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HomeMy WebLinkAbout2013-42 - Adopting Revised City Council PoliciesRESOLUTION NO. 2013-42 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ADOPTING REVISED CITY COUNCIL POLICIES WHEREAS, the City of Newport Beach is governed, in part, by its Charter, Municipal Code and adopted City Council Policies; WHEREAS, City Council Policy D -3 requires that the City Manager annually review the Council Policy Manual for any needed additions, changes or deletions; WHEREAS, the City Manager recently completed his review of the Council Policy Manual and recommends revising various City Council Policies as shown in the revised redline policies attached to this resolution, and incorporated by reference herein (Exhibit 1); and WHEREAS, the City Manager's proposed revisions bring the City Council Policies into conformity with recent amendments to the Charter, promote efficiencies, and update agenda posing locations resulting from the move into the new Civic Center, among others NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The Qty Council hereby amends the various City Council Policies as shown in Exhibit 1. Section 2: All prior versions of the City Council Policies that are in conflict with the revisions adopted by this resolution are hereby repealed. Section 3: If any section, subsection, sentence, clause or phrase of this resolution is for any reason held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution and each section, subsection, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses and phrases be declared unconstitutional. Section 4: The recitals provided in this resolution are true and correct and are incorporated into the substantive portion of this resolution. N Section 5: Except as expressly modified in this resolution, all other City Council Policies, sections, subsections, terms, clauses and phrases set forth in the Council Policy Manual shall remain unchanged and shall be in full force and effect. Section 6: The City Council find the adoption of this resolution and the amendment of the specified City Council Policies is not subject to the California Environmental Quality Act ( "CEQA') pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA; Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Section 7: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting this resolution. ADOPTED this 14�t day of May, 2013. ATTEST: 09W - !M) Leilani I, Brow— P - City Clerk ,'' , Keith D. Curry, Mayor Attachment: Exhibit 1 - Redline Draft of Revised City Council Policies -2- REQUESTS FOR RESEARCH OR INFORMATION PURPOSE A -3 (New) Like most California cities, the City of Newport Beach is a City Council -City Manager form of government. The City Council appoints a City Manager to implement policy, to ensure laws are enforced, to direct the daily operations of city government, and to prepare and monitor the municipal budget. Because Council Policy is implemented on a daily basis through City staff, it is critical that the relationship between the City Council and City staff be well understood by all parties so that policies and programs may be implemented successfully. Charter Section 406 (Interference in Administrative Service) reinforces this relationship — it reads as follows: Neither the City Council nor any of its members shall interfere with the execution by the City Manager of his or her powers and duties, or order, directly or indirectly, the appointment by the City Manager or by any of the department heads in the administrative service of the City, of any person to an of lce or employment or his or her removal therefrom. Except for the purpose of inquiry, the City Council and its members shall deal with the administrative service under the City Manager solely through the City Manager and neither the City Council nor any member thereof shall give orders to any subordinates of the City Manager, either publicly or privately. The purpose of this Council. Policy is to further guide the implementation of Charter Section 406 so that the long tradition of positive relationships between members of the City Council and City staff is maintained. POLICY A. General. Interactions with City Staff: The City Manager, City Attorney, and City Clerk are appointed directly by the City Council to provide executive, administrative and legal services. In many cases, the City Manager encourages direct contact with department directors within this Policy's guidelines, thus enabling the Council Member to get appropriate information quickly and easily. When interacting with City staff, Council Members should keep in mind the work of City staff on current projects, assignments and City Council priorities before requesting action or detailed information because these requests may take staff time away from this work. B. Requests for Information or Research: I. For new issues, actions, or research proposed by a Council Member which require approval by the City Council, Council Members will follow Council Policy A -6. A -3 (New) 2. For issues or actions that have been previously approved by the City Council, or which do not require City Council approval, Council Members will, depending on the nature of the request, route the request for information or research through the City Manager, City Attorney, or City Clerk. It shall be the responsibility of the City Manager, City Attorney, or City Clerk to promptly respond as to their recommended disposition of the request. Upon authorization by the City Manager, City Attorney, or City Clerk, the Council Member may communicate directly with other city staff members (such as department directors) or City consultants. 3. Council Members' contact with City staff or City consultants, other than City Council appointees, is limited to asking questions and obtaining information and not giving direction or assignments. 4. If a Council Member's request is expected to take more than thirty (30) minutes (or in the case of a request from the Mayor, two hours) to research, gather information, report on or otherwise respond to any inquiry, the City Manager, City Attorney, or City Clerk shall ask that the Council Member or Mayor place the request on the agenda for formal Council action per Council Policy A -6 before the staff spends time or resources on the request. Adopted i41ay 14, 2013 OPEN MEETING POLICIES PURPOSE A -6 The Newport Beach City Council and certain Boards, Commissions and Committees are required to comply with the Ralph M. Brown Act (Brown Act). The Brown Act requires public entities to deliberate and take action, in open session. The City Council has adopted these rules to ensure compliance with the Brown Act and to promote full citizen participation in the discussions and decisions of their elected and appointed representatives. POLICY A. Regular Meetings. The City Council shall hold regular meetings on the second and fourth Tuesdays of each month except in December and August when there shall be at least one regular meeting held on the second Tuesday. The meetings shall be held in a location allowed by the Charter. The regular meeting shall 'begin at 4.00 p.m., or as otherwise scheduled due to the demand of business, for Study Session, Closed Session to follow immediately thereafter, recess after Closed Session, and reconvene at 7:00 p.m. or as otherwise scheduled due to the demand of business. The December meeting of evert- numbered years shall begin at 4:00 p.m., or as otherwise scheduled due to the demand of business, without reconvening at 7:00 p.m. The City Councii may hold a regular meeting, special meeting, or adjourned regular or special meeting at another location within the Citv, or locations outside the jurisdiction of the City provided appropriate notice is given pursuant to, and the location of the meeting is consistent with, the Brown Act. When the day for any regular meeting falls on a legal holiday, no meeting shall be held on such holiday, but a regular meeting shall. be held at the same hours on the following business day. B. All regular, special and adjourned meetings of the City Council, Boards, Commissions, and Committees created by the Charter or formal action of the City Council and which have continuing subject matter jurisdiction shall be called, noticed and conducted in compliance with the Brown Act. C. Regular City Council Meeting Agenda. 7. Staff shall provide the City Clerk with the title and recommendation of all items to be placed on a regular Council meeting agenda no later than 5:00 p.m. two Fridays before the next regular City Council meeting. The City Clerk shall prepare the regular meeting agenda of all such matters under the direction of the City Manager. This agenda shall be deliv-e�provided to the City Council Members on the "Thursday preceding the Tuesday Council meeting to which it pertains. 1 . The agenda and staff reports will be available for the public and media in the Office of the City Clerk and shall be posted on the City's public website no later than 3:30 p.m. on the Friday preceding the meeting. iI _ _ y Iffem 32. The regular meeting agenda shall contain a brief description of each item of business to be transacted or discussed and a statement that members of the public may offer testimony as to any matter on the agenda and may speak on non - agenda items during the public comment section of the agenda. The agenda shall be posted on the City's website, as well as at the entrance to the City Council Chambersb lleti b0al.a ^ ° ^:a^ t ,,-1,in-entrance e'er— r f'- }° 11-11 -at °• _ -- , least 72 hours before each regular meeting, and the City Clerk shall maintain records of the name of the person posting the agenda, and the date and time of posting. 3. Items ma- be placed on a City Council agenda in the following manner: A. of the City Ceia w will A Council Member may during the Council meeting that a matter be s`C2ed-ulcu Cacd—fv%—a m..,.t a fld Or- ,7:,-n, .. a.. r es ;.,,> the ..,tea- �-.,,- h,. - I-eell ..,� a'h„ ax. ^L=cc..zca -c cnc x. �ccrcc.x a�irzrzccI eR- he agenda for action brought to the City Council at a future meeting. The matter will be brought back at the next Council meeting (if possible). At that Council meeting, if a majority of the City Council wishes to examine the issue, staff will prepare an appropriate report and return in the item to the Citv Council with r, eater° detail for discussion and /or action. p'lace~a «... tte F..+,+,.,. �.... , —1- b -5-1 _-WOR Witbe tt B. In addition to the above, the Mavor may ask the Citv Manager to place an item on the Council's agenda outside of a Council meeting. If so, the matter will be brought back at the next Council meeting (if possible). At that Council meeting, if a majority of the Council wishes to examine the issue, the staff will prepare an appropriate report and return the item to the City Council with greater detail for discussion and /or action. 2 M C. The City Manager may place an item on the agenda in the course of berating the City. CLOSED SESSION AGENDA The eCoosed sSession agenda shall be prepared by the City Attorney. The dosed session agenda shall strictly conform to the format specified in the Brown Act. The City Attorney shall prepare a written report, or give an oral report, of any action taken in closed session that is required to be reported in open session by the Brown Act. COUNCIL CORRESPONDENCE The City Clerk is authorized to open and examine all mail or other written communications addressed to the City Council and to immediately give a copy to the City Manager. The City Manager shall give immediate attention to administrative business referred to in the communication that does not require Council action and may be promptly concluded or shall prepare a staff report for the next available Council meeting. Except as otherwise permitted by law, all mail or written communications from the public /residents /applicants shall be submitted to the City Council by 5:00 p.m. on the Monday immediately prior to the meeting at which the City Council will consider the item that is the subject of the mail or written communications to allow time for the City Council to adequately consider the mail or written communications. ORDER OF BUSINESS The agenda for regular meetings of the City Council shall contain the following items in the order listed: Study Session Public Comments, including public comments about items on the Closed Session agenda. Closed Session - After Study Session - Council Chambers Conference Room Recess Reconvene at 7:00 p.m. for Regular Meeting Roll Call Closed Session Report 3 M Pledge of Allegiance Invocation Presentations Notice to the Public City Council Announcements or Matters Which Council Members Would Like Placed on a Future Agenda 'or isc (Non- discussion Item) Public Comments on Consent Calendar Consent Calendar: A. Reading of Minutes/Ordinances and Resolutions B. Ordinances for Introduction C. Ordinances .for Adoption D. Resolutions for Adoption E. Contracts and Agreements F. Miscellaneous (for example, Planning Commission Agendas, budget amendments, and permit applications) Items Removed from the Consent Calendar Public Comments on Non-Agenda Items Oral Reports from City Council on Committee Activities Public Hearings Continued Business Current Business Motions for Reconsideration Continued Closed Session, if necessary (report if applicable) Adjournment M The order of business shall not be changed except by majority vote of the City Council. PREPARATION OF MINUTES The City Clerk shall have the exclusive responsibility for preparation of the minutes, and any directions for changes in the minutes shall be made only by majority action of the City Council. READING OF MINUTES Unless the reading of the minutes of a Council meeting is ordered by a majority vote of the Council, such minutes may be approved without reading if the City Clerk previously furnished each Council Member and the public binder and website with a copy. Adopted - November 13,1967 Amended - March 28,1994 Amended - June 13,1977 Amended - June 27,1994 Amended - October 25, 1977 Amended - December 12,1994 Amended - February 9,1981 Amended - February 26,1996 Amended - December 9,1996 Amended - May 26,1998 Amended - November 8,1999 (ef£.1/1 /2Q00) Amended - March 14, 2000 Amended - February 27, 2001 Amended - March 27, 2001 Amended - August 28, 2001 Amended - January 27, 2004 Amended - March 9, 2004 Amended - March 28, 2006 Amended - February 26, 2008 Amended - October 27, 2009 Amended - December 6, 2010 Amended - February 22, 2011 Amended - November 27, 2012 Amended - January 8, 2013 Amended - May 14, 2013 PARK FEE POLICY PURPOSE W The