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HomeMy WebLinkAboutFinance Committee - February 14, 2019CITY OF NEWPORT BEACH FINANCE COMMITTEE AGENDA - Final 100 Civic Center Drive - Crystal Cove Conference Room, Bay 2D Thursday, February 14, 2019 - 3:00 PM Finance Committee Members: Will O'Neill, Chair / Mayor Pro Tem Diane Dixon, Mayor Joy Brenner, Council Member William Collopy, Committee Member Joe Stapleton, Committee Member Larry Tucker, Committee Member VACANT, Committee Member Staff Members: Grace K. Leung, 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 February 14, 2019 Page 2 Finance Committee Meeting MINUTES OF JANUARY 17, 2019A. Recommended Action: Approve and file. DRAFT MINUTES 011719 V.CURRENT BUSINESS HARBOR AND BEACHES MASTER PLAN UPDATEA. Summary: The Finance Committee is charged with a variety of tasks including, but not limited to, reviewing with staff on an annual basis the timing, means of financing, and fiscal impacts associated with funding the high-priority projects designated in the Facilities Financing Plan (FFP) and the Harbor and Beaches Master Plan (HBMP). Staff welcomes input and recommends that the Committee receive and file the attached HBMP update and provide staff any input regarding its financial solvency. Recommended Action: Staff welcomes input and recommends that the Committee receive and file the attached HBMP update and provide staff with any input regarding its financial solvency. STAFF REPORT ATTACHMENT A FACILITIES FINANCIAL PLAN UPDATEB. Summary: The Finance Committee is charged with a variety of tasks including, but not limited to, reviewing with staff on an annual basis the timing, means of financing, and fiscal impacts associated with funding the high-priority projects designated in the Facilities Financing Plan (FFP). Staff welcomes input and recommends that the Committee receive and file the attached FFP update and provide staff any input regarding its financial solvency. Recommended Action: Staff welcomes input and recommends that the Committee receive and file the attached FFP update and provide staff with any input regarding its financial solvency. STAFF REPORT ATTACHMENT A February 14, 2019 Page 3 Finance Committee Meeting LONG-RANGE FINANCIAL FORECAST (LRFF)C. Summary: Staff will provide an update to the latest version of the LRFF. Recommended Action: Receive and file. WORK PLAN REVIEWD. Summary: Staff will review with the Committee the 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 January 17, 2019   Page 1 of 9 CITY OF NEWPORT BEACH FINANCE COMMITTEE JANUARY 17, 2019 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:00 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, Mayor Diane Dixon, Council Member Joy Brenner, Committee Member William Collopy, Committee Member Joe Stapleton and Committee Member Larry Tucker ABSENT: Committee Member (VACANT POSITION) STAFF PRESENT: City Manager Grace K. Leung, Finance Director/Treasurer Dan Matusiewicz, Deputy Director/Finance Steve Montano, Real Property Administrator/Community Development Lauren Wooding-Whitlinger, Senior Accountant/Finance Theresa Schweitzer, Senior Accountant/Finance Trevor Power, Accountant/Finance, Jeremiah Lim, Administrative Specialist to the Finance Director Marlene Burns, Administrative Manager/PW Finance Jamie Copeland, Budget Manager/Finance Susan Giangrande, Accounting Manager/Finance Rukshana Virany, and Budget Analyst/Finance Jason Loya OTHER ENTITIES: Ellen Clark, Multi-Asset Class Specialist, PFM Asset Management LLC and Kerry Worgan, Supervising Pension Actuary, CalPERS MEMBERS OF THE PUBLIC: Jim Mosher and Carl Cassidy III. PUBLIC COMMENTS Chair O’Neill opened public comments. Jim Mosher addressed the Committee regarding City Council Policy F-14 and noted it still has not gone to City Council for their final approval. He clarified while the City Manager has the authority to approve contracts up to $120,000; City Charter Section 1110 states contracts for public works that exceed $120,000 in total expenditures must be awarded through a formal bidding process. Mr. Mosher also advised that City Charter updates have changed the amount over the years, noted state limits have changed to $200,000 and feels that the City Charter is out-of-step with the state. He also clarified the dollar amount of $120,000 for the City Manager and City Council, respectively, to enter into contracts are not tied to one another. Mr. Mosher expressed concerns about previous discussion of authorizing the Human Resources Director to settle claims up to $75,000. He referenced the claims procedure in the City Charter states all claims will be filed according to state law and that they are settled by ordinance and noted that he could not find a procedure for settling claims. He referenced state law and noted it states claim settlement lies with the City Council. He expressed concern with having staff settle claims without City Council oversight. Lastly, Mr. Mosher noted that many City policies rely on administrative policies to flesh out details and requests transparency for the public, so they have an opportunity to review administrative policies. Finance Committee Meeting Minutes January 17, 2019   Page 2 of 9 Committee Member Tucker expressed concern regarding the scope and budget amount of the General Plan update. He questioned how much of the General Plan requires updating and hopes that the process is bifurcated so the initial focus can be on what the public feels needs updating in order for the update to be strategic. 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 DECEMBER 13, 2018 Recommended Action: Approve and file. MOTION: Committee Member Stapleton moved, and Mayor Dixon seconded, to approve the minutes. The motion carried 5 ayes – 0 noes, 1 abstention (Brenner) and 1 Committee Member position vacant. V. CURRENT BUSINESS A. COUNCIL POLICY F-7, INCOME PROPERTY, REVIEW Summary: A subcommittee of the Finance Committee was appointed to review and recommend changes if deemed necessary to select financial policies. In continuation from the December 13, 2018, meeting, the subcommittee working with staff has made additional edits to Council Policy F-7, Income Property, in order to align policy with current practice. Recommended Action: Review the draft changes to Council Policy F-7, Income Property, and recommend further changes as needed for submission to the City Council for final approval. Chair O’Neill introduced this matter. There were no inquiries from members of the Committee. Chair O’Neill opened public comments. Jim Mosher found the title confusing and suggested the title of “Income from City Property.” Noting there were no other members of the public who elected to speak on this item, Chair O’Neill closed public comments. Chair O’Neill thanked Committee Members Stapleton and Tucker for their work on this item. MOTION: Chair O’Neill moved, and Committee Member Stapleton seconded, to recommend approval for submission to City Council. The motion carried 5 ayes – 0 noes and 1 Committee Member position vacant. Chair O’Neill noted that this item would likely be on the February 12, 2019, City Council meeting agenda and the subcommittee would be disbanded at this time. B. PENSION ACCRUED LIABILITY BASICS Summary: The City’s CalPERS actuary, Kerry Worgan, will present the major components, assumptions and plan experience considered during the development of the pension-accrued liability. Recommended Action: Receive and file. Finance Director/Treasurer Dan Matusiewicz introduced Kerry Worgan, Supervising Pension Actuary, CalPERS. Finance Committee Meeting Minutes January 17, 2019   Page 3 of 9 Mr. Worgan presented on the topic of Pension Accrued Liability. He advised accrued funding liability is calculated based on the present value of projected benefits payment and based on a number of assumptions, which can include salary growth, termination, death, retirement age, mortality and inflation. In addition to the present value of all the project benefit payments, CalPERS also reviews the projected value of the employer and employee contributions. The discount rate is set to be representative of the expected future investment return and is based on short-term capital market assumptions over the next ten years derived from forecasts from the eight to ten financial advisors that CalPERS uses. Mr. Worgan clarified the future investment return is set equal to the discount rate in response to Committee Member Tucker’s inquiry. He also advised the 7% discount rate is split slightly because the short-term capital market assumption was 6.2% and the long-term was 8.3% that gives a present value of a 7% per year discount rate. Mr. Worgan clarified CalPERS goes through an asset liability review every four years to determine the discount rate per Committee Member