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HomeMy WebLinkAboutFinance Committee Agenda Packet - March 14, 2024CITY OF NEWPORT BEACH FINANCE COMMITTEE AGENDA Central Library - Friends Room 1000 Avocado Avenue, Newport Beach, CA 92660 Thursday, March 14, 2024 - 3:00 PM Finance Committee Members: Will O'Neill, Mayor / Chair Joe Stapleton, Mayor Pro Tem Noah Blom, Council Member Allen 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 Brittany Cleberg, Assistant Management Analyst 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 their agenda be posted at least twenty-four (24) hours in advance of each special 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. I.CALL MEETING TO ORDER II.ROLL CALL III.PLEDGE OF ALLEGIANCE 1 March 14, 2024 Page 2 Finance Committee Meeting PUBLIC COMMENTSIV. 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. V.CONSENT CALENDAR MINUTES OF FEBRUARY 15, 2024A. Recommended Action: Approve and file. MINUTES VI.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 2024-25 budget preparation process. Recommended Action: Receive and file. STAFF PRESENTATION 2 March 14, 2024 Page 3 Finance Committee Meeting FISCAL YEAR 2023-2024 FEE STUDY UPDATEB. Summary: Review and discuss the Fiscal Year 2023-2024 Fee Study, which included a review of the following departments: Finance; Harbor; Public Works; and Utilities. The current year fee study also included other updates to certain fees outside of the departments that were studied, which will be discussed with the Finance Committee. Recommended Action: Review and discuss the proposed fee updates discussed in the report and provide any recommendations for consideration by the City Manager and City Council. STAFF REPORT ATTACHMENT A ATTACHMENT B ATTACHMENT C STAFF PRESENTATION INVESTMENT POLICY UPDATEC. Summary: Review and discuss proposed changes to the StatemeReview and discuss the report and recommend that the City Council formally approve the proposed changes to Council Policy F-1 by adopting a resolution. Recommended Action: Review and discuss the report and recommend that the City Council formally approve the proposed changes to Council Policy F-1 by adopting a resolution. STAFF REPORT ATTACHMENT A WORK PLAN REVIEWD. Summary: Staff and Finance Committee to review the proposed work plan and identify matters that members would like placed on a future Agenda for discussion, action, or report. Recommended Action: Receive and file. WORK PLAN VII.ADJOURNMENT 3 ITEM NO. 4A1 PUBLIC COMMENTS ATTACHMENT A PUBLIC COMMENTS – ADDITIONAL MATERIALS RECEIVED 4 March 14,2024,Finance Committee Agenda Comments These comments on Newport Beach Finance Committee agenda items are submitted by: Jim Mosher (jimmosher@yahoo.com ),2210 Private Road,Newport Beach 92660 (949-548-6229). Item No.V.A.MINUTES OF FEBRUARY 15,2024 Page 1 of 4 (agenda packet page 4),Item 4,paragraph 1:“Chair O’Neill Mayor Pro Tem Stapleton.opened public comments on agenda and non-agenda items.”[?The draft minutes indicate the meeting started at 3:02 p.m.,and Mayor O’Neill did not arrive until 3:04 p.m.I could be wrong,but I seem to recall it was Mayor Pro Tem Stapleton who opened the public comments.I do not recall who closed them.] Page 4 of 4 (agenda packet page 7),full paragraph 5:“Jim Mosher commented stating that many mooring permittees feel they have a permanent right to mooring use,and that rents are similar and should be treated as perhaps include property taxes.He inquired how the City would describe the rents,and what would be the projected return to the City on lost revenue,if the mooring permits were considered property.”[The reference was to the “possessory interest tax”which the county tax collector is supposed to collect on property valued at more than $10,000 (?)over which a person has extended,exclusive use.Mooring spaces in Newport Harbor “sell”for $30,000 and up (see Mooring Transfers).] Item No.VI.A..OVERVIEW OF REVENUE PROJECTIONS I am unable to guess what is being plotted in Slide 9 (agenda packet page 17). Item No.VI.B.FISCAL YEAR 2023-2024 FEE STUDY UPDATE Regarding Attachment B (Newport Beach Municipal Code Section 3.36.030 Changes)many of the listings regarding appeal fee cost recovery,including the proposed changes on Page 4/9 (agenda packet page 70)through Page 6/9 (agenda packet page 72)are unnecessary,and are in sections that could be deleted since,as proposed,they follow the “All Departments”rule given on Page 2/9 (agenda packet page 68),and do not need to be separately specified. In that regard,it is unclear why the “Community Development Department”Chapter 17.65 Appeal recovery amounts,immediately under that,are being kept as a special case not following the “All Departments”rule,or why it is being retained as fixed dollar amounts that would need to be amended each time there is a new fee study (and not as percentages). 5 Finance Committee Regular Meeting Minutes February 15, 2024 Page 1 of 4 CITY OF NEWPORT BEACH FINANCE COMMITTEE FEBRUARY 15, 2024 REGULAR MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:02 p.m. by Mayor Pro Tem Stapleton. II. ROLL CALL PRESENT: Will O’Neill, Mayor/Chair (arrived at 3:04 p.m.) Joe Stapleton, Mayor Pro Tem Noah Blom, Council Member (arrived at 3:03 p.m) Allen Cashion, Committee Member William Collopy, Committee Member Keith Curry, Committee Member Nancy Scarbrough, Committee Member ABSENT: None STAFF PRESENT: Grace K. Leung, City Manager Jason Al-Imam, Finance Director/Treasurer Michael Gomez, Deputy Finance Director Shelby Burguan, Budget Manager Anthony Alannouf, Budget Analyst Abigail Marin, Budget Analyst Jennifer Anderson, Purchasing & Contracts Administrator Brittany Cleberg, Assistant Management Analyst Dave Webb, Public Works Director James Houlihan, Deputy Public Works Director/City Engineer Theresa Schweitzer, Public Works Finance/Administrative Manager Raymund Reyes, Fire Administrative Manager MEMBERS OF THE PUBLIC: Jim Mosher Charles Klobe III. PLEDGE OF ALLEGIANCE The Pledge of Allegiance was led by Mayor Pro Tem Stapleton. IV. PUBLIC COMMENTS Chair O’Neill opened public comments on agenda and non-agenda items. Jim Mosher commented by requesting the addition of review of City mooring permit rates to the Finance Committee’s work plan, as it is a City financial issue, and the Harbor Commission could benefit from the Finance Committee’s financial counsel. He identified rental costs and cost recovery from program administration as items that should be reviewed by individuals with expertise in financial matters. Seeing no others, Chair O’Neill closed public comments. V. CONSENT CALENDAR A. MINUTES OF JANUARY 11, 2024 6 Finance Committee Regular Meeting Minutes February 15, 2024 Page 2 of 4 Recommended Action: Approve and file. MOTION: Committee Member Curry moved to approve the minutes of January 11, 2024, seconded by Committee Member Scarbrough. The motion carried as follows: AYES: Blom, Cashion, Curry, Scarbrough, Stapleton, O’Neill NOES: None ABSENT: None ABSTAIN: Collopy VI. CURRENT BUSINESS A. FACILITIES FINANCIAL PLAN (FFP) AND HARBOR & BEACHES MASTER PLAN (HBMP) Recommended Action: Review and discuss this report, concur with staff’s recommended funding levels for the FFP and HBMP, and provide any other related recommendations for consideration by the City Manager and City Council. Budget Manager Shelby Burguan and Public Works Director Dave Webb presented a summary status of the Facilities Financial Plan (FFP) and Harbor & Beaches Master Plan (HBMP). Details on planned projects and funding levels for the FFP and HBMP, the impacts of inflation, as well as staff’s recommendations for funding levels. Both documents 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. Committee Member Collopy inquired regarding the escalating net cost related to the construction of the Police Station, to which staff confirmed that net costs for construction are increasing across all facilities projects. Committee Member Collopy expressed support for rigorous debate on the projected $100 million cost for a new Police facility. Discussion ensued on the unique features, such as a jail and communications components, of the subject facility. Committee Member Scarbrough and staff discussion ensued concerning private contributions to various planned projects, which is subject to City Council policy. In the past, joint users have made contributions to certain projects. There was a question about the private contributions reflected on the FFP for Fire Station No. 7 (Ref. No. 22). City staff indicated that they would look into this. Committee and staff discussion ensued concerning the unfunded projects and unknowns and uncertainties concerning planning beyond five-years ahead. Chair O’Neill inquired if the Lower Castaways project could be added to the FFP moving forward. Budget Manager Burguan responded it could be added to the unfunded section at this point. Committee and staff discussion ensued concerning potential projects in the unfunded section of the documentation related to needs at the Corporate Yard. Committee Member Curry inquired concerning current plans for the building where the new Police Facility will be constructed. City Manager Grace Leung responded the building is being leased and revenue is being received. Committee Member Scarbrough inquired whether there is a conflict of interest, as the property management company leasing the City’s building also has other buildings in the area that they own. Councilmember Blom responded that the referenced company was not doing the management for the building itself. The building was already fully leased. The City took over from them a number of long term contracts and leasehold agreements in that building. As far as staff knows, the City is receiving market rate for rental. 7 Finance Committee Regular Meeting Minutes February 15, 2024 Page 3 of 4 Committee Member Collopy expressed concern regarding the escalating costs for the Police Facility and recognizes funding is a City Council decision. However, he would prefer accelerated funding for the project as he believes construction costs will continue to increase. Chair O’Neill stated that there will likely not be a surplus this fiscal year and this is a matter that future City Councils will need to pay attention to. He expressed support to have the City monetize the current property where the Police Station sits now to offset future costs. Committee and staff discussion ensued on the Harbor & Beaches Master Plan, including the costs related to specific projects, including Balboa Island Seawall Replacement, Newport Pier Replacement, and Balboa Pier Replacement, with a recommendation to increase General Fund contributions to build up reserves for the subject projects. Discussion ensued concerning potential funding for the various projects, including financing versus cash payments, with a preference to fund future projects on a cash basis. In conclusion, it was staff’s recommendation to increase the General Fund contribution to the FFP and HBMP by $2 million each in the upcoming fiscal year (total of $4 million). Chair O’Neill stated that it should also be noted that the current labor contracts will be expiring in the next year and negotiations will be commencing soon, which may have impacts on the budget. The planned and projected projects are also experiencing increases in costs. There appeared to be general Committee concurrence to support staff’s recommendation, as listed in the presentation materials. Chair O’Neill opened public comments. Jim Mosher commented noting the purpose of the FFP had appeared to change in concept from general planning to a firm commitment to specific projects, inquiring as to the amount of revenue the City is projecting from the Uptown Newport project development agreement, whether the developer would be obligated to pay development fees after 2028, and suggesting the Finance Committee become more involved in the Harbor Commissions review of mooring permit rental rates, to provide financial counsel. Seeing no others, Chair O’Neill closed public comments. Chair O’Neill confirmed there appeared to be general Committee consensus to support staff’s recommendation on the funding of the FFP and HBMP in the upcoming fiscal year. There was no further action taken on this item. B. SECOND QUARTER BUDGET UPDATE Recommended Action: Review and discuss this report and provide any recommendations for consideration by the City Manager and City Council. Budget Manager Shelby Burguan presented an overview of the budgetary trends for the second quarter of Fiscal Year 2023-24 that generally reflected positive trends for projected General Fund revenues, including property tax and other General Fund revenues, which is partially offset by a projected decrease in Sales Tax revenue. A current projected savings in General Fund expenditures is forecasted, which is attributable to savings in salaries and benefits due to vacancies and lower than budgeted costs for employee benefits. There were no proposed budget amendments at this juncture. General discussion ensued including comments related to the decrease in property transfer tax fees as home sales have declined over the past few years, approximately $18 million in lost revenue during the pandemic, and the City’s need to reallocate $5.2 million in ARPA funds to 8 Finance Committee Regular Meeting Minutes February 15, 2024 Page 4 of 4 another eligible use with a recommendation to allocate the funding to reimburse the City for public safety operating costs incurred on Fire operations. The General Fund operating savings that would result from this reimbursement would be then transferred to the FFP to be used for future capital projects. Chair O’Neill stated it appeared the City was on track to reach the budget numbers it has originally projected for the current fiscal year. In response to an inquiry concerning “claw back” of FEMA funds, staff noted that from an accounting perspective, there should not be an impact to the City. In response to an inquiry from Committee Member Scarbrough, City Manager Leung reported that the City is currently at its lowest vacancy rate, under 5%. In response to the inquiry concerning the reduction in plan check fees, it was noted that a certain amount of the work is performed by plan check contractors with the balance performed by City staff. Chair O’Neill opened public comments. Jim Mosher commented stating that many mooring permittees feel they have a permanent right to mooring use, and that rents are similar and should be treated as property taxes. He inquired how the City would describe the rents, and what would the projected return to the City on lost revenue, if the mooring permits were considered property. Charles Klobe commented citing references in the news media that cities are losing property tax revenue due to commercial building vacancies and reassessed values. The reports are alleging that commercial renters are fleeing due to the lack of amenities. Seeing no others, Chair O’Neill closed public comments. There was no further action taken on this item. C. WORK PLAN REVIEW Recommended Action: Receive and file. A summary of items scheduled for upcoming Finance Committee meetings was provided as listed in the publicly noticed agenda report, including upcoming joint meetings with the City Council for budget review. Chair O’Neill opened public comments. Seeing none, Chair O’Neill closed public comments. This item was received and filed. There was no further action taken. VII. ADJOURNMENT The Finance Committee meeting adjourned at 3:51 p.m. Attest: ___________________________________ _____________________ Will O’Neill, Chair Date Finance Committee 9 ITEM NO. 6A1 OVERVIEW OF REVENUE PROJECTIONS ATTACHMENT A STAFF PRESENTATION – ADDITIONAL MATERIALS RECEIVED 10 FY 2024-25 OVERVIEW OF REVENUE PROJECTIONS Finance Committee Meeting –March 14, 2024 11 HISTORICAL GENERAL FUND REVENUES 2 $7.0 million of projected revenue growth over the current year projected actuals Drivers of revenue growth: •Property Tax + $5.7 million •Sales Tax + $2.3 million •Growth over FY24 projected actual (down $4.8 million from FY24 adopted budget) •TOT + $0.6 million $- $50 $100 $150 $200 $250 $300 $350 FY 2022-23Actuals FY 2023-24Projected FY 2024-25Projected Mi l l i o n s Property Tax Sales Tax TOT Transfers Others $300.8m $308.2m $315.2m 12 PROPERTY TAX REVENUE 3 •The City receives 16.8% 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 $75.8 billion in FY 2023-24, a 6.51% growth from FY 2022-23 •The assessed valuation is projected to be $77.4 billion in FY 2024-25, a 4.21% increase 17.15% 67.21% 7.02%8.61% City of Newport Beach Schools County of Orange Special Districts 13 PROPERTY TAX REVENUE BY CATEGORY AND RESIDENTIAL SALES TRENDS 4 10.60% 84.70% 2.20% 2.50% Commercial Residential Other Unsecured Single Family Residential Sales 14 PROPERTY TAX REVENUE PROJECTION METHODOLOGY 5 •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 15 PROPERTY TAX REVENUE PROJECTION 6 •Represents approximately 50% of General Fund revenues •Growth has been accelerating based on strong assessed value growth and sales activity •4.0% growth projected for FY 2024-25 for property tax revenue $97.0 $104.6 $110.7 $115.6 $123.2 $128.5 $138.4 $143.6 $149.3 $95 $105 $115 $125 $135 $145 $155 2016-17 Actual 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 Actual 2021-22 Actual 2022-23 Actual 2023-24 Projected 2024-25 Projected Mi l l i o n s +5.8% +4.5% +6.6% +7.7% +3.8% +4.0% +4.3% +7.9% 16 PROPERTY TAX REVENUE GROWTH HISTORY 7 1.8%-0.4%-0.1%13.4%-2.1%5.6%11.2%6.0%7.9%5.8%4.5%6.6%4.3%7.7%3.8%4.0% $ 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 FY23 FY 24Projected FY 25Projected 17 SALES TAX REVENUE 8 •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 & State Pools 12.9% 50.8% 23.4%6.5% 6.5% City of Newport Beach State General Fund County of Orange Proposition 172 OCTA 18 -15.00% -5.00% 5.00% 15.00% 25.00% 35.00% 45.00% 55.00% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Newport Beach Orange County SALES TAX REVENUE NEWPORT BEACH VS. ORANGE COUNTY 9 19 PROJECTED SALES TAX REVENUE MAJOR INDUSTRY GROUPS 10 $14.1 $9.5 $8.6 $7.5 $11.7 $10.1 $8.3 $6.8 $12.5 $10.7 $8.4 $7.2 $0 $2 $4 $6 $8 $10 $12 $14 Mi l l i o n s 22/23 23/24 24/25 22/23 23/24 24/25 22/23 23/24 24/25 22/23 23/24 24/25 Autos & Transportation Restaurants & Hotels General Consumer Goods State & County Pools 20 SALES TAX REVENUE PROJECTION METHODOLOGY 11 •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 21 SALES TAX REVENUE PROJECTION 12 •Sales tax revenue is projected to be $2.3 million higher than the current FY 2023-24 year-end projection, reflecting a 5.3% growth over estimates for the current year. $33.7 $35.0 $38.5 $36.2 $39.0 $46.2 $46.6 $43.0 $45.3 $30 $34 $38 $42 $46 $50 2016-17Actual 2017-18Actual 2018-19Actual 2019-20Actual 2020-21Actual 2021-22Actual 2022-23Actual 2023-24Projected 2024-25Projected -5.9%+7.5% +18.5% +0.8% -7.6%+5.3% 9.9%4.0% 22 SALES TAX REVENUE GROWTH HISTORY 13 -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%0.8% -7.6%5.3% $ M $5 M $10 M $15 M $20 M $25 M $30 M $35 M $40 M $45 M $50 M FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY 23 FY 24 Projected FY 25 Projected 23 TRANSIENT OCCUPANCY TAX REVENUE 14 •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 24 TRANSIENT OCCUPANCY TAX REVENUE PROJECTION METHODOLOGY 15 •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 25 TRANSIENT OCCUPANCY TAX REVENUE COMMERCIAL & RESIDENTIAL 16 $21.0 $16.6 $11.8 $20.0 $21.9 $23.6 $24.1 $3.7 $4.2 $5.1 $6.7 $8.3 $8.4 $8.5 $0 $5 $10 $15 $20 $25 Mi l l i o n s 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 26 TRANSIENT OCCUPANCY TAX REVENUE PROJECTION 17 •Current year overall projection is in line with the budgeted revenues •Short-term lodging revenues are projected to grow 2% in FY 2024-25 •Growth in residential TOT revenue has slowed, while hotel TOT revenue outperforms prior years primarily due to the recent opening of the Pendry in September 2023 $22.3 $22.8 $24.7 $20.8 $16.9 $26.7 $30.2 $32.0 $32.6 $14 $18 $22 $26 $30 $34 2016-17 Actual 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 Actual 2021-22 Actual 2022-23 Actual 2023-24 Projected 2024-25 Projected Mi l l i o n s +5.9% +2.0% +13.2% +58.0% -19.0% -15.6%+8.2%+2.4% 27 TRANSIENT OCCUPANCY TAX REVENUE GROWTH HISTORY 18 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% 13.2% 5.9%2.0% $ 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 FY24 Projected FY25 Projected 28 OTHER REVENUES 19 •Property tax, sales tax, and transiency occupancy tax revenues make up approximately 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 (6% of General Fund revenues) •Other Taxes (3% 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 29 SERVICE FEES AND PERMITS REVENUE PROJECTION 20 $25.5 $25.4 $25.7 $23.5 $28.9 $30.9 $30.4 $31.2 $20 $24 $28 $32 2017-18Actual 2018-19Actual 2019-20Actual 2020-21Actual 2021-22Actual 2022-23Actual 2023-24Projected 2024-25Projected Mi l l i o n s +2.84%+6.70%-1.58% +23.26% -8.57%+1.16%-0.54% •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 latest fee study approved by Council after the budget was adopted •The projected increase is offset by a projected decrease in Plan Check Fees of $400,000 •Paramedic service fees •Recycling fees 30 PROPERTY INCOME REVENUE PROJECTION 21 •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 $15.0 $17.5 $17.9 $8 $10 $12 $14 $16 $18 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 Actual 2021-22 Actual 2022-23 Actual 2023-24 Projected 2024-25 Projected Mi l l i o n s +2.33% +16.82% +6.57% +15.29% +5.54% +17.05% -0.65% 31 TIDELANDS FUND REVENUES 22 •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 $11 million in recent fiscal years that is supported by the General Fund •The General Fund will transfer $4.8 million to the capital fund in FY 2023-24 to support capital needs. An additional $2 million will be recommended with the FY 25 Proposed Budget. 32 TIDELANDS FUND REVENUE PROJECTION 23 •95% 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 •5% of revenues are generated by investment income (primarily from capital reserves) $14.7 $16.8 $16.6 $16.6 $18.2 $20.7 $21.4 $12 $14 $16 $18 $20 $22 $24 2017-18Actual 2018-19Actual 2019-20Actual 2020-21Actual 2021-22Actual 2022-23Projected 2023-24Projected Mi l l i o n s +13.84%-0.86%-0.13%+9.54% +13.68% +3.66% 33 WATER UTILITY REVENUE PROJECTION 24 •New rates effective January 1, 2024 with the final scheduled adjustment occurring January 1, 2028 •Majority of revenues are derived from water and recycle water meter (fixed) and usage (variable) charges •Other operating revenues represent 1.5% of the Water Utility’s total revenue •The Water Utility consistently looks for other sources of revenue, such as grants, to fund infrastructure investments •Rate revenue is expected to grow annually for the next 4 years $27.0 $27.6 $27.9 $30.8 $31.8 $32.2 $34.1 $37.3 $22 $26 $30 $34 $38 $42 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 Actual 2021-22 Actual 2022-23 Actual 2023-24 Projected 2024-25 Projected Mi l l i o n s +9.3% +5.8%+1.4%+3.3% +10.4%+0.9%+2.2% 34 WASTEWATER UTILITY REVENUE PROJECTION 25 •New rates effective January 1, 2024 with the final scheduled adjustment occurring January 1, 2028 •Majority of revenues are derived from sewer meter (fixed) and usage (variable) charges •Other operating revenues represent 1.4% of the Wastewater’s Utility’s total revenue •The Sewer Utility is constantly looking for alternative sources of revenues, such as grants, to help mitigate the ratepayer impacts •Rate revenue is expected to grow annually for the next 4 years $3.5 $4.1 $4.2 $4.6 $4.8 $4.7 $4.6 $5.6 $3 $4 $5 $6 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 Actual 2021-22 Actual 2022-23 Actual 2023-24 Projected 2024-25 Projected Mi l l i o n s +20.0% +0.8%+10.4%+3.8%-1.9%-1.3% +19.9% 35 QUESTIONS? Finance Committee Meeting –March 14, 2024 36 Agenda Item No. 6B March 14, 2024 TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE FROM: Finance Department Jason Al-Imam, Finance Director/City Treasurer 949-644-3123, jalimam@newportbeachca.gov SUBJECT: FISCAL YEAR 2023-2024 FEE STUDY UPDATE SUMMARY: Fees are regularly studied and updated by departments to ensure the proper recovery for cost of services in accordance with the cost recovery rates established by the City Council. Departments are reviewed on a rotating basis such that each department’s fees are comprehensively studied and updated every 3-5 years. This year, staff has comprehensively reviewed the fees for the following departments: • Finance • Harbor • Public Works • Utilities Specific recommendations related to the fees referenced above are discussed in detail later in this report. The proposed net fiscal impact of the proposed non-inflationary fee changes is an increase of $581,000 in revenue to the City as summarized in the table below. CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT 37 Fee Study Update March 14, 2024 Page 2 Staff has also identified necessary administrative fee updates in the various departments that will be reflected in the redlined version of the Schedule of Fees, Fines, and Rents (SRFF) that will be included in the fee resolution presented to the City Council. Subject to City Council approval, staff recommends that the fee schedule updates, with the exceptions noted in this report, become effective July 1, 2024. In addition to the proposed fee updates, staff is recommending modifications to the Newport Beach Municipal Code (NBMC) Section 3.36.030 (Cost Recovery Percentages) to facilitate the changes to authorized levels of cost recovery required by the fee changes that are recommended at this time. RECOMMENDED ACTION: Review and discuss the proposed fee updates discussed in this report and provide any recommendations for consideration by the City Manager and City Council. DISCUSSION: NBMC Section 3.36, and Council Policy F-4 (Revenue Measures) provide staff and the City Council with policy guidance related to setting cost recovery targets and updating user fees. User fees, or cost-of-service fees, are charged to a citizen or group for services performed or provided by a government agency on their behalf. If the service primarily benefits an individual or group of people, then the burden of that cost should be borne by the person receiving the benefit. NBMC Section 3.36.030 sets the cost recovery for user fees at 100%, apart from the subsidized fees listed in Exhibit “A” of that same section, as well as those limited by California or Federal statutes. A recommendation for less than a 100% cost recovery rate may occur when a service is beneficial to the community at large along with specific individuals or groups, and/or when there is an economic incentive, or disincentive, to do so. In these cases, another City revenue source – in most cases, the General Fund - subsidizes the service. Any newly proposed fee or fee increase that is not approved by the City Council will by default be subsidized by the General Fund. 38 Fee Study Update March 14, 2024 Page 3 The SRFF primarily includes cost-of-services fees, which are designed to recover the City’s cost to provide the related service. To establish fees based on full cost recovery, it is necessary to determine the cost of services. Using well-established cost accounting methodologies, the City’s consultant, ClearSource Financial Consulting (ClearSource), conducts a comprehensive review and update of the Citywide cost allocation plan, and direct user fee calculations for each department on a rotating basis every three years. This year, ClearSource studied the following departments at staff’s direction: • Finance • Harbor • Public Works • Utilities As part of this study, ClearSource met with City staff from each studied department to discuss the services provided, the annual volume for those services, and the staff resources and time estimates for delivering the related services. To factor in both direct and indirect costs, ClearSource then calculated the department staff’s fully burdened hourly rate, which includes both internal administrative as well as citywide overhead costs. The fully burdened hourly rates are applied to the time estimates provided by staff and the fee is calculated. Based on the results of the fee study, it is not uncommon for some fees to increase while others may decrease. The most common reasons for fees to go up or down are: 1) costs changing over time, most often increasing 2) the staff performing the service changes, and/or 3) the amount of time to perform the service changes. Once the calculations are confirmed, department staff then recommends that the fee should either be fully recovered or subsidized. NBMC Section 3.36.030 Exhibit “A” subsidy changes are detailed in Attachment B. The remainder of this report focuses on how studied fees are changing. Before and after illustration of each department’s studied fees can be found in Attachment A. Finance Department The Revenue Division of the Finance Department maximizes and safeguards the City’s revenues by implementing and enforcing Municipal Code revenue programs. These programs include, but are not limited to, tax collection, short term lodging, film permitting and parking. The Revenue Division was last studied in FY 2020-21. Many of the Finance fees have proposed significant decreases due to the improved system processes including the implementation of revised forms in the revenue division that have allowed for a more streamlined and efficient cycle processing time. Notable decreases include the Business License Initial Application (in person), Sidewalk Vending Permit Application and Sound Amplification permit. Short-term Lodging Permits have seen an increase in Initial and Renewal proposed fees as staff time involvement with code enforcement regulation from the Community Development Department is factored into the model. Staff are proposing a phased in approach to the Short-term Lodging Permits from current recovery to full cost recovery over a two-year period to mitigate the impact 39 Fee Study Update March 14, 2024 Page 4 of the increase in fee to the customer. In this department, two new fees are proposed: 1. Business License Initial Application (online) – The Revenue Division in Finance currently provides review of online Business License Initial Applications at no cost. Initially, a no cost structure was provided to incentivize individuals to utilize the City’s online portal to streamline the application process, despite staff time involvement. The proposed fee of $6 would allow cost recovery for staff time involved with the review and processing of online applications. 2. Taxicab Operator License Fee – This fee is being proposed as the Orange County Taxi Administration Program (OCTAP), which regulated taxi operations on behalf of participating Orange County cities through a centralized permitting of cab companies, drivers, and vehicles, dissolved on December 31, 2020. The City of Newport Beach will be taking over the processes that OCTAP provided and will perform the regulatory functions within the city. Three fees associated with Taxicab permitting are proposed: a Company Permit fee of $1,660, a Vehicle Permit (per vehicle) fee of $1,399, and a Driver Permit fee of $1,660. Updates to NBMC Section 5.17 are currently in progress and will be presented to City Council for review. The proposed Finance fees will have an overall fiscal impact of $171,000 in increased estimated revenues, with much of the fiscal impact associated with adjustments to short term lodging permit fees, as the city targets a 68% cost recovery. Harbor Department The Harbor Department is responsible for many harbor-related programs and services within the city, including but not limited to, managing the guest marina, and renting available slip space and moorings. The Harbor Department was last studied in FY 2020- 21. Many of the fees have proposed increases to align with the current cost of providing these services. Many of these fees are market-based rates that are adjusted annually in-line with regional cost of inflation, typically amounting to $10 or less, to align the fees with the current cost of providing these services. Fees that have notable variance increases include Environmental Response, Impound Fees, and the Large Boat Escort/Permit due to transitioning to staff to conduct the response instead of relying on another agency, increase in costs related to staffing, and the recalculation of time and effort in performance service, respectively. There are several new fees proposed related to the harbor services as follows: 1. Towing Fee for Abandoned/Impounded Boats Over 14’ but less than 25’ – The Harbor Department needs to move impounded boats more often than originally 40 Fee Study Update March 14, 2024 Page 5 anticipated. Staff has the capability and capacity to tow boats in this size category. The proposed fee of $377 would allow cost recovery from vessel owners for services provided. 2. Rhine Wharf Permit – The Harbor Department took over the responsibility for writing permits for the use of the commercial Rhine Wharf in 2022. In 2023, there were 53 Rhine Wharf permits issued. The proposed fee of $28 is for processing the applications received and is reflective of the resources dedicated to application review and permit issuance. 3. Variance Applications – This proposed fee of $498 is reflective of the process and effort required to review harbor related variance requests to deviate from current zoning requirements. The process for variance requests specific to harbor had not previously been defined since the last fee study and mirrored a structure like the Community Development Department's process which is limited applicable to dock, pier permits and other structures over tidelands, prompting the need for a distinct individual fee. 4. Use of electrical cord and/or adapter while at Marina Park – Staff have found that they frequently loaned their limited supply of electrical adapters to mariners arriving at the Marina Park facility without appropriate equipment. The proposed fee of $10 would allow for cost recovery related to the rental, wear, and tear on such equipment provided by the Harbor Department. 5. Purchase (non-return) of electrical cord or adapter – In the event that an electrical adapted or cord that was loaned to a mariner while staying at the Marina Park facility is not returned or is returned in damaged condition, a proposed fee of $75 would be assessed to reimburse the Harbor Department and allow for the equipment to be replaced. 