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HomeMy WebLinkAboutFinance Committee - November 29, 2018CITY OF NEWPORT BEACH FINANCE COMMITTEE AGENDA - Final 100 Civic Center Drive - Crystal Cove Conference Room, Bay 2D Thursday, November 29, 2018 - 3:00 PM Finance Committee Members: Will O'Neill, Chair / Mayor Pro Tem Diane Dixon, Council Member Scott Peotter, Council Member William Collopy, Committee Member Joe Stapleton, Committee Member Larry Tucker, Committee Member VACANT, Committee Member Staff Members: Grace K. Leung, City Manager Carol Jacobs, Assistant City Manager Dan Matusiewicz, Finance Director / Treasurer Steve Montano, Deputy Director, Finance Marlene Burns, Administrative Specialist to the Finance Director The Finance Committee meeting is subject to the Ralph M. Brown Act. Among other things, the Brown Act requires that the Finance Committee agenda be posted at least seventy-two (72) hours in advance of each regular meeting and that the public be allowed to comment on agenda items before the Committee and items not on the agenda but are within the subject matter jurisdiction of the Finance Committee. The Chair may limit public comments to a reasonable amount of time, generally three (3) minutes per person. The City of Newport Beach’s goal is to comply with the Americans with Disabilities Act (ADA) in all respects. If, as an attendee or a participant at this meeting, you will need special assistance beyond what is normally provided, we will attempt to accommodate you in every reasonable manner. Please contact Dan Matusiewicz, Finance Director, at least forty-eight (48) hours prior to the meeting to inform us of your particular needs and to determine if accommodation is feasible at (949) 644-3123 or dmatusiewicz@newportbeachca.gov. NOTICE REGARDING PRESENTATIONS REQUIRING USE OF CITY EQUIPMENT Any presentation requiring the use of the City of Newport Beach’s equipment must be submitted to the Finance Department 24 hours prior to the scheduled meeting. I.CALL MEETING TO ORDER II.ROLL CALL III.PUBLIC COMMENTS Public comments are invited on agenda and non-agenda items generally considered to be within the subject matter jurisdiction of the Finance Committee. Speakers must limit comments to three (3) minutes. Before speaking, we invite, but do not require, you to state your name for the record. The Finance Committee has the discretion to extend or shorten the speakers’ time limit on agenda or non-agenda items, provided the time limit adjustment is applied equally to all speakers. As a courtesy, please turn cell phones off or set them in the silent mode. IV.CONSENT CALENDAR MINUTES OF OCTOBER 18, 2018A. Recommended Action: Approve and file. DRAFT MINUTES 101818 November 29, 2018 Page 2 Finance Committee Meeting V.CURRENT BUSINESS PRELIMINARY PENSION FUNDING RECOMMENDATION - FISCAL YEAR 2019/20 A. Summary: Staff and consultant(s) will summarize the funded status, required contributions as of the latest valuations, June 30, 2017, and provide preliminary funding recommendations for CalPERS pension plans for Fiscal Year 2019/20. Recommended Action: Provide feedback to staff regarding recommendations. STAFF REPORT APPENDICES A-1 THROUGH D-1 CONSIDERATION OF HARBOR FEES FOR THE NEW HARBOR DEPARTMENT AND SELECT RENTS B. Summary: The Harbor Commission reviewed, and recommended for Council adoption, updates to harbor fees and changes to select fair-market rent categories. Staff will summarize the various updates for Committee input. Recommended Action: Staff welcomes comments and recommendations related to the proposed Harbor Department fee and rent updates. Based upon Finance Committee input, staff will bring the proposed recommendations to the City Council for formal action. STAFF REPORT ATTACHMENT A ATTACHMENT B WORK PLAN REVIEWC. Summary: Staff has provided the Committee agenda topics scheduled for the remainder of the calendar year. Recommended Action: Receive and file. ATTACHMENT A VI.FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON-DISCUSSION ITEM) VII.ADJOURNMENT Finance Committee Meeting Minutes October 18, 2018 Page 1 of 7 CITY OF NEWPORT BEACH FINANCE COMMITTEE OCTOBER 18, 2018 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:02 p.m. in the Crystal Cove Conference Room, Bay 2D, 100 Civic Center Drive, Newport Beach, California 92660. II. ROLL CALL PRESENT: Mayor Pro Tem/Chair Will O’Neill, Council Member Diane Dixon, Committee Member William Collopy, Committee Member Joe Stapleton, and Committee Member Larry Tucker ABSENT: Council Member Scott Peotter (excused), Committee Member (VACANT POSITION) STAFF PRESENT: City Manager Grace K. Leung, Finance Director/Treasurer Dan Matusiewicz, Deputy Director/Finance Steve Montano, Administrative Specialist to the Finance Director Marlene Burns, Human Resources Director/Risk Manager Barbara Salvini, Finance/Administrative Manager Jamie Copeland, Administrative Manager Angela Crespi, Accounting Manager Rukshana Virany , and Budget Manager Susan Giangrande OTHER ENTITIES: Eric Small and Nina Gau (via teleconference) of Bickmore MEMBERS OF THE PUBLIC: Jim Mosher, Carl Cassidy, and Jennifer McDonald III. PUBLIC COMMENTS Chair O’Neill opened public comments. Jim Mosher expressed concerns with City contract procedures and lack of clarity regarding the city- wide budget line items. He inquired as to the Charter provision that requires the City Clerk to maintain a list of contracts approved by the City, the Merchants Association contribution made by the City, the pension agenda discussion item requested by the Finance Committee, and the City’s defined benefit program. He expressed support for a defined contribution program, which functions similar to a 401(k). He referenced a recent California Supreme Court case and inquired whether options for the City to address pension liability have changed due to the case. Chair O’Neill mentioned a detailed discussion regarding the City’s pension options will take place at the November meeting. Staff confirmed the recent Supreme Court case and noted it addressed the pension plan for the City of San Diego, which is different from the City of Newport Beach plan. Noting there were no other members of the public who elected to speak on this item, Chair O’Neill closed public comments. IV. CONSENT CALENDAR A. MINUTES OF SEPTEMBER 6, 2018 Recommended Action: Approve and file. Finance Committee Meeting Minutes October 18, 2018 Page 2 of 7 MOTION: Chair O’Neill moved, and Committee Member Tucker seconded, to approve the minutes, as amended. The motion carried 4 – 0, 1 excused absence (Peotter), 1 vacancy, 1 abstention (Stapleton). V. CURRENT BUSINESS A. STATUS OF INSURANCE RESERVE (GENERAL LIABILITY AND WORKERS’ COMPENSATION) FUND Summary: The Insurance Reserve Fund was established to account for costs associated with the General Liability and Workers’ Compensation programs. The City employs an actuary to estimate the liabilities and recommend a range of funding options associated with each program. The actuary will provide a high-level review of the actuarial valuations and key trends. Staff has identified preliminary recommendations that should be considered in the proposed 2019-2020 Budget. Recommended Action: Receive and file. Finance Director Matusiewicz opened the item and introduced Eric Small, Senior Actuarial Analyst. He noted there is a preliminary staff recommendation to increase the annual contribution to the Workers’ Compensation reserve by $900,000 and infuse a one-time $3 million. There are no projected changes to the contribution toward General Liability at this time. Staff is recommending a disciplined approach, which assesses all liability needs prior to committing funds towards the budget. Committee Member Collopy inquired regarding the addition of $900,000 toward Workers’ Compensation, and the one-time $3 million infusion, and staff confirmed the recommendation. Mr. Small displayed a PowerPoint Presentation entitled, Discussion of Actuarial Analyses as of June 30, 2018, and reviewed the actuarial methodology applied in conducting the analysis. He noted all losses are reviewed separately for Workers’ Compensation and General Liability. He stated the City of Newport Beach commenced its self-insured Workers’ Compensation program in 1980. The current report is based upon data evaluated through June 30, 2018. Council Member Dixon inquired as to the self-insured retention amount per single occurrence, and Mr. Small responded the amount was $500,000 and the City should expect to cover the excess. Discussion ensued among the Committee members, Mr. Small, and City staff regarding the definitions of incurred loss, actual loss, paid expected loss, and ultimate loss. Mr. Small confirmed the amount paid out by the City in a current year may apply to incidents that occurred in previous years. It was confirmed that incurred expected loss is the amount that triggers City staff as to the amount to accrue. Finance Director Matusiewicz stated the total expected liability for Workers’ Compensation is $16 million. Mr. Small noted he receives raw data on every City claim (limited to the $500,000) retention, conducts a comparison based upon the previous year’s incidents, reviews other historic data and assesses trends. Human Resources Director/Risk Manager Barbara Salvini provided context as to the City’s process in evaluating claims, including constant contact with the various parties involved in the claim, consultation with legal counsel, the impacted employee, and medical personnel as required and appropriate. Discussion ensued as to the involvement of the City and various parties to the claim. Finance Committee Meeting Minutes October 18, 2018 Page 3 of 7 Mr. Small indicated the City could earn interest on its fund balances, and any projected earned interest is discounted from the overall amount. He did affirmatively state the City must make the contribution to have an amount on which to earn interest. Discussion ensued regarding loss control methods and staff confirmed the City is actively administering the City’s overall risk management program to mitigate losses. Finance Director Matusiewicz noted public safety Workers’ Compensation claims are presumptive. Mr. Small acknowledged Workers’ Compensation claims have a longer tail for closure. Committee Member Collopy inquired whether various Departments are assessed a different rate for Workers’ Compensation. Finance Director Matusiewicz stated City staff and the actuary review the cost allocation plan based upon payroll and claim experience per Department and adjust accordingly depending on the results. Mr. Small noted the City overall is experiencing less claim activity; however, the amounts per claim were increasing. Claim amounts are assessed per $100 of payroll. Discussion ensued among the Committee, staff, and Mr. Small regarding the methods for controlling Workers’ Compensation costs and loss prevention. Overall, Mr. Small noted the City’s overall trend in relation to losses is favorable, the average case reserves per open claim have decreased by 11%, the number of open claims has decreased by 1.7%, there is a 5.4% decrease in the outstanding liabilities as of June 30, 2018, as compared with the June 30, 2017, estimate, and loss and LAE funding for 2019-2020 is 1.8% lower than funding for 2018-2019. Finance Director Matusiewicz confirmed at a 75% confidence level rate, there will be a shortfall of approximately $3 million in the Workers’ Compensation fund and recommends the infusion of $3 million to off-set the deficit. Discussion ensued regarding the City’s long-term liability funding process and utilizing other investment instruments and strategies. Finance Director Matusiewicz mentioned there are certain Government Code sections that restrict the type and term of investments that local agencies are able to purchase. He also noted that City Council could elect to make certain exceptions that would allow the City to buy treasury and agency bonds up to a maximum term of ten years that may be appropriate for Worker’s Compensation reserves. In response to a Committee Member inquiry, Mr. Small noted the payroll metric is commonly utilized as an exposure measure, which allows for comparison against other agencies in relation to liability. Chair O’Neill opened public comments. Jim Mosher referred to a Charter provision related to claim information presented at City Council meetings and inquired as to the extent of City claim information that is within the public’s right to know. Staff directed Mr. Mosher to the City Clerk’s Office in regarding to public record requests and also noted there are specific restrictions related to privacy that may render certain information non-disclosable. Carl Cassidy inquired regarding the legal costs as related to liability, claim information as related to City Council closed session items, the City Attorney’s role in representing the City Council as related to claims, and the amount paid regarding liability as compared to other surrounding cities. Finance Committee Meeting Minutes October 18, 2018 Page 4 of 7 Noting there were no other members of the public who elected to speak on this item, Chair O’Neill closed public comments. The item was unanimously received and filed by the Committee. There was no further action taken on this item. B. FUNDING STATUS OF KEY RESERVES Summary: Prudent financial management requires that some portion of available funds be reserved for future use. Council Reserve Policy F-2 establishes reserve requirements and funding policies associated with key reserves. Staff has prepared a summary of the funding status of the City’s key reserves for the Committee’s review. Recommended Action: Receive and file. Committee Member Collopy noted this item has been reviewed by the Committee for almost one year and he is personally satisfied with the City’s policy related to 25% of General Fund. He did express there are several other accounts throughout the City that operate as reserves, and suggested an annual review of the General Fund reserve and other accrued liability accounts. He did not require any further staff presentation at this time. Council Member Dixon inquired as to the various classifications for reserves and how they are reviewed. Chair O’Neill stated he would like to have a longer discussion related to water infrastructure reserve methods and will have a preliminary meeting with the Public Works Director in that regard. There was consensus among the Committee members to continue with the City’s current 25% of General Fund reserve policy. Discussion ensued regarding how to address water infrastructure reserves, the upcoming completion of the water master plan, infrastructure replacement, and set-asides. Committee Member Collopy stated he though the reserve study would be broader in scope than just the General Fund, and indicated at some point, he would like to review reserve options for addressing pension and OPEB obligations. Further discussion ensued regarding water infrastructure funding needs, including depreciation of assets and anticipated wear and tear. Finance Director Matusiewicz confirmed the GFOA reserve study scope included an opportunity for review of the water and wastewater reserves, although it was not conducted at this time. It was noted there will be further discussion and input from the Director of Public Works, review of outside agencies and their approach to various water infrastructure and wastewater needs, including