Collopy’s inquiry. He also noted it takes 9 to 10 months to go through the review to determine the number so determining the discount rate annually would be difficult but did advise a mid-cycle review happens every two years they will look at the market to determine if the rate is significantly different than when the initial review was completed. Lastly, he noted if a significant difference is found, the board can recommend a change, as was most recently changed from 7.5% to 7% because of this mid-cycle review. Finance Director/Treasurer Matusiewicz advised that in November 2015 CalPERS put an additional risk mitigation policy in place for “if and when” CalPERS beats the expected rate of return by a certain percentage, they will continue to reduce the discount rate further to a target rate all the way down to 6%. However, the policy can be implemented at the CalPERS Board’s discretion. He also noted regardless of whether CalPERS lowers the discount rate, CalPERS consultants believe the returns will average only 6.2% and the City may see losses, which will disrupt the funding plan a bit. Mr. Worgan believes the discount rate will stay tied to 7% and there could be an adjustment in June 30, 2019, but he believes it will stay at 7%. Mr. Worgan presented examples of benefit payments based on different assumptions to the Committee. He also noted these are estimates and there can be gains or losses yearly. Mr. Worgan spoke about recent change of the discount rate from 7.5% to 7% and noted the June 30, 2019, valuation will generate the City’s expense for fiscal year 2020. Committee Member Collopy inquired if the discount rate is an arithmetically derived number to which Mr. Worgan responded it is initially. Mr. Worgan referred to the risk mitigation policy and advised in a risk mitigation event, the rate should be lowered by five basis points that is subject to CalPERS Board (Board) approval on a yearly basis. Committee Member Collopy stated it feels like the stakeholders have no rights and the Board should be doing what is right. Mr. Worgan stated that historically, the Board would do what is right as their fiduciary responsibility is to the system. Finance Director/Treasurer Matusiewicz noted that there are 15 members of the CalPERS Board and some are elected officials. Chair O’Neill opened public comments. Carl Cassidy inquired about the assumptions related to the mortality rate. Mr. Worgan advised it is a calculation based on the last historical mortality rates of every age and gender and they do a comparison against the national mortality improvement scale to determine the rate. He also stated that the most recent mortality table used was from 2016. There have been two that have been released since then; however, the mortality improvement is much lower. He advised it is continually monitored and evaluated. Finance Committee Meeting Minutes January 17, 2019   Page 4 of 9 Mr. Cassidy noted there are two numbers from the City’s financial statements, one of which is the CalPERS valuation and one that is the Governmental Accounting Standards Board (GASB) and asked Mr. Worgan to elaborate further. Mr. Worgan advised that GASB has slightly different reporting and has a fifteen-point difference based on the way expenses are handled which accounts for the slightly different number. Chair O’Neill noted it takes about two years to go from the valuation to the actual bill and the City ends up paying interest on the two-year lag. The City is now paying a discretionary amount in order to avoid interest and inquired how many other agencies also utilize that practice. Mr. Worgan advised that 260 agencies are employing this practice out of 1800. In response to Committee Member Collopy’s inquiry, Finance Director/Treasurer Matusiewicz advised agencies may include organizations other than cities and they may be making discretionary payments for different reasons. He elaborated other agencies may make discretionary payments instead of just paying the minimum payment as they may not know what their bill amount may be, unlike the City of Newport Beach. Mr. Worgan advised an experience study was completed in 2017 and a new one would be completed in 2021. He also noted that because of the lag, it was reflected in the June 30, 2017, valuation that the City would start paying in 2019-2020. Mr. Worgan provided an update on the amortization schedule impact, which is an additional $11 million on the miscellaneous side and an additional $15 million on the safety side. This was reflected in the June 30, 2018, valuation. Finance Director/Treasurer Matusiewicz advised the required contributions growth payment to CalPERS is close to $50 million, less employee contributions. Mr. Worgan demonstrated a prototype tool to the Committee and advised it gives the City the ability to project for the next thirty years and see the impact on rates and funding status. He provided an example using the miscellaneous plan in which it was fully funded by 2033 or 2034 based on different investment scenarios. Committee Member Collopy asked for a demonstration of the tool that projects the next three years for budgetary purposes. Mr. Worgan advised there are many scenarios, which can be explored; however, they cannot predict what the market will do. He advised typically, the market trends go up and down and then the market corrects itself. Mr. Worgan advised that he also built Additional Discretionary Payments (ADP) into the tool to show what an ADP can do to lower contributions. He noted that modeling can be completed with the tool and only one-payment is currently built in; however, it can be changed based on multiple payments in response to City Manager Leung’s inquiry. Finance Director/Treasurer Matusiewicz pointed out this model keeps the discount rate the same and keeps incurring losses less than the expected return. He noted, as an example, if the City wants to fund at 6% return it would mean that the pensions would be underfunded by $20 million per year for at least the first 20 years because the City would first need to pay-off the $150 million of unfunded liability associated with the reduction of the discount rate plus the increase of normal costs. Mr. Worgan pointed out that the City is in a unique position due to its participation in the “Fresh Start” plan and has credits sitting on the amortization sheet. He ran the tool through the example of what the plan would need to earn in order to be fully funded in the next 20 years. According to the tool, the plan would need to earn 6.86% without ADP in order to fully fund in 20 years. Mr. Worgan advised he could add additional ADP payments to the tool. Finance Committee Meeting Minutes January 17, 2019   Page 5 of 9 Committee Member Collopy stated according to the tool, the plan could suffer a ½ point degradation in the investment return and City would not lose any money because of the ADP payment. In response to Mayor Dixon’s inquiry, Mr. Worgan advised he liked what the City was doing in regard to ADP and advised the cities of Stockton and Santa Monica were as aggressive in their approach. Committee Member Tucker inquired why the City would not use the overall discount number calculated based on a scientific approach and ignore what the Board is using based on agencies’ complaints. Mr. Worgan responded they recommend different sets of portfolio allocations with the investment office and showed them the level of risk in conjunction with the discounted rate. He advised the plan needs to weigh risk versus cost and, as an example, CalPERS could lower the discounted rate to 5% but many cities would go into bankruptcy, so the Board needs to do what is best for the system. Committee Member Tucker stated that the Committee’s primary focus is the City and they are trying to right-size the number to be used. He would like to know what number would be more realistic. Mr. Worgan noted this is an unusual economic time period and bond yields and interest rates are down and the assumptions are that this will continue for 10 years. However, he believes it will normalize in somewhere between 6 and 7 years. If CalPERS set the discount rate to 6% and the plan earns 7% or 8%, the money could not be refunded, and the employees would have overpaid. He stated it is a delicate balance between conservative and aggressive approaches. Mr. Worgan advised the former Chief Actuary wanted to de-risk the portfolio to a 50/50 (equity vs. bonds) or 40/60 blend. Mr. Worgan further noted if the plan were to be around for 100 to 200 years, he would fund with a focus on an equity base that is sustainable for the long-term. Finance Director/Treasurer Matusiewicz stated that the goal is to determine how to fund the plan for the next 10 years. He believes the City may want to look at funding at a lower assumed investment