6. Mooring size exchange – Staff is recommending recovering 100% of the cost of this service as outlined in Attachment B at a fee of $302. Should the City be successful in reconfiguring one or some of the mooring fields according to the Harbor Commission’s recommendations, the opportunity to apply for a mooring size adjustment within the reconfigured field(s) will no longer exist. As defined in Title 17, along with other aspects of the mooring field optimization project, mooring permittees in a reconfigured field will have the opportunity to apply for a mooring size exchange. 7. Mooring license application fee – The new mooring license program for City controlled moorings launched at the beginning of 2024. Applications for these mooing licenses are accepted through the City’s online system. The $26 proposed fee considers staff time for reviewing and processing of applications. 8. Mooring license waitlist fee (one time or annual) – Staff has noted that there has 41 Fee Study Update March 14, 2024 Page 6 been significantly more demand for mooring licenses – currently 16 – than there is supply. Those applicants not offered licenses will be placed on a waitlist for when an existing or new license becomes available. The proposed fee of $34 considers the maintenance of the application records on the waitlist and City resources consumed. 9. Group/exclusive use fee for Marina Park – Staff exerts additional effort when a group of mariners desire to have sole and exclusive access to the Marina Park marina facility to support coordination of the group member reservations, arrivals, departures, special requests, and organized activity. The proposed fee of $502 suggest a 100% cost-of-service recovery. 10. Mooring Assists – After Hours – By special arrangement, harbor staff remain on duty past normal working hours to support a visitor or resident mariner getting onto or off a mooring. This proposed fee of $200 considers staff time to provide a service that ensures safety during inclement weather, or for mariners unfamiliar with the harbor and mooring tackle. 11. Deposit/late cancellation fee for use of Human Lift – Marina Park – Staff has noted that on several occasions within the past year, a mariner with a reservation to use the Human Lift at Marina Park cancelled or failed to show up for the use of the lift after utilizing staff time for setup. The proposed fee of $31 considers staff time to setup the lift and is intended to prevent the unnecessary use of resources required for deployment of the lift for unused reservations. There is no cost to the mariner to use the lift and the deposit is returned when the mariner uses the lift as scheduled or cancels with sufficient advance notice. 12. Deposit/late cancellation fee for use of Human Lift – Balboa Marina PD – The proposed fee of $117 considers setup and use of the human lift at the new public dock at Balboa Marina which requires more resources than deployment at Marina Park due to the transport required to the location. This fee is also being proposed to prevent cancellations and no shows related to reservation for use of the lift. There is no cost to the mariner to use the lift and the deposit is returned when the mariner uses the lift as scheduled or cancels with sufficient advance notice. The overall fiscal impact in the Harbor Department pertaining to the proposed service-related fees for a target 100% cost recovery is an estimated increase of $20,000 in revenues, where most of the fiscal impact increase is derived from the adjustments linked to impounded vessel releases. Public Works The Public Works Department is responsible for managing a comprehensive capital improvement program, including the promotion of a safe and efficient transportation system. Public Works also manages public property through permitted encroachments, ensures the safety of utility company activities, private construction and special events in 42 Fee Study Update March 14, 2024 Page 7 the public right-of-way, reviews plans for residential and commercial development as they relate to the public right of-way, and oversees activities that protect and improve the harbor and upper bay. The Public Works Department was last studied in FY 2020-21. The proposed changes to Public Works fees cover Engineering & Harbor Resources, Refuse, and Water Quality/Conservation/Environmental Services. Changes to existing fees for the Public Works department include: 1. An additional Engineering Field Inspection fee will be applied with a Street Closure Permit that requires a field inspection. This is noted in both the Enginering Field Inspection fee and the Street Closure Permit fee as a footnote. 2. Recycling Service Fee – Per Residential Unit, Per Month – This fee would replace the two existing fees as one combined fee at $6.39. This fee is a cost-of-service fee based solely on recovery of operational costs associated with collection of recyclable materials in accordance with State mandates. 3. Construction and Demolition – This fee would make changes to the presentation of the current Demolition fee, distinguishing between Complete Demolition Deposit and Construction Demolition Deposit for a series of valuation ranges as identified in the proposed schedule. The construction and demolition deposits are intended to encourage compliance and are refundable if the applicant uses an approved franchise hauler and arranges for an inspection. Should the applicant fail to meet conditions required on the permit, the deposit would be subject to forfeiture. Having two distinguishing fees will aide in achieving waste diversion compliance with Assembly Bill (AB) 939 and CalGreen requirements, as well as allowing for accurate reporting to CalRecycle. The Public Works Department is also proposing changes to NBMC Section 15.02.085 Addition of Section 105.3.1.1 relating to the administrative code to refine language for the Construction and Demolition permits, as identified in Attachment C. Most of the fiscal impact in the Public Works Department for service-related fees is associated with adjustments to review of street closure permit requests and administration of diversion requirements associated with construction demolition. An increase of $66,000 in estimated revenues with the proposed fees is anticipated. Utilities The Utilities Department is responsible for overseeing the management and maintaining of water, wastewater, storm drain and tidal valve systems to provides clean, safe, and responsive utility and infrastructure maintenance services to the community. The department was last studied in FY2020-21. The proposed new fees in the department include: 1. Meters, Boxes, Lids, Etc. – The proposed fee consolidates a base fee of $53 plus 43 Fee Study Update March 14, 2024 Page 8 a pass-through of the actual cost of materials for a meter, box, lid, etc. It should be noted that the pass through of the actual costs of materials is reflected in the current SRFF with price points identified for each meter, box, or lid; the base fee is the proposed new aspect of the fee which would allow for a proposed cost recovery of 100% associated with staff time involvement. 2. Water and Sewer Services Establishment Fee. Remote Activation – The proposed Remote Activation sub fee of $52 under the Water and Sewer Establishment Fee requires less staff time than instances where Onsite Activation is required and proposes 100% cost recovery. The overall fiscal impact in the Utilities Department pertaining to the proposed service- related fee changes is an estimated decrease of $115,000 in revenues, with approximately $143,000 of the decrease pertaining to the new remote activation fee which is offset in part by estimated revenue increases to other fees. Other Updates Even when a department is not scheduled for a comprehensive fee study, occasionally, operations will change enough that the non-studied departments will request one or two fee study changes for consideration and adoption. As part of this study and to present a comprehensive and thorough update on the City’s fees and current operations, staff considered the following additional updates outside of the departments scheduled to be studied. The Information Technology Department is proposing an hourly rate for A/V technical support related activities for both business hours and non-business hours at $144 and $173, respectively, for a 100% proposed cost recovery. This fee is intended to be charged in any instance in which an additional level of IT support is required, for example, support associated with facility rentals. The Police Department is proposing a revised fee structure for civil subpoenas of actual cost with $275 per day initial amount. The last time the Police Department was studied was in FY 2022-23 and did not experience an increase in the Civil Subpoena fee at the time. This fee is utilized when any staff member is requested to appear in court for administrative hearings, civil trials, court actions, etc. Actual amounts paid would be calculated in accordance with California Government Codes 68096.1 and 68097.2. The Police Department is also proposing a revised fee structure for Towing and Vehicle Release/ Repossession Fees as follows: • Tow Operator Fee to be eliminated • Customer Fee increased from $110 to $156 • Vehicle Release Fee increase from $20 to $28 Staff is proposing to eliminate the Tow Operator Fee and have the cost proportioned out to be absorbed by the Customer Fee and the Vehicle Release Fee. This proposal is 44 Fee Study Update March 14, 2024 Page 9 intended to eliminate the franchise fee and set the user fee at 100% cost recovery with the full cost to be borne by the party being towed. The fee is not intended to be punitive to any victims of a crime; staff is also proposing that the Police Chief have the authority to waive fees related to towing in circumstances where an individual has been identified as a victim. A credit card convenience fee of 2.85% has been included in the all-departments section for online utility bill payments and other payments received by the City in excess of $20,000. The City may also determine to apply a similar fee to other receipts collected by the City via credit card. This fee is intended to update the current Credit Card Fees on Charges in Excess of $20,000. The fiscal impact associated with adding in the 2.85% fee to utility bill payments is $439,000. The Community Development Department is proposing minor revisions to descriptions in the Banner Permit fee title to Banner/Sign Permit and to include a footnote in the General Plan Maintenance Fee - % of Building Permit Fee that the fee will be applied as five percent (5%) to permit fees for all new construction, additions, and additions with alterations for the residential and commercial projects for clarification purposes. The Parking Meter Mobile Application Processing Fee is the existing fee of Vendor Transaction Fee for Online Payment Processing that has been renamed for fee schedule clarity; the fee continues to be a pass-through fee. CPI Updates - The applicable rental fees within each studied department as well as all applicable fees listed in the SRFF that are subject to CPI increases based on prior resolutions, will be increased by CPI effective July 1, 2024. The applicable cost-of-service fees within each studied department this fiscal year will be increased by CPI effective July 1, 2025. However, the percentage by which these fees, including the rental fees referenced above, will increase is not yet known as the City’s methodology in calculating the change in CPI is by using March of the prior year to March of the current year. The proposed increases will be included in the redline version of the SRFF that will be attached to the fee resolution when the fee study update is considered by the City Council. CONCLUSION: Subject to City Council approval of the fees as recommended, it is estimated that approximately $581,000 of additional revenues will be generated for the City. However, this projection does not account for any fees where volume statistics are unavailable. The City Council’s policy of ensuring regular review of the City’s cost-of-service fees and adequate cost recovery will continue to ensure adequate cost recovery from users of the City’s fee-related services. This then facilitates the redirection of general tax revenues currently subsidizing fee-supported services to maintaining and enhancing non-fee supported services and programs. Staff will present the proposed fee recommendations to the City Council for formal 45 Fee Study Update March 14, 2024 Page 10 consideration in April and will incorporate any feedback received from the Finance Committee into staff’s final recommendations. Prepared and Submitted by: /s/ Abigail Marin Abigail Marin Budget Analyst Attachments: A. FY 2023-24 Studied Department Changes – Illustration of Proposed Fee Changes B. Newport Beach Municipal Code Section 3.36.030 Changes C. Newport Beach Municipal Code Section 15.02.085 Addition of Section 105.3.1.1 46 ATTACHMENT A FY 2023-24 STUDIED DEPARTMENT CHANGES – ILLUSTRATION OF PROPOSED FEE CHANGES 47 ILLUSTRATION OF PROPOSED FEE CHANGES This List Does Not Include All City Fees and Charges Fees Shown are Limited to Those Studied During the Current Fee Study Cycle Appendix B: p. 1 48 Fee Type Page FINANCE - REVENUE SERVICES FEES 3 HARBOR DEPARTMENT SERVICES FEES 5 INFORMATION TECHNOLOGY HOURLY COST FOR DIRECT SERVICES 8 PUBLIC WORKS FEES ENGINEERING FEES AND HARBOR RESOURCES FEES 9 MUNICIPAL OPERATIONS FEES 12 WATER QUALITY / CONSERVATION / ENVIRONMENTAL SERVICES FEES 13 UTILITY SERVICES FEES 14 CREDIT CARD / MOBILE APPLICATION PAYMENT CONVENIENCE FEE 16 CIVIL SUBPOENA FEES 17 PLANNING AND BUILDING FEES 18 TAXICAB OPERATOR LICENSING FEE 19 TOW FEE / VEHICLE RELEASE FEE 20 City of Newport Beach Illustration of Proposed Fee Changes Appendix B: p. 2 49 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - FINANCE - REVENUE SERVICES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note FINANCE - REVENUE SERVICES 1 Adult Oriented Business Permits $1,383.00 $1,404 1%$21 99%100% 2 Business License Processing Fees a) Business License Initial Application (online)$0.00 $6 n/a - new n/a - new 0%100% b) Business License Initial Application (in person)$63.00 $17 -73%($46)370%100% c) Business License - Change in Information $25.00 $14 -43%($11)176%100% d) Business License - Duplicate $12.00 $12 -1%($0)101%100% 3 Dance Permit $186.00 $178 -5%($9)105%100% 4 Escort Service a) Escort Service Permit $1,186.00 $1,316 11%$130 90%100% b) Escort Service Per Employee $609.00 $647 6%$38 94%100% 5 Fire Arms Sales Permit $114.00 $107 -7%($8)107%100% 6 Hotel Special Package Application Review $206.00 $216 5%$10 95%100% 7 Live Entertainment Permit $184.00 $189 3%$5 97%100% 8 Parking Permit a) Preferential Parking Permit $20.00 $24 18%$4 85%100% b) Parking Permit Replacement Fee $12.00 $12 -1%($0)101%100% 9 Payment Plan Processing Fee a) Payment Plan - Except Parking $25.00 $36 42%$11 70%100% b) Payment Plan - Parking i) Indigent $5.00 $5 0%$0 14%14% ii) All Other $25.00 $36 42%$11 70%100% 10 Short-Term Lodging Permits a) Short Term Lodging Permits - Initial $175.00 $238 36%$63 58%79% b) Short Term Lodging Permits - Renewal $92.00 $214 133%$122 27%64% c) Short Term Lodging Permits - Reinstatement $96.00 $107 11%$11 90%100% d) Short Term Lodging Permits - reprint $13.00 $12 -9%($1)110%100% e) Short Term Lodging Permits - suspension or revocation hearing - Applicant Successful $0.00 $0 0%$0 0%0% f) Short Term Lodging Permits - suspension or revocation hearing - Applicant Unsuccessful $538.00 $738 37%$200 73%100% Description Appendix B: p. 3 50 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - FINANCE - REVENUE SERVICES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery NoteDescription 11 Sidewalk Vending Permit Application $183.00 $107 -42%($77)172%100% 12 Sound Amplification Permit $78.00 $36 -54%($43)220%100% 13 Vehicles for Hire a) Vehicles For Hire - Annual Per Vehicle Fee $250.00 $250 0%$0 n/a - not examined n/a - not examined b) Vehicles For Hire - Certificate $2,281.00 $2,281 0%$0 n/a - not examined n/a - not examined c) Vehicles For Hire - Driver's Permit $454.00 $454 0%$0 n/a - not examined n/a - not examined d) Vehicles For Hire - Driver's Permit Renewal $443.00 $443 0%$0 n/a - not examined n/a - not examined e) Vehicles For Hire - Fee per Vehicle $250.00 $250 0%$0 n/a - not examined n/a - not examined 14 Zero Bill Reprints No Charge No Charge 0%$0 0%0% Appendix B: p. 4 51 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - HARBOR DEPARTMENT SERVICES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note HARBOR DEPARTMENT 1 Appeals a) Appeal of Harbormaster Decision to Harbor Commission i) Appellant Successful $0.00 $0 0%$0 0%0%[a] ii) Appellant Unsuccessful $1,250.00 $623 -50%($628)100%50%[a] b) Appeal of Harbor Commission Decision to City Council i) Appellant Successful $0.00 $0 0%$0 0%0%[a] ii) Appellant Unsuccessful $940.00 $498 -47%($442)94%50%[a] 2 Dinghy Rack Rental a) Dinghy Rack Rental Application Fee $20.00 $26 28%$6 78%100% b) Dinghy Rack Rental - Marina Park/Balboa Yacht Basin - Per Month $38.00 $39 2%$1 n/a n/a 3 Environmental Response $77.00 $535 594%$458 14%100% 4 Impound Fee a) Impound Fee - Initial $110.00 $243 121%$133 45%100% b) Impound Fee - Loose or Lost and Found Boats/Vessels $56.00 $106 90%$50 53%100% 5 Key Card Replacement $13.00 $17 33%$4 75%100% 6 Large Boat Escort / Permit a) Large Boat Escort $107.00 $172 60%$65 62%100% b) Large Boat Permit (≥80 Lineal Feet)$78.00 $537 588%$459 15%100% c) Large Boat Permit (≥80 Lineal Feet), Requiring Interagency Coordination $779.00 $1,148 47%$369 68%100% 7 Live Aboard Permit $395.00 $441 12%$46 90%100% 8 Lost/Broken Line $64.00 $86 35%$22 74%100% 9 Marina Park a) Marina Park Deposit - Slip Reservation Deposit $50.00 $50 n/a n/a n/a n/a b) Marina Park Cancellation Fee $13.00 $17 33%$4 75%100% c) Marina Park - Flat Rate for Electricity $13 plus actual per kWh usage $19 plus actual per kWh usage varies varies varies varies Description Appendix B: p. 5 52 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - HARBOR DEPARTMENT SERVICES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery NoteDescription 10 Marine Activities Permit a) Service Providers i) Initial $386.00 $394 2%$8 n/a n/a ii) Renewal $87.00 $89 2%$2 n/a n/a b) Charters, Boat Rentals, Human-Powered Rentals i) Initial $1,203.00 $1,227 2%$24 n/a n/a ii) Renewal $465.00 $474 2%$9 n/a n/a 11 Mooring Extension Permit $533.00 $515 -3%($18)103%100% 12 Multiple Vessel Mooring System Application Fee $533.00 $515 -3%($18)103%100% 13 Special Events - Harbor a) Simple (Raft Up, Boat Race, etc.) $101.00 $136 34%$35 75%100% b) Complex $519.00 $996 92%$477 52%100% 14 Temporary Sea Lion Deterrent $148.00 $201 36%$53 74%100% 15 Towing Fee a) Boats under 14'$74.00 $129 75%$55 57%100% b) Boats over 14'$27 plus 100% Contractor Cost $176 plus 100% of Contractor Cost varies varies varies 100% c) Abandoned / Impounded Boats Over 14' but less than 25'n/a - new $377 varies varies 0%100% 16 Wait List a) Wait List for Balboa Yacht Basin Slips and Garages $34.00 $34 -1%($0)101%100% b) Wait List for Balboa Yacht Basin/Marina Park Dinghy Racks $27.00 $34 25%$7 80%100% c) Wait List for Live Aboard $27.00 $30 9%$3 92%100% Appendix B: p. 6 53 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - HARBOR DEPARTMENT SERVICES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery NoteDescription 17 Mooring / Slip Rental / Storage a) Dinghy Storage - Per Lineal Foot (LF)/Per Night $0.69 $0.70 2%$0.01 n/a n/a b) Guest Moorings - Onshore - Per Lineal Foot (LF)/Per Night $0.69 $0.70 2%$0.01 n/a n/a c) Guest Moorings - Offshore - Per Lineal Foot (LF)/Per Night $1.39 $1.42 2%$0.03 n/a n/a d) Impound - Nightly Storage Fee - Per Lineal Foot (LF)/Per Night Same as Guest Mooring Rate Same as Guest Mooring Rate 2%$0.00 n/a n/a e) Large Vessel (80+ LF) Offshore Guest Mooring - Per Lineal Foot (LF)/Per Night $1.72 $1.75 2%$0.03 n/a n/a f) Large Vessel Guest Anchorage Rate - Non City Tackle - no boat $0.52 $0.53 2%$0.01 n/a n/a g) Marina Park Boat Slips (40' Slip) - Per Night $88.00 $90 2%$2 n/a n/a h) Marina Park Boat Slips (55' Slip) - Per Night $121.00 $123 2%$2 n/a n/a i) Marina Park Boat Slips (Overhang Charge) - Per Foot/Per Night $2.22 $2.26 2%$0.04 n/a n/a j) Moorings - Offshore - Per Lineal Foot (LF)/Per Year $39.38 $40.17 2%$0.79 n/a n/a [b] k) Moorings - Onshore - Per Lineal Foot (LF)/Per Year $19.68 $20.07 2%$0.39 n/a n/a [b] l) Multi-hull Vessel - 2 hulls - Per Lineal Foot (LF)/Per Night $1.66 $1.69 2%$0.03 n/a n/a m) Multi-hull Vessel - 3 hulls - Per Lineal Foot (LF)/Per Night $1.94 $1.98 2%$0.04 n/a n/a 18 Rhine Wharf permit n/a - new $28 n/a - new n/a - new 0%100% 19 Variance applications n/a - new $498 n/a - new n/a - new 0%100% 20 Use of electrical cord and/or adapter while at Marina Park n/a - new $10 n/a - new n/a - new n/a n/a 21 Purchase (non-return) of electrical cord or adapter n/a - new $75 n/a - new n/a - new 0%100% 22 Mooring size exchange n/a - new $302 n/a - new n/a - new 0%100% 23 Mooring license application fee n/a - new $26 n/a - new n/a - new 0%100% 24 Mooring license waitlist fee (one time or annual)n/a - new $34 n/a - new n/a - new 0%100% 25 Group/exclusive use fee for Marina Park n/a - new $502 n/a - new n/a - new 0%100% 26 Mooring Assists - After Hours n/a - new $200 n/a - new n/a - new 0%100% 27 Deposit/late cancellation fee for use of Human Lift - Marina Park n/a - new $31 n/a - new n/a - new 0%100% 28 Deposit/late cancellation fee for use of Human Lift - Balboa Marina PD n/a - new $117 n/a - new n/a - new 0%100% [a] NBMC Chapter 17.65. [b] Resolution 2016-17. Adjusted annually by the U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers ("CPI"), Los Angeles-Riverside-Orange County Region or 2%, whichever is less. Appendix B: p. 7 54 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - INFORMATION TECHNOLOGY Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note INFORMATION TECHNOLOGY 1 Hourly Rate for A/V / Technical Support Associated with Fee and Charge Related Activities (e.g., support associated with facility rentals) a) Business Hours - Per Hour n/a - new $144 n/a - new n/a - new 0%100% b) Non-Business Hours - Per Hour n/a - new $173 n/a - new n/a - new 0%100% Description Appendix B: p. 8 55 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - PUBLIC WORKS ENGINEERING AND HARBOR RESOURCES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note PUBLIC WORKS - ENGINEERING 1 Covenant Agreement Research & Review Fee (Per Hour)$177.00 $202 14%$25 88%100% 2 Dining Encroachment a) Dining Encroachment Permit - Application $486.00 $540 11%$54 90%100% b) Dining Encroachment Permit - Transfer $223.00 $249 12%$26 90%100% c) Dining Encroachment Annual Use Fee i) 100 SF or Less $176.00 $180 2%$4 n/a n/a ii) Over 100 SF $331.00 $338 2%$7 n/a n/a 3 Document Recordation Fee $216.00 $207 -4%($9)104%100% 4 Easement Deed Research, Reviews/Processing $266.00 $263 -1%($4)101%100% 5 Encroachment & Eng. Agreement Prep a) Encroachment & Eng. Agreement Prep $609.00 $788 29%$179 77%100% b) Encroachment & Eng. Agreement Prep - Planning Commission $3,321.00 $2,722 -18%($599)122%100% 6 Encroachment Permit a) Encroachment Permit With Other Dept./Div. Review $468.00 $525 12%$57 89%100% b) Encroachment Permit Without Other Dept./Div. Review $266.00 $303 14%$37 88%100% 7 Engineering Field Inspection - Per Inspection $146.00 $90 -38%($56)162%100%[a],[b] 8 Escrow Account Administration $132.00 $134 2%$2 99%100% 9 Fair Share Fee $225.64 $225.64 0%$0 n/a n/a 10 Lot Line Adjustment Checking Fee $1,242.00 $1,080 -13%($162)115%100% 11 Monitoring Wells $367.00 $414 13%$47 89%100% 12 News Rack Permits $64.00 $81 27%$17 79%100% 13 Oceanfront Encroachment Annual Permit a) Depth of Encroachment - 0 -5.0 Feet $423.00 $431 2%$8 n/a n/a b) Depth of Encroachment - 5.0 - 7.5 Feet $635.00 $648 2%$13 n/a n/a c) Depth of Encroachment - 7.5 - 10.0 Feet $847.00 $864 2%$17 n/a n/a d) Depth of Encroachment - 10 - 15 Feet $1,272.00 $1,297 2%$25 n/a n/a Description Appendix B: p. 9 56 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - PUBLIC WORKS ENGINEERING AND HARBOR RESOURCES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery NoteDescription 14 Parcel Map Check $3,286.00 $2,144 -35%($1,143)153%100% 15 Plan Check (per hour)$215.00 $234 9%$19 92%100% 16 Street Closure Permit a) Street Closure Permit with Engineering Review i) Permit Fee $82.00 $96 17%$14 85%100% ii) Field Inspection - Per Inspection (if required)n/a $90 n/a $90 100%[b] b) Street Closure Permit without Engineering Review i) Permit Fee $32.00 $41 27%$9 79%100% ii) Field Inspection - Per Inspection (if required)n/a $90 n/a $90 100%[b] 17 Street Easement and Vacation Processing Fee $1,073.00 $1,191 11%$118 90%100% 18 Temporary No Parking Signs (per sign)$0.80 $1 10%$0 91%100% 19 Tract Plan Check a) Up to $100,000 Improvement 6.5% of value up to $100,000. $390 minimum 6.5% of value up to $100,000. $390 minimum 0%$0 varies varies b) $100,000 - $400,000 Improvement $8,680 Base fee for first $100,000 + 5% incremental costs for amount over $100,000 $8,680 Base fee for first $100,000 + 5% incremental costs for amount over $100,000 0%$0 varies varies c) Over $400,000 Improvement $28,710 Base fee for first $400,000 + 4% incremental costs for amount over $400,000 $28,710 Base fee for first $400,000 + 4% incremental costs for amount over $400,000 0%$0 varies varies 20 Traffic Control Plan Check a) 8½" x 11"/11" x17"; per sheet $82.00 $96 17%$14 85%100% b) 24" x 36"; per sheet $183.00 $207 13%$24 88%100% 21 Traffic Study Consultant Cost + 10% City Administrative Fee Consultant Cost + 10% City Administrative Fee 0%$0 0%100% 22 Traffic Subdivision Plan Check (per hour)$177.00 $222 25%$45 80%100% Appendix B: p. 10 57 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - PUBLIC WORKS ENGINEERING AND HARBOR RESOURCES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery NoteDescription Deposits - (Refundable) 23 Crane Deposit $1,000.00 $1,000 0%$0 n/a n/a 24 Improvements Required By City Determined by Public Works Determined by Public Works 0%$0 n/a n/a PUBLIC WORKS - HARBOR RESOURCES 25 Piers a) Residential - Per Square Foot $0.55 $0.55 0%$0 n/a n/a b) Pier Permit Transfer (line moved)$259.00 $324 25%$65 80%100% 26 Plan Review - (Additional Fees Apply if Public Hearing Required) a) Plan Check Fee - New Construction w/ Agency Approval $259.00 $405 56%$146 64%100% b) Plan Check Fee - Maintenance $64.00 $162 153%$98 40%100% 27 Public Hearing Fees (for Appeal, Variance, Plan Review, etc.) a) Public Hearing - Variance (Harbor Commission)varies $2,893 varies varies 0%100% b) Public Hearing - (Harbor Commission)$2,253.00 $1,765 -22%($489)128%100% c) Public Hearing - Appellant Successful (Harbor Commission)$0.00 $0 0%$0 0%0% d) Public Hearing - Appellant Unsuccessful (Harbor Commission)$1,250.00 $1,446 16%$196 43%50% e) Public Hearing - Appellant Successful (City Council)$0.00 $0 0%$0 0%0% f) Public Hearing - Appellant Unsuccessful (City Council)$940.00 $691 -27%($250)68%50% g) Director/Staff Approval varies $856 varies varies 0%100% 28 RGP Dredging Permit $3,450.00 $1,703 -51%($1,747)varies 100% [a] Curb/Gutter/Sidewalk/Driveway/Non-standard Imp. - Each Inspection 1/30'/Sewer/Water Meter/Fire Service/Underground Utilities-Each Insp./location/Parkway Drains - Each Inspection [b] Engineering field inspection fee will be applied with street closure permit when inspections are required. Appendix B: p. 11 58 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - PUBLIC WORKS MUNICIPAL OPERATIONS FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note PUBLIC WORKS - MUNICIPAL OPERATIONS 1 Recycling Service Fee - Per Residential Unit, Per Month $6.56 - $7.03 $6.39 varies varies varies 100% a) Excluding Newport Coast and Santa Ana Heights - Per Residential Unit, Per Month $7.03 See above n/a n/a n/a n/a b) Newport Coast - Per Residential Unit, Per Month $6.56 See above n/a n/a n/a n/a 2 Solid Waste Franchise Application $1,005.00 $1,652 64%$647 61%100% 3 Supplemental Tree Trimming pass through of 100% of contract svc cost pass through of 100% of contract svc cost n/a n/a 100%100% 4 Tree Planting / Removal pass through of 100% of contract svc cost pass through of 100% of contract svc cost n/a n/a 100%100% 5 Washington Street Trash Bin Variable - See Reso #97-70 and #2021- 65 Variable - See Reso #97-70 and #2021- 65 n/a n/a n/a n/a 6 Construction and Demolition a) Public Works Waste Management Administration Fee $281.00 $303 8%$22 93%100% b) Construction and Demolition Deposit i) Complete Demolition Deposit a) Valuation of $0 to $4,999 $564.00 $564 0%$0 n/a - deposit n/a - deposit b) Valuation of $5,000 to $9,999 $1,127.00 $1,127 0%$0 n/a - deposit n/a - deposit c) Valuation of $10,000 and above $1,692.00 $1,692 0%$0 n/a - deposit n/a - deposit ii) Construction Demolition Deposit a) Valuation of $100,000 to $299,999 $564.00 $564 0%$0 n/a - deposit n/a - deposit b) Valuation of $300,000 to $599,999 $564.00 $1,127 100%$563 n/a - deposit n/a - deposit c) Valuation of $600,000 and above $564.00 $1,692 200%$1,128 n/a - deposit n/a - deposit b) Demolition Deposit i) Valuation - $0 - $4,999 $564.00 ii) Valuation - $5,000 - $9,999 $1,127.00 i) Valuation - $10,000 and Above $1,692.00 Description Appendix B: p. 12 59 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - PUBLIC WORKS WATER QUALITY / CONSERVATION / ENVIRONMENTAL SERVICES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note PUBLIC WORKS - WQ/CONSERVATION/ENV SVCS 1 EV Charging Rate a) Base Rate - per kWh $0.50 $0.52 4%$0.02 96%100% b) Overstay Rate $0.10 per minute; $6.00 per hour $0.10 per minute; $6.00 per hour 0%$0 n/a n/a [a] 2 Water Quality Construction Site Inspection a) Site Inspection - Low $161.00 $196 22%$35 82%100% b) Site Inspection - Medium $484.00 $589 22%$105 82%100% c) Site Inspection - High i) Base Fee - Up to 8 inspections $1,291.00 $1,571 22%$280 82%100% ii) Fee for each additional inspection if more than 8 inspections are required $161.00 $196 22%$35 82%100% [a] For maximum fee see 22511.1(A) CVC EV Parking - Not Charging. Per minute rate begins after 10-minute grace period. Description Appendix B: p. 13 60 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - UTILITY SERVICES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note UTILITIES Miscellaneous 1 Annual Grease Disposal Mitigation Fee $634.00 $718 13%$84 88%100% 2 FOG Annual Permit No Charge No Charge 0%$0 0%0% 3 FOG Non-Compliance $74.00 $75 2%$1 100%100% 4 Re-inspection Fee $175.00 $196 12%$21 89%100% 5 Utilities Field Inspection $284.00 $294 4%$10 97%100% Sewer Related Fees 6 Meters, Boxes, Lids, Etc. a) Base Fee n/a - new $53 n/a - new n/a - new 0%100% b) Plus, Actual Cost of Meter, Box, Lid, Etc.varies Pass-through of Actual Cost of Materials varies varies n/a 100% 7 Sewer Only Establishment Fee $52.00 $52 0%($0)100%100% 8 Sewer 4TT Box (Main Line)$38.79 See above n/a n/a n/a n/a 9 Sewer 4TT Box Lid (Main Line)$24.48 See above n/a n/a n/a n/a Water Related Fees 8 Construction Water Meter a) Establishment Charge - Application $106.00 $105 -1%($1)0%50% b) Meter Deposit $1,250.00 $1,250 0%$0 0%0% c) Monthly Charge See - 2" domestic meter rate See - 2" domestic meter rate n/a n/a 0%0% 9 Delinquent Water Service Discontinuance $148.00 $147 -1%($1)0%100% 10 Delinquent Water Service Restoration a) Low Income Household - below 200% of the federal poverty line i) Business Hours $50.00 $50 0%$0 25%25% ii) After Hours $150.00 $150 0%$0 74%74% b) All Others i) Business Hours $269.00 $304 13%$35 83%100% ii) After Hours $289.00 $336 16%$47 80%100% Description Appendix B: p. 14 61 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - UTILITY SERVICES FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery NoteDescription 11 Hydrant Flow Test a) Hydrant Flow Test - Highway Test (Night Time)$535.00 $646 21%$111 83%100% b) Hydrant Flow Test - Non-Highway (Regular Hours)$475.00 $541 14%$66 88%100% 12 Meters, Boxes, Lids, Etc. a) Base Fee n/a - new $53 n/a - new n/a - new 0%100% b) Plus, Actual Cost of Meter, Box, Lid, Etc.varies Pass-through of Actual Cost of Materials varies varies n/a 100% 13 Water and Sewer Service Establishment Fee - Business Hours a) Business Hours i) Remote Activation (NEW)$123 - $127 $52 varies varies n/a - new 100% ii) Onsite Activation Required $123 - $127 $176 varies varies varies 100% b) Non-Business Hours $339.00 $405 20%$66 84%100% 14 Water Meter Service Installation Fee $754.00 $754 0%($0)100%100% 15 Water Shut Off-Tag Placement $33.00 $28 -14%($5)116%100% 16 3/4 Inch Meter Box $52.79 See above n/a n/a n/a n/a 17 3/4 Inch Meter Box Lid $25.86 See above n/a n/a n/a n/a 18 5/8 & 3/4 Inch Water Meter $172.40 See above n/a n/a n/a n/a 19 1 Inch Meter Box $78.32 See above n/a n/a n/a n/a 20 1 Inch Meter Box Lid $42.02 See above n/a n/a n/a n/a 21 1 Inch Water Meter $193.95 See above n/a n/a n/a n/a 22 1.5 Inch Turbine Water Meter $491.34 See above n/a n/a n/a n/a 23 1.5 Inch Water Meter $463.33 See above n/a n/a n/a n/a 24 2 Inch Meter Box $138.69 See above n/a n/a n/a n/a 25 2 Inch Meter Box Lid $72.19 See above n/a n/a n/a n/a 26 2 Inch Turbine Water Meter $573.23 See above n/a n/a n/a n/a 27 2 Inch Water Meter $565.69 See above n/a n/a n/a n/a 28 Main Line Valve Box $38.79 See above n/a n/a n/a n/a 29 Main Line Valve Box Lid $34.48 See above n/a n/a n/a n/a Appendix B: p. 15 62 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - CREDIT CARD / MOBILE APPLICATION PAYMENT CONVENIENCE FEE Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note 1 Credit Card Convenience Fee (% of fee paid by credit card)n/a - new 2.85%n/a - new n/a - new 0%100%[a] 2 Parking Meter Mobile Application Payment Processing Fee Vendor Transaction Fee for Online Payment Processing Pass-Through Pass-Through 0%$0 100%100%[b] 3 Credit Card Fees on Charges in Excess of $20,000 Pass-Through Pass-Through [c] Description [a] Credit convenience fees currently applicable for online utility bill payments and other payments received by the City in excess of $20,000. The City may determine to apply a similar fee to other receipts collected by the City via credit card (e.g., business license payment). [b] Renaming fee for fee schedule clarity. [c] Removing from fee schedule. Renamed to Credit Card Convenience Fee. Appendix B: p. 16 63 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - CIVIL SUBPOENA FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note 1 Civil Subpoena (per day; per employee)$275.00 Actual Cost; with $275 per day initial amount varies varies n/a n/a [a],[b],[c] a) All Staff Except Sworn Officers and Firefighters (per day; per employee)$275.00 b) Sworn Officers and Firefighters (per day; per employee)$275.00 Description [b] Actual amounts paid shall be calculated in accordance with California Government Code 68097.2. (b) The party at whose request the subpoena is issued shall reimburse the public entity for the full cost to the public entity incurred in paying the peace officer, firefighter, state employee, trial court employee, or specified county employee his