City of Newport Beach maintains an extensive park and open space system. The acquisition and development of our park and open space properties is funded, in part, through the payment of park fees paid by persons or entities who subdivide properties. The Subdivision Map Act requires park fees to be used only for the purpose of developing new or rehabilitating existing neighborhood or community park or recreational facilities to serve the subdivision that paid the fees. The City is required to develop a schedule specifying how, when and where the park fees will be used. The purpose of this Policy is to establish the criteria to be used in deciding which facilities serve subdivision residents and schedule whereby park fees are properly and timely committed to appropriate projects, POLICY A, Service Criteria. The Recreation and Open Space Element of the General Plan states that community parks and view parks serve the entire City. Community parks are those with improvements such as community buildings, parking, swimming, facilities for picnicking, active sports and other facilities that serve a larger population. Neighborhood parks which include unique recreational facilities, such as basketball courts, tennis courts, turf areas, active sports fields, community buildings, unique play areas or view parks are also considered City- wide resources used by all citizens. Accordingly, park fees generated by any subdivision within the City may be used to develop new or rehabilitate existing community parks, view parks, and those neighborhood parks listed on Exhibit A. The Recreation and Open Space Element divides the City into 11 service areas consisting of relatively discrete residential communities. These service areas were created for the purpose of determining whether particular geographical areas were deficient in terms of park and recreational facilities and to identify acquisitions or improvements which would provide residents with greater recreational opportunities. Accordingly, park fees generated by a subdivision within any services are may be used to create new, or rehabilitate, existing park 1 IMI or recreational facilities within that services area and as provided in the Recreation and Open Space Element.. B. Implementation Schedule. Park fees shall be placed in the G�na Facilities Financial Planning Reserve Fund immediately upon receipt with a special designation as Park Fees. "These funds, after special designation, shall be used solely for the acquisition or establishment of new, or the rehabilitation of existing, park, open space and recreational facilities. The park fees shall also 'be placed on a schedule that lists the location of the subdivision, the fees paid, the date on which the fees were paid or the date on which building permits had been issued for 1/2 of the lots created by the subdivision (whichever occurs later), the service area within which the subdivision is located, the neighborhood park, recreation and open space facilities eligible for park fees generated by that subdivision, the date on which the park fees must be committed to specific project of improvements. The park fees shall be used only for the park and recreation facilities identified in the Recreation and Open Space Element and shall be utilized in accordance with the policies and standards specified in the General Plan. Designations for expenditures will be made as part of the annual budget adoption. [Attachment - Exhibit A] Adopted- June 27,1994 Amended - April 23, 2002 Amended and Reassigned - April 8, 2003 Amended - April 13, 2004 Amended - September 13, 2005 Amended - August 11, 2009 Amended - 2013 Formerly I -1 N EXHIBIT A PARK DEDICATION POLICY PARKS GUIDE RM The following view parks serve as citywide resources by reason of their unusual beauty and the view provided: Back Bay View Park Bayview Park Begonia Park Channel Place Park Civic Center Park Cliff Drive Park Corona del Mar State Beach Park Ensign View Park Galaxv View Park I.nspiration Point Irvine Terrace Park Castaways Park Jasmine View Park Kings Road Park Lido Park Lookout Point Newport Island Park Peninsula Park Rhine Wharf Park West Jetty View Park Westcliff Park The following Community and Neighborhood Parks serve as citywide resources by reason of the unique recreational opportunities they offer: Arroyo Park - Lighted multi - purpose field, basketball court, picnic areas and playground. Bonita Canyon Sports Park - Pour youth baseball fields, one multi- purpose field, one soccer field, tennis courts, basketball court, 2 playgrounds and connecting trail to Arroyo Park. Bonita Creek Park - Community center, lighted softball and multi - purpose field, and basketball court. Buffalo Hills Park - Basketball court, baseball/ softball diamond, volleyball court, multi - purpose fields. Carroll Beek Community Center and Balboa Island Park - Basketball court, tot playground and community center. 193 1001 Coastal Peak Park - Two baseball fields, playground, two picnic pavilions and basketball court. Community Youth Center / Grant Howald Park - Basketball court, tennis courts, community center, softball and multi- purpose field. Bastbluff Park - Baseball diamond, multi - purpose field, and view of the Back Bay. Harbor View Nature Park - Natural vegetation area. Las Arenas Park - Lighted tennis courts, basketball court and community center. Lincoln Athletic Center - Gymnasium, lighted baseball /softball diamond and multi- purpose fields. Marina Park - Community center, sailing center, picnic area, playground.{ basketball courts and fitness course. Mariners Park - Multi- purpose room, baseball/ softball facilities, racquetball courts, lighted tennis courts, multi - purpose fields, and an ADA equipped play area. OASIS Senior Center - Multi - purpose senior facility with classrooms and large multi- purpose room. Peninsula Park - Beach sited multi - purpose field, playground (ADA compliant), picnic and barbecue facilities, baseball/ softball diamond and gazebo. San Joaquin Hills Park - Tennis courts, pentanque courts and lawn bowling facility. San Miguel Park - Ball diamond; athletic field, four racquetball courts, basketball court and an ADA equipped play area. Sunset Ridge Park - Baseball field, soccer field, butterfly garden and playground. Theater Arts Center - Ninety seat community theater. West Newport Park - Tennis courts, racquetball courts, basketball court, and 3 playgrounds. 38th Street Park - Basketball courts and playground (ADA compliant). In PUBLIC USE OF CITY FACILITIES PURPOSE B -13 City of Newport Beach (City) facilities, which include parks, playing fields, gymnasiums, community rooms and swimming pools, are available to the public for civic, social, educational, athletic, cultural activities and limited commercial use. It is the intent of this Policy to provide use regulations and application and scheduling procedures to accommodate groups that wish to use City facilities. PROCEDURE A. Applications to use the City facilities must be made on forms provided by the Recreation and Senior Services Department (Department). Applicants must provide all information as may be required by the Department to assure compliance with the requirements and regulations of this Policy. B. Applicants will be required to pay a security deposit in an amount that will promote use of the Recreation and Senior Services facilities in an orderly manner without damage to the facilities. Security deposits will be refunded upon inspection of facilities and confirmation that no property damage has occurred or additional cle m up is required. C. Applicants will be required to acknowledge that neither the City nor the Department assumes any liability for injury or loss of personal property. Prior to the use of the facility, the application must have approval of the Recreation and Senior Services Director or designated representative. D. Approval of denial of a reservation request will be provided within five working days of receipt of a completed application. E. Reservations for use of Department facilities may be made up to six months in advance, but no later than ten working days before the event with the exception of park reservations which may be made no later than five working days before the event. B -13 R The City is not liable for any and all accidental injury to any and all persons or loss or damage to group or individual property. When it is deemed to be in the best interest of the general public, the City will require the permittee to furnish a Certificate of Insurance naming the City of Newport Beach as an additional insured. The amount of the insurance shall not be less than $1,000,000 per occurrence of commercial general liability insurance. G. A contract shall not be transferred, assigned or sublet, All contracts will be issued for specific facilities and for specific hours, and the premises must be vacated as scheduled. H. The reservation request and rental agreement must be completed and signed by an adult age 21 and over who will attend, supervise and be responsible for the entire event or activities. Proof of residency is required at the time of application in order to receive the resident rate. Proof of non - profit status is required at the time of application in order to receive the non - profit rate. 1. A Facility Use Agreement which authorizes the rental of facilities may be revoked for violation of any rental policies. REGULATIONS AND RESTRICTIONS All uses of Department facilities will be subject to the following regulations and restrictions: A. Use of Alcohol. 1. Alcoholic beverages are prohibited and shall not be permitted in or on any municipal facilities operated by the Department, except beer and wine may be served for special occasions at the OASIS Senior Center, Newport Theatre Arts Center (NTAC), and— Newport Coast Community Center (NCCC ),-Civic Center Community Room (CCCR), and Marina Park when done in compliance with State of California Department of Alcoholic Beverage Control (ABC) regulations and approved in writing by the Recreation and Senior Services Director. Approval to serve beer and wine shall not be deemed to approve service of alcohol in violation of Section 25604 of the Business and Professions Code. The Recreation and Senior 2 B -13 Services Director will require the pern-dttee to pay City costs to provide additional security when alcohol is served. 2. The use of alcoholic beverages is by written permission only and must be requested at the time the facility use request is submitted. The Department reserves the right to place restrictions on the use of alcoholic beverages in accordance with State Law and these guidelines. "Alcohol use" means the presence of any beverage that contains any amount of alcohol. 3. Alcohol is not allowed when an event is designated for minors such as school age award programs, birthday parties and/or receptions. 4. When alcohol is served, there shall be a minimum of two security guards present at the facility at all times. The guards must arrive 30 minutes before guest arrival time and remain until the contract end time. One guard must be positioned at the entrance of the event and one guard positioned in the event area. The parking lot must be monitored every 30 minutes. The security guards shall have the authority to enforce all rules and regulations governing facility rentals. In the event that the Police are called, the cost of their services shall be deducted from the applicant's security deposit. The applicant will be billed for any costs exceeding the security deposit. S. No alcoholic beverage shalt be served to any person less than 21 years of age. Injuries caused to any person as a result of alcoholic beverages being served to or consumed by someone under the age of 21 while on the City's premises, shall be the sole responsibility of the organization or individual renting the facility. 6. The distribution or consumption of alcoholic beverages shall be in compliance with all applicable laws, including regulations of the ABC. Any organization using City facilities shall be solely responsible for obtaining all permits or licenses relating to the distribution and consumption of alcoholic beverages on the premises. T Alcohol may only be served by an adult 21 years of age or older. If evidence is found that alcohol is being served that was not authorized by the Department or to a minor the Police will be notified and the event will be terminated and all fees and deposits will be forfeited. 