return rate. Committee Member Collopy stated it is a slippery slope and the City needs to stay with CalPERS and look at additional budget contribution levels. Mr. Worgan continued with his presentation and expressed confidence in a 7% return on investment for the long-term. Committee Member Stapleton affirmed this approach makes sense. Committee Member Collopy stated that he felt the tool was very powerful and hoped that it could be made available as soon as possible. Committee Member Tucker inquired as to how the numbers are derived for employee salary growth assumptions. Mr. Worgan advised they run the numbers based on past employee history and those assumptions can be wrong. He also advised 80% to 90% of the number for experienced gains and losses come from the investment side and 10% is from the demographic side. He also advised gains and losses tend to offset each other. Finance Director/Treasurer Matusiewicz advised two years lie between each valuation and a 5-year ramp up for smoothing to soften the impact on the budget; however, the City is subject to higher interest cost during ramp up periods. Finance Committee Meeting Minutes January 17, 2019   Page 6 of 9 In response to Mayor Dixon’s inquiry regarding the two-year lag time, Mr. Worgan advised it takes a certain amount of time to prepare for the next valuation for 3,000 to 4,000 plans. Chair O’Neill opened public comments. Jim Mosher stated this complicated conversation could be avoided if the City participated in defined-contribution plans. Carl Cassidy stated it would be helpful if the public knew what the real internal rate of return is in comparison to the City’s growth from property tax and sales tax. Finance Director/Treasurer Matusiewicz responded it is the comparison the City is looking for and it would be great if CalPERS actually earns 7%. He also advised that the primary focus for the City is liquidity; however, the interest rates have been terrible. New money interest rates are looking better. Noting there were no other members of the public who elected to speak on this item, Chair O’Neill closed public comments. There was no further action taken on this item. C. SECTION 115 DISCUSSION Summary: An investment advisor and major provider of Section 115 pension prefunding trusts, PFM, will discuss the pros and cons; risks and benefits; and other considerations when considering the establishment of a Section 115 pension benefit trust. Recommended Action: Recommend a subcommittee further investigate the merits of a Section 115 prefunding trust and or receive and file. Ellen Clark, Multi-Asset Class Specialist, PFM Asset Management LLC, introduced herself to the Committee and advised that she works primarily with pension plans and Other Post- Employment Benefits (OPEB) trusts and endowment foundations and they have a full universe of investments to choose from to structure a portfolio. Ms. Clark compared an operating portfolio versus the opportunity to invest as CalPERS does. She indicated that with an operating portfolio, the City is restricted by California Government Code 53601, which is short-term, high-quality fixed income. Ms. Clark indicated that with the operating cash, the City would need to earn a real rate of return higher than 2% to have real buying power and that has not been possible the last 8 years. The money is designed for short- term funds to be available for operating expenses in the near future and the total return potential is limited to what those securities provide. Ms. Clark indicated that with a Section 115 Trust, the City would not be limited to short-term, high-quality fixed-income investments and the portfolio could be diversified with stocks and longer-term bonds that would give the portfolio a better return. If the City needed money to address a problem, the example being able to mitigate the volatility or the increase that the City would experience in its CalPERS contribution, the money could be set aside in an in-service fund within the operating portfolio; however, it can be repurposed at any time and its only investment opportunity is that of short-term fixed income. Ms. Clark noted with a Section 115 Trust established, the City would be dedicating those funds to a particular problem such as pension, OPEB, etc., and the City is obligated to use those assets for that specific purpose. Ms. Clark stated the only reason to invest in a Section 115 Trust is if the City has the ability to take on a long-term time horizon approach. Finance Committee Meeting Minutes January 17, 2019   Page 7 of 9 Ms. Clark advised the reason to consider a Section 115 Trust is to have access to a universe of investments that provides the City with diversification benefits and the potential for higher returns. However, there is always the risk of lower returns. She advised the return on the Section 115 Trust for OPEB are down to 5-6% over the calendar year and last year was not a great year. She further advised a Section 115 Trust allows the City an opportunity for a budgetary control tool, which allows it to earn more than cash. She did confirm there are higher management fees to invest in a Section 115 Trust. Ms. Clark advised over time a diversified portfolio is going to give the City a lot more return and provided examples of investments. In the last three years, there have been significantly positive returns exceeding the operating portfolio. Ms. Clark presented the five-year rolling returns and advised CalPERS is managing money for the long-term and noted there is risk in the equity markets. She advised Domestic Equity has given a return of 9.78%, Aggregate Fixed Income a return of 5.11%, and the U.S. Inflation has been at 3.04% over the last five years. She feels a broad mixed-use portfolio should give a 2.8% rate of return and the stock market portfolio should give a 5-6% rate of return. Lastly, Ms. Clark spoke about the Fixed Income market and feels that it will not sustain where it is today. She suggests Fixed Income will have modest returns moving forward. Ms. Clark suggested the City have an oversight committee, should it choose to invest in a Section 115 Trust, and suggested the City have fiduciary partners within the structure. PFM only interacts with the trustee bank to advise on the investment and they never touch the assets. Ms. Clark advised they typically see a three-member staff committee providing oversight and making decisions for the benefit of the entity. She feels what is important is there is some type of oversight committee that communicates the strategy to PFM. PFM typically prepares an Investment Policy Statement in collaboration with the City and it is effectively their job description. Ms. Clark prepared an example using PFM’s 5-year projection portfolio and advised that they are renewed annually. Ms. Clark also presented three diversified portfolios and explained what the expected return on the portfolio would be for each. Committee Member Collopy inquired why Government Code standards are not required for a Section 115 Trust. Ms. Clark advised it is because the City is putting the money in for an essential governmental purpose that is funding a long-term obligation. It gives the City the flexibility to go outside of Government Code Section 53601. In response to Committee Member Tucker’s inquiry, Ms. Clark advised these portfolio projections were gross of management fees. Ms. Clark also presented three diversified portfolios and what the expected return on the portfolio would be for each. For the short-term portfolio, PFM is expecting a 3% rate of return over the next five years. If a portfolio runs with 20% stock and 80% broad fixed income, PFM expects a rate of return of 4% over the next five years. If a portfolio runs at a 40% stock and 60% broad fixed income, they would expect a 5% rate of return over the next five years. Ms. Clark advised that entering into a Section 115 Trust is like using a budgetary control tool similar to over-paying on a long-term mortgage payment. If the City is not worried about making the payments, then making the payments to CalPERS may be the right option. Chair O’Neill advised the City has $50 million as a reserve. He advised the City recently completed a reserve study to determine if it is an appropriate reserve. He noted part of the analysis was to determine if a certain amount of money, for example, $10 million, was placed in a trust, how long would it take to earn enough to have enough money to fund CalPERS. Ms. Clark advised it would take a while to turn $10 million into $50 million. Finance Committee Meeting Minutes January 17, 2019   Page 8 of 9 Committee Member Collopy advised the City is taking $9 million and adding it to the CalPERS contribution. He advised the City has $50 million in unencumbered reserves. He wants to take $10 million