engineering items. Chair O’Neill opened public comments. Carl Cassidy noted he would like to see the Finance Committee and the City address water infrastructure and include engineering as part of the discussion. Jim Mosher inquired regarding the status of water infrastructure reserve and expressed concern regarding the small amount of wastewater reserve. Chair O’Neill confirmed the wastewater matters will be addressed as part of the larger water infrastructure presentation. Finance Committee Meeting Minutes October 18, 2018 Page 5 of 7 Noting there were no other members of the public who elected to speak on this item, Chair O’Neill closed public comments. The item was unanimously received and filed by the Committee. There was no further action taken on this item. C. FISCAL SUSTAINABILITY PLAN REVIEW Summary: The Finance Committee periodically reviews the Fiscal Sustainability Plan to align its ongoing work with the Plan and to consider any changes deemed necessary. Many of the elements contained in the plan are incorporated in Council policies that are reviewed by the Finance Committee on an ongoing basis. Recommended Action: Review the Fiscal Sustainability Plan, suggest and recommend changes as needed for submittal to the City Council for final approval. Chair O’Neill stated he wanted to add this item periodically to ensure the Committee and public can review this item. He would like to include an annual review of the City’s reserves and Finance Director Matusiewicz suggested the review of City Council Policy F-2, as well. Discussion ensued in regard to Item No. 5, requiring the City to establish appropriate case reserves. Chair O’Neill opened public comments. Jim Mosher stated the City Council Policy F-2 is confusing and inquired whether it is incorporated into other policies. He would like a review to clarify the Policy’s function and purpose. There was consensus among the Committee that City Council Policy F-14 along with others would be reviewed in December. Noting there were no other members of the public who elected to speak on this item, Chair O’Neill closed public comments. The item was unanimously received and filed by the Committee. There was no further action taken on this item. D. FISCAL YEAR 2017-2018 YEAR END SURPLUS Summary: The Finance Department has prepared a preliminary 2017-2018 fiscal year-end General Fund surplus estimate. Recommended Action: Receive and file. Chair O’Neill noted Council Member Dixon had requested a review of the Fiscal Year 2017-2018 surplus. Discussion ensued regarding the Charter requirement to split surpluses 50/50 and the process for the City Manager to request an alternative to this surplus allocation method. Council Member Dixon expressed confidence in the City’s work to achieve a surplus and was encouraged by the overall economic improvement. She would like the City to continually Finance Committee Meeting Minutes October 18, 2018 Page 6 of 7 approach any surpluses with a planned approach and to include options for applying surpluses to the pension obligations. Chair O’Neill opened public comments. Noting there were no members of the public who elected to speak on this item, Chair O’Neill closed public comments. The item was unanimously received and filed by the Committee. There was no further action taken on this item. E. BUDGET AMENDMENTS (QUARTER ENDED SEPTEMBER 30, 2018) Summary: Receive and file a staff report on the budget amendments for the prior quarter. Recommended Action: Receive and file. Chair O’Neill introduced the matter and noted this is a review and file item. Staff noted there was a grant coming in that accounted for information provided in the agenda report. Chair O’Neill opened public comments. Jim Mosher inquired whether the final budget document, which includes all corrected items, is available and on-line. Staff confirmed the final budget, with corrections, is available and on- line. Noting there were no further members of the public who elected to speak, Chair O’Neill closed public comments. There was no further action taken on this item. F. WORK PLAN REVIEW Summary: Staff has provided the Committee agenda topics scheduled for the remainder of the calendar year. Recommended Action: Receive and file. Chair O’Neill introduced this matter and stated a major goal to discuss CalPERS and City Council Policy F-14. He noted it is complicated to get all the Departments to “mesh together” on this item and plans a full discussion at the November Finance Committee meeting. He preferred not to include other items due to the time required to address CalPERS and Council Policy F-14. Chair O’ Neill inquired if any of the subcommittees were prepared to discuss their policy review at the January meeting. Council Member Dixon confirmed Bartel and Associates would be making a presentation at an upcoming Finance Committee meeting. Discussion ensued regarding a primer, documents, or other media, which can be utilized to provide training to future Finance Committee members on the various topics, which have been discussed thus far including pending funding options, investment horizons, Section 115 trusts, and other information. Suggestions included a glossary of terms, video links, and building a library of agenda reports and PowerPoint Presentations. Finance Committee Meeting Minutes October 18, 2018 Page 7 of 7 Chair O’Neill opened public comments. Carl Cassidy mentioned the future City Council vetting of potential Finance Committee members, ensuring future members have requisite expertise in the matters considered by the Finance Committee, and expressed support to leave politics out of the selection process. Noting there were no other members of the public who elected to speak on this item, Chair O’Neill closed public comments. The item was unanimously received and filed by the Committee. There was no further action taken on this item. VI. FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON- DISCUSSION ITEM) There was no action taken on this item. VII. ADJOURNMENT The Finance Committee adjourned at 5:04 p.m. to the next regular meeting of the Finance Committee. Filed with these minutes are copies of all materials distributed at the meeting. The agenda for the Regular Meeting was posted on October 12, 2018, at 5:19 p.m., in the binder and on the City Hall Electronic Board located in the entrance of the Council Chambers at 100 Civic Center Drive. Attest: ___________________________________ _____________________ Will O’Neill, Chair Date Finance Committee November 29, 2018, Finance Committee Agenda Comments These comments on an item on the Newport Beach City Council Finance Committee agenda are submitted by: Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229) Item IV.A. MINUTES OF OCTOBER 18, 2018 Changes to the draft minutes passages shown in italics are suggested in strikeout underline format. Page 2, paragraph 4 from the end: “Council Member Dixon inquired as to the self-insured retention amount per single occurrence, and Mr. Small responded the amount was $500,000 and the City should expect to cover recover the excess.” [??] Page 2, paragraph 4 from the end: “Mr. Small noted he receives raw data on every City claim (limited to the $500,000) retention (limited to the $500,000), conducts a comparison based upon the previous year’s incidents, reviews other historic data and assesses trends.” [?? Or was the parenthesis supposed to end after “retention” ??] Page 3, paragraph 4, sentence 4: “Overall, Mr. Small noted the City’s overall trend in relation to losses is favorable, …” Page 3, paragraph 6, last sentence: “He also noted that the City Council could elect to make certain exceptions …” Page 4, Item B, paragraph 6: “Committee Member Collopy stated he though thought the reserve study would be broader in scope than just the General Fund, …” [Note: were the references on this page to conversations about water infrastructure with the “Public Works Director” intended to say “Utilities Director”?] Page 5, Item C, paragraph 1: “Discussion ensued in regard to Item No. 5, requiring the City to establish appropriate case cash reserves.” Page 5, Item C, paragraph 3: “Jim Mosher stated the City Council Policy F-2 is confusing and inquired whether it the Fiscal Sustainability Plan is incorporated into other policies. He would like a review to clarify the Policy’s Plan’s function and purpose.” Item No. 4A1 Draft Minutes of October 18, 2018 Correspondence November 29, 2018 CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Agenda Item No. 5A November 29, 2018 TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE FROM: Finance Department Dan Matusiewicz, Finance Director 949-644-3123 or danm@newportbeachca.gov SUBJECT: PRELIMINARY PENSION FUNDING RECOMMENDATION – FISCAL YEAR 2019/20 SUMMARY: Each year, staff analyzes the most recent California Public Employees’ Retirement System (CalPERS) pension actuarial valuations and evaluates opportunities to more efficiently amortize the City’s unfunded accrued liability (UAL) compared to the default minimum contribution schedules proposed by CalPERS. Staff has evaluated the merits of pursuing the default payment option, three additional direct payment options to CalPERS, and considered the option of locally investing our discretionary payments into a Section 115 pension prefunding trust. Staff recommends Option 3A which consolidates all amortization bases, except the 2013 Fresh Start base, into a new 2018 partial Fresh Start base as is illustrated in Appendix A-1. Option 3A further contemplates a level dollar payment of $35 million annually for 14 years followed by a final payment of $22.8 million in the fifteenth year (see proposed payment schedule in Appendix C-4). Under this option the City is not committed to continue additional discretionary payments (ADPs) into the future. Option 3A represents a savings of $45 million over the default schedule realized over 15 years. See the proposed payment option comparison in Appendix B-1. Staff considered the potential benefits of using Section 115 pension benefit trust to prefund CalPERS contributions, but ultimately concluded that it did not add value to the City’s pension funding efforts because the General Fund Contingency Reserve already provides funding flexibility when needed, a Section 115 pension trust would have a higher cost of investing, would be subject to high market volatility risk, and would not likely outperform the $360 billion CalPERS pension trust. RECOMMENDED ACTION: Provide feedback to staff regarding recommendations. Preliminary Pension Funding Recommendation – Fiscal Year 2019/20 November 29, 2018 Page 2 DISCUSSION: The City’s pension obligations are and will continue to be one of the City’s largest financial concerns for decades to come so it is important that it receives appropriate and regular attention. With its current participants and benefit levels, the City’s accrued pension liability (AL) is approaching 1 billion dollars and has been growing at an annual rate of 6.5% per year for the last ten years. Meanwhile, General Fund revenue has only grown 3.7% annually for the same ten-year period (2007-2017). See Appendix D-1. The City’s current unfunded accrued pension liability (UAL) is significant at $320 million. The funded status is improving slowly, despite the 0.125% reduction in the discount rate, but the overall plan funded status of 66% is still significantly low by industry standards. The silver lining is that the City Council has been proactive and aggressive in addressing the ongoing pension crisis. By proactively managing the repayment of the unfunded pension liability and influencing CalPERS policies, the City is well positioned to weather the pension challenges known today. The most recent actuarial report presents the results of the June 30, 2017, CalPERS valuation of both the Miscellaneous and the Public Safety Plans for the City of Newport Beach and sets the required contribution amounts and rates for Fiscal Year 2019/20. After adding in ADPs and deducting negotiated employee contributions, Fiscal Year (FY) 2019/20 pension costs are estimated as follows: Net of investment returns, annual contributions, benefit payments and changes in actuarial assumptions, the City’s unfunded pension liability decreased $1.8 million from $321.5 million to $319.7 million. This resulted in an overall funded status of 66 percent. The components of the plan assets and liabilities are displayed in the following table: 2018/19 2019/20 2018/19 2019/20 Dollars Percent Misc 16.2%16.9%7,205,087 7,712,921 507,834 7.0% Safety 27.4%28.1%9,082,071 9,694,972 612,901 6.7% Total Expected Normal Cost 16,287,158 17,407,893 1,120,735 6.9% 2018/19 2019/20 Dollars Percent Minimum Payment of on UAL 25,698,507 26,469,557 771,050 3.0% Additional Discretionary Payment (ADP)8,801,493 8,530,443 (271,050) -3.1% Total Planned UAL Payment 34,500,000 35,000,000 500,000 1.4% 2018/19 2019/20 Dollars Percent Total Expected PERS Contribution 50,787,158 52,407,893 1,620,735 3.2% Less: Expected Employee Contributions 10,324,540 11,017,800 693,260 6.7% Net Employer Cost "Projected"40,462,618 41,390,093 927,475 2.3% Total Expected Pension Cost Change ChangeExpected Normal CostNormal Cost Rate Amortization of UAL Change Preliminary Pension Funding Recommendation – Fiscal Year 2019/20 November 29, 2018 Page 3 While the City’s combined plan funded ratio is slightly lower than the county-wide average of 70%, Newport Beach has one of the most aggressive repayment plans in the County which will result in an improved funded status over time. The actuarial valuations in their entirety for our miscellaneous and safety plans can be found at www.newportbeachca.gov/pensions under “CalPERS Valuations.” Funding Goals Staff has and will continue to pursue the UAL pension funding goals indicated below. These goals form the basis of funding options and recommendations that follow later in the report. • Consistent with the Government Finance Officers’ Association (GFOA) and the California Actuarial Advisory Panel (CAAP), the staff believes it is financially advantageous to repay or amortize unfunded pension liabilities over a period of not-to-exceed 20 years, but a term closer to 15 years is preferred. • Maintain prudent funded status levels or develop an aggressive repayment plan to ensure that funds are available in the long-run to meet City obligations. • Preserve financial flexibility to meet or maintain City service obligations while funding post-employment benefit obligations. • A short amortization period dramatically reduces taxpayer interest costs and better matches the average remaining work-life of plan participants. • Manage amortization bases effectively to avoid negative amortization and repay unfunded liabilities in the most efficient manner possible, with an overall goal of reducing the interest costs to taxpayers. • There is a high cost of waiting for actuarial valuation results that lag the contribution year by at least two years. Therefore, all known pending loss bases are considered when developing a payment plan recommendation. This minimizes negative amortization and interest cost to tax payers. • Staff also believes that a level dollar repayment schedule improves the likelihood that funds will be available to meet future repayment schedules. A level dollar payment plan becomes a decreasing percentage of the annual budget over time, whereas an increasing dollar payment plan moves in commensurate manner with rising budgets. Why is it Important to Manage Amortization Bases of the Unfunded Liability? The unfunded liability balance is made up of a series of gain/loss bases each with their own methodology and term. It is important to proactively consolidate bases because: Miscellaneous Safety Total Total Accrued Liability 396,834,941 542,668,920 939,503,861 887,481,877 Less: Market Value of Assets 278,869,980 340,964,919 619,834,899 566,016,065 Unfunded Accrued Liability (UAL) 117,964,961 201,704,001 319,668,962 321,465,812 Funded Status 70.3%62.8%66.0%63.8% 2017 2016 Preliminary Pension Funding Recommendation – Fiscal Year 2019/20 November 29, 2018 Page 4 1. Some bases contain a significant amount of negative amortization. Left as such, they are inefficient and are costly to our taxpayers. 