HomeMy WebLinkAboutApproved Minutes - February 15, 2024Finance Committee Regular Meeting Minutes February 15, 2024
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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
Mayor Pro Tem Stapleton 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
Finance Committee Regular Meeting Minutes February 15, 2024
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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.
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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