of the reserve and place it in a Section 115 Trust and in three to four years the City could exhaust it and use that as the additional payment to CalPERS. He is concerned that the portfolio lost 5% last year and does not feel the City Council could tolerate the backlash from the public. Chair O’Neill advised one of the recommended actions on this item could be to create a subcommittee to further review and make recommendations. Committee Collopy suggested the City Manager and staff review the item and make recommendations to the Committee for their review. Committee Member Dixon thanked Ms. Clark for making the presentation and believes this can be a good repository for monies the City does not need immediately, and it can be a backup for bad economic times; however, notes it needs further review by staff in the context of the City of Newport Beach investment strategies. Committee Member Tucker believes the City Council needs to review this item and there is a Section 115 Trust for OPEB because there is not really anywhere else to put it. He sees other agencies have chosen to handle it this way, but they may not have the same unfunded liabilities as Newport Beach has and he does not see a compelling reason to enter into a Section 115 Trust. Committee Member Collopy believes the City has a disciplined City Council that is transparent enough and does not feel the money needs to be set aside unnecessarily. Ms. Clark did note that she is a fan of dollar cost averaging and asked the Committee to keep that in mind. She also noted it is a tool to have more of the City’s money work for the City. Chair O’Neill opened public comments. Carl Cassidy thanked Ms. Clark for an excellent presentation. Noting there were no other members of the public who elected to speak on this item, Chair O’Neill closed public comments. There was no further action taken on this item. D. BUDGET AMENDMENTS (QUARTER ENDED DECEMBER 31, 2018) Summary: Receive and file a staff report on the budget amendments for the prior quarter. Recommended Action: Receive and file. In reference to the revised name for the budget “checklist,” Deputy Director/Finance Steve Montano inquired whether the Committee preferred “Proposed Budget Revision (PBR)” or “Proposed Budget Modification (PBM).” The Committee selected, by consensus, the title “Proposed Budget Revision (PBR).” 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. There was no further action taken on this item. Finance Committee Meeting Minutes January 17, 2019   Page 9 of 9 E. WORK PLAN REVIEW Summary: Staff will review with the Committee the agenda topics scheduled for the remainder of the calendar year. Recommended Action: Receive and file. 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. 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) Chair O’Neill reminded the Committee that Beacon Economics will provide a high-level economic outlook and local revenue forecast for the City at the next City Council meeting on January 22, 2019. ADJOURNMENT The Finance Committee adjourned at 5:03 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 January 11, 2019, at 12:44 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 Finance Committee Meeting Minutes January 17, 2019 Page 8 of 9 Committee Member Collopy advised the City is taking $9 million and adding it to the CalPERS contribution. He advised the City has $50 million in unencumbered reserves. He wants to take $10 million of the reserve and place it in a Section 115 Trust and in three to four years the City could exhaust it and use that as the additional payment to CalPERS. He is concerned that the portfolio lost 5% last year and does not feel the City Council could tolerate the backlash from the public. Chair O’Neill advised one of the recommended actions on this item could be to create a subcommittee to further review and make recommendations. Committee Collopy suggested the City Manager and staff review the item and make recommendations to the Committee for their review. Committee Member Dixon thanked Ms. Clark for making the presentation and believes this can be a good repository for monies the City does not need immediately, and it can be a backup for bad economic times; however, notes it needs further review by staff in the context of the City of Newport Beach investment strategies. Committee Member Tucker explained that the City hasbelieves the City Council needs to review this item and there is a Section 115 Trust for OPEB because there is not another mechanism to set aside money that will be due for post-employment benefits. not really anywhere else to put it. He also noted that whilesees other agencies have chosen to create 115 Trustshandle it this way, but they may not have a similar level ofthe same unfunded liabilities as Newport Beach has. and Accordingly, at this point, Committee Member Tuckerhe does not see a compelling reason to establishenter into a Section 115 Trust, but is willing to hear more about the topic later. Committee Member Collopy believes the City has a disciplined City Council that is transparent enough and does not feel the money needs to be set aside unnecessarily. Ms. Clark did note that she is a fan of dollar cost averaging and asked the Committee to keep that in mind. She also noted it is a tool to have more of the City’s money work for the City. Chair O’Neill opened public comments. Carl Cassidy thanked Ms. Clark for an excellent presentation. Noting there were no other members of the public who elected to speak on this item, Chair O’Neill closed public comments. There was no further action taken on this item. D. BUDGET AMENDMENTS (QUARTER ENDED DECEMBER 31, 2018) Summary: Receive and file a staff report on the budget amendments for the prior quarter. Recommended Action: Receive and file. In reference to the revised name for the budget “checklist,” Deputy Director/Finance Steve Montano inquired whether the Committee preferred “Proposed Budget Revision (PBR)” or “Proposed Budget Modification (PBM).” The Committee selected, by consensus, the title “Proposed Budget Revision (PBR).” 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. CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Agenda Item No. 5A February 14, 2019 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE FROM: Dan Matusiewicz, Finance Director 949-644-3123 or danm@newportbeachca.gov SUBJECT: HARBOR AND BEACHES MASTER PLAN UPDATE SUMMARY: The Finance Committee is charged with a variety of tasks including, but not limited to, reviewing with staff on an annual basis the timing, means of financing, and fiscal impacts associated with funding the high-priority projects designated in the Facilities Financing Plan (FFP) and the Harbor and Beaches Master Plan (HBMP). Staff welcomes input and recommends that the Committee receive and file the attached HBMP update and provide staff with any input regarding its financial solvency. RECOMMENDED ACTION: Staff welcomes input and recommends that the Committee receive and file the attached HBMP update and provide staff any input regarding its financial solvency. DISCUSSION: Each year, as part of the budget process, staff prepares an update to the long-term HBMP. Staff has projected the timing, means of financing, and fiscal impacts associated with funding the high-priority projects in the HBMP as recommended by the Harbor Commission. The Harbor Commission reviewed and approved the HBMP on January 9, 2019. Harbor and Beaches Master Plan Update February 14, 2019 Page 2 Prepared and Submitted by: /s/ Steve Montano _____________________________ Steve Montano Deputy Finance Director Attachment: A. Harbor and Beaches Master Plan ATTACHMENT A HARBOR AND BEACHES MASTER PLAN HARBOR & BEACHES MASTER PLAN DASHBOARD TRUE Updated:2/8/2019 1 2 3 4 5 6 $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 Harbor and Beaches Master Plan Funding Balance $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 Project Expenditures 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 Debt Service as % of Dedicated Revenues Debt Service - as % of Revenues $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 20 4 7 All Estimated Revenue Sources Grants Periodic GF or One-time Transfers General Fund Contributions Interest Earnings Incremental Revenue Projection Bulkhead, $156.9, 81% Drain, $0.0, 0% Dredging, $11.7, 6% Gate Valves, $4.3, 2% Other, $5.6, 3% Piers, $4.2, 2% Slips, $9.7, 5% Water Quality, $0.6, 1% Bay, $0.1, 0% Expenditures by Type (millions) With external contributions (grants) as indicated on project list Increment Revenue, $155 , 37% General Fund Contributions, $207 , 50% Periodic General Fund Contributions or One-Time Transfers, $2 , 0% Grants, $53 , 13% Revenues by Type (millions) I:\Users\FIN\Shared\Admin\Finance Committee\REPORTS\2019\021419\HBMP\ATTACHMENT\Harbor and