2. Several bases are credit bases extending credits out 30 plus years. As illustrated in the default column of Appendix B1 (Summary of Payment Options) the payment schedule goes negative in years 19-31 where $31.3 million in credits will be underutilized starting in payment year 2038. This is because CalPERS does not write “credit” checks back to the City in the years when amortized credits exceed required contributions. Currently, there is an opportunity to bring the $31.3 million in underutilized credits forward to offset costs in the nearer term. 3. Each ADP payment must be applied against a specific base; therefore, it is administratively more efficient when bases are consolidated into a single base that can be identified for reduction/elimination. While we were successful in influencing the CalPERS policy to utilize level dollar amortization schedules not-to-exceed 20 years, this policy does not go into effect until the 2019 valuation. The 2019 valuation will be received in the fall of 2020 and it will set rates for FY 2021/22. All legacy bases will remain in effect until they mature or are consolidated through a fresh start. This is important because the 30-year amortization bases have an Amortization Efficiency (AE) ratio of 308% meaning that payments required to amortize a 30-year schedule are 308% of the original principal balance. The City’s efforts to accelerate the amortization of the City’s unfunded pension liability has resulted in the most efficient repayment schedule in the County. County-wide CalPERS agencies are scheduled to pay approximately 200% of the principal UAL balance. Through a combination of previous “Fresh Starts” and previous “Additional Discretionary Payments” (ADPs) the City’s default repayment schedule has led to a lower (AE) ratio of 167% of principal UAL balance which would result in approximately $100 million of interest savings compared to the average county-wide repayment schedule of 200% of principal. Using a hypothetical UAL balance of $300 million, the comparative savings between a 200% AE ratio schedule and a 166.6% AE ratio schedule is illustrated as follows: See County-wide averages on Appendix D-1. County-wide City Default AE Ratio AE Ratio Hypothetical Unfunded Pension Liability 300,000,000$ 300,000,000$ AE Ratio 200%166.6% Total Principal & Interest Payments 600,000,000 499,800,000 Interest savings relative to County-wide average 100,200,000$ Preliminary Pension Funding Recommendation – Fiscal Year 2019/20 November 29, 2018 Page 5 Funding Options In order to achieve the aforementioned funding goals, staff considered three additional direct payment plans to CalPERS and considered the option of locally investing our discretionary payments into a Section 115 pension prefunding trust. Since all optional payment programs contemplate a directive to the CalPERS actuarial office to adjust the default payment schedule in the 2018 valuation, which sets the rates for the 2020/21 fiscal year, the minimum UAL contribution for FY 2019/20 would remain unchanged at $26.5 million. The City contemplates making an ADP of at least $8.5 million bringing the total UAL payment to $35 million for the FY 2019/20. Default Payment Option: This option starts with the 2017 actuarial valuation (2013 Fresh Start Base plus gain loss bases between 2014 and 2017) but then considers the future impact of known 2018 gain/loss bases that do not require a minimum payment until Fiscal Year 2020/21. Specifically, the known 2018 gain/loss bases include the 0.25% reduction in discount rate from 7.25% to 7.0% ($28,888,079) amortized over 20 years, less the favorable investment gain base of ($8,953,515) amortized over 30 years. See Appendix A-1 for breakdown of amortization bases. Together the net impact of the 2018 gain/loss bases total $19,934,564 which include interest accumulation of approximately $2 million between June 30, 2018 and July 1, 2019. However, if we wait until July 1, 2020, another $2.1 million of interest would compound on top of that. There is a high cost for waiting. Therefore, we do our best to estimate known losses and start paying on them as soon as is practical. The minimum required payment on the UAL for FY 2019/20 under the default option is $26,469,557. The annual amount under this option would escalate to a maximum of $44.9 million in FY 2033/34. See Appendices B-2 and C-1. Assuming $35,000,000 is allocated and authorized to pay down the unfunded pension liability in the FY 2019/20 budget, this would leave $8,530,443 available for additional discretionary payments before considering any additional allocation from the FY 2017/18 surplus. In addition to unfavorable payment escalation, there are $31 million in underutilized credits in year 2038-2050 that can be brought forward to offset nearer term costs. See Appendices B-1 and B-2. Option 1: proposes a full Fresh Start which would consolidate all gain/loss amortizations bases into one base amortized over a level dollar base for 15 years. This option would require a minimum annual contribution of approximately $34.5 million annually and would be irrevocable. See Appendix C-2. New credit bases or ADPs would be the only actions that could lower the minimum contribution level. This options represents a total payment savings of approximately $40 million over the default schedule over 15 years as demonstrated in Appendix B-1. Option 2: This option converts the existing 2013 Fresh Start base to a level dollar payment plan over the original 15-year term and consolidates the remaining bases including the 2018 loss into a 20-year level dollar partial fresh start base. This election would require a minimum contribution of approximately $34.1 million annually for 15 years Preliminary Pension Funding Recommendation – Fiscal Year 2019/20 November 29, 2018 Page 6 and then a payment of approximately $2 million thereafter for 5 additional years. See Appendix C-3. This payment election would be irrevocable but represents a total payment savings of approximately $35.5 million over 20 years as demonstrated in Appendix B-1. Option 3A: The option leaves the 2013 Fresh Start base alone, consolidates all other bases into a new 2018 Fresh Start base (See Appendix A-1 for proposed consolidation of bases). This plan contemplates a level dollar payment of $35 million annually for 14 years followed by a final payment of $22.8 million in the 15th year. If this option is selected, the minimum payment would not increase initially over the default minimum requirement in FY 2019/20 but would increase approximately $1.7 million over the default minimum in FY 2020/21 but then would level off at $35 million if ADPs of approximately $5 million are maintained. This payment election does not commit the City to continued ADPs. See Appendix C-4. This option represents a total payment saving of approximately $45 million over 15 years as demonstrated in Appendix B-1. Option 3B: This option is the same as Option 3A above but illustrates the consequence if ADPs are not utilized as contemplated in Option 3A. The minimum payments would range from $29.2 million to $42 million annually for 15 years with payments dropping to approximately $2.4 million per year for years 16 through 20. See Appendix C-5. This option represents a total payment savings of approximately $16 million over 20 years as demonstrated in Appendix B-1. Staff Recommendation After evaluating the City’s current default repayment schedule and the three optional repayment schedules presented in Appendix B-1, staff’s preliminary recommendation is to pursue Option 3A. Option 3A accomplishes the following funding goals: 1. Amortizes the UAL over a level dollar payment plan over 15 years as opposed to the lengthier, and consequently costlier, term options. 2. Continues an aggressive funding plan to improve the plan’s funded status and further increases repayment efficiency of the unfunded pension liability. 3. Preserves financial flexibility to continue ADPs or not. 4. Consolidates the number of amortization bases that range between 19-30 years down to a default 20-year repayment schedule. If ADPs are continued, this 20 year base would be reduced to 4 years. See Appendix C-5 then C-4 to see how the ADPs would reduce the term of the 2018 Fresh Start Base from 20 years to 4 years. 5. Starts paying on projected loss base that will be included in the 2018 actuarial valuation thereby avoiding one year’s worth of negative amortization. Option 3A represents a savings of $45 million over the default schedule realized over 15 years. By carefully managing our bases over several years, the payment efficiencies gained will save Newport Beach taxpayers between $100 and $126 million relative to the county-wide repayment schedule. In the example below, we illustrate the comparative Preliminary Pension Funding Recommendation – Fiscal Year 2019/20 November 29, 2018 Page 7 savings of having efficient repayment schedules compared to the county-wide average of 200% on a hypothetical unfunded pension liability of $300 million. Consistent with Council Policy F-5, General Fund Surplus utilization, should there be additional surplus available that is not otherwise allocated to long-term obligations, City Council should further consider increasing the ADP contribution to hasten the pay-down of the 2018 partial fresh-start base. See Appendix C-4. SECTION 115 PREFUNDING PENSION TRUST Section 115 plans have become popular in recent years due to their perceived flexibility. Without considering investment horizon and market risk, funds in the trust can be used to meet a pension plan’s minimum contribution thus freeing up budget to be spent elsewhere. Staff considered the potential benefits of using Section 115 pension benefit trust to prefund CalPERS contributions, but ultimately concluded it did not add value to the City’s pension funding efforts for the following reasons: • The City is already retaining budget flexibility by maintaining a $50 million contingency reserve and has options to apply ADPs in a discretionary manner. • Unlike other post-employment benefits like retiree healthcare, a pension plan, by its very nature, is already a prefunding trust. This trust can only be used for the intended purpose of providing pension benefits. Funding a Section 115 pension trust would be redundant and increase the cost of administration. • The cost of investing would undoubtedly be more expensive and would not likely outperform a $360 billion pension trust over time. • Due to the limited scale of Section 115 plans, these plans could not likely avail the City to the private equity asset class of investments that have been an important driver of investment return over time. • Funded solely by additional discretionary payments, the fund would not have any measurable impact on diversification. • The potentially short investment horizon could subject the trust assets to undue market volatility risk since assets cannot be simply transferred between plans. Trust assets would have to be sold at then market prices at potentially below their original acquisition cost. • If the locally directed trust does not perform well, public officials may be subjected to additional headline risk. • Due to the inherent flexibility of this a Section 115 plan, the Governmental Accounting Standards Board (GASB) no longer allows funds in a Section 115 County-wide City Default City Payment Option 3A AE Ratio AE Ratio AE Ratio Hypothetical Unfunded Pension Liability 300,000,000$ 300,000,000$ 300,000,000$ AE Ratio 200%166.6%157.7% Total Principal & Interest Payments 600,000,000 499,800,000 473,100,000 Interest savings relative to County-wide average 100,200,000$ 126,900,000$ Preliminary Pension Funding Recommendation – Fiscal Year 2019/20 November 29, 2018 Page 8 pension prefunding trust to reduce the net pension obligation on the City’s balance sheet. Since the Public Employer’s Pension Reform Act (PEPRA) eliminated “contribution holidays” there is a risk that plans could someday become overfunded without a mechanism to cease employer contributions. When the funded status of our pension plans approach 85-90% funded, it may be prudent to utilize a Section 115 plan at that time. Risks Discount Rate It is still possible that due to Risk Mitigation policies currently in place or due to future reviews of capital market assumptions, CalPERS may reduce discount rates further. This will increase normal costs on a go-forward basis as well as create some level of new unfunded liability. Given staff is already prepared for the reduction to 7% staff believes there is ample time and resources to plan for further reduction in discount rates. Market Volatility Recessions and market volatility are unavoidable and the plan will most likely experience turbulence in the future. Staff has recently analyzed the risk of revenue decline due to likely recessionary scenarios and the secondary impact of low investment returns on the plan. Considering the risk of market volatility on a mature pension plan, it is deliberately recommended to leave contingency reserve levels higher than might otherwise be necessary, approximating at 25% of operating expenditures. This policy currently equates to a $50 million General Fund contingency reserve. Given the two-year lag between actual results and a five-year direct smoothing policy (five-year phase-into contribution rates), staff believes the City has ample time and flexibility to withstand temporary volatility without impacting service levels. If market returns are persistently below expected results, staff believes there will be ample time to react accordingly, depending on the magnitude and duration of the market losses incurred. Prepared and Submitted by: /s/ Dan Matusiewicz Dan Matusiewicz Finance Director Attachments: Appendix A-1: Projected Amortization Bases of 6/30/18 and Rolled Forward to 6/30/19 Appendix B-1: Payment Options Appendix B-2: Line Graph of All Payment Options Preliminary Pension Funding Recommendation – Fiscal Year 2019/20 November 29, 2018 Page 9 Appendix B-3: Line Graph of Options 3a and 3b Appendix C-1: Default Payment Option Appendix C-2: Option 1 – Full Fresh Start 15 Years Appendix C-3: Option 2 – Partial Fresh Start 15 & 20 Years Appendix C-4: Option 3a – Partial Fresh Start with ADP Appendix C-5: Option 3b – Partial Fresh Start without ADP Appendix D-1: County-Wide Comparison of Pension Funding Progress Table APPENDIX A-1 PROJECTED AMORTIZATION BASES OF 6/30/18 AND ROLLED FORWARD TO 6/30/19 Est. UAL Balance Yrs 6/30/19*Total Pmts*No ADPs With ADPs 1 6/30/2013 Fresh Start Base 15 304,262,134 500,960,084 165%161% 2 6/30/2014 (Gain)Investment Return 18.6%27 (76,596,032) (175,892,383) 230% 3 6/30/2015 Loss Investment Return 