3 c 8. The City shall require the applicant to carry general liability insurance when alcohol is available, but not sold. The City shall require a full liquor liability premium in addition to general liability insurance when alcohol is sold in exchange for money. The cost of the required liability insurance shall be borne by the applicant. B. Smoking is prohibited in all City facilities including restrooms and within 25 feet of all entrances, windows, and playgrounds. C. For all indoor facility rentals involving youth, 27 years and under, there shall be at least one adult for every 20 minors, or increments thereof, in attendance, who shall remain in. the facility for the duration of the activity. D. No group's activities shall interfere with the administration of the Department. E. Non - profit 502 (c) (3) groups may use the facility for fundraising activities and charge entrancce fees and collect donations provided that a detailed plan of the event, including the expenses, marketing plan and procedure for collecting fees, is submitted with the rental application. F. Facilities and equipment are to be left in the same condition as they were prior to the rental. The permittee is responsible to pay for any damage to property or loss of property. A fee equal to total replacement cost will be charged. It shall be the responsibility of the permittee to see that unauthorized portions of the facility are not used. Continued or repeated use of City facilities will be contingent upon care of the facility, property and equipment, and observance of all approved rules and regulations. G. No gambling of any kind shall be conducted on, or in, City facilities, and the permittee shall insure that no disorderly or illegal conduct shall be allowed in any facility. H. The use of public address equipment will be limited to that provided by the facility, unless written approval has been secured by the Department through a Special Event Permit. B -13 L Private groups wishing to collect fees, donations or admission charges, or those using the facility to market a product, give a presentation, or advertise their business, will be considered commercial users. J, The posted occupancy of City facilities shall not be exceeded. K. Storage space will not be granted at anytime. L. Facilities are not available for reservations on the following holidays: Christmas Eve, Christmas Day, Easter, President's Day, Independence Day, Labor Day, Martin Luther King Day, Memorial Day, New Year's Eve, New Year's Day, Thanksgiving and Veteran's Day, M. All persons using the facilities shall observe and obey regulations of this policy, the rules of the Department and all applicable City, State and Federal laws, rules and regulations. N. Vehicles are not permitted on park grass or fields. Parking is permitted in designated spaces. O. Minors must remain in the rented facility room and shall not be allowed to roam unsupervised throughout the facility. FEE CLASSIFICATIONS - PRIORITIES OF USE Permission for use of City facilities shall be granted on a first come first served basis, subject to the following priorities: A. All official Department initiated and/or conducted activities, including those of the Friends of OASIS at the OASIS Senior Center, and exemptions noted in City Council Policies B -5 and B -10. B. All official City of Newport Beach activities. C. All official City co- sponsored groups and /or activities such as community groups and activities which are non - profit, self governing, privately organized and of an educational nature which may be brought under the sponsorship of the Department. V; B -13 D. Official public agency sponsored programs and activities not included in A, B, and C above. E. Youth Sports Commission Member Organizations. F. Resident non - profit youth serving organizations with 50°% or more of membership consisting of Newport Beach residents. G. Recreational, social or civic activities of groups which are resident promoted and sponsored by local non - profit* organizations which are open to the public and have 50% or more of memberships consisting of Newport Beach residents. H. Recreational or social activities of private Newport Beach residents which are not open to the public. (private parties) I. Recreational, social or civic activities and/or groups which are non - resident promoted and sponsored by non - profit organizations which are open to the public, but nst qualifying under D above. J. Schools, colkr es, hospitals and other similar civic groups not qualifying under the definition: of non- profit. K. Others. * Non - profit status is defined as an organization that is so defined by the Internal Revenue Service, § 501(c) (3) and has a State of California 'Tax Identification Number. FEES, DEPOSITS AND CANCELLATION PROCEDURES Fees may be charged for the use of City facilities and shall be established and periodically adjusted and approved by the City Council. Fees are imposed to cover overhead, processing, deposits, maintenance and replacement costs for application and scheduling and maintenance of the facilities. A. A security deposit will be required for all room rentals. All or a portion of the deposit may be retained by the Department after inspection of the facility by the Recreation and Senior Services Director or a designated representative and a determination that the facility has not been left clean and/or in good repair. M B -13 B. A separate additional cleaning fee will be charged for rental of the OASIS Event Center, Newport Coast Community Center- aar-d- Community Youth Center, Civic Center Community Room, and Marina Park. C. No fee or deposit shall be charged for use of City facilities by the City of Newport Beach, or events co- sponsored by the City of Newport Beach or its departments, with the exception of set -up charges. D. Cancellations for any facility other than the OASIS Event Center, Newport Coast Community Center -an4- Community Youth Center, Civic Center Community Room and Marina Park —may occur seventy -two hours prior to the scheduled use of facilities without forfeiting fees collected by the City, with exception of a City service refund processing fee. Cancellations with less than seventy -two hours notice will be charged a cancellation fee established by resolution of the City Council. In the event of cancellation by the City, notice will be given as far in advance of the scheduled use as possible. E. Cancellation of rentals by users for the OASIS Event Center, Newport Coast Community Center.-and- Community Youth Center, Civic Center.Community Rom and I - 'farina Park that occur less than thirty days prior to the scheduled use of the facility will be charged 25% of the rental fee. Cancellations with less than seventy -two hours notice will be charged the entire rental fee. Adopted - May 26,1998 Amended - May 8, 2001 Amended - April 23, 2002 Amended and Reassigned - April 8, 2003 Amended - July 22, 2003 Amended - September 13, 2005 Amended - October 10, 2006 Amended - August 11, 2009 Formerly 1 -25 9 D -4 PURPOSE To establish a method for employees to submit suggestions of,,,-to improveing City business practices. The objective of the program is to achieve efficiencies in City operations by providing employees an opportunity and incentive to contribute their ideas. Ideas resulting in measurable cost savings, increased efficiency or increased revenue to the City will be given priority over intangible sup estions. T4 m ct, ^12 F.., .,., +. +t.,.d it«. „7,,..,,, A..�., POLICY Review Committer' °t ^ ^i^^+ieffa ' ucture: The City Manager's Office shall designate an Innovation Im rovement Incentive Program coordinator in addition to a five member review committee made up of three members of the management team; and one standing advisory member from both the City_ Manager's Office and Finance Department. The review board , all be - ��^bli^T� —will review each idea submitted. The review v-H. be---,--' -cuir^n x, -aaa„ 4 1--- . - 1- izc p v --- - -- - ��-' -'-'_ Cite Manager The C.+., Man t $- 2- :rte =- — — - crrc-c ---- t{3'ru'e %fie -ciS- 4T[ertrG.. ......... .... �� . . c pr + r iu=fi a F Nt ,air,. , +i., review beard. Application Period Employee suggestions will be accepted by the Innovation/Improvement Incentive Program coordinator year-round. Submittal and Review Procedure. Employee suggestions must be submitted to the • appFeved mu A 'emInnovation/ Improvement Incentive acknowledged Program coordinator. will be .+ + Improvement 11 FIM, Incentive Program Committee eoerdinater ^' ^" ' ^�owill forward a copy of the lPE f eff i,+- any approved idea to the appropriate department(s) for evaluation. R-*fll-be-the respoRsibi4ity ef ' .at A 4 I -ePar�..ent to assigR oHe or- more to investigate eae sub.—mitte A :A idea. After review by the affected department(s), a written response signed by the department director shall be returned to the IDEA Innovation /Improvement Incentive Program Committee eoerdinato with a recomrnendation--to-ac� pt, F Allell— : mplementa"on, The affected department(s) shall provide a summary of_ On Weas recommended projected cost or operational benefit to the City and prepaFe a su ar-y for p sen. a+ -Matienfor suggestions recommended for adoption. The fev4ew-boardcomrnittee will make a determination to adopt, reject or defer the matter for further investigation. The decision` of the rev4ew-4oaf4committee shall be communicated directly to the emFloyee. 4etEef--4-re@egi�'isAon fer a.. ideas w-411 be fervy'arded to 4--- d--p--'--.en4: I the committee ad-opj�. the U� pilot .stud~ -1nav b,1 conducted to determine the actual savings/revenue or cost avoidance. Emplovee Award Eli6bilitv-. All current City of Newport Beach full time and part time employees, actively in the workplace, are eligible to receive awards with the exception of Department Directors, AdFnin4sLTahve Manager-smembers of the City_ Council members of appointed advisory boards or commissions, and members of the MUM Subject Matter Eligjhi4jyT All areas of activity within the City of Newport Beach are eligible for IDE 4- Innovation /Improvement Incentive Program submission with the following exceptions: A. Personnel grievances 2 D -4 B. Matters within the scope of collective bargaining C. Suggestions awarded in the prior three ors D. Matters that are a result of assigned or contracted audits, studies surveys review, or other research projects E. Enforcement of existing federal, state, or local rules regulations and laws including printed City policies, rules and procedures F. Recommendations for purchase or replacement of parts from a different source at a lesser price G. Suggestions that would result in increased fees or costs to the City of Newport Beach residents H. Matters which are considered part of the normal job duties of the employee Time Period Eligibility: Any employee who submits an- videaa suggestion retains the right to any award during the period of time that the i4ea— suggestion is being evaluated, plus an additional twelve months from the date of notification that the idea was rejected or deferred for further investigation. ^ oy an s i�- cwcrve I}_4 Criteria for jud ing Suggestion& leas- 5gZgestions that result in one of the following outcomes will have the greatest ehimee- likelihood of adoption: A. Measurable Cost Savings B. n =ire ^mod ewe hemp Improved Customer Service C. Increased Efficiency D. Improved Work Environment E. Improved Safety and Health F. Increased Employee Morale IDEA- Awards: If an- itleaa sug eg_ stion is adopted, the amount of the award will depend on whether the idea is one which results in tangible or intangible savings as determined by thedcommittee. Tangible ,d ^; value. i,.k..,,gible ;deal de not rns le Pe -a measurab ..,. --l—, -4 �.,.. +L.., We andy €in ^ ^ ^; ^' mae, + a^„ + t^ d— Ideas Suggestions involving working conditions, employee morale, customer service or safety may fall in the intangible category. year's "'--af Awards are given for 4 D-4 implemented suggestions for which monetary savings can be precisely determined. Cost avoidance awards are given for suggestions that are implemented that reduce time required for an existing process or avoid future cost increases without reducing current level of service. The amount of these awards is 1 % of savings or avoided costs capped at 1000.00."1, FRaXimum awaF,4 C,,,. y r ;nm idea nk n be $10,000.00. ,000.00. Intangible Suggestionldeas: Awards are given for suggestions implemented which improve customer service, working conditions, result in a chance in procedures, revision of forms, or improvement in employee morale, health or safety. Ra^rthe ffill extent f s,,, e.—Itat.an a ci .,cc ..t tt.„ ...,t;.,., The minimum award for these sug estions isof- $94-50 and- -with a maximum not to exceedef $388 500 VAIF -via wed. Group Suggestion Tomas Awards for aff4deaa s estion presented by a group of employees shall be determined on the same basis as if the idea - suggestion had been submitted by one employee. The amount of the award shall be equally divided among those employees submitting the ideasug esg tion. Special Awards The City Manager, upon recommendation of the Innovation /Improvement Incentive Program Committee, may determine a special award for a submitted suggestion. Special awards will be considered only for unusual suggestions that result in superior savings, and /or innovative safety or customer service improvements. i _ a board will e TSa.TJrSC RTtVS�i3"1P1 fifkal deCfJIenr 5 D -4 Decision of the City Shall Be Final: The decision by the T' =cam v d am ^i cecr ateFlnnovation /Improvement Incentive Pro gam Committee, the City Manager or the City Council regarding any action governed by this policy shall be at the sole discretion of such decision making authority and shall be final and binding. Nothing contained in this policy shall be deemed to create any contract or other legally binding obligation upon the City to adopt any idea - suggestion submitted. Submittal of an idea °he DE- -ferma suZgestion shall constitute a waiver of all claims against the City with regard to such idea and an agreement by the employee to be bound by the decision of the City. Adopted v January 24,1994 Amended - March 22,1999 Amended - May 14._213 Forme, -ly 4-3 0 RESERVE POLICY PURPOSE F -2 To establish City Council policy for the administration of Reserves defined as fund balances in governmental funds and net working capital in proprietary funds. BACKGROUND Prudent financial management dictates that some portion of the funds available to the City be reserved for future use. As a general budget principle concerning the use of reserves, the City Council decides whether to appropriate funds from Reserve accounts. Even though a project or other expenditure qualifies as a proper use of Reserves, the Council may decide that it is more beneficial to use current year operating revenues or bond proceeds instead, thereby retaining the Reserve funds for future use. Reserve funds will not be spent for any function other than the specific purpose of the Reserve account from which they are drawn without specific direction in the annual budget; or by a separate City Council action. Information regarding Annual Budget Adoption and Administration is contained in City Council Policy F -3. GOVERNMENTAL. FUNDS AND FUND BALANCE DEFINED Governmental Funds including the General Fund, Special Revenue Funds, Capital Projects Funds, Debt Service Funds and Permanent Funds have a short -term or current flow of financial resources, measurement focus and basis of accounting and therefore, exclude long -term assets and long -term liabilities. The term Fund Balance, used to describe the resources that accumulate in these funds, is the difference between the fund assets and fund liabilities of these funds. Fund Balance is similar to the measure of net working capital that is used in private sector accounting. By definition, both Fund Balance and Net Working Capital exclude long -term assets and long -term liabilities. PROPRIETARY FUNDS AND NET WORKING CAPITAL DEFINED Proprietary Funds including Enterprise Funds and Internal Service Funds have a long- term or economic resources measurement focus and basis of accounting and therefore, include long -term assets and liabilities. This basis of accounting is very similar to that used in private sector. However, instead of Retained Earnings, the term Net Assets is used to describe the difference between fund assets and fund liabilities. Since Net Assets include both long -term assets and liabilities, the most comparable measure of 1 F -2 proprietary fund financial resources to governmental Fund Balance is Net Working Capital, which is the difference between current assets and current liabilities. Net Working Capital, like Fund Balance, excludes long -term assets and long -term liabilities. GOVERNMENTAL FUND RESERVES (FUND BALANCE) For Governmental Funds, the Governmental Accounting Standards Board ( "GASB ") Statement No. 54 defines five specific classifications of fund balance. The five classifications are intended to identify whether the specific components of fund balance are available for appropriation and are therefore "Spendable." The classifications also are intended to identify the extent to which fund balance is constrained by special restrictions, if any. Applicable only to governmental funds, the five classifications of fund balance are as follows: CLASSIFICATIONS NATURE OF RESTRICTION Non - spendable Cannot be readily converted to cash Restricted Externally imposed restrictions Committed City Council imposed commitment Assigned City Manager assigned purpose /intent Unassigned Residual balance not otherwise restricted A. Non - amendable fund balance: That portion of fund balance that includes amounts that are either (a) not in a spendable .form, or (b) legally or contractually required to be maintained intact. Examples of Non - spendable fund balance include: 1. Reserve for Inventories: The value of inventories purchased by the City but not ye, issued to the operating Departments is reflected in this account. 