Beaches Capital Planning v2019_01_14 1 of 4 Ref #ProjGL Project Category YR Built Last Refurb. Units Measurement Total Units Today's Unit Cost Current Age: Useful Life Years to Start Project Estimate FY Design Start Year FY Const Start Year FV Cost Est @2.5% Growth External Contributions Net Proposed Cost 1 Arches Drain: Dry Weather Diversion Drain 2017 0 LS 1 $860,000 2 80 1 $860,000 2017 2019 $881,500 $820,000 $61,500 2 16H12 Dredging (Grand Canal): North of Center Dredging 0 0 CY 1 $1,459,213 **5 1 $1,459,213 2017 2019 $1,495,694 $1,495,694 3 Bildge Pumpout Dock Water Quality 0 0 LS 2 $100,000 **15 1 $200,000 2018 2020 $205,000 $205,000 4 Navigation Markers: Convert Federal Stationary Markers to Floats Other 0 0 LS 1 $60,000 **0 1 $60,000 2018 2019 $61,500 $61,500 5 19H11 Public Swim Float (10th St)Other 0 0 EA 1 $30,000 **20 1 $30,000 2018 2019 $30,750 $30,750 6 19H11 Public Swim Float (Ruby Ave. N Bay Font)Other 0 EA 1 $30,000 **20 1 $30,000 2018 2019 $30,750 $30,750 7 Recyling Center Water Quality 0 0 EA 1 - 0 1 $0 2018 2019 $0 $0 8 Bulkhead (American Legion): Repair Bulkhead 1957 0 LF 1 $1,000,000 62 40 2 $1,000,000 2019 2021 $1,050,625 $1,050,625 9 Dredging: Lower Bay (Channels - Ongoing Maintenance)Dredging 0 0 CY 900,000 $25 **30 3 $22,500,000 2019 2022 $24,230,039 $18,000,000 $6,230,039 10 Entrance Jetty: Maintenance (Federal)Other 1936 0 LF 3,000 $1,000 83 50 17 $3,000,000 2019 2036 $4,564,855 $4,564,855 $0 11 Public Pier (15th St): Float only Piers 0 0 EA 1 $50,000 **20 2 $50,000 2019 2021 $52,531 $52,531 12 Public Pier (19th St): Gangway & Float Piers 0 0 EA 1 $75,000 **20 2 $75,000 2019 2021 $78,797 $78,797 13 Public Pier (Coral Ave): Gangway & Float Piers 1985 1985 EA 1 $75,000 34 20 2 $75,000 2019 2021 $78,797 $78,797 14 Public Pier (Fernando St): Gangway & Float Piers 0 0 EA 1 $75,000 **20 2 $75,000 2019 2021 $78,797 $78,797 15 Public Pier (M St): Gangway & Float Piers 0 0 EA 1 $100,000 **20 2 $100,000 2019 2021 $105,063 $105,063 16 Public Pier (Opal Ave): Gangway & Float Piers 0 0 EA 1 $75,000 **20 2 $75,000 2019 2021 $78,797 $78,797 17 Public Pier (Park Ave): Gangway & Float Piers 0 0 EA 1 $75,000 **20 2 $75,000 2019 2021 $78,797 $78,797 18 Public Pier (Washington St): Gangway & Float Piers 0 0 EA 1 $75,000 **20 2 $75,000 2019 2021 $78,797 $78,797 19 Tide Gate Valves (Balboa Island): Replace Gate Valves 0 0 EA 34 $50,000 **25 6 $1,700,000 2019 2025 $1,971,479 $1,971,479 20 Water Quality: TMDL Compliance:Water Quality 0 0 LS 1 $300,000 **Ongoing 9 $300,000 2019 2028 $374,659 $374,659 21 Balboa Yacht Basin (Significant Maintenance)Slips 1985 0 EA 1 150,000 34 40 2 $150,000 2020 2021 $157,594 $157,594 22 Central Peninsula Sand Nourishment (Ocean Beach)Sand 2017 CY 1,000,000 2 20 11 $0 2020 2030 $0 $0 23 Coastal Commission/Public Works Plan Other 0 0 LS 1 $500,000 **50 2 $500,000 2020 2021 $525,313 $525,313 24 Dredging Equipment (needs further review)Dredging 0 0 EA - $0 **0 2 $0 2020 2021 $0 $0 25 Dredging: Newport Island Area (Channels)Dredging 0 0 CY 20,000 $150 **50 4 $3,000,000 2020 2023 $3,311,439 $3,311,439 26 Land Acquisition for Potential Launch Ramp Other 0 EA 1 $0 **80 4 $0 2020 2023 $0 $0 27 Mooring Field Enhancements Moorings 0 0 EA 1 - 0 0 5 $0 2020 2024 $0 $0 28 Ocean Piers Maintenance (Balboa and Newport)Piers 0 2017 EA 1 500,000 **0 2 $500,000 2020 2021 $525,313 $525,313 29 Public Pier (29th St): Gangway & Float Piers 0 0 EA 1 $100,000 **20 2 $100,000 2020 2021 $105,063 $105,063 30 Public Pier (Emerald Ave): Gangway & Float Piers 1986 1986 EA 1 $75,000 33 20 3 $75,000 2020 2022 $80,767 $80,767 31 Public Pier (Sapphire Ave): Gangway & Float Piers 0 0 EA 1 $75,000 **20 3 $75,000 2020 2022 $80,767 $80,767 32 Tide Gate Valves (Peninsula): Replace Gate Valves 0 0 EA 39 $50,000 **25 7 $1,950,000 2020 2026 $2,317,937 $2,317,937 33 Vessel Sewage Pumpout Facilities: Replace Water Quality 0 0 EA 5 $25,000 **10 4 $125,000 2020 2023 $137,977 $75,000 $62,977 34 Entrance Jetty - Navigation Aid Replace Other 0 0 EA 1 400,000 0 30 4 $400,000 2021 2023 $441,525 $441,525 35 Ferry Landing - Agate Avenue Bulkhead 1930 0 EA 1 - 89 60 4 $0 2021 2023 $0 $0 36 Ferry Landing - Palm Street Bulkhead 1930 0 EA 1 - 89 60 4 $0 2021 2023 $0 $0 37 Public Beaches (Lido Isle Bridge) Potential Handrail Other 0 0 EA 1 50,000 **4 $50,000 2021 2023 $55,191 $55,191 38 Public Beaches (Lido Isle Bridge): Install Walkway to Beach Bay 0 0 EA 1 $75,000 **40 4 $75,000 2021 2023 $82,786 $82,786 39 Lower Castaways: Bulkhead Only Bulkhead 0 0 LF 265 $3,800 **80 5 $1,007,000 2022 2024 $1,139,328 $1,139,328 40 Water Quality: Circulation (Newport Island Area):Water Quality 0 0 EA - **0 6 $0 2022 2025 $0 $0 41 Balboa Island, N, S, E & GC: Boardwalk & Perimeter Drainage System only (Little Island not include ~42k SF) Other 0 0 SF 92,000 $25 **80 7 $2,300,000 2024 2026 $2,733,977 $2,733,977 42 Balboa Yacht Basin Marina (Slips): Replace Slips 1985 0 Slips 172 $35,000 34 40 8 $6,020,000 2024 2027 $7,334,785 $7,334,785 43 Dredging (Balboa Yacht Basin):Dredging 1985 0 CY 25,600 $70 34 40 8 $1,792,000 2024 2027 $2,183,378 $2,183,378 44 Surfside/Sunset Beach Sand Nourishment Stage 14 Sand 2017 LS 1 $300,000 2 7 6 $300,000 2024 2025 $347,908 $347,908 45 Balboa Island, N, S, E & GC: Replace Seawall EBF Bulkhead 1930 LF 4,386 $3,800 89 81 12 $16,667,666 2026 2031 $22,416,158 $22,416,158 46 Balboa Island, N, S, E & GC: Replace Seawall GC and EBF Bulkhead 1930 LF 4,386 $3,800 89 80 7 $16,667,666 2026 2026 $19,812,618 $19,812,618 47 Balboa Island, N, S, E & GC: Replace Seawall NBF Bulkhead 1930 LF 4,386 $3,800 89 82 18 $16,667,666 2026 2037 $25,995,871 $25,995,871 48 Dredging: Upper Bay Catch Basins Dredging 2009 0 CY 500,000 $30 10 21 11 $15,000,000 2027 2030 $19,681,300 $19,681,300 ($0) 49 Dredging: Upper Bay Channels Dredging 2009 CY 250,000 $30 10 21 11 $7,500,000 2027 2030 $9,840,650 $9,840,650 $0 50 Rhine Wharf Boardwalk: Major Repair Other 0 0 LF 1 $150,000 **20 10 $150,000 2027 2029 $192,013 $192,013 51 Public Bay Beaches: Sand Nourishment (25k yards)Other 2016 0 CY 25,000 $50 3 25 12 $1,250,000 2028 2031 $1,681,111 $1,681,111 52 Public Pier (15th St): Pier & Gangway Piers 0 0 EA 1 $115,000 **20 15 $115,000 2031 2034 $166,554 $166,554 53 Public Pier (Coral Ave): Pier only Piers 1985 1985 EA 1 $75,000 34 20 15 $75,000 2031 2034 $108,622 $108,622 54 Public Pier (Emerald Ave): Pier only Piers 1986 1986 EA 1 $75,000 33 20 15 $75,000 2031 2034 $108,622 $108,622 55 Public Pier (Fernando St): Pier only Piers 0 0 EA 1 $75,000 **20 15 $75,000 2031 2034 $108,622 $108,622 56 Public Pier (M St): Pier only Piers 1985 1985 EA 1 $100,000 34 20 15 $100,000 2031 2034 $144,830 $144,830 57 Public Pier (Opal Ave): Pier only Piers 0 0 EA 1 $75,000 **20 15 $75,000 2031 2034 $108,622 $108,622 58 Public Pier (Park Ave): Pier only Piers 0 0 EA 1 $75,000 **20 15 $75,000 2031 2034 $108,622 $108,622 59 Public Pier (Sapphire Ave): Pier only Piers 0 0 EA 1 $75,000 **20 15 $75,000 2031 2034 $108,622 $108,622 60 Public Pier (Washington St): Pier only Piers 0 0 EA 1 $75,000 **20 15 $75,000 2031 2034 $108,622 $108,622 61 Bulkhead (American Legion): Replace Bulkhead 1957 0 LF 336 $3,800 62 80 18 $1,276,800 2034 2037 $1,991,372 $1,991,372 62 Public Pier (Rhine Channel): Float only Piers 2007 2007 EA 1 $175,000 12 30 18 $175,000 2034 2037 $272,940 $272,940 63 Bulkhead (Rhine Channel): Replace Bulkhead 1960 0 LF 375 $3,800 59 80 21 $1,425,000 2037 2040 $2,393,404 $2,393,404 I:\Users\FIN\Shared\Admin\Finance Committee\REPORTS\2019\021419\HBMP\ATTACHMENT\Harbor and Beaches Capital Planning v2019_01_14 2 of 4 Ref #ProjGL Project Category YR Built Last Refurb. Units Measurement Total Units Today's Unit Cost Current Age: Useful Life Years to Start Project Estimate FY Design Start Year FY Const Start Year FV Cost Est @2.5% Growth External Contributions Net Proposed Cost 64 Public Pier (Grand Canal, Balboa Ave): Pier Platform Piers 2017 2012 EA 1 $15,000 2 20 19 $15,000 2037 2038 $23,980 $23,980 65 Bulkhead (West Newport): Replace Bulkhead 0 0 LF 1,722 $3,800 **80 22 $6,543,600 2038 2041 $11,265,275 $11,265,275 66 Bulkhead (Corona Del Mar): Replace Bulkhead 0 0 LF 175 $3,800 **80 26 $665,000 2042 2045 $1,263,695 $1,263,695 67 Bulkhead (Promontory Bay): Replace Bulkhead 1965 0 LF 1,158 $3,800 54 80 26 $4,400,400 2042 2045 $8,362,048 $8,362,048 68 Public Pier (Rhine Channel): Gangway only Piers 0 0 EA 1 $60,000 **40 28 $60,000 2044 2047 $119,790 $119,790 69 Bulkhead (Rhine Wharf): Replace Bulkhead 0 0 LF 343 $3,800 **80 30 $1,303,400 2046 2049 $2,733,970 $2,733,970 70 Marina Park Slips: Replace Slips 2015 0 EA 23 $40,000 4 40 36 $920,000 2052 2055 $2,237,932 $2,237,932 71 Bulkhead (Street Ends - Peninsula): Replace Bulkhead 0 0 LF 2,217 $3,800 **80 37 $8,424,600 2053 2056 $21,005,465 $21,005,465 72 Public Pier (Balboa Marina West): Float only Piers 2017 