2.4%28 31,847,317 76,537,056 240% 4 6/30/2016 Loss Discount Rate Change 7.5 %to 7.375%19 16,814,230 30,846,769 183% 5 6/30/2016 Loss Investment Return .6%29 31,111,035 78,779,656 253% 6 6/30/2017 Loss Discount Rate Change 7.375% to 7.25%20 19,880,007 38,694,483 195% 7 6/30/17 (Gain)Investment Return 11.2%30 (22,066,767) (59,307,662) 269% Net Other (2-9) Bases Prior to 6/30/18 Mixed 989,790 (10,342,080) N/A 8 6/30/2018 Loss Discount Rate Change 7.25% to 7.0%20 28,888,079 60,201,260 208% 9 6/30/2018 Gain Investment Return 8.6%30 (8,953,515) (25,752,005) 288% Net 2018 (8 &9) (Gain) Loss Bases 19,934,564 34,449,256 N/A 10 Proposed 2018 Partial Fresh Start 20 20,924,354 40,535,310 194%112% TOTAL 325,186,488 589,709,745 172%158% * Balance and payments reflect projected balances and phased-in discount rates not yet reflected in the 6/30/17 valuation. Amort. Efficiency Projected Amortization Bases as of 6/30/18 and rolled forward to 6/30/19 Miscellaneous and Safety Plan Combined Appendix A-1 Proposed consolidation of amortization bases in payment option 3A APPENDIX B-1 PAYMENT OPTIONS Option 1 Option 2 Option 3B Year Val Year Pmt Yr Default Full Fresh Start Partial Fresh Start Required Pmt ADP Total Pmt Partial Fresh Start No ADP 1 2017 2020 26,469,557$ 35,022,218$ 34,713,090$ 26,469,557$ 8,530,443$ 35,000,000$ 26,469,557$ 2 2018 2021 27,561,712$ 34,458,224$ 34,147,012$ 29,306,494$ 5,693,506$ 35,000,000$ 29,981,598$ 3 2019 2022 30,065,625$ 34,458,224$ 34,147,012$ 29,645,174$ 5,354,826$ 35,000,000$ 30,806,092$ 4 2020 2023 32,234,127$ 34,458,224$ 34,147,012$ 30,003,361$ 4,996,639$ 35,000,000$ 31,653,260$ 5 2021 2024 33,696,917$ 34,458,224$ 34,147,012$ 30,326,744$ 4,673,256$ 35,000,000$ 32,523,725$ 6 2022 2025 35,136,470$ 34,458,224$ 34,147,012$ 30,564,692$ 4,435,308$ 35,000,000$ 33,418,127$ 7 2023 2026 36,102,723$ 34,458,224$ 34,147,012$ 30,788,488$ 4,211,512$ 35,000,000$ 34,337,126$ 8 2024 2027 37,095,548$ 34,458,224$ 34,147,012$ 30,988,822$ 4,011,178$ 35,000,000$ 35,281,396$ 9 2025 2028 38,115,676$ 34,458,224$ 34,147,012$ 31,150,874$ 3,849,126$ 35,000,000$ 36,251,635$ 10 2026 2029 39,163,857$ 34,458,224$ 34,147,012$ 31,249,714$ 3,750,286$ 35,000,000$ 37,248,555$ 11 2027 2030 40,240,863$ 34,458,224$ 34,147,012$ 31,240,183$ 3,759,817$ 35,000,000$ 38,272,890$ 12 2028 2031 41,347,486$ 34,458,224$ 34,147,012$ 31,031,591$ 3,968,409$ 35,000,000$ 39,325,395$ 13 2029 2032 42,484,542$ 34,458,224$ 34,147,012$ 30,411,823$ 4,588,177$ 35,000,000$ 40,406,843$ 14 2030 2033 43,652,867$ 34,458,224$ 34,147,012$ 28,743,737$ 6,256,263$ 35,000,000$ 41,518,031$ 15 2031 2034 44,853,321$ 34,458,224$ 34,147,012$ 22,839,988$ -$ 22,839,988$ 42,659,777$ 16 2032 2035 4,444,209$ -$ 1,906,027$ -$ -$ -$ 2,650,665$ 17 2033 2036 3,521,472$ -$ 1,906,027$ -$ -$ -$ 2,723,558$ 18 2034 2037 1,632,422$ -$ 1,906,027$ -$ -$ -$ 2,798,456$ 19 2035 2038 (363,189)$ -$ 1,906,027$ -$ -$ -$ 2,875,413$ 20 2036 2039 (2,469,794)$ -$ 1,906,027$ -$ -$ -$ 2,954,487$ 21 2037 2040 (4,164,792)$ -$ -$ -$ -$ -$ -$ 22 2038 2041 (5,296,082)$ -$ -$ -$ -$ -$ -$ 23 2039 2042 (5,441,724)$ -$ -$ -$ -$ -$ -$ 24 2040 2043 (3,723,617)$ -$ -$ -$ -$ -$ -$ 25 2041 2044 (2,706,415)$ -$ -$ -$ -$ -$ -$ 26 2042 2045 (2,444,828)$ -$ -$ -$ -$ -$ -$ 27 2043 2046 (1,556,781)$ -$ -$ -$ -$ -$ -$ 28 2044 2047 (353,140)$ -$ -$ -$ -$ -$ -$ 29 2045 2048 (1,221,211)$ -$ -$ -$ -$ -$ -$ 30 2046 2049 (1,221,095)$ -$ -$ -$ -$ -$ -$ 31 2047 2050 (287,364)$ -$ -$ -$ -$ -$ -$ Totals 557,819,393$ 517,437,361$ 522,301,394$ 444,761,242$ 68,078,746$ 512,839,988$ 544,156,586$ Savings over default 40,382,033$ 35,517,999$ 44,979,405$ 13,662,807$ NPV@3%445,220,316$ 424,264,842$ 426,211,164$ 364,822,975$ 57,500,385$ 422,323,359$ 436,084,773$ NPV@4%415,729,645$ 399,008,679$ 400,312,223$ 343,084,264$ 54,602,935$ 397,687,199$ 407,188,179$ Efficiency 172% 159% 161% NA NA 158% 167% PAYMENT COMPARISON Option 3A - Partial Fresh Start with ADP APPENDIX B-1 $31.25  Million Unused APPENDIX B-2 LINE GRAPH OF ALL PAYMENT OPTIONS APPENDIX B-2 -$10,000,000 $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 Payment Comparison -All OptionsDefaultOption 1 - Full Fresh Start (FS) Option 2 - Partial FS (2 Amort Periods)Option 3A - Partial FS with ADPOptions 3B - Partial FS w/o ADP No impact on minimum payment in FY 2019/20butminimum payment increases to $1.7 million in FY 2020/21. $31 million of under utilized credits APPENDIX B-3 LINE GRAPH OF OPTIONS 3A AND 3B APPENDIX B-3 -$10,000,000 $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 Payment Comparison -Option 3 Default Option 3A - Partial FS with ADP Options 3B - Partial FS w/o ADP APPENDIX C-1 DEFAULT PAYMENT OPTION 15 Various Yr Val Yr Pmt Yr Balance Payment Balance Payment Balance Min Pmt 1 2017 2020 304,262,134$ 27,734,444$ 20,924,353$ (1,264,887)$ 325,186,486$ 26,469,557$ 2 2018 2021 296,871,751$ 28,168,551$ 24,484,898$ (606,839)$ 321,356,649$ 27,561,712$ 3 2019 2022 288,514,998$ 28,943,186$ 26,826,560$ 1,122,438$ 315,341,557$ 30,065,625$ 4 2020 2023 278,771,983$ 29,739,124$ 27,543,359$ 2,495,004$ 306,315,343$ 32,234,127$ 5 2021 2024 267,523,633$ 30,556,950$ 26,890,543$ 3,139,967$ 294,414,176$ 33,696,917$ 6 2022 2025 254,641,933$ 31,397,266$ 25,524,874$ 3,739,204$ 280,166,807$ 35,136,470$ 7 2023 2026 239,989,284$ 32,260,691$ 23,443,752$ 3,842,033$ 263,433,036$ 36,102,723$ 8 2024 2027 223,417,816$ 33,147,860$ 21,110,585$ 3,947,688$ 244,528,401$ 37,095,548$ 9 2025 2028 204,768,651$ 34,059,426$ 18,504,805$ 4,056,250$ 223,273,456$ 38,115,676$ 10 2026 2029 183,871,112$ 34,996,060$ 15,604,324$ 4,167,797$ 199,475,436$ 39,163,857$ 11 2027 2030 160,541,884$ 35,958,452$ 12,385,424$ 4,282,411$ 172,927,309$ 40,240,863$ 12 2028 2031 134,584,105$ 36,947,309$ 8,822,643$ 4,400,177$ 143,406,748$ 41,347,486$ 13 2029 2032 105,786,398$ 37,963,360$ 4,888,650$ 4,521,182$ 110,675,048$ 42,484,542$ 14 2030 2033 73,921,841$ 39,007,352$ 554,108$ 4,645,515$ 74,475,949$ 43,652,867$ 15 2031 2034 38,746,851$ 40,080,055$ (4,212,463)$ 4,773,267$ 34,534,388$ 44,853,321$ 16 2032 2035 (9,444,840)$ 4,444,209$ (9,444,840)$ 4,444,209$ 17 2033 2036 (14,703,105)$ 3,521,472$ (14,703,105)$ 3,521,472$ 18 2034 2037 (19,374,961)$ 1,632,422$ (19,374,961)$ 1,632,422$ 19 2035 2038 (22,419,798)$ (363,189)$ (22,419,798)$ (363,189)$ 20 2036 2039 (23,613,498)$ (2,469,794)$ (23,613,498)$ (2,469,794)$ 21 2037 2040 (22,711,669)$ (4,164,792)$ (22,711,669)$ (4,164,792)$ 22 2038 2041 (19,993,392)$ (5,296,082)$ (19,993,392)$ (5,296,082)$ 23 2039 2042 (15,914,619)$ (5,441,724)$ (15,914,619)$ (5,441,724)$ 24 2040 2043 (11,399,679)$ (3,723,617)$ (11,399,679)$ (3,723,617)$ 25 2041 2044 (8,345,917)$ (2,706,415)$ (8,345,917)$ (2,706,415)$ 26 2042 2045 (6,130,594)$ (2,444,828)$ (6,130,594)$ (2,444,828)$ 27 2043 2046 (4,030,787)$ (1,556,781)$ (4,030,787)$ (1,556,781)$ 28 2044 2047 (2,702,595)$ (353,140)$ (2,702,595)$ (353,140)$ 29 2045 2048 (2,526,485)$ (1,221,211)$ (2,526,485)$ (1,221,211)$ 30 2046 2049 (1,440,108)$ (1,221,095)$ (1,440,108)$ (1,221,095)$ 31 2047 2050 (277,805)$ (287,364)$ (277,805)$ (287,364)$ Total Payments 500,960,084$ 25,609,278$ 557,819,393$ Amortization Efficiency (AE) Ratio 172% APPENDIX C-1 Default Option Total 2013 Fresh Start Base 2014 - 2018 Bases Level % of Pay No Ramp Up/Down % of Pay 5 Yr Ramp Up/Down Default - Minimum Payment Options (Inclusive of Projected 2018 Net Gain\Loss Bases) APPENDIX C-2 OPTION 1 – FULL FRESH START 15 YEARS 15 15 Yr Val Yr Pmt Yr Balance Payment Balance Payment Balance Payment 1 2017 2020 304,262,134$ 32,768,689$ 20,924,353$ 2,253,529$ 325,186,486$ 35,022,218$ 2 2018 2021 291,664,287$ 32,240,986$ 20,057,989$ 2,217,239$ 311,722,276$ 34,458,224$ 3 2019 2022 278,730,452$ 32,240,986$ 19,168,519$ 2,217,239$ 297,898,971$ 34,458,224$ 4 2020 2023 264,891,249$ 32,240,986$ 18,216,785$ 2,217,239$ 283,108,034$ 34,458,224$ 5 2021 2024 250,083,301$ 32,240,986$ 17,198,431$ 2,217,239$ 267,281,732$ 34,458,224$ 6 2022 2025 234,238,797$ 32,240,986$ 16,108,792$ 2,217,239$ 250,347,589$ 34,458,224$ 7 2023 2026 217,285,178$ 32,240,986$ 14,942,877$ 2,217,239$ 232,228,056$ 34,458,224$ 8 2024 2027 199,144,806$ 32,240,986$ 13,695,349$ 2,217,239$ 212,840,155$ 34,458,224$ 9 2025 2028 179,734,607$ 32,240,986$ 12,360,494$ 2,217,239$ 192,095,101$ 34,458,224$ 10 2026 2029 158,965,695$ 32,240,986$ 10,932,199$ 2,217,239$ 169,897,894$ 34,458,224$ 11 2027 2030 136,742,958$ 32,240,986$ 9,403,924$ 2,217,239$ 146,146,882$ 34,458,224$ 12 2028 2031 112,964,630$ 32,240,986$ 7,768,669$ 2,217,239$ 120,733,299$ 34,458,224$ 13 2029 2032 87,521,819$ 32,240,986$ 6,018,946$ 2,217,239$ 93,540,766$ 34,458,224$ 14 2030 2033 60,298,012$ 32,240,986$ 4,146,743$ 2,217,239$ 64,444,755$ 34,458,224$ 15 2031 2034 31,168,537$ 32,240,986$ 2,143,486$ 2,217,239$ 33,312,023$ 34,458,224$ 16 2032 2035 -$ 17 2033 2036 18 2034 2037 19 2035 2038 20 2036 2039 21 2037 2040 22 2038 2041 23 2039 2042 24 2040 2043 25 2041 2044 26 2042 2045 27 2043 2046 28 2044 2047 29 2045 2048 30 2046 2049 31 2047 2050 Total Payments 484,142,490$ 33,294,871$ 517,437,361$ Amortization Efficiency (AE) Ratio 159% Appendix C-2 Option 1 - Full Fresh Start 15 Years Option 1 Total Consolidate 2014-2018 Bases -Level $ Payment Reset to Level $ No Ramp Up/Down Reset to Level $ No Ramp Up/Down 2013 Fresh Start APPENDIX C-3 OPTION 2 – PARTIAL FRESH START 15 & 20 YEARS 15 20 Yr Val Yr Pmt Yr Balance Payment Balance Payment Balance Payment -$ -$ -$ -$ -$ 1 2017 2020 304,262,134$ 32,768,689$ 20,924,353$ 1,944,400$ 325,186,486$ 34,713,090$ 2 2018 2021 291,664,287$ 32,240,986$ 20,377,754$ 1,906,027$ 312,042,041$ 34,147,012$ 3 2019 2022 278,730,452$ 32,240,986$ 19,832,588$ 1,906,027$ 298,563,040$ 34,147,012$ 4 2020 2023 264,891,249$ 32,240,986$ 19,249,260$ 1,906,027$ 284,140,509$ 34,147,012$ 5 2021 2024 250,083,301$ 32,240,986$ 18,625,099$ 1,906,027$ 268,708,400$ 34,147,012$ 6 2022 2025 234,238,797$ 32,240,986$ 17,957,247$ 1,906,027$ 252,196,044$ 34,147,012$ 7 2023 2026 217,285,178$ 32,240,986$ 17,242,645$ 1,906,027$ 234,527,823$ 34,147,012$ 8 2024 2027 199,144,806$ 32,240,986$ 16,478,021$ 1,906,027$ 215,622,826$ 34,147,012$ 9 2025 2028 179,734,607$ 32,240,986$ 15,659,873$ 1,906,027$ 195,394,480$ 34,147,012$ 10 2026 2029 158,965,695$ 32,240,986$ 14,784,455$ 1,906,027$ 173,750,150$ 34,147,012$ 11 2027 2030 136,742,958$ 32,240,986$ 13,847,758$ 1,906,027$ 150,590,716$ 34,147,012$ 12 2028 2031 112,964,630$ 32,240,986$ 12,845,492$ 1,906,027$ 125,810,122$ 34,147,012$ 13 2029 2032 87,521,819$ 32,240,986$ 11,773,067$ 1,906,027$ 99,294,886$ 34,147,012$ 14 2030 2033 60,298,012$ 32,240,986$ 10,625,572$ 1,906,027$ 70,923,584$ 34,147,012$ 15 2031 2034 31,168,537$ 32,240,986$ 9,397,753$ 1,906,027$ 40,566,291$ 34,147,012$ 16 2032 2035 8,083,987$ 1,906,027$ 8,083,987$ 1,906,027$ 17 2033 2036 6,678,257$ 1,906,027$ 6,678,257$ 1,906,027$ 18 2034 2037 5,174,126$ 1,906,027$ 5,174,126$ 1,906,027$ 19 2035 2038 3,564,705$ 1,906,027$ 3,564,705$ 1,906,027$ 20 2036 2039 1,842,625$ 1,906,027$ 1,842,625$ 1,906,027$ 21 2037 2040 22 2038 2041 23 2039 2042 24 2040 2043 25 2041 2044 26 2042 2045 27 2043 2046 28 2044 2047 29 2045 2048 30 2046 2049 31 2047 2050 Total Payments 484,142,490$ 38,158,904$ 522,301,394$ Amortization Efficiency (AE) Ratio 161% Option 2 -Partial Fresh Start 15 & 20 Years APPENDIX C-3 Option 2 Total 2013 Fresh Start Consolidate 2014-2018 Bases - 20 Yr Level $ Level $ No Ramp Up/Down Level $ No Ramp Up/Down Reset to Level $ Payment 2018 Partial Fresh Start APPENDIX C-4 OPTION 3A – PARTIAL FRESH START WITH ADP 15 20 Yr Val Yr Pmt Yr Balance Required Pmt. ADP Balance Payment ADP Balance Payment ‐$                          ‐$                          ‐$                          ‐$                          1 2017 2020 304,262,134$        27,734,444$           20,924,353$           (1,264,887)$            8,530,443$    325,186,486$        35,000,000$            2 2018 2021 296,871,751$        28,168,551$           14,873,508$           1,137,943$             5,693,506$    311,745,259$        35,000,000$            3 2019 2022 288,514,998$        28,943,186$           8,848,148$             701,988$                5,354,826$    297,363,146$        35,000,000$            4 2020 2023 278,771,983$        29,739,124$           1,948,390$    3,202,301$             264,237$                3,048,249$    281,974,284$        35,000,000$            5 2021 2024 265,508,203$        30,326,744$           4,673,256$     ‐$                          ‐$                         265,508,203$        35,000,000$            6 2022 2025 247,889,495$        30,564,692$           4,435,308$    247,889,495$        35,000,000$            7 2023 2026 229,037,479$        30,788,488$           4,211,512$    229,037,479$        35,000,000$            8 2024 2027 208,865,821$        30,988,822$           4,011,178$    208,865,821$        35,000,000$            9 2025 2028 187,282,146$        31,150,874$           3,849,126$    187,282,146$        35,000,000$            10 2026 2029 164,187,615$        31,249,714$           3,750,286$    164,187,615$        35,000,000$            11 2027 2030 139,476,467$        31,240,183$           3,759,817$    139,476,467$        35,000,000$            12 2028 2031 113,035,538$        31,031,591$           3,968,409$    113,035,538$        35,000,000$            13 2029 2032 84,743,744$           30,411,823$           4,588,177$    84,743,744$           35,000,000$            14 2030 2033 54,471,525$           28,743,737$           6,256,263$    54,471,525$           35,000,000$            15 2031 2034 22,080,250$           22,839,988$           22,080,250$           22,839,988$            16 2032 2035 ‐$                         ‐$                          ‐$                          17 2033 2036 ‐$                         ‐$                          ‐$                          18 2034 2037 ‐$                         ‐$                          ‐$                          19 2035 2038 ‐$                         ‐$                          ‐$                          20 2036 2039 ‐$                         ‐$                          ‐$                          21 2037 2040 ‐$                          ‐$                          22 2038 2041 ‐$                          ‐$                          23 2039 2042 ‐$                          ‐$                          24 2040 2043 ‐$                          ‐$                          25 2041 2044 ‐$                          ‐$                          26 2042 2045 ‐$                          ‐$                          27 2043 2046 ‐$                          ‐$                          28 2044 2047 ‐$                          ‐$                          29 2045 2048 ‐$                          ‐$                          30 2046 2049 ‐$                          ‐$                          31 2047 2050 Total Payments 443,921,961$        45,451,722$  839,281$                22,627,024$  512,839,988$         Net Savings Amortization Efficiency (AE)  Ratio 158% APPENDIX C‐4 Level % of Pay With ADP Option 3A ‐ Partial Fresh Start With ADP Option 3A Total Original 2013 Fresh Start Level % of Pay With ADP Partial Fresh Start ‐ All Other Bases APPENDIX C-5 OPTION 3B – PARTIAL FRESH START WITHOUT ADP   15 20 Yr Val Yr Pmt Yr Balance Required Pmt. ADP Balance Payment ADP Balance Payment ‐$                          ‐$                          ‐$                          ‐$                          1 2017 2020 304,262,134$         27,734,444$           20,924,353$           (1,264,887)$            325,186,486$         26,469,557$            2 2018 2021 296,871,751$         28,168,551$           23,697,467$           