2. Reserve for Long Texan Receivables and Advances: This Reserve is used to identify and segregate that portion of the City's financial assets which are not due to be received for an extended period, so are not available for appropriation during the budget year. 3. Reserve for Prepaid Assets: This reserve represents resources that have been paid to another entity in advance of the accounting period in which the resource is deducted from fund balance. A common example is an insurance premium, which is typically payable in advance of the coverage period. Although prepaid assets have yet to be deducted from fund balance, they are no longer available for appropriation. 2 F -2 4. Reserve for Permanent Endowment - Bay Dredging: The endowment specifies that the principal amount will not be depleted and represents the asset amounts to be held in the Bay Dredging Fund. 5. Reserve for Permanent Endowment - Ackerman Fund: The endowment specifies that the principal amount will not be depleted and represents the asset amount to be held in the Ackerman Fund, B. Restricted fund balance: The portion of fund balance that reflects constraints placed on the use of resources (other than non - spendable items) that are either (a) externally imposed by creditors; grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Examples of restricted fund balance are: 1. Reserve for Debt Service: Funds are placed in this Reserve at the time debt is issued. The provisions governing the Reserve, if established, are in the Bond Indenture and the Reserve itself is typically controlled by the Trustee. 2. ,Affordable I kousinZ: A principal provision of the Newport Beach Housing Klement regedres developers to provide housing units for lower income households, the number of which is to be negotiated for each development project. In lier of constructing affordable housing, developers have paid into this reserve whic'1 is used at the City Council's discretion to provide alternate methods for the delivery of affordable housing for lower income households. 3. Park In Lieu: Per NBMC 19.52 and California Government Code Section 664777 (The 1975 "Quimby_Act' � -_w �__ � a dedication of land or nayment of fens for park or recreational purposes in conjunction with residential t rejopment is required. The fees collected can only be used forspecific park or recreationTjgRoses as outlinedin NBMC 19.52.030 and 19.52.070. 34_Upper Newport BayRestoration Reserve: This reserve is the repository for funds mandated by SB573, as well as special fees charged to permit holders as an alternative to meeting certain specified mitigation criteria. In addition to the mitigation fees, ten percent (10 %) of Beacon Bay lease revenue is placed in this Reserve. Funds in the Reserve are c-erran»ed— torestricted for Upper Newport Bay restoration projects. 3 F -2 4-.S.Permanent Endowment for Bay Dredging: The endowment also specifies that the interest earnings on the principal amount can only be used for dredging projects in the Newport Bay. S:b.Permanent Endowment for Ackerman Fund: The endowment also specifies that the interest earnings on the principal amount can only be used for scholarships provided by the City. C. Committed fund balance: That portion of a fund balance that includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action by the government`s highest level of decision making authority, and remain binding unless removed in the same manner. The City considers a resolution to constitute a formal action for the purposes of establishing committed, fund balance. The action to constrain resources must occur within the fiscal reporting period; however the amount can be determined subsequently. City Council imposed Commitments are as follows: 1. Continency Reserve: The Contingency Reserve shall have a target balance of fifteen percent (15 %) of General Fund "Operating Budget" as originally adopted. Operating Budget for this purpose shall include current expenditure appropriations and shall exclude Capital Improvement Projects and Transfers Out. Appropriation a+W -and or access to these funds are reserved for emergency situations only. The parameters by which the Contingency Reserve could be accessed wou td include the following circumstances: a. A catastrophic loss of critical infrastructure requiring an expenditure of greater than or equal to five percent (5 %) of the General Fund, Operating Budget, as defined above. b. A State or Federally declared state of emergency where the City response or related City loss is greater than or equal to five percent (5 %) of the General Fund, Operating Budget. c. Any settlement arising from a claim or judgment where the loss exceeds the City's insured policy coverage by an amount greater than or equal to five percent (5 %) of the General Fund, Operating Budget. d. Deviation from budgeted revenue projections in the top three General Fund revenue categories, namely, Property Taxes, Sales "Taxes and Transient Occupancy Taxes in a cumulative amount greater than or equal to five percent (5 %) of the General Fund, Operating Budget_ 5! F -2 Any action by another government that elin- dnatesting or sh ft - shifts revenues from the City amounting to greater than or equal to five percent (5 %) of the General Fund, Operating Budget_ Inability of the City to meet its debt service obligations in any given year. f. &_,Any combination of factors 1) a. -fe, amounting to greater than or equal to five percent (5 %) of the General Fund, Operating Budget in any one fiscal year. Use of the Contingency Reserve must be approved by the City Council. Should the Contingency Reserve commitment be used, the City Manager shall present a plan to City Council to replenish the reserve within five years. 2. Facilities Financial Replacement Planning Reserve: In conjunction with the City's Facilities Financial Rep�Plan, a sinking fund has been established to amortize the cost of critical City facilities such as, but not limited to, the Civic Center,Qty--T- al' — <d- Police Department buildings, Fire Stations, Library Branches and other Facility Improvement Projects. The Facilities FinancialR^ruefft Planning—Program establishes a level charge to the General Fund that will perpetually replenish the cash flows necessary to finance the construction of critical City facilities. This plan will be updated annually as part of the budget process, or as conditions change. The City shall strive to maintain fund balance in the Facilities FinancialReWaeement - Planning Reserve at a level equal to or greater than the maximum annual debts of existing obligations. The eligible uses of this reserve include the cash funding of public facility improvements or the servicing of related debt. 3. Oceanfront Encroachment Reserve: In the early 1990's, it was discovered by survey that improvements to several ocean front parcels were encroaching onto the public beach. The encroachment was relatively minor. The negotiated solution was for the property owners to pay a permit fee each year to the City. Revenue thus generated may only be used for ocean front restoration projects and incidental costs of improvements and maintenance to enhance public access and use of ocean beaches as approved by the City Council. This Reserve is the repository for those funds. City Council Policy L -12 contains additional background and details about the encroachment issue. 61 F -2 4. Senior Citizen Center and Recreation Facilitv Rental ReserveSite: Citv Council Policy B- 2rquires ten percent (_10 %) of gross revenues derived from gasisOASIS Senior Center and Recreation facilities rental fees to be set aside annually for equipment replacement and/or facility refurbishment. 5 w 'per-cent - (1&°rf 11_4 fevennc�ed- frekii.- rcictirl -x. set -asi 4ef eEluip 7„ .,,,+ .,...7 /„r »„F 1 `•i'an<.nct- atzz"ke �ente.r. '1'h1fi c,,c�mrcc�n-x�,?R� -1+i c.crcc— crcz�- vs���.u�.-vxu c p.,liey was as .- ,,.,7,,ced TZ„ ., A,.,.,,.,,�.,.,,,+ ,..; #i, +F,., i~ «;.,,, rar �.�' rI ACTC J.ery or+cy -ccu ..,mt-cczr-C < < , - ti-- �+ Y' 7�' r 'a:�- crf"z'r""i-c'c'r'r�c^vix.. ccccc: i.rzi— uzgti'nt iriuc"r "'£ - e b ne new funds, -are beinfl, - .,+ C t, 1 + 7 / o ceecezrzr iiif rres -e�- trey; ac:- r'eineni-- car/?' xi `S-- °�SpCax- +c.�cq"-a'�'�mc�zx rt °- '�":iecti^.cne^- iitaizcr/-v'r „C,a- cruri�rar�'miirrc -amts the -ez rtes . 5. Off Street Parking: Per NBMC 12.44.025 fifty percent (50 %) of parking meter revenue collected in designated areas is set aside for acquisition, development and improvement of off street parking facilities within those areas. 6. Paramedic Program (Hoag): In addition to the debt issuance agreements with Hoag Hospital which required an original deposit, effective July 1, 2000, any excess revenues generated by this program, after accounting for General City Overhead of fifteen percent (15 %), were to be accumulated for future paramedic related purposes. Funds accumulated may be used only for paramedic related purposes as directed by the City Council. ;._Recreational instruction: City Council Policy B -2 requires ten percent (10 %) to twenty percent (20 %) of gross annual revenues derived from specified recreational classes to be set aside for the refurbishment of certain recreational facilities, fee -based activity Drograms and equipment used in connection with fee -based recreation classes. 7:8.Senior Fitness Center Reserve: City Council .Policy B -2 requires ten percent (10 °i)) of theme -ross annual revenues derived from fitness center membership fees to be set aside and used for new or replacement fitness equipment. 8.9.ln Lieu Parking: Per NBMC 12.44.125 the City requires commercial businesses to provide adequate off - street parking or where this is not possible, businesses are afforded the opportunity to pay an annual fee and use parking spaces in a municipal lot, providing such a lot is located within specified proximity to the business. These funds can only be used to provide additional parking. 6 F -2 10. Neighborhood Enhancement - A: NBMC 12.44.027 directs revenues from parking meters in Zone 9 shall be apportioned to this Neighborhood Enhancement A. Funds accumulated will only be used for the purpose of enhancing and supplementing services to the West Newport area. Both the nature of the supplemental services and the definition of the area served are set forth in the Code Section above. 11. Neighborhood Enhancement - B: NBMC 12.44.027 directs that fifty percent (50 %) of revenues from parking meters in the Balboa Peninsula be apportioned to this Neighborhood Enhancement B. Funds accumulated will only be used for the purpose of enhancing and supplementing services in the Balboa Peninsula. Specific details are contained in the Code Section. 12. Cable Franchise: Pursuant to the provisions of the Newport Beach Municipal Code, Title 5, Business Licenses &z Regulations, Chapter 5.44, in return for the use of the City's streets and public ways for the purpose of installing, operating, maintaining, or reconstructing a cable system, to provide cable service, fees are collected by the City from cable providers. Those fees are to be used by the City for support o Public, Education, and Government access programming only. 13, START Pr am: The Fire Department's START Program developed by the Fire Department and Hoag Hospital helps prepare emergency personnel to quickly organize their resources to handle multi - casualty emergencies. Training video and training materials are sold to other agencies. Any excess revenues generated by this program shall only be used for production expenses related to future START training materials and to enhance paramedic, EMT, and MICN pre - hospital education as directed by the City Council. 14. Oil and Gas Reserve: The annual $40,000 which is being set aside from the oil and gas field production revenues is to be used to fund abandoned wells and facilities as they go out of service. D. Assigned fund balance: That portion of a fund balance that includes amounts that are constrained by the City's intent to be used for specific purposes but that are not restricted or committed. This policy hereby delegates the authority to the City Manager or designee to modify or create new assignments of fund balance. Constraints imposed on the use of assigned amounts may be changed by the City Manager or his designee. Appropriations of balances are subject to Council Policy F -2 F -3 concerning budget adoption and administration. Examples of assigned fund balance may include but are not limited to: 1. Appropriations Reserves:: This is a temporary repository for funds not yet fully appropriated in the annual budget. It is normally used during the budget process to set aside funds for known or strongly anticipated expenses that will need to be addressed by budget amendment during the budget year, Sometimes the dollar amount and/or appropriate account breakdown for such expenses cannot be specifically identified at the time the budget is adopted, even though the funds will be needed. In such cases, the funds will normally be budgeted to the Reserve for Appropriations. 