or her salary or other compensation and traveling expenses as provided for in this section, for each day that the peace officer, firefighter, state employee, trial court employee, or specified county employee is required to remain in attendance pursuant to the subpoena. The amount of two hundred seventy-five dollars ($275), together with the subpoena, shall be tendered to the person accepting the subpoena for each day that the peace officer, firefighter, state employee, trial court employee, or specified county employee is required to remain in attendance pursuant to the subpoena. (c) If the actual expenses should later prove to be less than the amount tendered, the excess of the amount tendered shall be refunded. (d) If the actual expenses should later prove to be more than the amount deposited, the difference shall be paid to the public entity by the party at whose request the subpoena is issued. [a] Actual amounts paid shall be calculated in accordance with California Government Code 68096.1. (a) Any employee of a local agency who is obliged by a subpoena to attend a civil action or proceeding as a witness in litigation in a matter regarding an event or transaction that he or she perceived or investigated in the course of his or her duties, to which that local agency is not a party, shall receive the salary or other compensation to which he or she is normally entitled from that local agency during the time that he or she prepares for his or her response and appearance, during the time that he or she travels to and from the place where the court or other tribunal is located and while he or she is required to remain at that place pursuant to the subpoena. He or she shall also receive from that local agency the actual necessary and reasonable traveling expenses he or she incurred in complying with the subpoena. (b) The party at whose request the subpoena is issued shall reimburse the local agency for the full cost incurred by the local agency in paying the employee his or her salary or other compensation and traveling expenses as provided for in this section, for each day that the employee is required to remain in attendance pursuant to the subpoena. The amount of two hundred seventy-five dollars ($275), together with the subpoena, shall be tendered to that local agency for each day that the employee is required to remain in attendance pursuant to the subpoena. (c) If the actual expenses should later prove to be less than the amount tendered, the excess of the amount tendered shall be refunded. (d) If the actual expenses should later prove to be more than the amount tendered, the difference shall be paid to the local agency by the party at whose request the subpoena was issued. [c] Salary/other compensation shall be determined based on the City's most current adopted salary schedule (top step) by position, subject to existing MOU provisions and minimums for court appearances. If preparation, service, or travel is provided during overtime hours, the City shall use overtime rate for calculating actual costs, subject to existing MOU provisions and minimums for court appearances. Appendix B: p. 17 64 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - PLANNING AND BUILDING FEES Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note 1 Banner / Sign Permit $59.00 $59.00 0%$0 n/a n/a 2 General Plan Maintenance Fee - % of Building Permit Fee 5%5%0%$0 n/a n/a [a] Description [a] The fee will be applied as five percent (5%) to permit fees for all new construction, additions, and additions with alterations for the residential and commercial projects. Appendix B: p. 18 65 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - TAXICAB OPERATOR LICENSING Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note 1 Taxicab Permitting a) Company Permit n/a $1,660 n/a n/a n/a 100%[a] b) Vehicle Permit (Per Vehicle)n/a $1,399 n/a n/a n/a 100%[a] c) Driver Permit n/a $1,660 n/a n/a n/a 100%[a] Description [a] Amount shown does not include applicable fingerprint/livescan fees and any fees collected on behalf of other agencies (e.g., Department of Justice fees). Appendix B: p. 19 66 City of Newport Beach BEFORE AND AFTER ILLUSTRATION - TOW FEE / VEHICLE RELEASE FEE Current Fee Proposed Fee Fee Change %Fee Change $ Current Cost Recovery Proposed Cost Recovery Note 1 Tow Fee / Vehicle Release Fee $185 See below for fee breakdown $185 See below for fee breakdown 0%$0 100%100% a) Tow Operator Fee $55 a) Customer Fee $110 $156 b) Vehicle Release Fee $20 $29 Description Appendix B: p. 20 67 ATTACHMENT B NEWPORT BEACH MUNICIPAL CODE SECTION 3.36.030 CHANGES 68 Newport Beach Municipal Code Chapter 3.36 COST RECOVERY FOR USER SERVICES Page 1/9 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. Chapter 3.36 COST RECOVERY FOR USER SERVICES 3.36.030 Cost Recovery Percentages. A. The municipal functions the City Council has determined to be user services and for which the City Council has initially determined the actual costs and the appropriate cost recovery percentage are described in the fee resolution. The cost recovery percentage appropriate for each user service shall be one hundred (100) percent with the exception of the user services listed in Exhibit “A” and those services for which the fee is limited by statute. The City Council may include in the fee resolution a schedule to phase in specific fee increases over a period not to exceed five (5) years. B. The City Council shall establish, pursuant to the fee resolution, the actual fee or charge for each user service described in the fee resolution. The fee or charge shall be based upon the actual cost of providing the user service, multiplied by the relevant cost recovery percentage. C. The City Council may, without amending this chapter, modify (increase or decrease) the fee resolution to amend the amount of any fee or charge for, and the actual cost of providing, any user service upon a determination that there has been an increase or decrease in one or more of the cost factors relevant to the calculation of the actual cost of providing that service. D. The City Council may modify the municipal functions determined to be user services in the fee resolution and the cost recovery percentage for any service only by amending this chapter. E. Fees for service established in the fee resolution may be waived by: 1. The City Council; 2. The City Manager, up to an amount not to exceed one thousand dollars ($1,000.00), per occurrence, for fees imposed on nonprofit organizations for nonprofit sponsored events; or 3. The City Manager or the Finance Director up to an amount not to exceed five thousand dollars ($5,000.00), per occurrence, if the City Manager or Finance Director determines that the imposition of the fee would exceed the actual cost to the City or would result in duplicative fees for services rendered. 69 Newport Beach Municipal Code Chapter 3.36 COST RECOVERY FOR USER SERVICES Page 2/9 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. Exhibit A The City’s cost of providing the following services shall be recovered through direct fees charged for services. Exhibit “A” limits cost recovery fees to the percentages or dollar amounts indicated below. Service Percentage of Cost or Amount to Be Recovered from Direct Fees All Departments Appeals—For Any User Services Appeal Not Otherwise Specified— Appellant Successful 0% Appeals—For Any User Services Appeal Not Otherwise Specified— Appellant Unsuccessful 50% Community Development Department Chapter 17.65 Appeal— Appellant Successful 0% Chapter 17.65 Appeal to City Council—Appellant Unsuccessful $940 Chapter 17.65 Appeal to Harbor Commission— Appellant Unsuccessful $1,250 Building Appeals Board Hearing —Appellant Successful 0% 70 Newport Beach Municipal Code Chapter 3.36 COST RECOVERY FOR USER SERVICES Page 3/9 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. Appeals Board Hearing —Appellant Unsuccessful 50% Harbor Construction 50% Preliminary Plan Review First Two Hours Free, Full Cost Thereafter Planning Appeals to City Council or Planning Commission— Appellant Successful 0% Appeals to City Council or Planning Commission— Appellant Unsuccessful 50% Coastal Development Permit Application Appeals from Zoning Administrator to Planning Commission 0% General Plan Maintenance Fee 12% Reasonable Accommodation 0% Finance Department Admin. Cite Hearings 0% Parking Hearings 0% 71 Newport Beach Municipal Code Chapter 3.36 COST RECOVERY FOR USER SERVICES Page 4/9 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. Payment Plans (Except Parking) $25 Short Term Lodging Permit Suspension or Revocation Hearing— Appellant Successful 0% Short Term Lodging Permit Suspension or Revocation Hearing— Appellant Unsuccessful 50% Zero Bill Reprint 0% Fire Department Emergency Medical Services Advanced Life Support (ALS)—Nontransport $400 Basic Life Support (BLS)—Nontransport $400 ALS First Responder Fee $400 BLS First Responder Fee $400 Harbor Department Chapter 17.65 Appeal — Appellant Successful 0% Chapter 17.65 Appellant Appeal to City Council – Applicant Appellant Unsuccessful $94050% 72 Newport Beach Municipal Code Chapter 3.36 COST RECOVERY FOR USER SERVICES Page 5/9 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. Chapter 17.65 Appeal to Harbor Commission— Appellant Unsuccessful $1,25050% Library Services Department Black and White Copies from Self-Service Copier or Printer $0.15 Color Copies from Self- Service Copiers or Printers $0.45 Use Fees—Materials $1 Inter-Library Loan $5 Police Department Bike Licenses 0% Citation Sign-off $10 Fingerprinting—City Portion $25 Secondhand/Pawn Dealer Tag Check 0% Registrant—Narcotics 0% Registrant—Sex 0% Animal Shelter Adoption Fee— Puppies $225 Adoption Fee—Senior Dog—Animal Over Eight (8) Years Old $70 73 Newport Beach Municipal Code Chapter 3.36 COST RECOVERY FOR USER SERVICES Page 6/9 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. Adoption Fee—Dog— All Other $150 Adoption Fee—Kittens $110 Adoption Fee—Senior Cat—Animal Over Eight (8) Years Old $70 Adoption Fee—Cat— All Other $90 Adoption Fee—Small Animals $45 Boarding Fee (per day) —Animals $25 Boarding Fee (per day) —Small Animals $10 Owner Turn-In Fee— Altered Animal $100 Owner Turn-In Fee— Unaltered Animal $200 Impound Fee—Dogs, Cats, Small Animals $62 Public Works Department Chapter 17.65 Appeal — Appellant Successful 0% Chapter 17.65 Appeal to City Council–Appellant Unsuccessful $94050% Chapter 17.65 Appeal to Harbor Commission— Appellant Unsuccessful $1,25050% 74 Newport Beach Municipal Code Chapter 3.36 COST RECOVERY FOR USER SERVICES Page 7/9 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. RGP Dredging Permit 100% Recreation and Senior Services Department Adult Sports 50%—95% Administrative Processing Fee $5 Badge Replacement $5 After School/Camp Programs Camps 20%—50% After-School/Teen Program 20%—50% Preschool Program 20%—50% Aquatics 20%—50% Contract Classes 50%—95% Class Refunds $74 or less $10 $75 or more $20 Youth Sports 20%—50% Special Events—Levels 1, 2, and 3 Resident, Level 1 and Late Fees for Level 1 0%—20% Resident, Levels 2—3 and Late Fees for Levels 2—3 20%—50% 75 Newport Beach Municipal Code Chapter 3.36 COST RECOVERY FOR USER SERVICES Page 8/9 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. Nonresident, Levels 1 —2 and Late Fees for Level 1 20%—50% Nonresident, Level 3 and Late Fees for Levels 2—3 50%—95% Appeal to City Council— Appellant Successful 0% Appeal to City Council— Appellant Unsuccessful 50%—95% Natural Resources Programs 0%—20% Senior Services OASIS Transportation $1—$3 each way Contract Classes 20%—50% Fitness Center 50%—95% Utilities Department Construction Water Meter Establishment 50% Fats, Oils, and Grease (FOG) Annual Permit 0% City Council, Board, Commission, Committee or Any Individual Member Thereof When Acting Within the Scope of Their Official Duties 76 Newport Beach Municipal Code Chapter 3.36 COST RECOVERY FOR USER SERVICES Page 9/9 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. Review from a Lower Body or Official $0 (Ord. 2023-22 § 184, 2023; Ord. 2023-7 § 1, 2023; Ord. 2022-10 §§ 3, 4, 2022; Ord. 2021-13 § 1, 2021; Ord. 2021-7 § 1, 2021; Ord. 2020-10 § 1, 2020; Ord. 2020-5 § 4, 2020; Ord. 2018-15 § 1, 2018; Ord. 2018-13 § 1, 2018; Ord. 2016-14 § 1, 2016; Ord. 2015-29 § 1, 2015; Ord. 2015-9 § 1, 2015; Ord. 2013-18 §§ 1, 2, 2013; Ord. 2013-1 § 1, 2013; Ord. 2011-28 § 1, 2011; Ord. 2011-10 § 1, 2011; Ord. 2009-32 § 1 (Exh. A), 2010; Ord. 2009-21 § 1 (Att. 1), 2009; Ord. 2008-14 § 1 (Exh. 1) (part), 2008: Ord. 2004-4 § 3, 2004; Ord. 2002-26 Exh. A, 2002; Ord. 2000-24 § 1, 2000; Ord. 98-18 § 1, 1998; Ord. 97-8 §§ 1 (part), 2, 1997) 77 ATTACHMENT C NEWPORT BEACH MUNICIPAL CODE SECTION 15.02.085 ADDITION OF SECTION 105.3.1.1 78 Newport Beach Municipal Code Chapter 15.02 ADMINISTRATIVE CODE Section 15.02.085 Page 1/1 The Newport Beach Municipal Code is current through Ordinance 2023-22, passed November 28, 2023. Chapter 15.02.085 Addition of Section 105.3.1.1 15.02.085 Addition of Section 105.3.1.1. Section 105.3.1.1 is added as follows: Section 105.3.1.1 Construction and Demolition permits. Prior to issuance of a demolition permit for construction having a valuation over $100,000 or for complete demolition of a structure, the permittee shall certify that a City franchised solid waste enterprise shall be used for the handling, removal and disposal of all construction and demolition waste. A demolition permit deposit, set by Resolution of the City Council, shall be paid at the time of submitting the demolition permit application and the Demolition Contractor Certification and Deposit Form Construction/Demolition Contractor Certification and Deposit Form. Said deposit shall be returned to the permittee, minus administrative fees set by Resolution of the City Council, at the conclusion of the demolition project, upon the submittal of documentation that a franchised solid waste enterprise was used to handle, remove and dispose of all construction and demolition wastes. The demolition permit deposit shall be forfeited in its entirety if a franchised solid waste enterprise is not used to handle, remove and dispose of all construction and demolition wastes. If the Building Official finds that the work described in an application for a demolition permit and the plans, specifications and other data filed therewith conform to the requirements of this Code and the technical codes and other pertinent laws and ordinances, and that the fees specified in Section 109 have been paid and that a franchised solid waste enterprise is being used, the building official shall issue a permit therefor to the applicant. Prior to any construction or demolition or construction wastes generated activities authorized by the permit, the permittee shall notify the Public Works Department no less than twenty-four (24) hours or more than seventy-two (72) hours in advance of its intent to commence any demolition work and provide the name of the franchised solid waste enterprise that will handle, remove, and dispose oftransportconduct the construction and demolition activitieswastes. Any hauling or disposal of demolition and construction wastes by other than the identified franchised solid waste enterprise shall subject the project to suspension of work as authorized in this cCode and subject the deposit to forfeiture. (Ord. 2023-22 § 692, 2023; Ord. 2022-26 § 1, 2022) 79 ITEM NO. 6B1 FISCAL YEAR 2023-2024 FEE STUDY UPDATE ATTACHMENT A STAFF PRESENTATION – ADDITIONAL MATERIALS RECEIVED 80 FEE STUDY UPDATE Finance Committee Meeting -March 14, 2024 81 TYPES OF FEES & FINES 2 Example:Building Permits Cost Recovery-Based User Fees Fees limited to recovering the cost of providing the service Example:Facility Rentals Market Rate User Fees The city can charge whatever price the market will pay(must be competitive) Example:Passport ServiceFeesSetby Law Some fees are set by Federal or State law Example:Business LicensesTaxes under Propositions 218 & 26 Certain fees constitute taxes and may not be increased without a vote of the people Example:Library Fines Fines Fines are not subject to cost recovery rules and may be set by the Council City of Newport Beach – Finance Department 82 DEGREE OF GENERAL VS. PRIVATE BENEFIT 3 Commercial Facility Rentals Fire Prevention Inspections Zoning and Planning ApprovalsRecreationClasses Certain Appeals Non-Profit Facility Rentals Police Services Street Maintenance Park Maintenance Tax -Funded Fee-Funded General Benefit Private Benefit City of Newport Beach – Finance Department 83 AUTHORITY FOR COST-RECOVERY BASED USER FEES 4 Fiscal Sustainability Plan Establish appropriate cost-recovery targets and adjust fee structure to ensure that the fees continue to meet cost recovery targets. City Council Policy F-4 –Revenues Measures The City will establish appropriate cost-recovery targets for its fee structure and will annually adjust its fee structure to ensure that the fees continue to meet cost recovery targets. Newport Beach Municipal Code Section 3.36.030 mandates 100% cost recovery (except for subsidized services identified in the municipal code) City of Newport Beach – Finance Department 84 COST RECOVERY-BASED USER FEES 5 Fees cannot exceed the cost of providing the service Considerations: Degree of private benefit Appropriate cost recovery level Size of increase that would result from full cost recovery Calculation of the maximum fee is a math exercise