1,813,047$             320,569,218$         29,981,598$            3 2019 2022 288,514,998$         28,943,186$           23,480,859$           1,862,906$             311,995,857$         30,806,092$            4 2020 2023 278,771,983$         29,739,124$           23,197,514$           1,914,136$             301,969,497$         31,653,260$            5 2021 2024 267,523,633$         30,556,950$           22,841,342$           1,966,775$             290,364,975$         32,523,725$            6 2022 2025 254,641,933$         31,397,266$           22,405,788$           2,020,861$             277,047,721$         33,418,127$            7 2023 2026 239,989,284$         32,260,691$           21,883,798$           2,076,435$             261,873,082$         34,337,126$            8 2024 2027 223,417,816$         33,147,860$           21,267,783$           2,133,537$             244,685,599$         35,281,396$            9 2025 2028 204,768,651$         34,059,426$           20,549,580$           2,192,209$             225,318,230$         36,251,635$            10 2026 2029 183,871,112$         34,996,060$           19,720,412$           2,252,495$             203,591,524$         37,248,555$            11 2027 2030 160,541,884$         35,958,452$           18,770,841$           2,314,439$             179,312,726$         38,272,890$            12 2028 2031 134,584,105$         36,947,309$           17,690,727$           2,378,086$             152,274,831$         39,325,395$            13 2029 2032 105,786,398$         37,963,360$           16,469,167$           2,443,483$             122,255,565$         40,406,843$            14 2030 2033 73,921,841$           39,007,352$           15,094,450$           2,510,679$             89,016,291$           41,518,031$            15 2031 2034 38,746,851$           40,080,055$           13,553,995$           2,579,722$             52,300,846$           42,659,777$            16 2032 2035 ‐$                         11,834,289$           2,650,665$             11,834,289$           2,650,665$              17 2033 2036 9,920,820$             2,723,558$             9,920,820$             2,723,558$              18 2034 2037 7,798,008$             2,798,456$             7,798,008$             2,798,456$              19 2035 2038 5,449,123$             2,875,413$             5,449,123$             2,875,413$              20 2036 2039 2,856,211$             2,954,487$             2,856,211$             2,954,487$              21 2037 2040 ‐$                          ‐$                          ‐$                          22 2038 2041 ‐$                          ‐$                          23 2039 2042 ‐$                          ‐$                          24 2040 2043 ‐$                          ‐$                          25 2041 2044 ‐$                          ‐$                          26 2042 2045 ‐$                          ‐$                          27 2043 2046 ‐$                          ‐$                          28 2044 2047 ‐$                          ‐$                          29 2045 2048 ‐$                          ‐$                          30 2046 2049 ‐$                          ‐$                          31 2047 2050 Total Payments 500,960,084$         ‐$                43,196,503$            ‐$                544,156,586$         Net Savings Amortization Efficiency (AE)  Ratio 167% APPENDIX C‐5 Option 3B Total Original 2013 Fresh Start Level % of Pay Without ADP Partial Fresh Start ‐ All Other Bases Level % of Pay Without ADP Option 3B ‐ Partial Fresh Start Without ADP APPENDIX D-1 COUNTY-WIDE COMPARISON OF PENSION FUNDING PROGRESS TABLE Agency AL UAL FS UAL Total Pmts Pmt Efficiency AL GF Rev City of Anaheim Total 2,534,550,976 741,068,980 70.8%765,071,137 1,514,945,993 198%5.7%2.6% City of Brea Total 384,756,109 121,252,581 68.5%125,739,198 257,714,835 205%10.4%1.6% City of Buena Park Total 135,767,673 39,221,940 71.1%40,454,441 78,190,765 193%5.4%1.7% City of Costa Mesa Total 561,805,186 212,923,672 62.1%218,582,780 448,749,985 205%6.4%1.6% City of Cypress* Total 77,989,853 18,663,147 76.1%19,428,798 38,181,448 197%6.0%-0.4% City of Fullerton Total 759,201,771 234,893,103 69.1%245,308,269 513,852,707 209%5.3%2.7% City of Garden Grove Total 810,370,322 268,412,094 66.9%277,299,537 568,946,411 205%6.1%2.9% City of Huntington Beach Total 1,267,782,797 403,394,647 68.2%415,378,946 840,702,143 202%6.0%2.4% City of Irvine Total 648,190,242 154,634,662 76.1%143,436,013 265,164,006 185%9.5%0.0% City of La Habra Total 109,736,831 26,498,700 75.9%27,862,230 56,060,884 201%6.7%1.5% City of Laguna Beach Total 110,341,091 27,243,435 75.3%26,964,768 50,220,994 186%8.4%3.0% City of Mission Viejo Total 82,812,124 19,596,811 76.3%19,947,678 35,963,154 180%10.9%1.0% City of Newport Beach Total 939,503,861 319,668,962 66.0%305,994,956 509,864,150 167%6.5%3.2% City of Orange Total 851,746,500 256,020,262 69.9%265,870,894 548,323,701 206%5.8%2.4% City of Santa Ana Total 1,955,454,608 613,781,439 68.6%635,622,920 1,280,054,051 201%5.6%1.1% City of Tustin Total 112,720,267 26,806,151 76.2%28,340,198 56,922,580 201%7.7%27.5% City of Westminster Total 127,883,624 39,342,203 69.2%40,431,030 79,306,054 196%6.2%1.7% City of Yorba Linda Total 69,845,408 21,183,584 69.7%21,466,831 43,314,830 202%6.7%1.2% Irvine Ranch Water District Total 260,190,689 62,900,429 75.8%63,953,833 111,870,935 175%8.9%6.1% Santa Margarita Water District Total 94,619,320 29,770,735 68.5%30,545,326 59,643,437 195%9.8%3.5% Grand Total 11,895,269,252 3,637,277,537 69.4%3,717,699,783 7,357,993,063 198%6.3%2.4% APPENDIX D -1 2017 Valuation 2019 Rollforward Annualized growth 2007 - 2017 (10 Years) 1 PRELIMINARY PENSION FUNDING RECOMMENDATIONS Fiscal Year 2019/20 Finance Committee November 29, 2018 22 PLAN ASSETS AND LIABILITIES Miscellaneous Safety Total Total Accrued Liability 396,834,941 542,668,920 939,503,861 887,481,877 Less: Market Value of Assets 278,869,980 340,964,919 619,834,899 566,016,065 Unfunded Accrued Liability (UAL) 117,964,961 201,704,001 319,668,962 321,465,812 Funded Status 70.3%62.8%66.0%63.8% Funded Status 6/30/2018*71.7%64.3% Funded Status 6/30/2023*79.8%73.1% *Assuming 7% return and no ADP's CALPERS Projection* 2017 Valuation 2016 3 ORANGE COUNTY COMPARISON 44 FUNDED STATUS TREND AND PROJECTION 70.1%74.2%71.6%67.9%70.3%71.7% 79.8% 62.7%65.6%64.5% 60.8%62.8%64.3% 73.1% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Miscellaneous Safety CalPERS Projection Assuming 7.0% annual return and no further ADPs 55 NET EMPLOYER COST PROJECTION 2018/19 2019/20 2018/19 2019/20 Dollars Percent Misc 16.2%16.9%7,205,087 7,712,921 507,834 7.0% Safety 27.4%28.1%9,082,071 9,694,972 612,901 6.7% Total Expected Normal Cost 16,287,158 17,407,893 1,120,735 6.9% 2018/19 2019/20 Dollars Percent Minimum Payment of on UAL 25,698,507 26,469,557 771,050 3.0% Additional Discretionary Payment (ADP)8,801,493 8,530,443 (271,050) -3.1% Total Planned UAL Payment 34,500,000 35,000,000 500,000 1.4% 2018/19 2019/20 Dollars Percent Total Expected PERS Contribution 50,787,158 52,407,893 1,620,735 3.2% Less: Expected Employee Contributions 10,324,540 11,017,800 693,260 6.7% Net Employer Cost "Projected"40,462,618 41,390,093 927,475 2.3% Total Expected Pension Cost Change ChangeExpected Normal CostNormal Cost Rate Amortization of UAL Change 66 CALPERS TIER SUMMARY 0 100 200 300 400 500 600 700 800 900 FY13 FY14 FY15 FY16 FY17 Ac t i v e E m p l o y e e s Fiscal Year CALPERS TIERS SUMMARY OVER TIME Classic Tier 2 PEPRA MISCELLANEOUS Group Name Benefit Active Employees Payroll FY19-20 % of Total Tier 1 2.5% @ 55 372 $33,348,039 80% Tier 2 2.0% @ 60 29 2,713,601 6% PEPRA 2.0% @ 62 113 5,764,989 14% TOTAL 514 $41,826,629 SAFETY Group Name Benefit Active Employees Payroll FY19-20 % of Total Tier 1 3.0% @ 50 212 $27,006,498 85% Tier 2 3.0% @ 55 (PD) 2.0% @ 50 (FD)27 2,648,599 8% PEPRA 2.7% @ 57 25 2,043,085 6% TOTAL 264 $31,698,182 7 AMORTIZATION SCHEDULES OLD POLICY NEW POLICY EFFECTIVE 6/30/19 NEW BASES ONLY $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 Level % of Pay –5 Yr Phase-In $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Level $ Amortization –5 Yr Phase-In Investment Gains/Losses $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Level $ Amortization All OtherDefault Schedule for new Gains & Losses $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 Level % of Pay Amortization 8 OLD VS. NEW AMORTIZATION POLICIES Driver Source (Gain)/Loss Assumption/Method Change Benefit ChangeInvestmentNon-investment Previous Amortization Policy Amortization Period 30 Years 30 Years 20 Years 20 Years Escalation Rate (Level Percent of Pay)Payroll (2.75%)2.75%2.75%2.75% Ramp Up 5 5 5 0 Ramp Down 5 5 5 0 Payment Efficiency (Total Pmts. As % of Principal)308%308%223%223% June 2019 Amortization Policy Amortization Period 20 Years 20 Years 20 Years 20 Years Escalation Rate (Level Dollar)0%0%0%0% Ramp Up 5 0 0 0 Ramp Down 0 0 0 0 Payment Efficiency (Total Pmts. As % of Principal)225%209%209%209% Efficiency Improvement (Interest Savings)27%32%6%6% 99 FUNDING OPTIONS •Default Payment Option •2013 Fresh Start Base: Level Percent of Pay –No Ramp Up/Down (15 year period) •16 Individual Bases between 2014 and 2018 : Level Percent of Pay –5 Year Ramp Up/Down (Various terms) •Option 1 •2013 Fresh Start Base: Reset to Level Dollar Amortization –No Ramp Up/Down (15 year term) •Consolidate 2014 –2018 Bases: Level Dollar Amortization –No Ramp Up/Down (15 years term) •Option 2 •2013 Fresh Start Base: Reset to Level Dollar Amortization–No Ramp Up/Down (15 year term) •Consolidate 2014 –2018 Bases: Level Dollar Amortization –No Ramp Up/Down (20 year term) •Option 3A –With ADPs •2013 Fresh Start Base: Level Percent of Pay with ADP (15 year term) •Partial Fresh Start –All Other Bases: Level Percent of Pay with ADP (4 year term with ADP) •Option 3B –Without ADPs •2013 Fresh Start Base: Level Percent of Pay without ADP (15 year term) •Partial Fresh Start –All Other Bases: Level Percent of Pay (20 year term) 1010 PAYMENT OPTION COMPARISON 2017 Val Default Option Default Option Option 1 Option 2 Option 3A (Recommended)Option 3B UAL Principal Balance 305,994,956 325,186,486 325,186,486 325,186,486 325,186,486 325,186,487 Interest 203,869,194 232,632,907 192,250,875 197,114,908 187,653,502 218,970,099 Total Payments Require to Amortize UAL 509,864,150 557,819,393 517,437,361 522,301,394 512,839,988 544,156,586 Amortiation Efficiency (AE) Ratio 166.6%171.5%159.1%160.6%157.7%167.3% Interest Savings Over 2018 Default 40,382,032$ 35,517,999$ 44,979,405$ 13,662,808$ NPV Savings @ 3%20,955,474$ 19,009,152$ 22,896,956$ 9,135,543$ 2019 Roll-Forward Balances (Used to determine minimum contributions for FY 19/20) 2018 Projected 1111 PROJECTED AMORTIZATION BASES AS OF 06/30/2018 AND ROLLED FORWARD TO 06/30/2019 MISCELLANEOUS AND SAFETY PLAN COMBINED Est. UAL Balance Yrs 6/30/19*Total Pmts*No ADPs With ADPs 1 06/30/2013 Fresh Start Base 15 304,262,134 500,960,084 165%161% 2 6/30/2014 (Gain)Investment Return 18.6%27 (76,596,032) (175,892,383) 230% 3 6/30/2015 Loss Investment Return 2.4%28 31,847,317 76,537,056 240% 4 6/30/2016 Loss Discount Rate Change 7.5 %to 7.375%19 16,814,230 30,846,769 183% 5 6/30/2016 Loss Investment Return .6%29 31,111,035 78,779,656 253% 6 6/30/2017 Loss Discount Rate Change 7.375% to 7.25%20 19,880,007 38,694,483 195% 7 6/30/17 (Gain)Investment Return 11.2%30 (22,066,767) (59,307,662) 269% Net Other (2-9) Bases Prior to 6/30/18 Mixed 989,790 (10,342,080) N/A 8 6/30/2018 Loss Discount Rate Change 7.25% to 7.0%20 28,888,079 60,201,260 208% 9 6/30/2018 Gain Investment Return 8.6%30 (8,953,515) (25,752,005) 288% Net 2018 (8 &9) (Gain) Loss Bases 19,934,564 34,449,256 N/A 10 Proposed 2018 Partial Fresh Start 20 20,924,354 40,535,310 194%112% TOTAL 325,186,488 589,709,745 172%158% * Balance and payments reflect projected balances and phased-in discount rates not yet reflected in the 6/30/17 valuation. Amort. Efficiency Proposed consolidation of amortization bases in payment option 3A 1212 1313 1414 COMPARATIVE SAVINGS HYPOTHETICAL UNFUNDED PENSION LIABILITY County-wide City Default City Payment Option 3A AE Ratio AE Ratio AE Ratio Hypothetical Unfunded Pension Liability 300,000,000$ 300,000,000$ 300,000,000$ AE Ratio 200%166.6%157.7% Total Principal & Interest Payments 600,000,000 499,800,000 473,100,000 Interest savings relative to County-wide average 100,200,000$ 126,900,000$ ** * Not discounted to reflect time value of money. 1515 D E F A U L T S C E N A R I O 1616 S C E N A R I O ( 3 B ) 1717 S C E N A R I O ( 3 A ) 1818 STAFF RECOMMENDATION OPTION 3A Option 3A accomplishes the following funding goals: •Amortizes the UAL over a level dollar payment plan over 15 years as opposed to the lengthier, and consequently costlier, term options. •Continues an aggressive funding plan to improve the plan’s funded status and further increases repayment efficiency of the unfunded pension liability. •Preserves financial flexibility to continue ADPs or not. •Consolidates the number of amortization bases that range between 19-30 years down to a default 20-year repayment schedule and significantly reduces administrative burden of managing 16 different bases. If ADPs are continued, this 20 year base would be reduced to 4 years. See Appendix C-5 then C-4 to see how the ADPs would reduce the term of the 2018 Fresh Start Base from 20 years to 4 years. •Starts paying on projected loss base that will be included in the 2018 actuarial valuation thereby avoiding one year’s worth of negative amortization. •Option 3A represents a savings of $45 million over the default schedule realized over 15 years (NPV Savings of $23 million) •By carefully managing our bases over several years including fresh starts and ADPs, the payment efficiencies gained will save Newport Beach taxpayers between $100 and $126 million over 20 years relative to the county-wide repayment schedule. 