2. Change in Fair Market Value of Investments:.. As dictated by GASB 31, the City is required to record investments at their fair value (market value). This accounting practice is necessary to insure that the City's investment assets are shown at their true value as of the balance sheet. However, in a fluctuating interest rate environment, this practice records market value gains or losses which may never be actually realized. The City Manager may elect to reserve a portion of fund balance associated with an unrealized market value gain. However, it is impractical to assign a portion of fund balance associated with an unrealized market value loss. 3. PERS Rate Reserve:. This Reserve may be established for the specific purpose of helping to smooth out the year -to -year fluctuations in PERS rates. When the City Manager or his designee authorizes a change in General Fund, Assigned Fund Balance, City Council shall be notified quarterly. E. Unassigned fund balance:— The residual portion of available fund balance that is not otherwise restricted, committed or assigned. PROPRIETARY FUND RESERVES (NET WORKING CAPITAL) In the case of Proprietary Funds (Enterprise and Internal Service Funds), Generally Accepted Accounting Principles ( "GAAP ") does not permit the reporting of reserves on the face of City financial statements. However, this does not preclude the City from setting policies to accumulate financial resources for prudent financial management of its proprietary fund operations. Since proprietary funds may include berth long -term capital assets and long -term liabilities, the most comparable measure of liquid financial resources that is similar to fund balance in proprietary funds is net working capital which is the difference between current assets and current liabilities. For all further 0 F -2 references to reserves in Proprietary Funds, Net Working Capital is the intended meaning. A. Water Enterprise Fund 1, Stabilization and Contingency Reserve: This Reserve is used to provide sufficient funds to support seasonal variations in cash flows and in more extreme conditions, to maintain operations for a reasonable period of time so the City may reorganize in an orderly manner or effectuate a rate increase to offset sustained cost increases. The intent of the Reserve is to provide funds to offset cost increases that are projected to be short - lived, thereby partially eliminating the volatility in annual rate adjustments. It is not intended to offset ongoing, long -term pricing structure changes. The target level of this reserve is fifty percent (50 %) of the annual operating budget. This reserve level is intended to provide a reorganization period of b months with zero income or 24 months at a twenty -five percent (25 %) loss rate. The City Council must approve the use of these funds, based on City Manager recommendation. Funds collected in excess of the Stabilization reserve target would be available to offset future rate adjustments, while extended reserve shortfalls would be recovered from future rate increases. Should catastrophic losses to the infrastructure system occur, the Stabilization and. Contingency Reserve may be called upon to avoid disruption to water distribution. 2. Infrastructure, Replacement Funding Policy: This funding policy is intended to be a temporary repository for cash flows associated with the funding of infrastructure replacement projects provided by the Water Master Plan. The contribution rate is intended to level- amortize the cost of infrastructure replacement projects over a long period, The annual funding rate of the Water Master Plan is targeted at an amount that _when combined with prior or future year contributions, is sufficient to provide for the eventual replacement of assets as scheduled in the lan. $2 5 illie ^ 'Base ea, — ,ar Irma 10 —lir �� '_a`_^ : t ?:� }�eenfi { 5 °}leer mar -This contribution policy is based on the eSlEa funding requirements of the most current Water Master Plan. There are no minimums or maximums balances contemplated by this funding policy. However, the contributions level should be reviewed periodically or as major updates to the Water Master Plan occur. Annual funding is contingent on many factors and may ultimately involve a combined strategy of cash funding and debt issuance with the intent to normalize the burden on Water customer rates. B. Wastewater Enterprise Fund 0 F -2 1. Stabilization and Contingency Reserve: This Reserve is used to provide sufficient funds to support seasonal variations in cash flows and in more extreme conditions, to maintain operations for a reasonable period of time so the City may reorganize in an orderly manner or effectuate a,rate increase to offset sustained cost increases. The intent of the Reserve is to provide funds to offset cost increases that are projected to be short - lived, thereby partially eliminating the volatility in annual rate adjustments. It is not intended to offset ongoing, long -term pricing structure changes. The target level of this reserve is fifty percent (50 %) of the annual operating budget This reserve level is intended to provide a reorganization period of 6 months with zero income or 24 months at a twenty -five percent (25 %) loss rate. The City Council must approve use of these funds, based on City Manager recommendation. Funds collected in excess of the Stabilization reserve target would be available to offset future rate adjustments, while extended reserve shortfalls would be recovered from future rate increases. Should catastrophic losses to the infrastructure system occur, the Stabilization and Contingency Reserve may be called upon to avoid disruption to wastewater service. 2. Infrastructure Replacement Funding Policy: This funding policy is intended to be a temporary repository for cash flows associated with the funding of infrastructure replacement projects provided by the Wastewater Master Plan. The contribution rate is intended to level - amortize the cost of infrastructure replacement projects over a long period of time. The annual funding rate of the Wastewater Master Plan is targeted at an amount that when combined with prior or future year contributions, is sufficient to provide for the eventual replacement of assets as scheduled in the plan. lT9f} pew year {scear Fiseal Ycai 20' I 11)) � 1. Ye� - - This contribution policy should be updated periodically based on the most current Wastewater Master Plan. There are no minimum or maximum balances contemplated by this funding policy. However, the contributions level should be reviewed periodically or as major updates to the Wastewater Master Plan occur. Annual funding is contingent on many factors and may ultimately involve a combined strategy of cash funding and debt issuance with the intent to normalize the burden on Wastewater customer rates. C. Internal Service Funds Background. Internal Service Funds are used to centrally manage and account for specific program activity in a centralized cost center. Their revenue generally comes from 10 F -2 internal charges to departmental operating budgets rather than direct appropriations. They have several. functions. - -They work well in normalizing departmental budgeting for programs that have life- cycles greater than one year; thereby facilitating level budgeting for expenditures that will, by their nature, be erratic from year to year. This also facilitates easier identification of long term trends. - -They act as a strategic savings plan for long -term assets and liabilities. - -From an analytical standpoint, they enable appropriate distribution of city -wide costs to individual departments, thereby more readily establishing true costs of various operations. Since departmental charges to the internal service fund duplicate the ultimate expenditure from the internal service fund, they are eliminated when consolidating entity -wide totals. The measurement criteria, cash flow patterns, funding horizon and acceptable funding levels are unique to each program being funded. Policy regarding target balance and( or contribution policy, gain/loss amortization assumption., source data, and gov(,mancc: for each of the City's Internal Service Funds is set forth as follows: 1. For all.Internal Service Funds:. the Finance Director may transfer part or all of any unencumbered fund balance between the Internal Service Funds provided that the withdrawal of funds from the transferred fund would not cause insufficient reserve levels or insufficient resources to carry out its intended purpose. This action is appr riate when the decline, in cash balance in any fund is precipitated by in off -trend non - recurring event. The Finance Director will make such recommendations as part of the annual budget adoption or through separate Council action. 2. Equipment Maintenance Fund and Equipment Replacement Fund:. The Equipment Maintenance and Replacement Funds receive operating money from the Departments to provide equipment maintenance and to fund the regular replacement of major pieces of equipment (mostly vehicles) at their economic obsolescence. a. Equipment Maintenance Fund:.. The Equipment Maintenance Fund acts solely as a cost allocation center (vs. a pre - funding center) and is funded on a pay - as- you -go basis by departmental maintenance charges by vehicle type and III F -2 usage requirement. Because of this limited function, the target year -end balance is zero. Contribution rates (departmental charges) are set to include the direct costs associated with maintaining the City vehicle fleetfleet, including fleet maintenance employee salary and benefits, operating expenses and maintenance related capital outlay. Administrative overhead and maintenance facility improvements and replacement costs are to be provided outside of this cost unit. Because of the limited purpose of this fund, a gain f loss assumption is not needed. Source data is ongoing city fleet inventory and maintenance cost information. Governance is achieved through annual management adjustment of contribution rates on the basis of maintenance cost by vehicle and distribution of costs based on fleet use by department. b. Equipment Replacement Fund:- Operating Departments are charged am -tual amounts sufficient to accumulate funds for the replacement of Felling steskvehicles, communications equipment, parking equipment and other ec ui - ment replacement determined appropriate by the Finance Director. in w eunc-' n _ Guidelines, The City Manager appreves—recommends annual rate adjustments as part of the budget preparation process. These adjustments are based on pricing, future replacement schedules and other variables. The age and needs of the equipment €tee�mventory vary from year to year. Therefore the year -end fund balance will fluctuate in direct correlation to accumulated depreciation. In general, it will increase in the years preceding the scheduled replacement of relatively large percentage of the €leete uipment, on a dollar value basis. However, rising vehiele- equipment costs, dissimilar future needs, replacing vel4elese�meet faster than their expected life or maintaining vehicles t uipment longer than their expected life all contribute to variation from the projected schedule. In light of the above, the target funding level is not established in terms of a flat dollar figure or even a percentage of the overall value of the fleete uipment inventory. It is established at fifty percent (50 %) of the current accumulated depreciation value of the equipment inventoryfleet, calculated on a replacement value basis. This will be reconciled annually as part of the 12 F -2 year -end close out process by the Finance Department if departmental replacement charges for eaehr -°-tee equipment prove to be excessive or insufficient with regard to this target funding level, new rates established during the next budget cycle will be adjusted with a view toward bringing the balance back to the target level over a three -year period. 3. Insurance Reserve Funds:. The Insurance Reserve funds account for the activities of general Iiability and elai workers' compensation claims. Background. The City employs an actuary to estimate the liabilities associated with the general liability and workers compensation activities. The costs typically associated with these programs include: claims administration, legal defense, insurance premiums, self insured retention and the establishment of appropriate loss reserves including "incurred -but -not reported" (IBNR) claims. In a prescribed measurement methodology, the Actuary estimates the liabilities in conformity with Generally Accepted Accounting Principles (GAAP). The Actuary refers to this measurement level in his report as the "Expected Level." However, because actuarial estimates are subject to significant uncertainties, actuaries typically recommend that a target funding level be set at an amount in excess of expected liability as a margin to cover contingencies. A typical target funding level would be set to obtain a specified confidence level (the percent chance that resources set -aside will be sufficient to cover existing claims). Full funding of the Actuary's "Target Funding Level" establishes a seventy -five percent (75 %) confidence there will be sufficient resources (including projected interest) to pay the full amount of existing claims without future contributions. . Funding at the "Expected Level" produces a confidence level of only fifty percent to sixty -five percent (50 % -65 %). Therefore, the target funding of insurance reserves should exceed the "Expected Level" to account for adverse estimate deviation. Policy & Practice. The City should target funding of its risk management obligations at not less than the Expected Level, described above; and not more than an amount sufficient to establish a seventy -five percent (75 %) Confidence Level. Actuarial losses should be recovered over a rolling 3 -year basis while actuarial gains should be amortized over a rolling 5 -year basis. As part of the operating budget, 13 F -2 each department will be charged a rate equal to its proportionate share of the total "revenue" required to fund the Insurance Reserve Fund at this level. To lessen the impact of short -term annual rate change fluctuation, City management may implement one -time fund transfers (rather than department rate increases) when funding shortfalls appear to be due to unusually sharp and non - recurring factors. Excess reserves in other areas may be transferred to the internal service fund in these instances but such transfers should not exceed the funding necessary to reach a seventy -five (75 %) confidence level interval. The be :«. F.,,- ..,.,, -I .,t +1.,, F:,,r+ f :+.