Type of fee varies based on fit (flat,tiered based on effort,or deposit-based) Degree of cost recovery is a policy decision City of Newport Beach – Finance Department 85 EXAMPLE: COST OF SERVICE ANALYSIS 6 Hourly Rate for Personnel Providing Services Time Required to Perform the Servicex =Cost of Service Fully Burdened Hourly Rates: Direct and indirect labor costs Services and supplies Agency overhead Estimated or Known Times for Providing Services Maximum Fee Amount City of Newport Beach – Finance Department 86 COST RECOVERY ANALYSIS 7 Revenue from Current Fee in $ Full Cost of Service in $Proposed Fee Current Level of Cost Recovery Maximum Level of Cost Recovery (100%) Proposed General Revenue Subsidy Recommended Level of Cost Recovery Current General Revenue Subsidy Minimum Level of Cost Recovery (0%) City of Newport Beach – Finance Department 87 FY 23-24 FEE STUDY UPDATE 8 Departments studied Finance Harbor Public Works Utilities One-Off Fees City of Newport Beach – Finance Department 88 FINANCE DEPARTMENT Fee Changes: •Decrease in most Business License Processing Fees, Sidewalk Vending Permit Application, and Sound Amplification Permit •Short-term Lodging Permits (STLP) increase in Initial and Renewal proposed fees •Proposing phased in approach to STLP over a two-year period •Continue to follow the City’s adopted cost recovery policy 9 New Fees: 1)Business License Initial Application (online) 2)Taxicab Operator License Fee a)Company Permit Fee b)Vehicle Permit (per vehicle) fee c)Driver Permit Fee Fees Last Updated: 2021 Sample Services: Permit review and issuance for vehicles for hire, short- term lodging, parking, tax collection. Net Revenue Impact: $171,000 City of Newport Beach – Finance Department 89 HARBOR DEPARTMENT Fee Changes: •Several new fees are proposed •Large Variance Increase Environmental Response, Impound Fees, and Large Boat Escort/Permit •Continue to follow the City’s adopted cost recovery policy 10 Fees Last Updated: 2021 Sample Services: Permit application review (marine activities, live aboard, mooring extension), waitlists, impounds, appeals Net Revenue Impact: $20,000 New Fees: 1)Towing Fee for Abandoned/Impounded Boats Over 14’ but less than 25’ 2)Taxicab Operator License Fee 3)Variance Applications 4)Use of electrical cord and/or adapter while at Marina Park 5)Purchase (non-return) of electrical cord or adapter 6)Mooring size exchange 7)Mooring License Application Fee 8)Mooring License Waitlist Fee 9)Group/exclusive use fee for Marina Park 10)Mooring Assists 11)Deposit/late cancellation fee for use of Human Lift – Marina Park 12)Deposit/late cancellation fee for use of Human Lift – Balboa Marina PD City of Newport Beach – Finance Department 90 PUBLIC WORKS DEPARTMENT Fee Changes: •Continue to follow the City’s adopted cost recovery policy •Changes to existing fees proposed •Engineering Field Inspection fee to be applied with Street Closure Permit that requires field inspection •Recycling Service Fee Combination •Construction and Demolition 11 Fees Last Updated: 2021 Sample Services: Plan check, permits, inspections, and compliance reviews Net Revenue Impact: $66,000 New Fees: No new fees are proposed NBMC 15.02.085 Section 105.3.1.1 Proposed Update •Revisions inclusion of construction permit and clarification of language City of Newport Beach – Finance Department 91 UTILITIES DEPARTMENT Fee Changes: •Two new proposed fees •Meters, Boxes, Lids, Etc. not eliminated, simply reformatted in presentation •Continue to follow the City’s adopted cost recovery policy 12 New Fees: 1)Meters, Boxes, Lids, Etc. – Base Fee 2)Water & Sewer Services Establishment Fee i. Remote Activation Fees Last Updated: 2021 Sample Services: Water service installation and establishment, delinquent water restoration, hydrant flow test, construction water meter establishment Net Revenue Impact: ($114,820) City of Newport Beach – Finance Department 92 OTHER UPDATES •Information Technology: A/V Technical Support •Police Department: •Civil Subpoenas •Towing and Vehicle Release/ Repossession Fee •Community Development: •Minor revisions to descriptions in the Banner Permit Fee •Inclusion of footnote for General Plan Maintenance Fee •All Departments: •Credit Card convenience fee of 2.85% for online utility bill payments •Renaming Vendor Transaction Fee for Online Payment Processing to Parking Meter Mobile Application Processing Fee 13 NBMC 3.36.030 Cost Recovery Percentages Proposed Update •Modifications to facilitate changes to authorized levels of cost recovery required by the fee changes City of Newport Beach – Finance Department 93 FISCAL IMPACT OF FEE UPDATES 14 Proposed fee updates will result in approximately $581,000 of additional revenue next fiscal year Additional revenues expected from proposed changes to fees and charges are intended to offset the cost of providing existing services associated with those fee-related regulatory functions. Additional fee revenue is not intended to fund new services. Department FY 2024-25 Proposed Net Revenue Impact Finance Department $171,000 Harbor Department $20,000 Public Works Department $66,000 Utilities Department ($115,000) Credit Card Convenience Fee $439,000 Total $581,000 City of Newport Beach – Finance Department 94 TIMELINE & RECOMMENDATION 15 Recommendation March 14,2024 Finance Committee Review April 23,2024 Council Review & First Ordinance Reading ofProposed NBMCChanges May 14,2024 Council Second Ordinance Reading/Adoptionof Proposed NBMC Changes Effective date for proposed fee updates1 Review the proposed fee updates and provide any recommendations for consideration by the City Manager and City Council. Recommendation July 13,2024 1 –CPI adjustments and new credit card fee effective July 1st City of Newport Beach – Finance Department 95 16 QUESTIONS? City of Newport Beach – Finance Department 96 CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Agenda Item No. 6C March 14, 2024 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE FROM: Finance Department Jason Al-Imam, Finance Director/Treasurer 949-644-3123, jalimam@newportbeachca.gov SUBJECT: REVIEW OF INVESTMENT POLICY SUMMARY: In September 2023, the Finance Committee completed its annual review of Council Policy F-1. During the meeting, the Finance Committee requested that staff review the investment pools for the County of Los Angeles and the County of Orange. In January 2024, staff reported to the Finance Committee regarding the County of LA and Orange investment pools and the Finance Committee asked staff to return with a formal recommendation to revise Council Policy F-1. RECOMMENDED ACTION: Review and discuss this report and recommend that the City Council formally approve the proposed changes to Council Policy F-1 by adopting a resolution. DISCUSSION: The California Government Code allows for surplus funds to be invested with any county in the State of California. The City’s Investment Policy currently lists the investment pool for the County of Los Angeles as an authorized investment, whereas the County of Orange is not listed as an authorized investment. The City has never invested surplus funds with the County of Los Angeles, and Council Policy F-1 does not allow for funds to be invested with the County of Orange. The City has short term investment options with the Local Agency Investment Fund (LAIF), and the California Asset Management Program (CAMP). LAIF and CAMP provide the City benefits over the county pool options, such as with a weighted average maturity more suitable for the City’s financial needs, and reporting is more timely for accounting. 97 Review of Investment Policy Page 2 The following excerpt of Council Policy F-1, Section G, Subsection 1. N. is recommended to be deleted. County Investment Funds: Los Angeles County provides a service similar to LAIF for municipal and other government entities outside of Los Angeles County, including the City. Investment in this pool is intended to be used as a temporary repository for short-term funds used for liquidity purposes. The Finance Director shall maintain on file appropriate information concerning the county pool’s current investment policies, practices, and performance, as well as its requirements for participation, including, but not limited to, limitations on deposits or withdrawals and the composition of the portfolio. At no time shall more than five percent (5%) of the City’s total investment portfolio be placed in this pool. Prepared and Submitted by: /s/ Michael Gomez _____________________________ Michael Gomez Deputy Finance Director ATTACHMENT: Attachment A – Redline Council Policy F-1 98 ATTACHMENT A REDLINE COUNCIL POLICY F-1 99 F-1   1 STATEMENT OF INVESTMENT POLICY Purpose The City Council has adopted this Investment Policy (the Policy) in order to establish the scope of the investment policy, investment objectives, standards of care, authorized investments, investment parameters, reporting, investment policy compliance and adoption, and the safekeeping and custody of assets. This Policy is organized in the following sections: A. Scope of Investment Policy 1. Pooling of Funds 2. Funds Included in the Policy 3. Funds Excluded from the Policy B. Investment Objectives 1. Safety 2. Liquidity 3. Yield C. Standards of Care 1. Prudence 2. Ethics and Conflicts of Interest 3. Delegation of Authority 4. Internal Controls D. Banking Services E. Broker/Dealers F. Safekeeping and Custody of Assets G. Authorized Investments 1. Investments Specifically Permitted 2. Investments Specifically Not Permitted 3. Exceptions to Prohibited and Restricted Investments H. Investment Parameters 1. Diversification 2. Maximum Maturities 3. Credit Quality 4. Competitive Transactions I. Portfolio Performance J. Reporting K. Investment Policy Compliance and Adoption 1. Compliance 2. Adoption 100 F-1   2 A. SCOPE OF INVESTMENT POLICY 1. Pooling of Funds All cash shall be pooled for investment purposes. The investment income derived from the pooled investment shall be allocated to the contributing funds, net of all banking and investing expenses, based upon the proportion of the respective average balances relative to the total pooled balance. Investment income shall be distributed to the individual funds not less than annually. 2. Funds Included in the Policy The provisions of this Policy shall apply to all financial assets of the City as accounted for in the City’s Comprehensive Annual Financial Report, including; a) General Fund b) Special Revenue Funds c) Capital Project Funds d) Enterprise Funds e) Internal Service Funds f) Trust and Agency Funds g) Permanent Endowment Funds h) Any new fund created unless specifically exempted If the City invests funds on behalf of another agency and, if that agency does not have its own investment policy, this Policy shall govern the agency’s investments. 3. Funds Excluded from the Policy Bond Proceeds – Investment of bond proceeds will be made in accordance with applicable bond indentures. B. INVESTMENT OBJECTIVES The City’s funds shall be invested in accordance with all applicable City policies and codes, State statutes, and Federal regulations, and in a manner designed to accomplish the following objectives, which are listed in priority order: 1. Safety Preservation of principal is the foremost objective of the investment program. Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective shall be to mitigate credit risk and interest rate risk. To attain this objective, the City shall diversify its investments by investing funds among several financial institutions and a variety of securities offering independent returns. a) Credit Risk The City shall minimize credit risk, the risk of loss due to the failure of the security issuer or backer, by: 101 F-1   3  Limiting investments in securities that have higher credit risks, pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisors with which the City will do business  Diversifying the investment portfolio so as to minimize the impact any one industry/investment class can have on the portfolio b) Interest Rate Risk To minimize the negative impact of material changes in the market value of securities in the portfolio, the City shall:  Structure the investment portfolio so that securities mature concurrent with cash needs to meet anticipated demands, thereby avoiding the need to sell securities on the open market prior to maturity  Invest in securities of varying maturities 2. Liquidity The City’s investment portfolio shall remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated without requiring a sale of securities. Since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets. A portion of the portfolio also may be placed in money market mutual funds or LAIF which offer same-day liquidity for short-term funds. 3. Yield The City’s investment portfolio shall be designed with the objective of attaining a benchmark rate of return throughout budgetary and economic cycles, commensurate with the City’s investment risk constraints and the liquidity characteristics of the portfolio. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. C. STANDARDS OF CARE 1. Prudence The standard of prudence to be used for managing the City's investment program is California Government Code Section 53600.3, the prudent investor standard, which states that “when investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.” 102 F-1   4 The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that no investment is totally without risk and that the investment activities of the City are a matter of public record. Accordingly, the City recognizes that occasional measured losses may occur in a diversified portfolio and shall be considered within the context of the overall portfolio's return, provided that adequate diversification has been implemented and that the sale of a security is in the best long-term interest of the City. The Finance Director and authorized investment personnel acting in accordance with established procedures and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided that deviations from expectations are reported in a timely fashion to the City Council and appropriate action is taken to control adverse developments. 2. Ethics and Conflicts of Interest Elected officials and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the City’s investment program or could impair or create the appearance of an impairment of their ability to make impartial investment decisions. Employees and investment officials shall subordinate their personal investment transactions to those of the City. In addition, City Council members, the City Manager, and the Finance Director shall file a Statement of Economic Interests each year as required by California Government Code Section 87203 and regulations of the Fair Political Practices Commission. 3. Delegation of Authority Authority to manage the City’s investment program is derived from the Charter of the City of Newport Beach section 605 (j). The Finance Director shall assume the title of and act as City Treasurer and with the approval of the City Manager appoint deputies annually as necessary to act under the provisions of any law requiring or permitting action by the City Treasurer. The Finance Director may then delegate the authority to conduct investment transactions and to manage the operation of the investment portfolio to other specifically authorized staff members. No person may engage in an investment transaction except as expressly provided under the terms of this Policy. The City may engage the support services of outside investment advisors with respect to its investment program, so long as it can be demonstrated that these services produce a net financial advantage or necessary financial protection of the City's financial resources. Such companies must be registered under the Investment Advisors Act of 1940, be well- established and exceptionally reputable. Members of the staff of such companies who will have primary responsibility for managing the City’s investments must have a working familiarity with the special requirements and constraints of investing municipal funds in general and this City's funds in particular. These firms must insure that the portion of the portfolio under their management complies with various concentration and other constraints specified herein, and contractually agree to conform to all provisions of governing law and 103 F-1   5 the collateralization and other requirements of this Policy. Selection and retention of broker/dealers by investment advisors shall be at their sole discretion and dependent upon selection and retention criteria as stated in the Uniform Application for Investment Advisor Registration and related Amendments (SEC Form ADV 2A). 