbor Department 18
Questions?
3/16/23
Scheduled Date Agenda Title Report Type Agenda Description
Thursday, March 16, 2023
Overview of Revenue Projections Presentation Staff will provide the Committee with an overview of the assumptions utilized to prepare revenue projections for the City's major funds as part of the FY 2023-24 budget preparation process.
New Item Harbor Department Operations and Finances Presentation
Staff will provide an updated overview of the status of the Harbor Department's
budget and staffing, as well as possible future budget enhancements for the Department.
Workplan Review Receive and File Staff will report on the upcoming Finance Committee items.
Thursday, April 13, 2023
Proposed FY 2023-24 Budget Overview Presentation Staff will provide the Committee with an overview of the expenditure budget for
FY 2023-24 that will be presented to the City Council in May.
Budget Amendments for Quarter Ending March 31, 2023 Receive and File Staff will report on the budget amendments from the prior quarter.
2023 Fee Study Update Presentation Staff will present the Master Fee Schedule to the Finance Committee prior to presenting it to the City Council.
New Item Enabling Resolution Review Presentation
Staff will provide the Committee with an overview of the Committee's enabling
resolution and the responsibilities delineated therein. The Committee can then
provide staff will feedback regarding any additional topics that should be added
to the Committee's Work Plan.
Workplan Review Receive and File Staff will report on the upcoming Finance Committee items.
Thursday, May 11, 2023
Third Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected Fiscal Year 2022-23 budget performance.
Follow-Up Discussion of Proposed FY 2023-24 Budget Discussion
Staff will provide the Committee with a copy of the Fiscal Year 2023-24 proposed budget document. Should the Committee wish to continue April's discussion of the Fiscal Year 2023-24 budget, this is also an opportunity to do
so.
Tuesday, May 23, 2023 Joint City Council and Finance Committee Study Session Presentation Staff will present the FY 2023-24 proposed budget to the City Council and Finance Committee.
Thursday, May 25, 2023 Financial Statement Auditor's Communication with the Finance Committee acting
as the City's Audit Committee Presentation
The City's external auditors, Davis Farr LLP, will provide an overview presentation regarding the audit process and request feedback from the
Committee regarding any information that may assist them in their audit of the
City's financial statements.
Internal Audit Program Reports Presentation Presentation of reports, findings, and recommendations from the FY 2022-23
audit program.
Committee Recommendation to Council for the FY 2023-24 Budget Discussion Discussion of the Study Session earlier in the week and formulation of any recommendations to be presented to the City Council at the budget public
hearing in June.
Workplan Review Receive and File Staff will report on the upcoming Finance Committee items.
March 2023
May 2023
Newport Beach Finance Committee Work Plan
April 2023
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3/16/23
Scheduled Date Agenda Title Report Type Agenda Description
Newport Beach Finance Committee Work Plan
Thursday, September 14, 2023
Annual Review of Investment Performance Presentation The City's investment advisor, Chandler Asset Management, will report on the performance of the City's investment portfolio for the fiscal year ending June 30, 2023.
Annual Review of Investment Policy Presentation Staff will provide a presentation regarding any changes proposed to the City's Investment Policy by staff or the City's investment advisor prior to the
Investment Policy being approved by the City Council.
Internal Audit Program Update Presentation Bi-monthly progress update on the internal audit program.
Budget Amendments for Quarter Ending June 30, 2023 Receive and File Staff will report on the budget amendments from the prior quarter.
Workplan Review Receive and File Staff will report on the upcoming Finance Committee items.
Thursday, October 12, 2023
Budget Amendments for Quarter Ending September 30, 2023 Receive and File Staff will report on the budget amendments from the prior quarter.
OPEB Actuarial Valuation Report Update Presentation Staff will provide the Committee with an overview of the Fiscal Year 2022-23 actuarial valuation report prepared by the City's actuary.
Workplan Review Receive and File Staff will report on the upcoming Finance Committee items.
Thursday, November 16, 2023
Rescheduled from October Year-End Budget Results and Surplus Allocation Presentation Staff will provide a presentation regarding the year-end budget results for FY
2022-23 and recommendations for allocation of any year-end budget surplus.
First Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected FY 2023-24 budget performance.
Committee Recess
Committee Recess
July 2023
June 2023
October 2023
November 2023
December 2023 Committee Recess
August 2023
September 2023
Committee Recess
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