1919 POTENTIAL BENEFITS OF USING A SECTION 115 TRUST •Trust assets can be theoretically accessed to pay CalPERS at anytime to reduce volatility and offset unexpected rate increases (rate stabilization). •Provides access to a broader universe of investments that the City can undertake on its own, including stocks and longer-term bonds. •Allows the City to maintain control and investment oversight of assets. •Rainy Day Fund -Emergency source of funds when Employer revenues are impaired based on economic or other conditions •Diversifies investment assets and strategies. •Added flexibility and control compared to the direct payment method to CalPERS •Since PEPRA eliminated “Contribution Holidays” a Section 115 plan could serve as a relief valve when plans are approaching fully funded status 2020 POTENTIAL LIMITATIONS OF USING A SECTION 115 TRUST •Does not directly reduce Net Pension Liability •Assets not recognized when CalPERS sets contribution rates •Investment Returns (net of expenses) likely to be lower than invested directly with CalPERS •Added complexities for reporting & administration •May introduce additional risks •Potentially short investment horizon •Headline risk •Assets can’t be simply transferred to CalPERS. They must be sold at current market value. In the event of an economic downturn, when the reserve funds might need to be accessed, the market value of the trust portfolio is also likely to be negatively impacted by the downturn. •The Trust would not likely have a material impact on overall pension asset diversification or investment return relative to the $620 million of pension assets already at CalPERS. CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Agenda Item No. 5B November 29, 2018 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE FROM: Finance Department Steve Montano, Deputy Finance Director 949-644-3240, smontano@newportbeachca.gov SUBJECT: CONSIDERATION OF HARBOR FEES FOR THE NEW HARBOR DEPARTMENT AND SELECT RENTS SUMMARY: On July 1, 2017, the City took over responsibility for managing harbor operations from the Orange County Sheriff. Since that time, the City has utilized the fee schedule from the County of Orange. The City’s fee study consultant, MGT of America (MGT), recently completed a comprehensive review of the Harbor Department fees. The real estate appraisal and consulting firm Netzer & Associates, determined the fair market value of rents charged at Marina Park, guest/transient slips throughout the harbor, and select rents at the Balboa Yacht Basin. On August 8, 2018, the Harbor Commission reviewed the recommended fee and rent updates and unanimously recommended the updates, with minor changes, to the City Council for adoption. Staff also reviewed the current Schedule of Rents, Fines, and Fees (SRFF) and has recommended some additional changes to the fees after approval by the Harbor Commission. RECOMMENDED ACTION: Staff welcomes comments and recommendations related to the proposed Harbor Department fee and rent updates. Based upon Finance Committee input, staff will bring the proposed recommendations to the City Council for formal action. DISCUSSION: The detailed staff report and attachments reviewed by the Harbor Commission on August 8, 2018, are included as Attachment A. An updated proposed rent and fee schedule is included as Attachment B, where the following changes were made based on the Harbor Commission’s recommendation: Consideration of Harbor Fees for the New Harbor Department and Select Rents November 29, 2018 Page 2 1. The “Large Vessel Guest Anchorage Rate – Non City Tackle – no boat, per Lineal Foot” charge, was corrected to read $0.47, rather than $0.047; and 2. “Lend a Mooring Line/Help to get on a Mooring” was removed. The intention of the fee was to calculate staff time spent processing and fulfilling a request for a line. Discussion made it clear that the naming of the fee was confusing and staff time assisting boaters onto a mooring is a customer service function and should not be charged at cost. Therefore, staff time to process and fulfill a request for a lost or broken line was added to the actual cost of the replacement line under the Lost/Broken Line fee. The service numbers highlighted on the left within Attachment B are the fees and rents that would need to be approved by Council. After studying the Harbor Department fees noted above, staff reviewed the current SRFF to see where further updates would be warranted. These updates can be found detailed in Attachment B. The following lists the proposed changes: 1. Renamed a. The “Inspection Fee – Charter Boats” was renamed to “Marine Activities Permit – initial,” for clarity and consistency with the current fee name; b. The “Inspection Fee – Live Aboards, Marine Activities Permit Re-check” was separated into two line items and renamed “Live Aboard Permit and Marine Activities Permit – renewal,” for clarity and consistency with the current fee names; and c. The “City owned Guest Moorings – Offshore and Sub-Permittee Guest Moorings – Offshore” have been combined to one line item and renamed “Guest Moorings – Offshore (Year-Round)” since they all have the same proposed rent. 2. Deleted a. The “Inspection Fee – Dock, Piling, Code Enforcement” was deleted from the fee study, this is not a fee that would be charged; b. The “Mooring Inspection” fee was deleted from the fee study as this is not a fee that would be charged; c. The “Impound Fee (Boats over 14’)” fee was deleted from the fee study because this is the same service as the “Towing Fee (Boats over 14’)”; and d. The “Live Aboard Permits, Marine Activities Permit (initial and renewal),” and waitlist fees currently under Public Works – Harbor Resources will be deleted as the recently studied fees can be found under Harbor. 3. Added a. A “Dinghy Storage” rent was added which is based on the “Guest Mooring – Onshore (Year-Round)” rate. 4. Moved Consideration of Harbor Fees for the New Harbor Department and Select Rents November 29, 2018 Page 3 a. The “Balboa Yacht Basin Rentals (except Dinghy Rentals)” and “Commercial Piers under Public Works - Harbor Resources” will be moved to Community Development – Real Property; b. “Dinghy Racks and Onshore and Offshore Moorings” will be moved to Harbor; and c. “Wait List” fees will be moved to Harbor. 5. Studied a. The fee for being added to the Balboa Yacht Basin slips and garages waitlist went from $38 to $27; b. The fee for being added to the Balboa Yacht Basin and Marina Park dinghy racks waitlist went from $38 to $23; and c. The fee for being added to the live aboard waitlist went from $38 to $5. 6. Other Adjustment a. When studying the waitlist fees, MGT updated the fee study workbook with the indirect citywide overhead from the most current cost allocation plan. This resulted in some fees going down a few pennies. Although the full cost decreased slightly, none of the recommended fees changed, due to the City’s practice of rounding the fee down to the nearest dollar. FISCAL IMPACT: The fiscal impact of the proposed guest mooring and Marina Park slips rents and the new cost of services fees is shown below. FY16-17 Actual FY17-18 Actual Proposed Annual Variance from FY18 Guest Moorings $ 179,080 $ 214,239 $ 588,000 $ 373,761 Marina Park Slips $ 133,461 $ 208,407 $ 277,000 $ 68,593 New Fees N/A N/A $ 16,000 $ 16,000 Total potential revenue increase $ 458,354 Consideration of Harbor Fees for the New Harbor Department and Select Rents November 29, 2018 Page 4 CONCLUSION: Based upon Finance Committee comments and input, staff will bring the proposed recommendations to the City Council for formal action. Prepared and Submitted by: /s/ Theresa Schweitzer _____________________________ Theresa Schweitzer Senior Accountant Attachments: A. Harbor Commission Packet – Proposed Rents and Fees for Marina Park Marina and the Harbor Department B. Proposed Rent and Fee Schedule – Updated ATTACHMENT A HARBOR COMMISSION PACKET – PROPOSED RENTS AND FEES FOR MARINA PARK MARINA AND THE HARBOR DEPARTMENT NEWPORT BEACH Harbor Commission Staff Report CITY OF August 8, 2018 Agenda Item No. 1 TO: HARBOR COMMISSION FROM: Carol Jacobs, Assistant City Manager - 949-644-3313, cjacobs@newportbeachca.gov Theresa Schweitzer, Senior Accountant - 949-644-3140, tschweitzer@newportbeachca.gov TITLE: Proposed Rents and Fees for Marina Park Marina and the Harbor Department ______________________________________________________________________ ABSTRACT: On July 1, 2017, the City took over responsibility for managing harbor operations from the Orange County Sheriff. Since that time, the City has utilized the fee schedule from the County of Orange to charge for fees and rents. Over the last year, staff has evaluated the services provided and completed an appraisal of rents charged at Marina Park and Guest/Transient Slips throughout the harbor, and selected rents at the Balboa Yacht Basin as well as a fee study for various tasks the Harbor Department performs. RECOMMENDATION: 1. Find this action exempt from 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. 2. Recommend to the City Council approval of Rent and Fees Schedule (Attachment C) for Marina Park and the Harbor Department. Proposed Rents and Fees for Marina Park Marina and the Harbor Department August 8, 2018 Page 2 FUNDING REQUIREMENTS: There are no funding requirements for this item. If City Council approves the attached Rent and Fees Schedule for Marina Park and the Harbor Department, the revenues will be approximately as follows: Fee Name FY 16-17 Actual FY 17-18 Actual FY 18-19 Budgeted Proposed Annual Guest Moorings $179,080 $198,143 $150,000 $588,000 Dinghy Racks $5,375 $5,450 $5,000 $ 7,400 New Fees N/A N/A $0 $440,000 Total $184,455 $203,593 $155,000 $1,035,400 BACKGROUND: As part of the City taking over the harbor from the Orange County Sheriff’s Department, the City has evaluated both the rents and services provided to harbor users. The City engaged Netzer and Associates to review and provide a current appraisal of the harbor rents in November of 2017 (Attachment B). At the December 11, 2017 Harbor Commission meeting, the Commission had some additional questions and concerns regarding the rents and asked Netzer for some additional information. Netzer completed an addendum in March of 2018 (Attachment C). In addition, the City’s fee study consultant, MGT performed an analysis of fees in the harbor and are shown as Attachment C. Rents and Fees are defined separately in the Municipal Code and are further explained below. DISCUSSION: Rents The Beacon Bay Bill, California Constitution Article 16, Section 6, Newport Beach Municipal Code, Section 17.60.060(D), Section 17.60.020(E), and City Council Policy F- 7(D) (Income Property) require that the rent received by the City from third parties using the Tidelands be based in part upon an appraisal, and reflective of the fair market value related to such uses. In order to determine the Fair Market Value of rents related to the Harbor, staff engaged Netzer & Associates, Real Estate Appraisal and Consulting. A Fair Market Rent – Guest/Transient Moorings, Newport Harbor, California was completed on November 27, 2017 (Attachment A). The Harbor Commission received the report at their December 11, 2017 Commission Meeting. At that meeting, the Harbor Commission requested additional information regarding fair market value of the slips at Marina Park, rents for dinghy racks at both Marina Park and the Balboa Yacht Basin. In addition, Netzer studied Daily “Guest Anchorage Rates of Non-City Owned Tackle and Large Vessel fees for the West Proposed Rents and Fees for Marina Park Marina and the Harbor Department August 8, 2018 Page 3 Anchorage (if approved sometime in the future). This addendum was completed on March 26, 2018 (Attachment B). Both reports provide the complete analysis. Fees The Newport Beach Municipal Code (NBMC) Section 3.36, City Council Policy F-4 (Revenue Measures) and Item 12 of the Fiscal Sustainability Plan (FSP) provide staff and the City Council with policy guidance related to setting cost recovery targets and updating user fees. User fees, or cost-of-service fees are charged to a private citizen or group for services performed or provided by a government agency on their behalf. If the service benefits primarily an individual or group of people, then the burden of that cost should be bore by the person receiving the benefit. NBMC Section 3.36 sets the cost recovery for user fees at one hundred percent (100%) with the exception of the subsidized fees listed in Exhibit “A” of that same section, as well as those limited by California or Federal statutes. A recommendation for less than a hundred percent (100%) cost recovery rate occurs, for example, when a service is beneficial to the community at large along with specific individuals or groups, and/or when there is an economic incentive, or disincentive, to do so. In these cases, the General Fund is essentially subsidizing the service. The City has been managing the City’s mooring fields since July 1, 2017. During this time, staff has identified a number of services that the Harbor Department performs for those using the harbor. Harbor staff and the Finance Department along with the City’s fee consultant, MGT, have evaluated the services provided and calculated the cost of service to individual users of the harbor. The proposed Rent and Fee Schedule is Attachment A. Should the Harbor Commission approve the rent and fee schedule, staff will then present the fee schedule to the City Council for consideration. Any newly proposed fee that is not approved will be absorbed through General Fund subsidy. ENVIRONMENTAL REVIEW: Staff recommends the Harbor Commission find this action exempt from 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. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the Harbor Commission considers the item). Proposed Rents and Fees for Marina Park Marina and the Harbor Department August 8, 2018 Page 4 ATTACHMENTS: Attachment A – Netzer Appraisal – November 27, 2107 Attachment B – Netzer Appraisal Addendum to File No. 2017-30 Attachment C – Proposed Rent and Fee Schedule 1 08/02/2018 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 B J L P Q R S T U A B C D E F G H SERVICE NAME Total or Base Fee Total or Base Fee REFERENCE TYPE Total or Base Fee Incremental - (if applicable)CPI Notes HARBOR Dinghy Rack Rental Application Fee $0.00 17.00$ M.C. 3.36.030 COS-Fee $17.40 Yes Impound Fee - Initial $150.00 68.00$ M.C. 3.36.030 COS-Fee $68.09 Yes Impound Fee - Loose or Lost and Found Boats/Vessels see notes 46.00$ M.C. 3.36.030 COS-Fee $46.72 Yes Free first 5 days then $50/day Inspection Fee - Charter Boats $0.00 341.00$ M.C. 3.36.030 COS-Fee $341.38 Yes Inspection Fee - Dock, Pilings, Code Enforcement $0.00 209.00$ M.C. 3.36.030 COS-Fee $209.47 Yes Inspection Fee - Live Aboards, Marine Activities Permit Re-check $0.00 275.00$ M.C. 3.36.030 COS-Fee $275.42 Yes Key Card Replacement $0.00 23.00$ M.C. 3.36.030 COS-Fee $23.12 Yes Large Boat Permit (80+ Lineal Feet)$0.00 64.00$ M.C. 3.36.030 COS-Fee $64.12 Yes Lend a Mooring Line/Help to get on a Mooring $0.00 32.00$ M.C. 3.36.030 COS-Fee $32.36 Yes Marina Park Cancellation Fee see notes 11.00$ M.C. 3.36.030 COS-Fee $11.60 Yes Cancel 72 hours or more $10 fee, less than 72 hours forfeit Mooring & Slips Rental Application Fee $0.00 17.00$ M.C. 3.36.030 COS-Fee $17.40 Yes Mooring Extension Permit $0.00 326.00$ M.C. 3.36.030 COS-Fee $326.81 Yes Mooring Inspection $0.00 68.00$ M.C. 3.36.030 COS-Fee $68.09 Yes Raft Up Permits - East Anchorage $0.00 62.00$ M.C. 3.36.030 COS-Fee $62.29 Yes Temporary Sea Lion Deterrent $0.00 136.00$ M.C. 3.36.030 COS-Fee 136.17$ Yes Towing Fee (Boats under 14')see notes 71.00$ M.C. 3.36.030 COS-Fee $71.76 Yes $0 if done by City staff Flat Rate for Electricity - Marina Park $0.13/kWh see notes M.C. 3.36.030 COS-Fee Pass Thru $12.03 $0.13 Yes $12 plus actual per kWh usage Towing Fee (Boats over 14')100% Contractor Cost see notes M.C. 3.36.030 COS-Fee Pass Thru $23.20 Yes $23 plus 100% contractor cost Marina Park Deposit $50/day 50.00$ Resolution Deposit Yes Charged against stay, forfeited if canceled with less Impound Fee (Boats over 14')see notes see notes M.C. 3.36.030 Pass Thru see notes Yes 100% contractor cost Lost/Broken Line $0.00 69.00$ M.C. 3.36.030 Pass Thru $69.73 Yes City owned Guest Moorings - Offshore (Year- Round) $27/Night $1.25 per Lineal Foot (LF) Resolution Rental $1.25/LF Yes Dinghy Rack Rental - Marina Park/Balboa Yacht Basin $25/Month $35 per Month Resolution Rental $35/Month Yes Impound Fee - Nightly Storage Fee $50/Night see notes Resolution Rental see notes Yes Same charge as Sub- Permittee Rental Rates Large Vessel (80+ LF) Offshore Guest Mooring Same as Offshore Guest Moorings $1.55 per Lineal Foot (LF) Resolution Rental $1.55/LF Yes Large Vessel Guest Anchorage Rate - Non City Tackle - no boat Same as Offshore Guest Moorings $0.047 per Lineal Foot (LF) Resolution Rental $0.047/LF Yes Marina Park Boat Slips (40' Slip) $60/Night $80 per Night Resolution Rental $80/Night Yes Marina Park Boat Slips (55' Slip) $82.50/Night $110 per Night Resolution Rental $110/night Yes Marina Park Boat Slips (Overhang Charge) $1.50/Foot $2 per Foot Resolution Rental $2/Foot Yes Multi-hull Vessel - 2 hulls Same as Offshore Guest Moorings $1.50 per Lineal Foot (LF) Resolution Rental $1.50/LF Yes Multi-hull Vessel - 3 hulls Same as Offshore Guest Moorings $1.75 per Lineal Foot (LF) Resolution Rental $1.75/LF Yes Sub-Permitee Guest Moorings - Offshore (May- Oct) $27/Night $1.25 per Lineal Foot (LF) Resolution Rental $1.25/LF Yes Sub-Permitee Guest Moorings - Offshore (Nov- April) $16/Night $1.25 per Lineal Foot (LF) Resolution Rental $1.25/LF Yes Sub-Permitee Guest Moorings - Onshore (Year- Round) $11/Night $0.625 per Lineal Foot (LF) Resolution Rental $0.625/LF Yes City of Newport Beach Schedule of Rents, Fines, and Fees (SRFF) - Harbor 2018 adj Full Cost/Market ValueProposed ChargesCurrent Charges ATTACHMENT B PROPOSED RENT AND FEE SCHEDULE – UPDATED AB C D   EF G H SE R V I C E  NA M E D E S C R I P T I O N T o t a l  or  Ba s e  Fe e T o t a l  or  Ba s e  Fe e R E F E R E N C E T Y P E To t a l  or  Ba s e   Fe e In c r e m e n t a l  ‐   (if   ap p l i c a b l e ) CPI N o t e s HA R B O R 1 Ap p e a l  He a r i n g F i l l i n g  Fe e  fo r  Ap p e a l s  ‐   ch a r g e d  ho u r l y . s e e  no t e s s e e  no t e s M . C . 