> c-d'3'dRe i•-meebR. :aiici + .. .,F xzaz-c�ccz -acziva=c. 4. Compensated Absences Fund:. Background. The primary purpose of flex leave, vacation leave and sick leave is to provide compensated time off as appropriate and approved. However, under .certain circumstances, typically at separation from service, some employees have the option of receiving cash -out payments for some accumulated leave balances. The Compensate.: Absences Fund is utilized primarily as a budget smoothing technique for any such leave bank liquidations. The primary purpose of the Compensated Absences Fund is to maintain a balance sufficient to facilitate this smoothing. Policy and Practice. The contribution rate will be set to cover estimated annual cash flows based on a three -year trailing average: high- eash4low years, -as "u- r4her dcsertbed velE)No The minimum cash reserve should not fall below that three -year average,--plus the —Mara- �u -rn ,s nua- '-- v�. The maximum cash reserve should not exceed fifty percent (50 %) of the long term liability. The target cash reserve shall be the median difference between the minimum and maximum figures. Each department will make contributions to the Compensated Absences Fund through its operating budget as a specified percentage of salary. The Finance Director will review and recommend adjustments to the percentage of salary required during the annual budget development process. This percentage will be set so as to maintain the reserve within the parameters established above, In adelit in" ~ ' F ^ " ^' ,� th W1 F -2 ... 5. Post Retirement Funding Policies:- a. Pension Funding:- (i) California Public Employees Retirement System (CalPERS):: The City's principal Defined Benefit Pension program is provided through contract with CaIPERS. The City's contributions to the plan include a fixed employer paid member contribution and an actuarially determined employer contribution that fluctuates each year based on an annual actuarial plan valuation. This variable rate employer contribution includes the normal cost of providing the contracted benefits plus or minus an amortization of plan changes and net actuarial gains and losses since the last valuation period. it is the City's policy to make contributions to the plan equaling at least one hundred percent (100 %) of the actuarially required contribution (annual pension cost). Because the City pays the entire actuarially required contribution each year, by definition, its net pension obligation at the en I of each year is $0. Any unfunded actuarial liability (UAL) is amortized and paid in accordance with the actuary's funding recommendations. The Citv will strive to maintain its UAL within a range that is considered acceptable to actuarial standards. The City Council shall consider increaser the annual CaIPERS contribution should the UAL status fall below acjce T table actuarial standards. (ii) Laborer's International Union of North America (LIUNAj:, The City provides funds to support a supplemental pension plan for some employee associations through con, i act with LIUNA. This is funded at a fixed percentage of total compensation on a pay -as- you -go basis. The City is not contractually required to guarantee the level of the ultimate LIUNA benefit to retirees, nor does it do so. Therefore the City's liability for this program is full funded each year. b. Other Post Employment Benefits(OPEB Funding):: Background. i F -2 The City's OPEB funding obligations consists of two retiree medical plans. New Plan. Effective January 2006, the City and its employee associations agreed to major changes to the Post Employment Healthcare Plan. New employees and all current employees participate in a program that requires certain defined employee and employer contributions while the employee is in active service. However, once the contributions have been made to the employee's account, the City has obligation to the Ialantransferred asubstantial portion of the funding risk to the employee. Old Plan. Eligible employees who retired prior to the "New Plan" and certain active employees were eligible to continue to receive post - retirement medical benefits (a defined benefit plan). The cost was divided among the City, current employees and retirees. In the past, this program was largely funded on a pay -as- you -go basis, so there was a significant unfunded liability. Recognizing this problem, the City began contributing to this obligation in 2001. In 2008, these assets were placed. in a pre - funding trust. The City's intention is to amortize the remaining unfunded liability within 20 years. Policy &Practice. New Plan. Consistent with agreements between the City and Employee Associations, the new defined contribution plan will be one hundred percent (100 %) funded, on an ongoing basis, as part of the annual budget process. Funds to cover this expenditure will be contained within the salary section of each department's annual operating budget. Old Plan. The City's policy is to pre fund the explicit (cash subsidy) portion of the Actuarial Accrued Liability (AAL) of the remnants of the old plan over a 20 -year amortization period, or less. This amount will be based on the Annual Required Contribution (ARC) determined by a biennial actuarial review; subject to review and analysis by the City. The City will strive to maintain nu a. la^rget reserve balan4 a funded status -that will be within a range that is considered acceptable to actuarial standards. The City Council shall consider increasing the annual OPEB contribution should the funded status fall below acceptable actuarial standards. established -an =,�', -;5 a na i = s press. �. 16 5 Ift !. • Adopted - January 24,1994 Amended - April 10, 1995 Amended - April 27,1998 Amended a March 14, 2000 Amended - May 8, 2001 Amended - April 23, 2002 Amended - April 13, 2004 Amended - September 15, 2008 Amended - November 12, 2008 Amended - May 24, 2011 Amended - September 27, 2011 W-j MA DEBT MANAGEMENT POLICY A. PURPOSE F -6 (New) The purpose of this policy is to establish guidelines and parameters for the effective governance, management and administration of City debt. E t The City is committed to fiscal sustainability by employing long -term financial planning efforts, maintaining appropriate reserves levels and employing prudent practices in governance, management, budget administration and financial reporting. Debt Levels and their related annual costs are important long -term obligations that must be managed within available resources. A disciplined thoughtful approach to debt management includes policies that provide guidelines for the City to manage its debt program in -line with those resources. Therefore, the objective of this policy is to provide written guidelines and restrictions concerning the amount and type of debt issued by Hie City and the caip, i.ng management of the debt portfolio. This debt management policy is intended to improve the quality of decisions, provide � U,- >tification for the structure of debt issuance, identify policy goals and demonstrate a coniriiitrnent to long-term financial planning, including a multi -year capital plan. Adherence to a debt management policy signals to rating agencies and the capital markets that a government is well managed and should meet its obligations in a timely manner. C. CONDITIONS AND PURPOSES OF DEBT ISSUANCE 1. Acceptable Conditions for the Use of Debt The City believes that prudent amounts of debt can be an equitable and cost - effective means of financing major infrastructure and capital project needs of the City. Debt will be considered to finance such projects if: a) It meets the City's goal of distributing the payments for the asset over its useful life so that benefits more closely match costs for both current and future residents. b) It is the most cost - effective funding means available to the City, taking into account cash flow needs and other funding alternatives. 1 F -5 (New) c) It is fiscally prudent and meets the guidelines of this Policy. Any consideration of debt financing shall consider financial alternatives, including pay -as- you -go funding, proceeds derived from development or redevelopment of existing land and capital assets owned by the City, and use of existing or future cash reserves, or combinations thereof. 2. Acceptable Uses of Debt The City will consider financing for the acquisition, substantial refurbishment, replacement or expansion of physical assets, including land improvements, The primary purpose of debt is to finance one of the following: a) Acquisition and or improvement of land, right -of -way or long -term easements. b) Acquisition of a capital asset with a useful life of 3 or more years. c) Construction or reconstruction of a facility. d) Refunding, refinancing, or restructuring debt, subject to refunding objectives and parameters discussed in Section E. e) Although not the primary purpose of the financing effort, project reirnbursables that include project planning design, engineering and other preconstrrrction efforts; project - associated furniture fixtures and equipment; capitalized interest, original issuer's discount, underwriter's discount and other costs of issuance. f) Interim or cash flow .financing, such as anticipation notes. g) Refinancing or advance funding of City pension obligations, but only to the extent significant financial benefit is achieved and limited by Section E. 3. Prohibited Uses of Debt Prohibited uses of debt include the following: a) Financing of operating costs except for anticipation notes with a term of less than one year. b) Debt issuance used to address budgetary deficits. c) Debt issued for periods exceeding the useful life of the asset or projects to be financed_ 2 F -6 (New) D. USE OF ALTERNATIVE DEBT INSTRUMENTS The City recognizes that there are numerous types of financing structures and funding sources available, each with specific benefits, risks, and costs. All potential funding sources are reviewed by management within the context of the Debt Policy and the overall portfolio to ensure that any financial product or structure is consistent with the City's objectives. Regardless of what financing structure(s) is utilized, due - diligence review must be performed for each transaction, including the quantification of potential risks and benefits, and analysis of the impact on City creditworthiness and debt affordability and capacity. 1. Variable Rate Debt Variable rate debt affords the City the potential to achieve a lower cost debt depending on market conditions. However, the City will seek to limit the use of variable -rate debt due to the potential risks of such instruments. a) Purpose The City shall consider the use of variable rate debt for the purposes of: i. Reducing the costs of debt issues. ii. Increasing flexibility for accelerating principal repayment and amortization. iii. Enhancing the management of assets and liabilities (matching short- term "priced debt" with the City's short -term investments). iv. Diversifying interest rate exposure. b) Considerations and Limitations on Variable -Rate Debt The City may consider the use of all alternative structures and modes of variable rate debt to the extent permissible under State law and will make determinations among different types of modes of variable -rate debt based on cost, benefit, and risk factors. The Finance Director shall consider the following factors in considering whether to utilize variable rate debt: i. Any variable rate debt should not exceed 20% of total City General Fund supported debt. ii. Any variable rate debt should be fully hedged by expected future Facility Financing Plan reserves or unrestricted General Fund reserve levels. 3 F -6 (New) iii. Whether interest cost and market conditions (including the shape of the yield curves and relative value considerations) are unfavorable for issuing fixed rate debt. iv. The likelihood of projected debt service savings when comparing the cost of fixed rate bonds. V. Costs, implementation and administration are quantified and considered. vi. Cost and availability of liquidity facilities (lines of credit necessary for variable rate debt obligations and commercial paper in the event that the bonds are not successfully remarketed) are quantified and considered. vii. Ability to convert debt to another mode (daily, monthly, fixed) or redeem at par at any time is permitted. viii. The findings of a thorough risk management assessment. c) Risk Management Any issuance of variable rate debt shall require a rigorous risk assessment, including, but not limited to factors discussed in this section. Variable rate debt subjects the City to additional financial risks (relative to fixed rate bonds), including interest rate risk, tax risk, and certain risks related to providing liquidity for certain types of variable rate debt. The City will properly manage the risks as follows: i. Interest Rate Risk and Tax Risk The risk that market interest rates increase on variable -rate debt because of market conditions, changes in taxation of municipal bond interest, or reductions in tax rates. Mitigation - Limit total variable rate exposure per the defined limits and match the variable rate liabilities with short term assets. ii. Liquidity/Remarketing Risk - The risk that holders of variable rate bonds exercise their "put" option, tender their bonds, and the bonds cannot be remarketed requiring the bond liquidity facility provider to repurchase the bonds. This will result in the City paying a higher rate of interest to the facility provider and the potential rapid amortization of the repurchased bonds. Mitigation - Limit total direct variable -rate exposure. Seek liquidity facilities which allow for longer (5 -10 years) amortization of any draws on the facility. Secure credit support 4 F -6 (New) facilities that result in bond ratings of the highest short -term ratings and long -term ratings not Iess than AA. If the City's bonds are downgraded below these levels as a result of the facility provider's ratings, a replacement provider shall be sought. iii. LiquiditylRollover Risk - The risk that arises due to the shorter term of most liquidity provider agreements (1 -5 years) relative to the longer- term amortization schedule of the City's variable -rate bonds. In particular, (1) the City may incur higher renewal fees when renewal agreements are negotiated and (2) the liquidity bank market constricts such that it is, difficult to secure third party liquidity at any interest rate. Mitigation - Negotiate longer terms on provider contracts to minimize the number of rollovers 2. Derivatives The use of certain derivative products to hedge variable rate debt, such as interest rate swaps, may be considered to the extent the City has such debt outstanding or under considerasion. The City will exercise extreme caution in the use of derivative iTtstrusaent,, for hedging purposes, and will consider their utilization only when sufficient understanding of the products and sufficient expertise for their al)p.ropriate u;;e has been developed. A comprehensive derivative policy will be adopted bY the City prior to any utilization of such instruments. E. REFUNDING GUIDELINES The Finance Director shall monitor at least annually all outstanding City debt obligations for potential refinancing opportunities. The City will consider refinancing of outstanding debt to achieve annual savings. Absent a compelling economic reason or financial benefit to the City, any refinancing should not result in any increase to the weighted average life of the refinanced debt. The City will generally seek to achieve debt service savings which, on a net present value basis, are at least 3% of the debt being refinanced. The net present value assessment shall factor in all costs, including issuance, escrow, and foregone interest earnings of any contributed funds on hand. Any potential refinancing shall additionally consider whether an alternative refinancing opportunity with higher savings is reasonably expected in the future. 