4. Internal Controls The Finance Director is responsible for establishing and maintaining a system of internal controls. The internal controls shall be designed to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, unanticipated changes in financial markets, or imprudent action by City employees and officers. The internal structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management. D. BANKING SERVICES Banking services for the City shall be provided by FDIC insured banks approved to provide depository and other banking services. To be eligible, a bank shall qualify as a depository of public funds in the State of California as defined in California Government Code Section 53630.5 and shall secure deposits in excess of FDIC insurance coverage in accordance with California Government Code Section 53652. E. BROKER/DEALERS In the event that an investment advisor is not used to purchase securities, the City will select broker/dealers on the basis of their expertise in public cash management and their ability to provide service to the City’s account. Each approved broker/dealer must possess an authorizing certificate from the California Commissioner of Corporations as required by Section 25210 of the California Corporations Code. To be eligible, a firm must meet at least one of the following criteria: 1. Be recognized as Primary Dealers by the Federal Reserve Bank of New York or have a primary dealer within their holding company structure, or 2. Report voluntarily to the Federal Reserve Bank of New York, or 3. Qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (Uniform Net Capital Rule). 104 F-1   6 F. SAFEKEEPING AND CUSTODY OF ASSETS The Finance Director shall select one or more banks to provide safekeeping and custodial services for the City. A Safekeeping Agreement approved by the City shall be executed with each custodian bank prior to utilizing that bank's safekeeping services. Custodian banks will be selected on the basis of their ability to provide services for the City's account and the competitive pricing of their safekeeping related services. The purchase and sale of securities and repurchase agreement transactions shall be settled on a delivery versus payment basis. All securities shall be perfected in the name of the City. Sufficient evidence to title shall be consistent with modern investment, banking and commercial practices. All investment securities, except non-negotiable Certificates of Deposit, Money Market Funds and local government investment pools, purchased by the City will be delivered by book entry and will be held in third-party safekeeping by a City approved custodian bank, its correspondent bank or its Depository Trust Company (DTC) participant account. All Fed wireable book entry securities owned by the City shall be held in the Federal Reserve system in a customer account for the custodian bank which will name the City as “customer.” All DTC eligible securities shall be held in the custodian bank’s DTC participant account and the custodian bank shall provide evidence that the securities are held for the City as “customer.” G. AUTHORIZED INVESTMENTS All investments and deposits of the City shall be made in accordance with California Government Code Sections 16429.1, 53600-53609 and 53630-53686. Any revisions or extensions of these code sections will be assumed to be part of this Policy immediately upon being enacted. The City has further restricted the eligible types of securities and transactions. The foregoing list of authorized securities and transactions shall be strictly interpreted. Any deviation from this list must be pre- approved by resolution of the City Council. In the event an apparent discrepancy is found between this Policy and the Government Code, the more restrictive parameter(s) will take precedence. Where this section specifies a percentage limitation or minimum credit rating for a particular security type, that percentage or credit rating minimum is applicable only at the date of purchase. 1. Investments Specifically Permitted a) United States Treasury bills, notes, or bonds with a final maturity not exceeding five years from the date of trade settlement. There is no limitation as to the percentage of the City’s portfolio that may be invested in this category. 105 F-1   7 b) Federal Instrumentality (government-sponsored enterprise) debentures, discount notes, callable and step-up securities, with a final maturity not exceeding five years from the date of trade settlement. There is no limitation as to the percentage of the portfolio that can be invested in this category. No more than thirty percent (30%) of the portfolio may be invested in any single Federal Instrumentality/GSE issuer. The maximum percentage of callable Federal Instrumentality/GSE securities in the portfolio will be twenty percent (20%.) c) Federal Agency Obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest and which have a final maturity not exceeding five years from the date of trade settlement. There is no limitation as to the percentage of the portfolio that can be invested in this category. d) Mortgage-backed Securities, Collateralized Mortgage Obligation (CMO) and Asset- backed Securities from issuers not defined sections a, b and c of the Investments Specifically Permitted section of this investment policy are limited to bonds with a final maturity not exceeding five years from the date of trade settlement. The security itself shall be rated at least “AAA” or the equivalent by an NRSRO. No more than five percent (5%) of the City’s total portfolio shall be invested in any one issuer of mortgage-backed and asset-backed securities listed above, and the aggregate investment in mortgage-backed and asset-backed securities shall not exceed twenty percent (20%) of the City’s total portfolio. e) Medium-Term Notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States, with a final maturity not exceeding five years from the date of trade settlement, and rated in at least the “A” category or the equivalent by an NRSRO. No more than five percent (5%) of the City’s total portfolio shall be invested in any one issuer of medium- term notes, and the aggregate investment in medium-term notes shall not exceed thirty percent (30%) of the City’s total portfolio. f) Municipal Bonds including bonds issued by the City of Newport Beach, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the City or by a department, board, agency, or authority of the City. State of California registered warrants or treasury notes or bonds, including bonds payable solely out of the revenues from a revenue- producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. 106 F-1   8 Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. Bonds, notes, warrants, or other evidences of indebtedness of a local agency within California, including bonds payable solely out of the revenues from a revenue- producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. In addition, these securities must be rated in at least the “A” category or the equivalent by a NRSRO with maturities not exceeding five years from the date of trade settlement. No more than five percent (5%) of the City’s total portfolio shall be invested in any one municipal issuer. In addition, the aggregate investment in municipal bonds may not exceed thirty percent (30%) of the portfolio. g) Non-negotiable Certificates of Deposit and savings deposits with a maturity not exceeding two years from the date of trade settlement, in FDIC insured state or nationally chartered banks or savings banks that qualify as a depository of public funds in the State of California as defined in California Government Code Section 53630.5. Deposits exceeding the FDIC insured amount shall be secured pursuant to California Government Code Section 53652. No one issuer shall exceed more than five percent (5%) of the portfolio, and investment in negotiable and nonnegotiable certificates of deposit shall be limited to thirty percent (30%) of the portfolio combined. h) Negotiable Certificates of Deposit only with a nationally or state- chartered bank, a savings association or a federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a federally licensed or state- licensed branch of a foreign bank whose senior long-term debt is rated in at least the “A” category, or the equivalent, or short-term debt is rated at least “A-1” or the equivalent by an NRSRO and having assets in excess of $10 billion, so as to ensure security and a large, well-established secondary market. Ease of subsequent marketability should be further ascertained prior to initial investment by examining currently quoted bids by primary dealers and the acceptability of the issuer by these dealers. No one issuer shall exceed more than five percent (5%) of the portfolio, and maturity shall not exceed two years. Investment in negotiable and non- negotiable certificates of deposit shall be limited to thirty percent (30%) of the portfolio combined. i) Prime Commercial Paper with a maturity not exceeding 270 days from the date of trade settlement that is rated “A-1”, or the equivalent, by an NRSRO. The entity that issues the commercial paper shall meet all of the following conditions in either sub- paragraph i. or sub-paragraph ii. below: 107 F-1   9 i. The entity shall (1) be organized and operating in the United States as a general corporation, (2) have total assets in excess of $500,000,000 and (3) have debt other than commercial paper, if any, that is rated in at least the “A” category or the equivalent by an NRSRO. ii. The entity shall (1) be organized within the United States as a special purpose corporation, trust, or limited liability company, (2) have program wide credit enhancements, including, but not limited to, over collateralization, letters of credit or surety bond and (3) have commercial paper that is rated at least “A- 1” or the equivalent, by an NRSRO. iii. No more than five percent (5%) of the City’s total portfolio shall be invested in the commercial paper of any one issuer, and the aggregate investment in commercial paper shall not exceed twenty-five percent (25%) of the City’s total portfolio. Under a provision sunsetting on January 1, 2026, no more than forty percent (40%) of the portfolio may be invested in commercial paper if the City’s assets under management are greater than $100,000,000. j) Eligible Banker’s Acceptances with a maturity not exceeding 180 days from the date of trade settlement, drawn on and accepted by a commercial bank whose senior long- term debt is rated in at least the “A” category or the equivalent by an NRSRO at the time of purchase. Banker’s Acceptances shall be rated at least “A-1”, or the equivalent at the time of purchase by an NRSRO. If the bank has senior debt outstanding, it must be rated in at least the “A” category or the equivalent by an NRSRO. The aggregate investment in banker’s acceptances shall not exceed forty percent (40%) of the City’s total portfolio, and no more than five percent (5%) of the City’s total portfolio shall be invested in banker’s acceptances of any one bank. k) Repurchase Agreements and Reverse Repurchase Agreements with a final termination date not exceeding 30 days collateralized by U.S. Treasury obligations or Federal Instrumentality securities listed in items 1 and 2 above with the maturity of the collateral not exceeding ten years. For the purpose of this section, the term collateral shall mean purchased securities under the terms of the City’s approved Master Repurchase Agreement. The purchased securities shall have a minimum market value including accrued interest of one hundred and two percent (102%) of the dollar value of the funds borrowed. Collateral shall be held in the City's custodian bank, as safekeeping agent, and the market value of the collateral securities shall be marked-to-the-market daily. 108 F-1   10 Repurchase Agreements and Reverse Repurchase Agreements shall be entered into only with broker/dealers and who are recognized as Primary Dealers with the Federal Reserve Bank of New York, or with firms that have a Primary Dealer within their holding company structure. Primary Dealers approved as Repurchase Agreement counterparties shall have a short-term credit rating of at least “A-1” or the equivalent and a long-term credit rating of at least “A” or the equivalent. Repurchase agreement counterparties shall execute a City approved Master Repurchase Agreement with the City. The Finance Director shall maintain a copy of the City's approved Master Repurchase Agreement and a list of the broker/dealers who have executed same. In addition, the City must own assets for more than 30 days before they can be used as collateral for a reverse repurchase agreement. No more than ten percent (10%) of the portfolio can be involved in reverse repurchase agreements. l) State of California’s Local Agency Investment Fund (LAIF), pursuant to California Government Code Section 16429.1. m) California Asset Management Trust Cash Reserve Portfolio (CAMP): Investments in CAMP shall not exceed the same maximum limit established for LAIF. n) County Investment Funds: Los Angeles County provides a service similar to LAIF for municipal and other government entities outside of Los Angeles County, including the City. Investment in this pool is intended to be used as a temporary repository for short-term funds used for liquidity purposes. The Finance Director shall maintain on file appropriate information concerning the county pool’s current investment policies, practices, and performance, as well as its requirements for participation, including, but not limited to, limitations on deposits or withdrawals and the composition of the portfolio. At no time shall more than five percent (5%) of the City’s total investment portfolio be placed in this pool. o) Mutual Funds and Money Market Mutual Funds registered under the Investment Company Act of 1940, provided that: i. MUTUAL FUNDS that invest in the securities and obligations as authorized under California Government Code, Section 53601 (a) to (k) and (m) to (q) inclusive and that meet either of the following criteria: 1) Attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or 109 F-1   11 2) Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations authorized by California Government Code, Section 53601 and with assets under management in excess of $500 million. 3) No more than 10% of the total portfolio may be invested in shares of any one mutual fund. ii. MONEY MARKET MUTUAL FUNDS registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and issued by diversified management companies and meet either of the following criteria: 1) Have attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or 2) Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of $500 million. 3) No more than 20% of the total portfolio may be invested in Money Market Mutual Funds. iii. No more than 20% of the total portfolio may be invested in these securities. p) Supranationals which are United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), or Inter-American Development Bank (IADB), with a maximum remaining maturity of five years or less from the date of trade settlement, and eligible for purchase and sale within the United States. Investments under this paragraph shall be rated in the "AA" category, its equivalent, or better by at least one NRSRO. No more than ten percent (10%) of the City’s total portfolio shall be invested in any one issuer of supranational obligations. Purchases of supranational obligations shall not exceed twenty percent (20%) of the investment portfolio of the City. 110 F-1   12 2. Investments Specifically Not Permitted Any security type or structure not specifically approved by this policy is hereby prohibited. Security types, which are thereby prohibited include, but are not limited to: “exotic” derivative structures such as range notes, dual index notes, inverse floating rate notes, leveraged or de-leveraged floating rate notes, interest only strips that are derived from a pool of mortgages and any security that could result in zero interest accrual if held to maturity, or any other complex variable or structured note with an unusually high degree of volatility risk. Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zero or negative interest accrual if held to maturity are permitted. The City shall not invest funds with the Orange County Pool. The purchase of a security with a forward settlement date exceeding 45 days from the time of the investment is prohibited. 3. Exceptions to Prohibited and Restricted Investments The City shall not be required to sell securities prohibited or restricted in this policy, or any future policies, or prohibited or restricted by new State regulations, if purchased prior to their prohibition and/or restriction. Insofar as these securities provided no notable credit risk to the City, holding of these securities until maturity is approved. At maturity or liquidation, such monies shall be reinvested as provided by this policy. H. INVESTMENT PARAMETERS 1. Diversification The City shall diversify its investments to avoid incurring unreasonable risks inherent in over-investing in specific instruments, individual financial institutions or maturities. As such, no more than five percent (5%) of the City’s portfolio may be invested in the instruments of any one issuer, except governmental issuers, supranationals, investment pools, mutual funds and money market funds, or unless otherwise specified in this investment policy. This restriction does not apply to any type of Federal Instrumentality or Federal Agency Security listed in Sections G1 b and G1 c above. Nevertheless, the asset allocation in the investment portfolio should be flexible depending upon the outlook for the economy, the securities markets and the City’s anticipated cash flow needs. 2. Maximum Maturities To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities. The City will not invest in securities maturing more than five years from the date of trade settlement, unless the City Council has by resolution granted authority to make such an investment at least three months prior to the date of investment. 