1 7 . 6 5 . 0 3 0 CO S ‐Fe e Ho u r l y Y e s 1 0 0 %  Loaded  Hourly  Rate  (see  appendix) 2 Ap p e a l  of  Le a s e / P e r m i t  un d e r  Se c t i o n  17 . 6 0 . 0 8 0 1 0 0 . 0 0 $                                                  10 0 . 0 0 $                                                  M. C . 1 7 . 6 0 . 0 8 0 CO S ‐Fe e Ho u r l y Y e s $ 1 0 0  Recovery  per  M.C. 3.36.030  Exhibit  A 3 Di n g h y  Ra c k  Re n t a l  Ap p l i c a t i o n  Fe e A p p l i c a t i o n  fe e  to  pr o c e s s  mo n t h l y  re n t a l  ag r e e m e n t $ 0 . 0 0 1 7 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $1 7 . 4 0 Y e s 4 Im p o u n d  Fe e  ‐  In i t i a l C o s t  to  im p o u n d  a  ve s s e l  on  th e  fir s t  da y . $ 1 5 0 . 0 0 $ 6 8 . 0 0 M . C .  3.3 6 . 0 3 0 CO S ‐Fe e $6 8 . 0 7 Y e s 5 Im p o u n d  Fe e  ‐  Lo o s e  or  Lo s t  an d  Fo u n d   Bo a t s / V e s s e l s Co s t  to  im p o u n d  a  ve s s e l  on  th e  fir s t  da y .  Ty p i c a l l y   ve s s e l s  un d e r  20  fe e t . s e e  no t e s 4 6 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $4 6 . 7 1 Y e s F r e e  first  5  days  then  $50/day 6 Ke y  Ca r d  Re p l a c e m e n t T h e  co s t  to  re p l a c e  th e  ke y  to  th e  Ma r i n a  Pa r k  fa c i l i t i e s $ 0 . 0 0 2 3 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $2 3 . 1 2 Y e s 7 La r g e  Bo a t  Pe r m i t  (8 0 +  Li n e a l  Fe e t ) A p p l i c a t i o n  fe e  to  lo c a t i o n  fo r  la r g e  bo a t s  in  Ha r b o r $ 0 . 0 0 6 4 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $6 4 . 1 0 Y e s 8 Liv e  Ab o a r d  Pe r m i t $3 3 8 . 0 0 2 7 5 . 0 0 $                                                  M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $2 7 5 . 3 7 Y e s 9 Lo s t / B r o k e n  Lin e Co s t  to  re p l a c e  a  lin e  pr o v i d e d  to  a  re n t e r  th a t  is  ei t h e r   re t u r n e d  br o k e n  or  no t  re t u r n e d  at  all $ 0 . 0 0 1 0 2 . 0 0 $                                                  M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $1 0 2 . 0 9 Y e s 10 Ma r i n a  Pa r k  Ca n c e l l a t i o n  Fe e   Fe e  ch a r g e d  if  re s e r v a t i o n  is  ca n c e l l e d s e e  no t e s 1 1 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $1 1 . 6 0 Y e s Cancel  72  hours  or  more  $10  fee, less  than  72  hours  forfeit  deposit 11 Ma r i n a  Pa r k  De p o s i t Fe e  to  re s e r v e  a  sl i p  at  Ma r i n a  pa r k  ‐   de p o s i t  ch a r g e d   ag a i n s t  st a y $ 5 0 / d a y 5 0 . 0 0 $                                                        Re s o l u t i o n De p o s i t YesCharged against  stay, forfeited  if  canceled  with  less  than  72  hours  notice 12 Ma r i n a  Pa r k  ‐   Fla t  Ra t e  fo r  Ele c t r i c i t y   Ac t u a l  co s t $ 0 . 1 3 / k W h s e e  no t e s M . C .  3.3 6 . 0 3 0 CO S ‐Fe e  Pa s s   Th r u $1 2 . 0 3 $ 0 . 1 3 Y e s $ 1 2  plus  actual  per  kWh  usage 13 Ma r i n e  Ac t i v i t i e s  Pe r m i t  ‐  in i t i a l    $7 3 1 . 0 0 3 4 1 . 0 0 $                                                  M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $3 4 1 . 3 1 Y e s 14 Ma r i n e  Ac t i v i t i e s  Pe r m i t  ‐  re n e w a l    $2 1 6 . 0 0 2 7 5 . 0 0 $                                                  M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $2 7 5 . 3 7 Y e s 15 Mo o r i n g  & Sli p s  Re n t a l  In i t i a l  Ap p l i c a t i o n  Fe e Ti m e  to  pr o c e s s  in i t i a l  ap p l i c a t i o n  an d  ga t h e r  ap p r o p r i a t e do c u m e n t s $ 0 . 0 0 1 7 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $1 7 . 4 0 Y e s 16 Mo o r i n g  Ex t e n s i o n  Pe r m i t Co s t  to  ev a l u a t e  th e  po s s i b i l i t y  of  ex t e n d i n g  a  mo o r i n g   le n g t h $ 0 . 0 0 3 2 6 . 0 0 $                                                  M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $3 2 6 . 7 5 Y e s 17 Ra f t  Up  Pe r m i t s  ‐  Ea s t  An c h o r a g e C o s t  to  pr o c e s s  pe r m i t  fo r  ra f t ‐up  ev e n t s $ 0 . 0 0 6 2 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $6 2 . 2 7 Y e s 18 Te m p o r a r y  Se a  Li o n  De t e r r e n t Co s t  of  st a f f  to  pu t  in  pla c e  ap p r o p r a i t e  se a  li o n   de t e r r e n t  an d  re m o v e  wh e n  ow n e r  co m p l i e s $ 0 . 0 0 1 3 6 . 0 0 $                                                  M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $1 3 6 . 1 5 Y e s 19 To w i n g  Fe e  (B o a t s  ov e r  14 ' ) C o n t r a c t  pa s s  th r o u g h  10 0 %  Co n t r a c t o r  Co s t   se e  no t e s M . C .  3.3 6 . 0 3 0 CO S ‐Fe e  Pa s s   Th r u $2 3 . 2 0 Y e s $ 2 3  plus  100% contractor  cost 20 To w i n g  Fe e  (B o a t s  un d e r  14 ' ) C i t y  st a f f s e e  no t e s 6 8 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e $6 8 . 0 7 Y e s $ 0  if  done  by  City  staff 21 Wa i t  Lis t  fo r  Ba l b o a  Ya c h t  Ba s i n  Sli p s  an d   Ga r a g e s 38 . 0 0 $                                                        27 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e 27 . 7 8 $                                Yes 22 Wa i t  Lis t  fo r  Ba l b o a  Ya c h t  Ba s i n / M a r i n a  Pa r k   Di n g h y  Ra c k s 38 . 0 0 $                                                        23 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e 23 . 2 0 $                                Yes 23 Wa i t  Lis t  fo r  Liv e  Ab o a r d   38 . 0 0 $                                                        5.0 0 $                                                            M.C .  17 . 4 0 . 1 1 0  (b ) CO S ‐Fe e 5.8 0 $                                    Yes 24 Di n g h y  Ra c k  Re n t a l  ‐   Ma r i n a  Pa r k / B a l b o a  Ya c h t   Ba s i n R e n t a l  ra t e  fo r  ra c k  sp a c e  at  Ma r i n a  Pa r k  an d  BY B  $2 5 / M o n t h   $3 5  pe r  Mo n t h   Re s o l u t i o n Re n t a l $3 5 / M o n t h Y e s 25 Di n g h y  St o r a g e B a s e d  on  On s h o r e  Gu e s t  Mo o r i n g  $                                                                    ‐        $0 . 6 2 5  pe r  Lin e a l  Fo o t    (L F )   Re s o l u t i o n Re n t a l $0 . 6 2 5 / L F Y e s 26 Cit y  ow n e d  Gu e s t  Mo o r i n g s  ‐   Of f s h o r e  (Y e a r ‐ Ro u n d ) Re n t a l  ra t e  to  sp e n d  th e  nig h t  on  an  of f s h o r e  gu e s t   mo o r i n g $ 2 7 / N i g h t  $1 . 2 5  pe r  Lin e a l  Fo o t    (L F )   Re s o l u t i o n Re n t a l $1 . 2 5 / L F Y e s 27 Su b ‐Pe r m i t e e  Gu e s t  Mo o r i n g s  ‐   Of f s h o r e  (M a y ‐ Oc t ) $2 7 / N i g h t  $1 . 2 5  pe r  Lin e a l  Fo o t    (L F )   Re s o l u t i o n Re n t a l $1 . 2 5 / L F Yes 28 Su b ‐Pe r m i t e e  Gu e s t  Mo o r i n g s  ‐   Of f s h o r e  (N o v ‐ Ap r i l ) $1 6 / N i g h t  $1 . 2 5  pe r  Lin e a l  Fo o t    (L F )   Re s o l u t i o n Re n t a l $1 . 2 5 / L F Yes 29 Su b ‐Pe r m i t e e  Gu e s t  Mo o r i n g s  ‐   On s h o r e  (Y e a r ‐ Ro u n d ) B a s e d  on  fa i r  ma r k e t  ra t e  an a l y s i s  $1 1 / N i g h t    $0 . 6 2 5  pe r  Lin e a l  Fo o t    (L F )   Re s o l u t i o n Re n t a l $0 . 6 2 5 / L F Y e s 30 Im p o u n d  Fe e  ‐  Ni g h t l y  St o r a g e  Fe e Nig h t l y  fe e  to  ho l d  an  im p o u n d e d  bo a t .   Th e  Cit y  ca n n o t   re n t  th i s  sp a c e  to  a  pa y i n g  cu s t o m e r .  $5 0 / N i g h t    se e  no t e s   Re s o l u t i o n Re n t a l se e  no t e s Y e s S a m e  charge  as  Guest  Mooring  Rental  Rates At t a c h m e n t  B.  Pr o p o s e d  Re n t  an d  Fe e  Sc h e d u l e  ‐   Up d a t e d 20 1 8  ad j Fu l l  Co s t / M a r k e t  Va l u e Pr o p o s e d  Ch a r g e s Cu r r e n t   Ch a r g e s 1 11/19/2018 AB C D   EF G H SE R V I C E  NA M E D E S C R I P T I O N T o t a l  or  Ba s e  Fe e T o t a l  or  Ba s e  Fe e R E F E R E N C E T Y P E To t a l  or  Ba s e   Fe e In c r e m e n t a l  ‐   (if   ap p l i c a b l e ) CPI N o t e s At t a c h m e n t  B.  Pr o p o s e d  Re n t  an d  Fe e  Sc h e d u l e  ‐   Up d a t e d 20 1 8  ad j Fu l l  Co s t / M a r k e t  Va l u e Pr o p o s e d  Ch a r g e s Cu r r e n t   Ch a r g e s 31 La r g e  Ve s s e l  (8 0 +  LF )  Off s h o r e  Gu e s t  Mo o r i n g Co s t  of  re n t i n g  a  la r g e  ve s s e l .   Th e r e  is  ad d i t i o n a l  ti m e   in v o l v e d  in  fi n d i n g  th e  pr o p e r  lo c a t i o n . Sa m e  as  Off s h o r e  Gu e s t   Mo o r i n g s  $1 . 5 5  pe r  Lin e a l  Fo o t    (L F )   Re s o l u t i o n Re n t a l $1 . 5 5 / L F Y e s 32 La r g e  Ve s s e l  Gu e s t  An c h o r a g e  Ra t e  ‐   No n  Cit y   Ta c k l e  ‐   no  bo a t Co s t  of  ke e p i n g  th e  ta c k l e  in  th e  wa t e r  if  a  ve s s e l  is  no t   ti e d  up . Sa m e  as  Off s h o r e  Gu e s t   Mo o r i n g s  $0 . 4 7  pe r  Lin e a l  Fo o t    (L F )   Re s o l u t i o n Re n t a l $0 . 4 7 / L F Y e s 33 Ma r i n a  Pa r k  Bo a t  Sl i p s  (4 0 '  Sli p ) B a s e d  on  fa i r  ma r k e t  ra t e  an a l y s i s  $6 0 / N i g h t   $8 0  pe r  Ni g h t   Re s o l u t i o n Re n t a l $8 0 / N i g h t Y e s 34 Ma r i n a  Pa r k  Bo a t  Sl i p s  (5 5 '  Sli p ) B a s e d  on  fa i r  ma r k e t  ra t e  an a l y s i s  $8 2 . 5 0 / N i g h t   $1 1 0  pe r  Nig h t   Re s o l u t i o n Re n t a l $1 1 0 / n i g h t Y e s 35 Ma r i n a  Pa r k  Bo a t  Sl i p s  (O v e r h a n g  Ch a r g e ) B a s e d  on  fa i r  ma r k e t  ra t e  an a l y s i s  $1 . 5 0 / F o o t   $2  pe r  Fo o t   Re s o l u t i o n Re n t a l $2 / F o o t Y e s 36 Mo o r i n g s  ‐   Of f s h o r e p e r  lin e a r  fo o t 3 6 . 1 4 $                                                        36 . 1 4 $                                                        Re s o l u t i o n s  20 1 6 ‐17 Re n t a l Se e  Re s o l u t i o n See  Note C P I  adjustments  occur  separately   37 Mo o r i n g s  ‐   On s h o r e   pe r  lin e a r  fo o t 1 8 . 0 6 $                                                        18 . 0 6 $                                                        Re s o l u t i o n  20 1 6 ‐17 Re n t a l Se e  Re s o l u t i o n See  Note C P I  adjustments  occur  separately   38 Mu l t i ‐hu l l  Ve s s e l  ‐   2  hu l l s B a s e d  on  fa i r  ma r k e t  ra t e  an a l y s i s Sa m e  as  Off s h o r e  Gu e s t   Mo o r i n g s  $1 . 5 0  pe r  Lin e a l  Fo o t    (L F )   Re s o l u t i o n Re n t a l $1 . 5 0 / L F Y e s 39 Mu l t i ‐hu l l  Ve s s e l  ‐   3  hu l l s B a s e d  on  fa i r  ma r k e t  ra t e  an a l y s i s Sa m e  as  Off s h o r e  Gu e s t   Mo o r i n g s  $1 . 7 5  pe r  Lin e a l  Fo o t    (L F )   Re s o l u t i o n Re n t a l $1 . 7 5 / L F Yes 40 Ap a r t m e n t s P e r  mo n t h  (A p a r t m e n t  #6 ) 2 , 4 1 6 . 9 0 $                                            2, 5 0 8 . 2 6 $                                            Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 2, 5 0 8 . 2 6 $                    See  Note C P I  adjustments  occur  separately   41 Ap a r t m e n t s P e r  mo n t h  (A p a r t m e n t s  #5  & #7 ) 2 , 6 8 5 . 4 5 $                                            2, 7 8 6 . 9 6 $                                            Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 2, 7 8 6 . 9 6 $                    See  Note C P I  adjustments  occur  separately   42 Ga r a g e  Re n t a l s P e r  mo n t h 3 5 6 . 1 7 $                                                  36 9 . 6 3 $                                                  Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 36 9 . 6 3 $                          See  Note C P I  adjustments  occur  separately   43 Sl i p  Re n t a l s 2 0 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 2 3 . 0 6 $                                                        24 . 8 1 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 24 . 8 1 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 44 Sl i p  Re n t a l s 2 5 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 2 3 . 4 9 $                                                        26 . 2 6 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 26 . 2 6 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 45 Sl i p  Re n t a l s 3 1 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 2 7 . 0 1 $                                                        27 . 3 1 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 27 . 3 1 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 46 Sl i p  Re n t a l s 3 2 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 2 7 . 4 0 $                                                        27 . 8 0 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 27 . 8 0 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 47 Sl i p  Re n t a l s 3 4 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 2 9 . 5 5 $                                                        31 . 4 5 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 31 . 4 5 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 48 Sl i p  Re n t a l s 3 5 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 3 0 . 4 3 $                                                        31 . 4 5 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 31 . 4 5 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. CO M M U N I T Y  DE V E L O P M E N T  ‐   RE A L  PR O P E R T Y Ba l b o a  Ya c h t  Ba s i n  Sli p / G a r a g e / A p a r t m e n t  Re n t a l s   2 AB C D   EF G H SE R V I C E  NA M E D E S C R I P T I O N T o t a l  or  Ba s e  Fe e T o t a l  or  Ba s e  Fe e R E F E R E N C E T Y P E To t a l  or  Ba s e   Fe e In c r e m e n t a l  ‐   (if   ap p l i c a b l e ) CPI N o t e s At t a c h m e n t  B.  Pr o p o s e d  Re n t  an d  Fe e  Sc h e d u l e  ‐   Up d a t e d 20 1 8  ad j Fu l l  Co s t / M a r k e t  Va l u e Pr o p o s e d  Ch a r g e s Cu r r e n t   Ch a r g e s 49 Sl i p  Re n t a l s 3 7 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 3 0 . 