9 F -6 (New) Any potential refinancing executed more than 90 days in advance of the outstanding debt optional call date shall require a higher savings threshold. Consideration of this method of refinancing shall place greater emphasis on determining whether an alternative refinancing opportunity with higher savings is reasonably expected in the future. F. MARKET COMMUNICATION, ADMINISTRATION, AND REPORTING 1, Rating Agency Relations and Annual or Ongoing Surveillance - The Finance Director shall be responsible for maintaining the City's relationships with Standard & Poor's Ratings Services, Fitch Ratings and Moody's Investor's Service. The City is committed to maintaining its existing rating levels. In addition to general communication, the Finance Director shall` a) Ensure the rating agencies are provided updated financial information of the City as it becomes publically available. b) Communicate with credit analysts at each agency at least once each year, or as may be requested by the agencies, c) Prior to each proposed new debt issuance, schedule meetings or conference calls with agency analysts and provide a thorough update on the City's financial position, including the impacts of the proposed debt issuance. 2. Council and Finance Committee Communication - The Finance Director should report feedback from rating agencies, when and if available, regarding the City's financial strengths and weaknesses and recommendations for addressing any weaknesses as they pertain to maintaining the City's existing credit ratings. 3. Continuing Disclosure Compliance - The City shall remain in compliance with Security and Exchange Commission Rule 15c2 -12 by filing its annual financial statements and other financial and operating data for the benefit of its bondholders within 270 days of the close of the fiscal year, or as required in any such agreement for any debt issue. The City shall maintain a log or file evidencing that all continuing disclosure filings have been made promptly. 4. Debt Issue Record - Keeping - A copy of all debt - related records shall be retained at the City's offices. At minimum, these records shall include all official statements, bond legal documents / transcripts, resolutions, trustee statements, leases, and title reports for each City financing (to the extent available). 5. Arbitrage Rebate - The use of bond proceeds and their investments must be monitored to ensure. compliance with all Internal Revenue Code Arbitrage Rebate Requirements. The Finance Director shall ensure that all bond proceeds 6 F -6 (New) and investments are tracked in a manner which facilitates accurate calculation, and, if a rebate payment is due, such payment is made in a timely manner. G. CREDIT RATINGS The City will consider published ratings agency guidelines regarding best financial practices and guidelines for structuring its capital funding and debt strategies to maintain the highest possible credit ratings consistent with its current operating and capital needs. H. LEGAL DEBT LIMIT Newport Beach Charter section 1109 indicates that the City shall not incur an indebtedness evidenced by general obligation bonds which shall in the aggregate exceed the sum of fifteen percent (15 %) of the total assessed valuation, for purposes of City taxation, of all the real and personal property within the City. While this limit defines the absolute maximum legal debt limit for the City, it is not an effective indicator of the City's affordable debt capacity. I. AFFORDABILITY Prior to the issuance of debt to finance a project, the City will carefully consider the overall long -term affordability of the proposed debt issuance. The City shall not assume more debt without conducting an objective analysis of the City's ability to assume and support additional debt service payments. The City will consider its long -term revenue and expenditure trends, the impact on operational flexibility and the overall debt burden on the tax payers. The evaluation process shall include a review of generally accepted measures of affordability and will strive to achieve and or maintain debt levels consistent with its current operating and capital needs. The Finance Director shall review benchmarking results of other California cities of comparable size with the City's Finance Committee prior to any significant project financing. 1. General Fund - Supported Debt - General Fund Supported Debt generally include Certificates of Participation (COPS) and Lease Revenue Bonds (LRBs) which are lease obligations that are secured by an installment sale or by a lease- back arrangement between the City and another public entity. The general operating revenues of the City are pledged to pay the lease payments, which are, in turn, used to pay debt service on the bonds or Certificates of Participation. a F -5 (New) These obligations do not constitute indebtedness under the state constitutional debt limitation and, therefore, are not subject to voter approval. Payments to be made under valid leases are payable only in the year in which use and occupancy of the leased property is available, and lease payments may not be accelerated. Lease financing requires the fair market rental value of the leased property to be equal to or greater than the required debt service or lease payment schedule. The lessee (City) is obligated to place in its Annual Budget the rental payments that are due and payable during each fiscal year the lessee has use of the leased property. The City should strive to maintain its net General Fund - backed debt service at or less than 8% of available annually budgeted revenue. This ratio is defined as the City's annual debt service requirements on Certificates of Participation and Lease Revenue Bonds compared to total General Fund Revenues net of interfund transfers. This ratio, which pertains to only general fund backed debt, is often referred to as "lease burden." 2.. fievenu-- Bonds - Long -term obligations payable solely from specific pledged sources, in general, are not subject to a debt limitation. Examples of such long - term obligations include those which achieve the financing or refinancing of projects provided by the issuance of debt instruments that are payable from restricted revenues or user fees (Enterprise Revenues) and revenues generated from a project. In determining the affordability of proposed revenue bonds, the City will perform an analysis comparing projected annual net revenues (exclusive of depreciation which is a non -cash related expense) to estimated annual debt service. The City should strive to maintain a coverage ratio of 125% using historical and/or projected net revenues to cover annual debt service for bonds. The City may require a rate increase to cover both operations and debt service costs, and create debt service reserve funds to maintain the required coverage ratios. 3. Special Districts Financing - The City's Special Districts primarily consist of Community Facilities Districts (CFDs) and 1913/1915 Act Assessment Districts (Assessment Districts). The City will consider requests for Special District 8 F -6 (New) formation and debt issuance when such requests address a public need or provide a public benefit. Each application will be considered on a case by case basis, and the Finance Department may not recommend a financing if it is determined that the financing could be detrimental to the debt position or the best interests of the City. 4. Conduit Debt - Conduit financing provides for the issuance of securities by a government agency to finance a project of a third party, such as a non - profit organization or other private entity. The City may sponsor conduit financings for those activities that have a general public purpose and are consistent with the City's overall service and policy objectives. Unless a compelling public policy rationale exists, such conduit financings will not in any way pledge the City's faith and credit. J. STRUCTURE OF DEBT 1. Term of Debt - Debt will be structured with the goal of distributing the payrents for the asset over its useful life so that benefits more closely match costs for both current and future residents. Borrowings by the City should be of a duration that does not exceed the useful life of the improvement that it finances. The standard term of long -term borrowing is typically 15 -30 years. 2. Rapidity of Debt Payment - Accelerated repayment schedules reduce debt burden faster and reduce total borrowing costs. The Finance Department will amortize debt through the most financially advantageous debt structure and to the extent possible, match the City's projected cash flow to the anticipated debt service payments. "Backloading" of debt service will be considered only when one or more of the following occur: a) Natural disasters or extraordinary or unanticipated external factors make payments on the debt in early years prohibitive. b) The benefits derived from the debt issuance can clearly be demonstrated to be greater in the future than in the present. c) Such structuring is beneficial to the City's aggregate overall debt payment schedule or achieves measurable interest savings. d) Such structuring will allow debt service to more closely match project revenues during the early years of the project's operation. M F -6 (New) 3. Level Payment - To the extent practical, bonds will be amortized on a level repayment basis, and revenue bonds will be amortized on a level repayment basis considering the forecasted available pledged revenues to achieve the lowest rates possible. Bond repayments should not increase on an annual basis in excess of 2% without a dedicated and supporting revenue funding stream. 4. Serial Bonds, Term Bonds, and Capital Appreciation Bonds - For each issuance, the City will select serial bonds or term bonds, or both. On the occasions where circumstances warrant, Capital Appreciation Bonds (CABs) may be used. The decision to use term, serial, or CAB bonds is driven based on market conditions. 5. Reserve Funds - The City shall strive to maintain fund balance in the Facilities Replacement Plan Reserve at a level equal to or greater than the maximum annual debt service of existing obligations. 10 F -7 INCOME PROPERTY The City owns and manages an extensive and valuable assortment of property including streets, parks, beaches, public buildings and service facilities. The City also owns and operates a yacht basin, a mobile home park, a luxury residential development and various other income properties. Most of the income property is tidelands, filled tidelands or waterfront. Unencumbered fee value of income property is estimated at upwards of one hundred million dollars, and income typically contributes ten percent of all City revenues. As ownertmanauer of property, the City is the steward of a public trust, and state law requires the City to maximize its returns on state— manatted property or be subject to a charge of making a gill, of public funds. Nevertheless, the City Council recognizes the importance of this property not only as a revenue generator, but also as a means to provide otherwise unfeasible uses and facilities to benefit the community. In managing its property, the City will continually evaluate the potential of all City owned property to produce revenue. This may include leasing unused land, renting vacant space, and establishing concessions in recreation areas or other similar techniques. The City Council will evaluate the appropriateness of establishing new income properties using sound business k principlcspfineipals and after receiving input from neighbors and users. The policy of the City Council is that income property be managed in accordance with the following: A. Whenever a lease, management contract, concession, sale or similar action regarding income property is considered by the City, an analysis shall be conducted to determine the maximum or open market value of the property. This analysis shall be conducted using appraisals or other techniques to determine the highest and best use of the property and the highest value of the property. & All negotiations regarding the lease, management contract, concession, sale or similar action, regarding income property shall include review of an appraisal or analysis of the use being considered for the property conducted by a reputable and independent professional appraiser, real estate consultant or business consultant. C. The City shall seek, whenever practical and financially advantageous, to operate or manage all property and facilities directly with City staff or contractors. D. In all negotiations regarding the lease, management contract, concession, sale or similar action regarding a non - residential income property, the City shall seek revenue equivalent to the open market value of the highest and best use; and, whenever possible the City shall conduct an open bid or proposal process to insure the highest financial return. E. Whenever less than the open market or appraised value is received or when an open bid process is not conducted, the City shall make specific findings setting forth the reasons thereof. 0 F -7 Such finding's may include but need not be limited to the following: 1. The City is prevented by tideland grants, Coastal Commission guidelines or other restrictions from selling the property or converting it to another use. 2. Redevelopment of the property would require excessive time, resources and costs which would outweigh other financial benefits. 