111 F-1   13 3. Credit Quality Each investment manager will monitor the credit quality of the securities in their respective portfolio. In the event a security held by the City is downgraded to a level below the requirements of this policy, making the security ineligible for additional purchases, the following steps will be taken:  Any actions taken related to the downgrade by the investment manager will be communicated to the Finance Director in a timely manner.  If a decision is made to retain the security, the credit quality will be monitored and reported to the City Council. 4. Competitive Transactions Investment advisors shall make best effort to price investment transactions on a competitive basis with broker/dealers selected consistent with their practices disclosed in form ADV 2A filed with the SEC. Where possible, at least three broker/dealers shall be contacted for each transaction and their bid or offering prices shall be recorded. If there is no other readily available competitive offering, the investment advisor shall make their best efforts to document quotations for comparable or alternative securities. If qualitative characteristics of a transaction, including, but not limited to, complexity of the transaction, or sector expertise of the broker, prevent a competitive selection process, investment advisors shall use brokerage selection practices as described above. I. PORTFOLIO PERFORMANCE The investment portfolio shall be designed to attain a market rate of return throughout budgetary and economic cycles, taking into account prevailing market conditions, risk constraints for eligible securities, and cash flow requirements. The performance of the City’s investments shall be compared to the total return of a benchmark that most closely corresponds to the portfolio’s duration, universe of allowable securities, risk profile, and other relevant characteristics. When comparing the performance of the City’s portfolio, its rate of return will be computed consistent with Global Investment Performance Standards (GIPS). J. REPORTING Monthly, the Finance Director shall produce a treasury report of the investment portfolio balances, transactions, risk characteristics, earnings, and performance results of the City’s investment portfolio available to City Council and the public on the City’s Website. The report shall include the following information: 1. Investment type, issuer, date of maturity, par value and dollar amount invested in all securities, and investments and monies held by the City; 2. A description of the funds, investments and programs; 112 F-1   14 3. A market value as of the date of the report (or the most recent valuation as to assets not valued monthly) and the source of the valuation; 4. A statement of compliance with this Policy or an explanation for non-compliance K. INVESTMENT POLICY COMPLIANCE AND ADOPTION 1. Compliance Any deviation from the policy shall be reported to Finance Committee as soon as practical, but no later than the next scheduled Finance Committee meeting. Upon recommendation of the Finance Committee, the Finance Director shall review deviations from policy with the City Council. 2. Adoption The Finance Director shall review the Investment Policy with the Finance Committee at least annually 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. The Finance Director shall review the Investment Policy with City Council at a public meeting if there are changes recommended to the Investment Policy. This Policy was endorsed and adopted by the City Council of the City of Newport Beach on September 28, 2021. It replaces any previous investment policy or investment procedures of the City. History Adopted F-1 – 4-6-1959 Reaffirmed F-1 – 8-15-1966 Reaffirmed F-1 – 11-12-1968 Reaffirmed F-1 – 3-9-1970 Amended F-1 – 11-9-1970 Reaffirmed F-1 – 2-8-1971 Reaffirmed F-1 – 2-14-1972 Reaffirmed F-1 – 12-10-1973 Amended F-1 – 2-11-1974 Amended F-1 –2-9-1981 Amended F-1 –10-27-1986 Rewritten F-1 – 10-22-1990 Amended F-1 – 1-28-1991 113 F-1   15 Amended F-1 – 1-24-1994 Amended F-1 – 1-9-1995 Amended F-1 – 4-22-1996 Corrected F-1 – 1-27-1997 Amended F-1 – 2-24-1997 Amended F-1 – 5-26-1998 Reaffirmed F-1 – 3-22-1999 Reaffirmed F-1 – 3-14-2000 Amended and Reaffirmed F-1 – 5-8-2001 Amended and Reaffirmed F-1 – 4-23-2002 Amended and Reaffirmed F-1 – 4-8-2003 Amended and Reaffirmed F-1 – 4-13-2004 Amended and Reaffirmed F-1 – 9-13-2005 Amended F-1 – 8-11-2009 Amended and Reaffirmed F-1 – 8-10-2010 Amended and Reaffirmed F-1 – 9-28-2010 Reaffirmed F-1 – 6-28-2011 Amended and Reaffirmed F-1 – 10-9-2012 Amended F-1 – 8-13-2013 Amended F-1 – 9-8-2015 Amended F-1 – 3-28-2017 Amended F-1 – 1-28-2020 Amended F-1 – 9-28-2021 Amended F-1 – 10-10-2023 114 F-1   16 GLOSSARY OF INVESTMENT TERMS AGENCIES. Shorthand market terminology for any obligation issued by a government-sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are: FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds. FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market. FHLB issues discount notes and bonds. FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called “FreddieMac” issues discount notes, bonds and mortgage pass-through securities. FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as “FannieMae,” issues discount notes, bonds and mortgage pass-through securities. GNMA. The Government National Mortgage Association, known as “GinnieMae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government. PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government. TVA. The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently issues discount notes and bonds. ASKED. The price at which a seller offers to sell a security. ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit. AVERAGE LIFE. In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected. BANKER’S ACCEPTANCE. A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which “accepts” the obligation to pay the investor. BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy. BID. The price at which a buyer offers to buy a security. BROKER. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position. CALLABLE. A callable security gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline since an issuer issues securities, it will likely call its current securities and reissue them at a lower rate of interest. Callable securities have reinvestment risk as the investor may receive its principal back when interest rates are lower than when the investment was initially made. CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable. 115 F-1   17 CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SYSTEM (CDARS). A private placement service that allows local agencies to purchase more than $250,000 in CDs from a single financial institution (must be a participating institution of CDARS) while still maintaining FDIC insurance coverage. CDARS is currently the only entity providing this service. CDARS facilitates the trading of deposits between the California institution and other participating institutions in amounts that are less than $250,000 each, so that FDIC coverage is maintained. COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies. COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities. COMMERCIAL PAPER. The short-term unsecured debt of corporations. COST YIELD. The annual income from an investment divided by the purchase cost. Because it does not give effect to premiums and discounts which may have been included in the purchase cost, it is an incomplete measure of return. COUPON. The rate of return at which interest is paid on a bond. CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer. CURRENT YIELD. The annual income from an investment divided by the current market value. Since the mathematical calculation relies on the current market value rather than the investor’s cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity. DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position. DEBENTURE. A bond secured only by the general credit of the issuer. DELIVERY VS. PAYMENT (DVP). A securities industry procedure whereby payment for a security must be made at the time the security is delivered to the purchaser’s agent. DERIVATIVE. Any security that has principal and/or interest payments which are subject to uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any security which represents a component of another security which has been separated from other components (“Stripped” coupons and principal). A derivative is also defined as a financial instrument the value of which is totally or partially derived from the value of another instrument, interest rate, or index. DISCOUNT. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality. DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk. DURATION. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See Modified Duration). FEDERAL FUNDS RATE. The rate of interest charged by banks for short-term loans to other banks. The Federal Reserve Bank through open-market operations establishes it. 116 F-1   18 FEDERAL OPEN MARKET COMMITTEE. A committee of the Federal Reserve Board that establishes monetary policy and executes it through temporary and permanent changes to the supply of bank reserves. LEVERAGE. Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing. LIQUIDITY. The speed and ease with which an asset can be converted to cash. LOCAL AGENCY INVESTMENT FUND (LAIF). A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State Treasurer’s Office. LOCAL GOVERNMENT INVESTMENT POOL. Investment pools that range from the State Treasurer’s Office Local Agency Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds. MAKE WHOLE CALL. A type of call provision on a bond that allows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this type of call, an investor is compensated, or "made whole." MARGIN. The difference between the market value of a security and the loan a broker makes using that security as collateral. MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates. MARKET VALUE. The price at which a security can be traded. MARKING TO MARKET. The process of posting current market values for securities in a portfolio. MATURITY. The final date upon which the principal of a security becomes due and payable. MEDIUM TERM NOTES. Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis. MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences. MODIFIED DURATION. The percent change in price for a 100 basis point change in yields. Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk. MONEY MARKET. The market in which short-term debt instruments (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded. MORTGAGE PASS-THROUGH SECURITIES. A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security. MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and operating expenses. MUTUAL FUND. An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio. 117 F-1   19 NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO). A credit rating agency that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's. NEGOTIABLE CD. A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state-licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market. PREMIUM. The difference between the par value of a bond and the cost of the bond, when the cost is above par. PREPAYMENT SPEED. A measure of how quickly principal is repaid to investors in mortgage securities. PREPAYMENT WINDOW. The time period over which principal repayments will be received on mortgage securities at a specified prepayment speed. PRIMARY DEALER. A financial institution (1) that is a trading counterparty with the Federal Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that participates for statistical reporting purposes in compiling data on activity in the U.S. Government securities market. PRUDENT PERSON (PRUDENT INVESTOR) RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as “Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.” REALIZED YIELD. The change in value of the portfolio due to interest received and interest earned and realized gains and losses. It does not give effect to changes in market value on securities, which have not been sold from the portfolio. REGIONAL DEALER. A financial intermediary that buys and sells securities for the benefit of its customers without maintaining substantial inventories of securities and that is not a primary dealer. REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement. SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the customer’s name. STRUCTURED NOTE. A complex, fixed income instrument, which pays interest, based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements. SUPRANATIONAL. A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries. 118 F-1   20 TOTAL RATE OF RETURN. A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio. U.S. TREASURY OBLIGATIONS. Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds. TREASURY BILLS. All securities issued with initial maturities of one year or less are issued as discounted instruments, and are called Treasury bills. The Treasury currently issues three- and six-month T- bills at regular weekly auctions. It also issues “cash management” bills as needed to smooth out cash flows. TREASURY NOTES. All securities issued with initial maturities of two to ten years are called Treasury notes, and pay interest semi-annually. TREASURY BONDS. All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi-annually. VOLATILITY. The rate at which security prices change with changes in general economic conditions or the general level of interest rates. YIELD TO MATURITY. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost. 119 2/6/24 Scheduled Date Agenda Title Report Type Agenda Description Thursday, April 11, 2024 Proposed FY 2024-25 Budget Overview Presentation Staff will provide the Committee with an overview of the expenditure budget for FY 2024-25 that will be presented to the City Council in May. Budget Amendments for Quarter Ending March 31, 2024 Receive and File Staff will report on the budget amendments from the prior quarter. Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items. Thursday, May 9, 2024 Third Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected Fiscal Year 2023-24 budget performance. Follow-Up Discussion of Proposed FY 2024-25 Budget Discussion Staff will provide the Committee with a copy of the Fiscal Year 2024-25 proposed budget document. Should the Committee wish to continue April's discussion of the Fiscal Year 2024-25 budget, this is also an opportunity to do so. Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items. Tuesday, May 28, 2024 Joint City Council and Finance Committee Study Session Presentation Staff will present the FY 2024-25 proposed budget to the City Council and Finance Committee. Thursday, May 30, 2024 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. Committee Recommendation to Council for the FY 2024-25 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. Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items. Thursday, September 12, 2024 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, 2024. Annual Review of Investment Policy Presentation Staff will provide a presentation regarding any proposed changes to the City's Investment Policy prior to the Investment Policy being approved by the City Council. Internal Audit Program Update Presentation Presentation of internal audit reports, findings, and recommendations from the FY 2023-24 audit program. August 2024 Committee Recess Newport Beach Finance Committee Work Plan April 2024 June 2024 Committee Recess Committee Recess July 2024 May 2024 September 2024 I:\Users\FIN\Administration\Shared\FINANCE COMMITTEE\WORK PLAN\2024\2024 WORK PLAN 1 120 2/6/24 Scheduled Date Agenda Title Report Type Agenda Description Newport Beach Finance Committee Work Plan Budget Amendments for Quarter Ending June 30, 2024 Receive and File Staff will report on the budget amendments from the prior quarter. Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items. Thursday, October 10, 2024 Overview of Public Works Department Budget Presentation Staff will provide the Committee with a presentation covering the budget for the Public Works Department. Budget Amendments for Quarter Ending September 30, 2024 Receive and File Staff will report on the budget amendments from the prior quarter. Year-End Budget Results and Surplus Allocation Presentation Staff will provide a presentation regarding the year-end budget results for FY 2023-24 and recommendations for allocation of any year-end budget surplus. Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items. Thursday, November 14, 2024 First Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected FY 2024-25 budget performance. OPEB Actuarial Valuation Report Update Presentation Staff will provide the Committee with an overview of the Fiscal Year 2023-24 actuarial valuation report prepared by the City's actuary. CalPERS Update Presentation Staff will provide the Committee with an overview of the data from the latest actuarial reports from CalPERS as well as their impact on prior projections of the paydown of the City's unfunded pension liability. Work Plan Review Receive and File Staff will report on the upcoming Finance Committee items. October 2024 November 2024 December 2024 Committee Recess I:\Users\FIN\Administration\Shared\FINANCE COMMITTEE\WORK PLAN\2024\2024 WORK PLAN 2 121