4 3 $                                                        30 . 8 6 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 30 . 8 6 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 50 Sl i p  Re n t a l s 4 0 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 3 3 . 8 4 $                                                        36 . 6 6 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 36 . 6 6 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 51 Sl i p  Re n t a l s 4 5 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 3 6 . 9 4 $                                                        39 . 6 8 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 39 . 6 8 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 52 Sl i p  Re n t a l s 5 0 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 4 2 . 5 7 $                                                        44 . 3 9 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 44 . 3 9 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 53 Sl i p  Re n t a l s 6 0 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 4 9 . 4 2 $                                                        48 . 8 3 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 48 . 8 3 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 54 Sl i p  Re n t a l s 7 5 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 5 0 . 8 8 $                                                        50 . 9 5 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 50 . 9 5 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. Pie r s   55 Co m m e r c i a l Se e  Re s o l u t i o n S e e  Re s o l u t i o n Re s  20 1 2 ‐91 ,  20 1 2 ‐ 92 ,  20 1 2 ‐96 ,  20 1 2 ‐ Re n t a l Se e  Re s o l u t i o n N o 56 Ap a r t m e n t s Pe r  mo n t h  (A p a r t m e n t  #6 ) 2,4 1 6 . 9 0 $                                            2, 5 0 8 . 2 6 $                                            Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 2, 5 0 8 . 2 6 $                    See  Note CPI  adjustments  occur  separately   57 Ap a r t m e n t s Pe r  mo n t h  (A p a r t m e n t s  #5  & #7 ) 2,6 8 5 . 4 5 $                                            2, 7 8 6 . 9 6 $                                            Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 2, 7 8 6 . 9 6 $                    See  Note CPI  adjustments  occur  separately   58 Di n g h y  Ra c k  Re n t a l s  Mo v e d  to  Ha r b o r  De p t L o c a t e d  ov e r  Ti d e l a n d s ;  Pe r  mo n t h ,  pe r  sp a c e 25 . 0 0 $                                                        25 . 0 0 $                                                        Re s o l u t i o n  20 1 5 ‐6 Re n t a l 25 . 0 0 $                                See  Note CPI  adjustments  occur  separately   59 Ga r a g e  Re n t a l s Pe r  mo n t h 35 6 . 1 7 $                                                  36 9 . 6 3 $                                                  Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 36 9 . 6 3 $                          See  Note CPI  adjustments  occur  separately   60 Sl i p  Re n t a l s 20 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 23 . 0 6 $                                                        24 . 8 1 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 24 . 8 1 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 61 Sl i p  Re n t a l s 25 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 23 . 4 9 $                                                        26 . 2 6 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 26 . 2 6 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 62 Sl i p  Re n t a l s 31 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 27 . 0 1 $                                                        27 . 3 1 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 27 . 3 1 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 63 Sl i p  Re n t a l s 32 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 27 . 4 0 $                                                        27 . 8 0 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 27 . 8 0 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. PU B L I C  WO R K S  ‐   HA R B O R  RE S O U R C E S Ba l b o a  Ya c h t  Ba s i n  Sli p / G a r a g e / A p a r t m e n t  Re n t a l s  ‐   Al l  ex c e p t  Din g h y  Re n t a l s  Mo v e d  to  Co m m u n i t y   De v e l o p m e n t  ‐   Re a l  Pr o p e r t y 3 AB C D   EF G H SE R V I C E  NA M E D E S C R I P T I O N T o t a l  or  Ba s e  Fe e T o t a l  or  Ba s e  Fe e R E F E R E N C E T Y P E To t a l  or  Ba s e   Fe e In c r e m e n t a l  ‐   (if   ap p l i c a b l e ) CPI N o t e s At t a c h m e n t  B.  Pr o p o s e d  Re n t  an d  Fe e  Sc h e d u l e  ‐   Up d a t e d 20 1 8  ad j Fu l l  Co s t / M a r k e t  Va l u e Pr o p o s e d  Ch a r g e s Cu r r e n t   Ch a r g e s 64 Sl i p  Re n t a l s 34 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 29 . 5 5 $                                                        31 . 4 5 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 31 . 4 5 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 65 Sl i p  Re n t a l s 35 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 30 . 4 3 $                                                        31 . 4 5 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 31 . 4 5 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 66 Sl i p  Re n t a l s 37 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 30 . 4 3 $                                                        30 . 8 6 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 30 . 8 6 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 67 Sl i p  Re n t a l s 40 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 33 . 8 4 $                                                        36 . 6 6 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 36 . 6 6 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 68 Sl i p  Re n t a l s 45 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 36 . 9 4 $                                                        39 . 6 8 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 39 . 6 8 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 69 Sl i p  Re n t a l s 50 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 42 . 5 7 $                                                        44 . 3 9 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 44 . 3 9 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 70 Sl i p  Re n t a l s 60 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 49 . 4 2 $                                                        48 . 8 3 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 48 . 8 3 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. 71 Sl i p  Re n t a l s 75 '  Sli p  ‐   pe r  fo o t ,  pe r  mo n t h 50 . 8 8 $                                                        50 . 9 5 $                                                        Re s o l u t i o n  20 1 0 ‐ 13 4 Re n t a l 50 . 9 5 $                                NoRate charged  shall  be  the  greater  of  the  slip  or  the  boat. If  the  boat  is  longer  than  the  slip  it  is  in, the  charge  shall  be  based  on  the  slip  price  plus  the  extra  lineal  feet  of  the  boat, at  that  same  slip  rate. Mo o r i n g s  ‐  Mo v e d  to  Ha r b o r  De p a r t m e n t 72 Off s h o r e pe r  lin e a r  fo o t 36 . 1 4 $                                                        36 . 1 4 $                                                        Re s o l u t i o n s  20 1 6 ‐17 Re n t a l Se e  Re s o l u t i o n See  Note CPI  adjustments  occur  separately   73 On s h o r e   pe r  lin e a r  fo o t 18 . 0 6 $                                                        18 . 0 6 $                                                        Re s o l u t i o n  20 1 6 ‐17 Re n t a l Se e  Re s o l u t i o n See  Note CPI  adjustments  occur  separately   Pie r s   74 Co m m e r c i a l  Mo v e d  to  Co m m u n i t y  De v e l o p m e n t  ‐   Re a l  Pr o p e r t y S e e  Re s o l u t i o n Se e  Re s o l u t i o n Re s  20 1 2 ‐91 ,  20 1 2 ‐ 92 ,  20 1 2 ‐96 ,  20 1 2 ‐ Re n t a l Se e  Re s o l u t i o n No 75 Re s i d e n t i a l Se e  Re s o l u t i o n S e e  Re s o l u t i o n Re s o l u t i o n  20 1 5 ‐10 Re n t a l Se e  Re s o l u t i o n N o Pla n  Re v i e w 76 Ap p e a l  He a r i n g F i l l i n g  Fe e  fo r  Ap p e a l s  ‐   ch a r g e d  ho u r l y . s e e  no t e s s e e  no t e s M . C . 1 7 . 6 5 . 0 3 0 CO S ‐Fe e Ho u r l y Y e s 1 0 0 %  Loaded  Hourly  Rate  (see  appendix) 77 Ap p e a l  of  Le a s e / P e r m i t  un d e r  Se c t i o n  17 . 6 0 . 0 8 0 1 0 0 . 0 0 $                                                  10 0 . 0 0 $                                                  M. C . 1 7 . 6 0 . 0 8 0 CO S ‐Fe e Ho u r l y Y e s $ 1 0 0  Recovery  per  M.C. 3.36.030  Exhibit  A 78 Liv e  Ab o a r d  Pe r m i t s  De l e t e ,  St u d i e d  un d e r   Ha r b o r  De p t A n n u a l  Pe r m i t  Fe e 31 7 . 0 0 $                                                  33 8 . 0 0 $                                                  M.C .  17 . 4 0 . 0 4 0 CO S ‐Fe e 33 8 . 8 9 $                          Yes 79 Ma r i n e  Ac t i v i t i e s  Pe r m i t  ‐  in i t i a l  De l e t e ,  St u d i e d   un d e r  Ha r b o r  De p t 68 6 . 0 0 $                                                  73 1 . 0 0 $                                                  17 . 1 0 . 0 4 0 CO S ‐Fe e 73 1 . 8 2 $                          Yes 80 Ma r i n e  Ac t i v i t i e s  Pe r m i t  ‐  re n e w a l  De l e t e ,   St u d i e d  un d e r  Ha r b o r  De p t 20 3 . 0 0 $                                                  21 6 . 0 0 $                                                  17 . 1 0 . 0 4 0 CO S ‐Fe e 21 6 . 9 2 $                          Yes 81 Pie r  Pe r m i t  Tr a n s f e r C o m m e r c i a l  an d  no n  co m m e r c i a l  pie r s 2 3 4 . 0 0 $                                                  25 0 . 0 0 $                                                  M.C . 1 7 . 6 0 . 0 2 0 ( D ) CO S ‐Fe e 25 0 . 0 3 $                          Yes 4 AB C D   EF G H SE R V I C E  NA M E D E S C R I P T I O N T o t a l  or  Ba s e  Fe e T o t a l  or  Ba s e  Fe e R E F E R E N C E T Y P E To t a l  or  Ba s e   Fe e In c r e m e n t a l  ‐   (if   ap p l i c a b l e ) CPI N o t e s At t a c h m e n t  B.  Pr o p o s e d  Re n t  an d  Fe e  Sc h e d u l e  ‐   Up d a t e d 20 1 8  ad j Fu l l  Co s t / M a r k e t  Va l u e Pr o p o s e d  Ch a r g e s Cu r r e n t   Ch a r g e s 82 Pla n  Ch e c k  Fe e N e w  Co n s t r u c t i o n  w/  Ag e n c y  Ap p r o v a l 5 2 3 . 0 0 $                                                  55 7 . 0 0 $                                                  M.C .  17 . 5 0 . 0 2 0 ( D ) CO S ‐Fe e 55 7 . 9 4 $                          Yes 83 Pla n  Ch e c k  Fe e M a i n t e n a n c e 1 2 3 . 0 0 $                                                  13 1 . 0 0 $                                                  M.C .  17 . 5 0 . 0 2 0 ( D ) CO S ‐Fe e 13 1 . 2 1 $                          Yes 84 RG P  Dr e d g i n g  Pe r m i t 1,7 0 7 . 0 0 $                                            1, 8 2 1 . 0 0 $                                            M.C .  17 . 5 5 . 0 2 0 ( D ) CO S ‐Fe e 1, 8 2 1 . 1 6 $                    Yes 85 Wa i t  Lis t  fo r  Ba l b o a  Ya c h t  Ba s i n  De l e t e ,  St u d i e d   un d e r  Ha r b o r  De p t S l i p s  an d  Ga r a g e s 35 . 0 0 $                                                        38 . 0 0 $                                                        M. C .  3.3 6 . 0 3 0 CO S ‐Fe e 38 . 1 5 $                                Yes 86 Wa i t  Lis t  fo r  Liv e  ab o a r d  De l e t e ,  St u d i e d  un d e r   Ha r b o r  De p t 35 . 0 0 $                                                        38 . 0 0 $                                                        M.C .  17 . 4 0 . 1 1 0  (b ) CO S ‐Fe e 38 . 1 5 $                                Yes Fe e s  an d  ch a r g e s  to  be  ap p r o v e d  by  Co u n c i l 5 11/29/2018 1 Harbor Department Fees and Select Rents Finance Committee Meeting November 29, 2018 BACKGROUND •July 1, 2017 – City Managing Harbor Operations •Fee study analysis – MGT of America •Fair market value of select rents - Netzer& Associates •August 8, 2018 – Fees and Rents to Harbor Commission •Unanimous Recommendation of Updates, with minor changes 11/29/2018 2 HARBOR FEES •Harbor Commission Change •Removed Lend a Mooring Line/Help to Get on a Mooring •Schedule of Rents, Fines, and Fees (SRFF) Changes •Cleanup - (Renamed, Deleted, Moved Fees) •Studied •Schedule of Rents, Fines, and Fees (SRFF) ChangesCurrent Proposed Balboa Yacht Basin (BYB) Slips and Garages Waitlist fee $38 $27 BYB and Marina Park (MP) Dinghy Racks Waitlist fee $38 $23 Live Aboard Waitlist fee $38 $5 HARBOR RENTS – MP SLIPS, DINGHY RACKS AND STORAGE Type Current Rate Proposed Rate 40’ Boat Slip $60/night $80/night 55’ Boat Slip $82.50/night $110/night Overhang Charge $1.50/LF/night $2.00/LF/night Dinghy Rack Rental -BYB & Marina Park $25/month $35/month Dinghy Storage $50/Night $0.625/LF/night 11/29/2018 3 HARBOR RENTS – GUEST/TRANSIENT MOORINGS Type Current Rate Proposed Rate (per Lineal Foot) City-owned Guest Mooring – Offshore $27/night $1.25/LF/night Sub-Permittee Guest Mooring – Offshore -May-October -November-April $27/night $16/night $1.25/LF/night year round Sub-Permittee Guest Mooring – Onshore -Year Round $11/night $0.625/LF/night year round Multi-Hull Vessel -2 Hull -3 Hull Same as offshore guest mooring $1.50/LF/night $1.75/LF/night Mooring – Large Vessel (80+ LF) Same as offshore mooring, prorated $1.55/LF/night Mooring – Large Vessel Tackle Only Same as offshore mooring, prorated $0.47/LF/night *Rates to be adjusted annually by change in Consumer Price Index (CPI) FISCAL IMPACT FY16‐17  Actual FY17‐18  Actual Proposed  Annual Variance  from FY18 Guest Moorings 179,080$ 214,239$ 588,000$ 373,761$  Marina Park Slips 133,461$ 208,407$ 277,000$ 68,593$    New Fees N/A N/A 16,000$   16,000$    458,354$  Total potential revenue increase  11/29/2018 4 Harbor Department Fees and Select Rents Finance Committee Meeting November 29, 2018 CONCLUSION AND QUESTIONS 11/20/18 Thursday, November 29, 2018 Preliminary Pension Funding Recommendation - Fiscal Year 2019-2020 Staff and consultant(s) will summarize the funded status, required contributions as of the latest valuations, June 30, 2017, and provide preliminary funding recommendations for CalPERS pension plans for Fiscal Year 2019/20. Consideration of Harbor Fees for the New Harbor Department and Select Rents The Harbor Commission reviewed, and recommended for Council adoption, updates to harbor fees and changes to select fair-market rent categories. Staff will summarize the various updates for Committee input. Work Plan Review Discuss Items for Future Agendas Thursday, December 13, 2018 Contracting Policy Limits Review allowable approval thresholds in the Authority to Contract Policy F-14. Review of Select City Council Financial Policies Finance Committee will review and recommended revisions to select City Council financial policies. Subcommittee Policy Recommendations Reserve for Subcommittee recommendations on Council finance policies. City of Newport Beach Finance Committee Work Plan 2018/19 November December