3. Converting the property to another use or changing the manager, concessionaire or lessee of the property would result in excessive vacancy, relocation or severance costs, which would outweigh other financial benefits. 4. Converting residential property to another use or opening residential leases to competitive bid would create recompensable liabilities and other inequities for long -term residents. 5. The property provides an essential or unique service to the community that might not otherwise be provided were full market value of the property be required. 6. The property serves to promote other goals of the City such as affordable lousing, preservation of open space or marine related services. F. Generally, lengths of leases, management contracts, concessions or similar agreements vriid be limited to the minimum necessary to meet market standards and will contain appropriate re €appraisal and inflation protection provisions. Also, all agreements shall contain provisions to assure complete audits periodically through their terms. G. All negotiations regarding the lease, management contract, concession, sale or similar action regarding income property shall be conducted by the City Manager or his /her designee under the direction of any appropriate City committees, prior to eoas:deratiefi Is r -- Gounei- H. To provide an accurate accounting of actual net revenues generated by the City's income property, all costs and charges directly attributable to the management of a specific income property shall be debited against the gross revenues collected on that property in the fiscal year the costs are incurred. Costs and charges include property repairs and maintenance, property appraisals, and consultant fees, as authorized by the City Council, City Manager or by this Income Property Policy. 1. The City Manager or his/her designee is authorized to sign a lease, management contract, concession or similar agreement or any amendment thereto, on behalf of the elarify ,. «....,,i ,.. s z were e IIISaac, .,r en . . .,..t: the b g,—cac� =aTY Y'fui l4evenu s 2 F -7 ir.cl4,400-or-�. Notwithstanding tlYe foregoing, the Gitager or bis/her designee, ar a City Council member, marefer any lease, management contract concession or sirriilar agreement or any _amendment thereto, to the City Council for its consideration and/or action. Adopted - July 27, 1992 Amended - January 24,1994 Amended - February 27,1995 Amended - February 24,1997 Amended - May 26, 1998 Amended — August 11, 2009 Amended — Ma_y_ .2013 Formerly F -24 F -28 FACILITIES FINANCIAL PLANNING T'EPT A^.C"RL'XTT PROGRAM PURPOSE To establish the policy for the administration of the City's Facilities Financial PlanninZ ReProgram. DISCUSSION In addition to the annual Capital Improvement Projects Program (CIP)- program, the City has established a long term plan for replacement of aging General Fund supported facilities. The primary focus of the program is the replacement or major renovation of existing physical infrastructure. The addition of new facilities is also a goal of the program. The emphasis is on structures and adjacent grounds, rather than transportation, environmental, or other projects funded either in whole or in part by the General Fund. OBJECTIVES A. To insure that a long -term program addressing large, non - recurring projects for replacement of facilities is addressed as part of the budget process each year. B. To insure that development fees, proceeds derived from redevelopment ox redeployment of existing land and capital assets owned by the City, and other non - recurring revenues are dedicated to the replacement of infrastructure facilities, rather than ongoing operating expenses. C. To provide a consistent, level funding plan that will minimize the 'peaks and valleys' in General Fund support levels for elements of the program. D. To insure that projects are properly prioritized and scheduled, taking into consideration the relative age, condition, and functional viability of current facilities; pairing of projects where prudent; and cost implications of immediate projects for the overall long -term program. 1 .a E. Budgeting the cost of facilities while those facilities are in use is consistent with good government management practices. However, creating a legacy of excessive fixed costs for debt service is not. Therefore one of the objectives of this program is to insure that future generations will not be required to carry a disproportionate fiscal burden for previously completed projects. SOURCES AND USES OF FUNDS Funding for the program comes from development fees, proceeds derived from redevelopment or redeployment of existing land and capital assets owned by the City, contributions from individuals and organizations within the community, annual budget allocations from the General Fund, net proceeds of Certificates of Participation or other financing instruments, and investment earnings on temporarily idle funds. Program funds are used for actual site acquisition, design, construction, and directly related costs; as well as debt service expenses. POLICY AND PROCEDURE A. Each year, as part of the budget process, staff shall prepare an update of the Facilities R-c-�.":xecrreRt-Financial Planning,Pegram -Tool for review, modification, and approval by the City Council. B. Unless otherwise specified in individual development agreements, other governing documents, or as otherwise specifically directed by the City Council, all development fees received by the City will be dedicated to the Facilities pi,�^- Financial Plaiutingl= 'regr- an�Reserve fund. C. Prudent assumptions regarding revenue and expenditure growth, inflation, and all relevant factors will be included in each year's update of the Facilities m ^nr° Financial Planning P�Tool. nom. E F -28 —an�cc c£6. zu�s- <.�i e '^` = shtfa I-- G t a —ib +' A r not c +t, r i z2c�c'r �i-QCaiccaz �a� xxs-ro-cx'C e:0. u. 'b7P'pr -FS'tt. wee.. .,tl3e O P g shall b — acvd fi ea General + n r . im�+ c ccrcc :n�rmar« a fs, r u+cs' orr�-;-- .,.25 ... .1., . .....1.. 1 0.1 .. +.4., . ..,t.•, . .. t>,,i w Fund contributions to the Program shall not be less than 3.0% of the total General Fund OPeratinR Bud e� t. If there is a shortfall in General Fund revenue due to a decline in economic actii, and it is necessary to reduce expenditures, General Fund contributions to the Facilities Financial Planning Program can be temporarily modified to maintain contributions under the 3% threshold. F. The financing duration for any borrowed funds shall not exceed 30 years or the protected. life of the new facility, whichever is less. E The Facilities Replac-ement Financial Planning P+egYaxnr Toot may be amended by City C otcnci3 action in the event of a natural disaster or financial crisis. Adopted - August 11, 2009 Amended - 2013 3 L -16 TEMPORARY BANNERS EXTENDING OVER THE PUBLIC RIGHT -OF -WAY FINDINGS AND PURPOSE Temporary banners and signs pose risks to the public in the form of potential physical obstructions in or over the right of way and by distracting an individual who otherwise would, and should, focus on other users. The City Council also finds that, in the absence of the size and number limits specified in this policy, temporary banners or sign could reduce property values, adversely impact land uses, and interfere with the recreational objectives of visitors to the City of Newport Beach. A total prohibition on the installation of temporary banners and signs is appropriate with the exception of the provisions of this Policy and Chapter 20.67 of the Newport Beach Municipal Code because there are adequate alternative means of communication for those wishing to engage in commercial or non - commercial speech except for temporary real estate signs and non - profit groups organizations conducting community wide events co- sponsored by the City of Newport Beach and open to the general public. Finally, the City Council has determined that the restrictions contained in this policy and the provisions of Title 20 of the New­)ort Beach Municipal Code are the least restrictive means available to accomplish the public safety, economic and aesthetic objectives of the City Council. GENERAL PROVISIONS Temporary banners and signs shall not be permitted within or over any public street or pedestrian right of way with the exception of temporary real estate signs as specified in Chapter 20.67 of the Newport Beach Municipal Code and banners notifying the general public of a community wide event, open to the general public without charge, conducted by a non - profit corporation or organization, and co- sponsored by the City of Newport Beach. Temporary banners and signs shall be installed in strict compliance with the provisions of this Policy and any conditions imposed on the permit by the Public Works Director and, if required, by the Municipal Operations L-4A ties [di;Director. PERMIT PROCESS A. Except as provided in Title 20 of the Newport Beach Municipal Code, no person shall install any temporary banner or sign within any public right of way without first obtaining a permit issued by the Public Works Department. L -16 B. Applications for a temporary banner permit shall be submitted to the Public Works Department on a form supplied by the City, and prior to 30 days of planned installation date. C. The Public Works Director shall determine if the application complies with the standards specified in this policy. D. The Public Works Director shall approve/ deny/ recommend City Council approval of the application within five (5) working days. If City Council approves the request,, subsequent requests forfrom the same event maybe approved by the City Manager, provided that the size, number, location and banner type (Iangcaage and raaohics, )are unchangad � E. The Public Works Director shall approve the permit if the application conforms with the standards contained in this policy. F. The Public Works Director shall deny the permit if the application does not conform to the standards in this policy and shall give the applicant written notice of, and the reasons for, the denial. G. The Public Works Director may impose a refundable security deposit to be applied to any damages, repairs to standards or poles not corrected by permittee within 14 days of banner removal or any special services required by City. H. The Permittee shall agree to indemnify and hold harmless the City of Newport Beach 1. The Permittee shall maintain a minimum of $1,000,000 in liability insurance from a company with a Best's Key Rating Guide parameter of "A" or better and a financial size category of "VIII" or higher. STANDARDS A. Manner of Installation. 1. Permittee shall install no more than one hundred (100) banners; 2. a) Banners on streetlight poles shall be no more than 2.5 feet wide and 8.0 feet high and approved by the tl¢unic�al "?perations Utilities, 2 L -16 Department. Wind load calculations, determined by a registered engineer, will be required for banners greater than 20 square feet; b) Banners other than streetlight pole banners shall be no more than 4' x 8' wide and are subject to review and approval by the Public Works Department for safety sight distance and clearance issues. 3 6 ay pit lidy isatc ehles [d3) 4.3. No more than one (1) banner shall be installed on any pole or standard and banners may not be installed between poles or standards; 5-1. The banners shall contain only the name of the permittee and the date, time and the name of the event to be conducted by the permittee; 675. All banner brackets on streetlight poles must be mounted at least fourteen (14) feet above the ground surface; .. All banner brackets on streetlight poles must be installed using stainless steel band clamps and the brackets must be sufficiently strong to withstand wind -load generated by ninety (90) mile per hour winds.. Each bairn r shall h.a,ce a minimum of two 2 5 -inch half circle wind slits are rtqui1Led_,"[d41 87. Poles or standards must be wrapped with forty five (45) ml thick black rubber sheet or other pre- approved material under all steel brackets and clamps and no portion of any bracket shall be in direct contact with the surface of any street light pole or standard. In addition, all street light pole(s) being used must be inspected and approved by the Municipal Qperations L-tilitit-,-Department; P:8. Banners shall be installed only at locations specified on the permit, [ ?. Permittee shall install and remove banners in strict compliance with the traffic control, signage and warning device criteria specified in the WATCH handbook and/or the C 4r-an­ -California mmi anual on er Uniform tTraffic cControl Devices [dsi and 3 L -16 t -1:10. If more than one permittee requests the use of the same street light pole(s) at the same time, the City may require removal of some of the banners to allow other organizations to install banners authorized under City policies. B. Time of Installation. Permittee shall contact the Municipal Ox-,rations City l leetria a �t he Utiliiic,�- Department of the City of Newport Beach at least forty eight (48) hours prior to the installation of any banner on streetlight poles pursuant to the permit; 2, All banners and supporting material shall be removed within thirty (30) days after the date of installation; C. Place of Installation. Banners shall only be installed on City owned poles and standards, or pre= €exta l} p6japproved locations in roadway medians, in City parks, and on other City owned facilities; 2. Banners shall not be installed on any pole or standard which could create sight distance problems for pedestrian or vehicular traffic; 3. Banners shall not be installed on poles or standards in any residential district, 4. Banners shall only be installed at the approved locations indicated on the plan submitted with the banner application. Adopted - January 24,1994 Amended - February 26,1996 Amended - February 24,1997 Amended - May 8, 2001 Amended - April 8, 2003 Amended - October 10, 2006 Formerly M4 Ell STATE OF CALIFORNIA } COUNTY OF ORANGE CITY OF NEWPORT BEACH } 1, Leilani 1. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; that the foregoing resolution, being Resolution No. 2013 -42 was duly and regularly introduced before and adopted by the City Council of said City at a regular meeting of said Council, duly and regularly held on the 141h day of May, 2013, and that the same was so passed and adopted by the following vote, to wit: Ayes: Gardner, Petros, Hill, Selich, Henn, Daigle, Mayor Curry Nays: None IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 15th day of May, 2013. City Clerk Newport Beach, California (Seal)