0 EA 1 $200,000 2 40 38 $200,000 2054 2057 $511,136 $511,136 73 Public Pier (Balboa Marina West): Gangway Piers 2017 0 EA 1 $50,000 2 41 39 $50,000 2055 2058 $130,979 $130,979 74 Public Pier (Central Ave): Gangway and Float Piers 2017 0 EA 1 $250,000 2 40 38 $250,000 2055 2057 $638,921 $638,921 75 Bulkhead (Balboa Yacht Basin): Replace Bulkhead 1985 0 LF 1,370 $3,800 34 80 46 $5,206,000 2063 2065 $16,210,708 $16,210,708 76 Bulkhead (Marina Park): Replace Bulkhead 2015 0 LF 857 $3,800 4 80 76 $3,256,600 2093 2095 $21,270,524 $21,270,524 TOTAL $158,972,613 $248,211,871 $52,981,805 $195,230,066 I:\Users\FIN\Shared\Admin\Finance Committee\REPORTS\2019\021419\HBMP\ATTACHMENT\Harbor and Beaches Capital Planning v2019_01_14 3 of 4 3 4 5 6 7 8 9 10 11 12 13 14 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 AFFORDABILITY ASSUMPTIONS Tidelands Capital Fund Revenues 2,377,527 2,413,190 2,449,388 2,486,129 2,523,420 2,561,272 2,599,691 2,638,686 2,678,267 2,718,441 2,759,217 2,800,605 Growth Assumption 1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50% HARBOR CAPITAL SOURCES BUDGETED Beginning Harbor Capital Balance 13,148,262 15,087,242 19,689,956 25,068,134 29,576,035 31,927,473 34,713,107 39,320,358 42,048,163 33,537,335 25,854,075 29,056,671 Sources Increment Revenue Projections 2,288,419 2,413,190 2,449,388 2,486,129 2,523,420 2,561,272 2,599,691 2,638,686 2,678,267 2,718,441 2,759,217 2,800,605 Interest Earnings 89,108 General Fund Contributions 2,500,000 3,500,000 4,500,000 5,500,000 6,000,000 6,000,000 5,500,000 5,500,000 5,500,000 4,500,000 4,500,000 4,500,000 Periodic GF or One-time Transfers 1,500,000 Grants 82,000 451,000 287,000 1,800,000 9,907,500 6,341,250 26,250 - - - - 2,952,195 Total Sources (does not include grants):6,377,527 5,913,190 6,949,388 7,986,129 8,523,420 8,561,272 8,099,691 8,138,686 8,178,267 7,218,441 7,259,217 7,300,605 Uses Debt Service (1,000,000) (1,250,000) (1,250,000) (1,250,000) (1,250,000) (1,250,000) (1,250,000) (1,250,000) (1,250,000) (926,659) (500,000) (500,000) Other Fiscal Charges - - - - - - - - - - - - Project Uses (3,438,548) (60,475) (321,209) (2,228,228) (4,921,983) (4,525,638) (2,242,440) (4,160,881) (15,439,094) (13,975,042) (3,556,621) (236,738) Transfers Out Less: Cash Proj Funding Total Uses:(4,438,548) (1,310,476) (1,571,209) (3,478,228) (6,171,983) (5,775,638) (3,492,440) (5,410,881) (16,689,094) (14,901,701) (4,056,621) (736,738) Projected Harbor Capital Balance 15,087,242 19,689,956 25,068,134 29,576,035 31,927,473 34,713,107 39,320,358 42,048,163 33,537,335 25,854,075 29,056,671 35,620,539 HARBOR & BEACHES MASTER PLAN SOURCES AND USES PROFORMA 4 of 4 Ba l b o a  Ya c h t  Ba s i n  – 8 2 9  Ha r b o r  Is l a n d  Drive Galley  Cafe Ya c h t  Br o k e r Of f i c e  Sp a c e (c u r r e n t l y  re n t e d ) 3  Ap a r t m e n t s   @  $2 , 7 0 0 / m o   (1  va c a n t ) 34  Ga r a g e s  @   $3 6 0  /m o  (1   va c a n t ) Ba s i n  Ma r i n e  Shipyard CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Agenda Item No. 5B February 14, 2019 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE FROM: Dan Matusiewicz, Finance Director 949-644-3123 or danm@newportbeachca.gov SUBJECT: FACILITIES FINANCIAL PLAN UPDATE SUMMARY: The Finance Committee is charged with a variety of tasks including, but not limited to, reviewing with staff on an annual basis the timing, means of financing, and fiscal impacts associated with funding the high-priority projects designated in the Facilities Financing Plan (FFP). Staff welcomes input and recommends that the Committee receive and file the attached FFP update and provide staff with any input regarding the financial solvency of the FFP. RECOMMENDED ACTION: Staff welcomes input and recommends that the Committee receive and file the attached FFP update and provide staff any input regarding its financial solvency. DISCUSSION: Key Planning Highlights:  The FFP relies mostly on front-loaded cash contributions for the near-term projects, and no debt issuance over the 30-year planning period.  Priority near-term projects include Lido Fire Station 2, Newport Jr. Guard Building (with 100% private contributions), Peninsula and Library Fire Station 1, Grant Howald Park Sport Field Rehabilitation, and Santa Barbara Fire Station 3.  The Police Facility project is assumed to start in 2032 at an estimated cost of $73 million, funded entirely through cash contributions. Facilities Financial Plan Update February 14, 2019 Page 2  City Council (F-6), Debt Management Policy, restricts debt service as a percentage of General Fund revenues to remain below 8%. Debt service reaches a maximum of 3.6%, and averages 1.9% over the 30-year planning period.  The remaining debt capacity, net of current debt service obligations, is nearly $150 million.  Over the 30-year planning period, the maximum annual General Fund contribution to the FFP Reserve Fund (as a percent of revenue) reserve fund is 3.8% and averages 3.1% of General Fund revenues.  The FFP Reserve Fund minimum target fund balance is maintained above the Maximum Annual Debt Service (MADS), $8.2 million over the 30-year planning period. Key Assumptions: Projects Included in the Analysis Only General Fund projects are addressed and new facilities are not included, unless specifically identified. One such project includes the potential land purchase/acquisition for the new Police Station. No cost is yet identified for this purchase as staff will seek direction from the City Council. Potential expenses for dredging are not included and are budgeted as part of the ongoing annual Harbor and Beaches Master Plan (HBMP). Building maintenance and operation costs are not included and are addressed in the Facilities Maintenance Plan (FMP). General Fund Revenue General Fund revenues are assumed to increase modestly 3% to be consistent with a conservative approach to debt affordability. Project Costs Estimated project costs are based on current time-frame estimates by Public Works. Construction costs are projected to increase 2.5% annually. Project and cost projections are revised periodically and are assumed to include project management expenditures. Debt Service Levels Debt Service will be maintained at less than 8% of General Fund revenues. This is consistent with City Council (F-6), Debt Management Policy. Facilities Financial Plan Update February 14, 2019 Page 3 Prepared and Submitted by: /s/ Steve Montano _____________________________ Steve Montano Deputy Finance Director Attachment: A. Facilities Financial Plan ATTACHMENT A FACILITIES FINANCIAL PLAN 4 Last Updated 1/30/2019 Start Start Est. Project Date Date Near-Term Projects Cost (Design)(Construction) 3 FS 1 - Peninsula (& Library)5,298,302 2020 2022 5 FS 2 - Lido 9,907,394 2019 2020 6 FS 3 - Santa Barbara 9,509,486 2022 2025 13 Newport Jr. Guard Building (1)- 2019 2021 25 Sunset View Park w/Ped Bridges & Dog Park 8,629,431 2018 2020 51 Grant Howald Park Sport Field Rehabilitation 6,041,094 2019 2020 3 FS 1 - Peninsula (& Library)5,298,302 2020 2022 37 Girls & Boys Club (East Bluff Park) (2)- 2020 2022 6 FS 3 - Santa Barbara 9,509,486 2022 2025 (1) Offset with private contributions of $3,703,427 (2) Offset with private contributions of $7,814,995 1 2 ******** Total 54,193,495 3 4 Key Metric Target Max Debt Svc as % of Revenues NA < 8.0% Minimum FFP Reserve Balance (000's)$8,162 NA Key Statistics Min Max Avg GF Contribution to FFP (000's)$8,500 $10,370 $8,972 Debt Service (000's)$7,477 $8,154 $7,657 GF Contributions to FFP as % Rev 3.00%3.8%3.2% Debt Svc as % of Revenues 2.16%3.6%2.8% 5 6 FFP Balance (000's)$10,319 $62,552 $28,690 Key Statistics Min Max Avg GF Contribution to FFP (000's)$8,500 $15,018 $10,779 Debt Service (000's)$0 $8,154 $5,623 GF Contributions to FFP as % Rev 3.00%3.8%3.1% Debt Svc as % of Revenues 0.00%3.6%1.9% FFP Reserve Balance (000's)$10,317 $120,445 $39,157 7 8 Remaining Debt Capacity (Dbt. Svc < or = 8% of GF Rev):150.2$ Million CITY OF NEWPORT BEACH FACILITIES FINANCIAL PLANNING DASHBOARD 30 Year Council Debt Mgmt Policy (F-6) 15 Year 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 GF Contribution to FFP as a Percent of GF Revenue GF Contribution % Budget Debt Service - as % of Revenues $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 GF Contribution to FFP Compared to Debt Service GF Contribution to FFP Debt Service - 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 90,000,000 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 20 3 8 20 3 9 20 4 0 20 4 1 20 4 2 20 4 3 20 4 4 20 4 5 FFP Reserve Balance - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 Project Funding Cash Funded Construction Debt Funded Construction - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 Project Expenditures - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 Debt Service Capacity Max Debt Service - 8% of Revenues Debt Service 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 20 1 9 20 2 1 20 2 3 20 2 5 20 2 7 20 2 9 20 3 1 20 3 3 20 3 5 20 3 7 20 3 9 20 4 1 20 4 3 20 4 5 Debt Service as % of GF Revenues Debt Service - as % of Revenues - 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 2019 2020 2021 2022 2023 2024 2025 Annual GF Contributions Periodic GF or One-time Transfers Private Contributions Interest Earnings Cash Contributions Project Total Interest Debt Service Description Year Proceeds COI Issue Rate Term Maturity 2010 Civic Center COPs 2011 123,000,000 1,289,442 124,289,442 4.4%30 2041 Traunch 2 0 - - - 5.0%30 30 Traunch 3 0 - - - 5.0%30 30 GF contributions equal to $8.5m/year (level dollar) GF contributions equal to 3% of annual General Fund revenue GF contributions equal to 5% of annual General Fund revenue GF contributions equal to 3% GF Rev but not < than $8.5M 1 of 5 2/8/2019 Active Projects YR Repl Est $Current Age:Useful Years to Cost Est.Project FY Design Start FY Const Start FV Cost Est @ Private Net Proposed ProjNo Function Project Built Sq Ft /Sq Ft 2018 Life Start Date Estimate Year Year 2.5% Growth Contribtions Cost 1 Gen Gov Civic Center 2013 100,000 675 5 60 55 Jun-13 67,500,000 2070 2073 - - 4 Gen Gov Council Chambers 2013 29,000 675 5 60 55 Jun-13 19,575,000 2070 2073 - - 41 Gen Gov Civic Center Parking Structure 2013 450 16,000 5 60 55 Jun-13 7,200,000 2070 2073 - - 2 Police Police Station 1973 60,000 800 45 50 17 Jan-19 48,000,000 2032 2035 73,037,677 73,037,677 52 Police Land Purchase for New Station (4 acres)174,000 **Jan-19 2028 2031 - - 40 Municipal Operations Big Canyon Aux. Yard 2015 9,000 575 3 50 51 May-12 - 2062 2065 - 3 Fire FS 1 - Peninsula (& Library)1962 6,000 800 56 50 4 Jan-19 4,800,000 2020 2022 5,298,302 5,298,302 5 Fire FS 2 - Lido 1952 11,500 820 66 50 2 Jan-19 9,430,000 2019 2020 9,907,394 9,907,394 6 Fire FS 3 - Santa Barbara 1971 10,000 800 47 50 7 Jan-19 8,000,000 2022 2025 9,509,486 9,509,486 7 Fire FS 4 - Balboa Island 1994 4,400 800 24 50 26 Jan-19 3,520,000 2041 2044 6,689,030 6,689,030 8 Fire FS 5 - CDM (& Library)2019 6,513 855 -1 50 52 Jan-19 5,568,615 2069 2070 - - 9 Fire FS 6 - Mariners (apparatus bay only)2018 1,436 866 0 50 0 Jan-19 1,243,576 2069 2070 1,243,576 1,243,576 47 Fire FS 6 - Mariners (Living Area Rebuild)1957 3,000 800 61 7 2,400,000 2024 2025 2,852,846 2,852,846 10 Fire FS 7 - SAH 2007 6,500 800 11 50 39 Jan-19 5,200,000 2054 2057 13,621,787 13,621,787 11 Fire FS 8 - Npt. Coast 1995 11,027 800 23 50 27 Jan-19 8,821,600 2042 2045 17,182,713 17,182,713 12 Fire Lifeguard HQ Replacement 5,500 800 **25 22 Jan-19 4,400,000 2038 2040 7,574,914 7,574,914 13 Fire Newport Jr. Guard Building 0 4,900 700 **3 3,439,000 2019 2021 3,703,427 3,703,427 - 15 Library Library-Balboa (Construct w/ FS-1)1962 3,000 650 56 50 44 Jan-19 - 2059 2062 - - 16 Library Library-CDM (Construct w/ FS-5)2019 3,800 600 -1 50 52 Jan-19 - 2069 2070 - - 17 Library Library-Mariners 2006 15,305 600 12 50 38 Jan-19 - 2053 2056 - - 18 Library Library-Central 1997 65,000 600 21 50 34 Jan-19 39,000,000 2049 2052 90,297,563 90,297,563 TBD Library Library Lecture Hall TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD TBD 20 Rec Facility Marina Park 2015 22,000 600 3 50 47 Jan-19 13,200,000 2062 2065 42,130,402 42,130,402 21 Rec Facility Newport Coast Ctr 2007 16,865 600 11 50 39 Jan-19 10,119,000 2054 2057 26,507,474 26,507,474 22 Rec Facility Newport Theatre Arts Center 1973 12,000 600 45 50 12 Jan-19 7,200,000 2027 2030 9,683,200 4,841,600 4,841,600 23 Rec Facility OASIS Sr. Ctr 2010 43,232 600 8 60 42 Jan-19 25,939,200 2057 2060 73,174,359 73,174,359 25 Rec Facility Sunset View Park w/Ped Bridges & Dog Park 0 NA **∞2 Mar-14 10,450,000 2018 2020 10,979,031 2,349,600 8,629,431 29 Rec Facility Bonita Creek - Artificial Turf 2015 NA 3 10 7 Jan-19 900,000 2025 2025 1,069,817 1,069,817 33 Rec Facility Community Youth Center (CYC) - Grant Howald 1988 5,146 600 30 50 14 Jan-19 3,087,600 2029 2032 4,362,698 4,362,698 34 Rec Facility Caroll Beek Center 1980 1,555 600 38 50 15 Jan-19 933,000 2030 2033 1,351,262 1,351,262 35 Rec Facility Bonita Creek Community Ctr.1988 2,876 600 30 50 20 Jan-19 1,725,600 2035 2038 2,827,597 2,827,597 36 Rec Facility Cliff Drive Community Room 1960 750 600 58 50 18 Jan-19 450,000 2033 2036 701,846 701,846 37 Rec Facility Girls & Boys Club (East Bluff Park)1965 11,800 600 53 50 4 Jan-19 7,080,000 2020 2022 7,814,995 7,814,995 - 51 Rec Facility Grant Howald Park Sport Field Rehabilitation **50 2 Jan-19 5,750,000 2019 2020 6,041,094 6,041,094 38 Rec Facility Lawn Bowling Facility (San Joaquin Hills Park)1974 2,750 575 44 50 21 Mar-14 1,581,250 2036 2039 2,655,839 2,655,839 326,513,441 430,218,328 18,709,622 411,508,706 FFP Project Planning 2 of 5 1 2 3 4 5 6 7 2019 2020 2021 2022 2023 2024 2025 2026 AFFORDABILITY ASSUMPTIONs General Fund Revenues 224,031,045 230,751,976 237,674,536 244,804,772 252,148,915 259,713,382 267,504,784 275,529,927 GF Revenue Growth Assumption 3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00% FFP Contributions @ 3% of GF Revenues 6,720,931 6,922,559 7,130,236 7,344,143 7,564,467 7,791,401 8,025,144 8,265,898 GF Annual Contribution % of Revenue (assuming $8.5 M/yr)3.79%3.68%3.58%3.47%3.37%3.27%3.18%3.08% Debt Service as % of GF Revenues 3.64%3.53%3.23%3.14%3.04%2.95%2.85%2.76% FFP SOURCES 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 Beginning FFP Balance 29,494,420 17,230,691 25,039,533 20,302,622 19,204,469 18,155,088 18,152,138 18,706,178 Sources Annual GF Contributions 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 8,500,000 Periodic GF or One-time Transfers In - 1,500,000 Private Contributions 3,912,029 9,249,361 903,823 361,722 368,956 376,336 383,862 391,540 Interest Earnings 90,884 430,767 751,186 659,835 672,156 635,428 635,325 654,716 Total Sources:12,502,913 19,680,128 10,155,009 9,521,557 9,541,113 9,511,764 9,519,187 9,546,256 Uses Debt Service (8,153,810) (8,138,841) (7,688,278) (7,676,638) (7,665,428) (7,649,308) (7,610,933) (7,603,024) Debt Funding Other Fiscal Charges (11,000) (11,000) (11,000) (11,000) (11,000) (11,000) (11,000) (11,000) Project Uses (16,601,832) (3,721,446) (7,192,642) (2,932,072) (2,914,066) (1,854,406) (1,343,214) (7,387,683) Total Uses:(24,766,642) (11,871,287) (14,891,920) (10,619,710) (10,590,494) (9,514,714) (8,965,147) (15,001,707) Projected FFP Balance 17,230,691 25,039,533 20,302,622 19,204,469 18,155,088 18,152,138 18,706,178 13,250,727 Sources and Uses Proforma 3 of 5 AFFORDABILITY ASSUMPTIONs General Fund Revenues GF Revenue Growth Assumption FFP Contributions @ 3% of GF Revenues GF Annual Contribution % of Revenue (assuming $8.5 M/yr) Debt Service as % of GF Revenues FFP SOURCES Beginning FFP Balance Sources Annual GF Contributions Periodic GF or One-time Transfers In Private Contributions Interest Earnings Total Sources: Uses Debt Service Debt Funding Other Fiscal Charges Project Uses Total Uses: Projected FFP Balance Sources and Uses Proforma 8 9 10 11 2027 2028 2029 2030 283,795,825 292,309,700 301,078,991 310,111,361 3.00%3.00%3.00%3.00% 8,513,875 8,769,291 9,032,370 9,303,341 3.00%3.00%3.00%3.00% 2.68%2.59%2.51%2.44% 8,513,875 8,769,291 9,032,370 9,303,341 13,250,727 10,318,740 12,263,540 14,561,222 8,513,875 8,769,291 9,032,370 9,303,341 399,370 407,358 415,505 30,848,204 463,775 361,156 429,224 509,643 9,377,020 9,537,805 9,877,098 40,661,188 (7,596,755) (7,582,004) (7,568,417) (7,555,522) (11,000) (11,000) (11,000) (11,000) (4,701,252) - - (484,160) (12,309,007) (7,593,004) (7,579,417) (8,050,682) 10,318,740 12,263,540 14,561,222 47,171,727 4 of 5 DEVELOPMENT AGREEMENTS AND PRIVATE CONTRIBUTIONS General TOTAL Non FFP 3 4 5 6 7 8 9 10 11 12 13 14 Public Park Public Arts FFP Traffic Amount 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Agreement REF Description Trigger Benefit Benefit & Culture BENEFIT Circulation Other Total Paid Hoag OASIS Pledge May 12, 2009 Pledge Letter Payment Schedule 500,000 - - 500,000 - - 500,000 500,000 Hoag OASIS Pledge May 12, 2009 Pledge Letter Payment Schedule 500,000 - - 500,000 - - 500,000 500,000 Hoag OASIS Pledge May 12, 2009 Pledge Letter Payment Schedule 1,500,000 - - 1,500,000 - - 1,500,000 1,500,000 2,500,000 - - 2,500,000 - - 2,500,000 2,500,000 Friends of Oasis Pledge Oasis Construction Restricted for Oasis Only 2,000,000 - - 2,000,000 - - 2,000,000 2,000,000 North Newport Center 4.1 In Lieu Park Fees Paid within 5 Days of Award of OASIS Contract - 5,600,000 5,600,000 5,600,000 5,600,000 North Newport Center 4.1 In Lieu Park Fees 430 $$26,046.51 Milestone Pmts - 5,600,000 5,600,000 5,600,000 5,600,000 North Newport Center T2 4.1 94 Units x $26,046.51 Milestone Pmts 2,448,372 2,448,372 2,448,372 2,448,372 - North Newport Center 4.2 1 Issuance of First Building Permit 13,545,000 - 13,545,000 13,545,000 13,545,000 North Newport Center 4.2 Public Benefit Fee - 430 Units @ $31,500 Issuance of remaining 430 Residential Building Permits 13,545,000 - (270,900) 13,274,100 13,274,100 13,545,000 North Newport Center T2 Amended Agrmt Public Benefit Fee - 94 Units @ $63,000 Issuance of 431 st permit - 524 th permit 5,922,000 (118,440) 5,803,560 5,803,560 5,922,000 North Newport Center 4.4 Street Widening and Traffic Signals Within 30 Days of Reimbursement Request - - 2,500,000 2,500,000 - North Newport Center Amended Agrmt Bayside Drive Walkway Connection Within 90 Days of written notice after award of contract 200,000 200,000 200,000 200,000 33,212,000 13,648,372 (389,340) 46,471,032 2,500,000 - 48,971,032 48,971,032 The Dart Development (24 units)(PA2012-146) - 600,875 600,875 600,875 600,875 Newport Bay Marina (27 units) (PA2001-210)- 186,147 186,147 186,147 186,147 Via Lido Mixed Use(2 units) (PA2010-081)- 104,500 104,500 104,500 104,500 2218 Channel Rd.Abell John & Helou Carol - 26,125 26,125 26,125 26,125 Plaza CDM (6 Units) (PA2010-061) - 156,750 156,750 156,750 Park Fees (One off)2,957,625 214 Narcissus (1 Units) (PA2011-192)- - - 604 Acacia Ave (PA2012-005) - 26,125 26,125 26,125 26,125 610 Larkspur LLC (NP2013-003)- 26,125 26,125 26,125 26,125 819 W. Balboa NP2012-010 26,125 26,125 26,125 26,125 501-507 L St(PA2016-010)78,375 78,375 78,375 78,375 416 Orchid Ave.- 26,125 26,125 26,125 26,125 Cohen Galina - 309 Goldenrod - 26,125 26,125 26,125 26,125 112 30th St. MW (PA2015-149)26,125 26,125 26,125 26,125 1560 Placentia (PA2014-110)209,000 209,000 209,000 209,000 115 30th St(PA2014-146)26,125 26,125 26,125 26,125 415 38th St(PA2006-005)26,125 26,125 26,125 26,125 3238 Clay (PA2015-114)26,125 26,125 26,125 26,125 128 29th St (PA2007-067)26,125 26,125 26,125 26,125 710 Goldenrod Ave (PA2016-036)26,125 26,125 26,125 26,125 612 Acacia Ave (PA2015-177)26,125 26,125 26,125 26,125 3125 Bayside Dr (PA2011-007)26,125 26,125 26,125 26,125 715 Heliotrope (PA2014-144)26,125 26,125 26,125 26,125 716 Larkspur (PA2014-068)26,125 26,125 26,125 26,125 422 Heliotrope (PA2015-071)26,125 26,125 26,125 26,125 715 Marigold (PA2015-046)26,125 26,125 26,125 26,125 404 Heliotrope (PA2015-081)26,125 26,125 26,125 26,125 129 34th St (PA2016-104)26,125 26,125 26,125 26,125 701 Poppy Ave (PA2016-154)26,125 26,125 26,125 26,125 211 Dahlia Ave(PA2016-146)26,125 26,125 26,125 26,125 712 Heliotrope(PA2016-054)26,125 26,125 26,125 26,125 514 Fernleaf(PA2016-051)26,125 26,125 26,125 26,125 607 Carnation Ave(PA2016-82)26,077 26,077 26,077 26,077 608 Heliotrope(PA2016-166)26,125 26,125 26,125 26,125 216 33rd St(PA2016-176)26,125 26,125 26,125 26,125 308 Fernleaf(PA2017-052)26,125 26,125 26,125 26,125 Friend of the Oasis 35,000 35,000 35,000 35,000 2,067,099 - 2,102,099 - - 2,102,099 Hoag DA # 5 8.2 Semeniuk Slough Study $200K Fee Eliminated with with DA amendment in 2008 - - - - - - - - Hoag DA # 5 8.2 Reimb City related to Superior Ave Medians Completion of Project Expenditures - - - - 1,500,000 - 1,500,000 1,500,000 Hoag DA # 5 8.2 Public Benefit (Park or Pub Safety)Paid June 2009 Xfred to Facilities Reserve 1,500,000 - - 1,500,000 - - 1,500,000 1,500,000 Hoag DA # 5 8.4 Sunset View Park, Shrub & Groundcover Pending Improvements - 150,000 - 150,000 - - 150,000 150,000 Extension pending 1,500,000 150,000 - 1,650,000 1,500,000 - 3,150,000 3,150,000 Santa Barbara Condos - - - - - Santa Barbara Condos Section 3.3 of MOA Unrestricted Public Benefit Concurrent with Certificate of Occupancy 1,645,566 - (32,911) 1,612,655 - - 1,612,655 1,645,566 Santa Barbara Condos Section 3.3 of MOA Unrestricted Public Benefit Concurrent with Certificate of Occupancy 3,354,434 - (67,089) 3,287,345 - - 3,287,345 3,354,434 Santa Barbara Condos (NP2005-014)Section 3.2 of MOA 79 Units x $26,046.51 Fee due at building permit issue 2,061,834 - 2,061,834 - - 2,061,834 2,061,834 5,000,000 2,061,834 (100,000) 6,961,834 - 6,961,834 7,061,834 Banning Ranch Section 3.1 1375 x 30,909 x 80% (Haircut Assumption)Each Building Permit - - - - - - - Uptown Newport $32,500/Unit - 1,244 Units - - - - - - Phase I - 620 Units a) 462 b) 158 PRIOR TO EACH BUILDING PERMIT 20,150,000 (403,000) 19,747,000 966,665 - 20,713,665 16,089,612 5,801,918 Phase II - 624 Units PRIOR TO EACH BUILDING PERMIT 20,280,000 (405,600) 19,874,400 631,456 - 20,505,856 19,874,000 PA2011-134 In Lieu Park Fees - Phase I PRIOR TO EACH BUILDING PERMIT-Less Park Credits - 10,143,361 10,143,361 10,143,361 2,895,687 2,200,000 In Lieu Park Fees - Phase II PRIOR TO EACH BUILDING PERMIT-Less Park Credits - 10,550,389 10,550,389 10,550,389 10,550,389 40,430,000 20,693,750 (808,600) 60,315,150 1,598,121 - 61,913,271 NB Country Club 3.1 54,819 x 10.00 Golf Club Clubhouse Issuance of First Building Permits 562,196 - (11,244) 550,952 - - 550,952 562,196 Dunes Settlement Section C(e)Restaurant on Parcel B2 Issuance of Building Permit 50,000 - (1,000) 49,000 - - 49,000 49,000 Dunes Settlement Section C(f)Family Inn Issuance of Building Permit 100,000 - (2,000) 98,000 - - 98,000 98,000 Dunes Settlement Section C(g)Family Inn Prior to Occupancy 410,402 - (8,208) 402,194 - - 402,194 402,194 560,402 - (11,208) 549,194 - - 549,194 Golf Reality Fund (GRF)3.1 Tennis Club Reconstruction 3,725 x $10.00 Issuance of Building Permit 37,250 136,025 (745) 172,530 - - 172,530 36,505 Golf Reality Fund (GRF)3.1 Single Family Homes $5 x $93,000 Single Family Homes 465,000 (9,300) 455,700 - - 455,700 455,700 502,250 136,025 (10,045) 628,230 - - 628,230 Harbor Point Senior Living 1,000,000 - (20,000) 980,000 - - 980,000 980,000 Land Re Use Decisions Monrovia Property Sale Actual 5,639,096 5,639,096 5,639,096 Police Facility Concord Estimated Annual Financial Benefit Not Used 1,706,000 1,706,000 - - 1,706,000 West Newport Gym - Lease Lease Ground Lease 289,055 289,055 - - 289,055 262,199 267,443 354,629 361,722 368,956 376,336 383,862 391,540 399,370 407,358 415,505 423,815 1,995,055 - - 7,634,151 - - 7,634,151 TOTAL 88,296,903 38,757,080 (1,330,437) 131,362,642 5,598,121 - 136,960,763 3,912,029 9,249,361 903,823 361,722 368,956 376,336 383,862 391,540 399,370 407,358 415,505 30,848,204 Paid Status 5 of 5 2/ 1 4 / 2 0 1 9 Ac t i v e  Pr o j e c t s YR R e p l E s t  $ C u r r e n t  Ag e : U s e f u l Y e a r s  to C o s t  Es t . P r o j e c t F Y  Design  Start F Y  Const  Start F V  Cost  Est  @ P r i v a t e N e t  Proposed Pr o j N o Fu n c t i o n Pr o j e c t Bu i l t S q  Ft / S q  Ft 2 0 1 8 L i f e S t a r t D a t e E s t i m a t e Y e a r Year 2 . 5 %  Growth C o n t r i b t i o n s C o s t 25 R e c  Fa c i l i t y Su n s e t  Vi e w  Pa r k  w/ P e d  Br i d g e s  & Do g  Pa r k   0N A ** ∞ 2 M a r ‐14 1 0 , 4 5 0 , 0 0 0                2018 2 0 2 0 1 0 , 9 7 9 , 0 3 1       2,349,600          8,629,431          13 F i r e Ne w p o r t  Jr .  Gu a r d  Bu i l d i n g 0 4 , 9 0 0                  70 0 * * 3 3,439,000 2 0 1 9 2 0 2 1 3 , 7 0 3 , 4 2 7        3,703,427        ‐ 51 R e c  Fa c i l i t y Gr a n t  Ho w a l d  Pa r k  Sp o r t  Fi e l d  Re h a b i l i t a t i o n   ** 5 0 2 J a n ‐19 5 , 7 5 0 , 0 0 0 2 0 1 9 2 0 2 0 6 , 0 4 1 , 0 9 4        6,041,094        3 F i r e FS  1  ‐   Pe n i n s u l a  (&  Li b r a r y ) 19 6 2 6 , 0 0 0                  80 0 5 6 5 0 4 J a n ‐19 4 , 8 0 0 , 0 0 0 2 0 2 0 2 0 2 2 5 , 2 9 8 , 3 0 2        5,298,302        37 R e c  Fa c i l i t y Gi r l s  & Bo y s  Cl u b  (E a s t  Bl u f f  Pa r k ) 19 6 5 1 1 , 8 0 0            60 0 5 3 5 0 4 J a n ‐19 7 , 0 8 0 , 0 0 0 2 0 2 0 2 0 2 2 7 , 8 1 4 , 9 9 5        7,814,995        ‐ 6 F i r e FS  3  ‐   Sa n t a  Ba r b a r a 19 7 1 1 0 , 0 0 0            80 0 4 7 5 0 7 J a n ‐19 8 , 0 0 0 , 0 0 0 2 0 2 2 2 0 2 5 9 , 5 0 9 , 4 8 6        9,509,486        47 F i r e FS  6  ‐   Ma r i n e r s  (L i v i n g  Ar e a  Re b u i l d ) 19 5 7 3 , 0 0 0                  80 0 6 1 7 2,400,000 2 0 2 4 2 0 2 5 2 , 8 5 2 , 8 4 6        2,852,846        29 R e c  Fa c i l i t y Bo n i t a  Cr e e k  ‐   Ar t i f i c i a l  Tu r f 20 1 5 N A 3 1 0 7 J a n ‐19 9 0 0 , 0 0 0                        2025 2 0 2 5 1 , 0 6 9 , 8 1 7        1,069,817        22 R e c  Fa c i l i t y Ne w p o r t  Th e a t r e  Ar t s  Ce n t e r 19 7 3 1 2 , 0 0 0            60 0 4 5 5 0 1 2 J a n ‐19 7 , 2 0 0 , 0 0 0 2 0 2 7 2 0 3 0 9 , 6 8 3 , 2 0 0        4,841,600        4,841,600        52 P o l i c e La n d  Pu r c h a s e  fo r  Ne w  St a t i o n  (4  ac r e s ) 17 4 , 0 0 0        ** Ja n ‐19 2028 2 0 3 1 ‐‐ 33 R e c  Fa c i l i t y Co m m u n i t y  Yo u t h  Ce n t e r  (C Y C )  ‐   Gr a n t  Ho w a l d 19 8 8 5 , 1 4 6                  60 0 3 0 5 0 1 4 J a n ‐19 3 , 0 8 7 , 6 0 0 2 0 2 9 2 0 3 2 4 , 3 6 2 , 6 9 8        4,362,698        34 R e c  Fa c i l i t y Ca r o l l  Be e k  Ce n t e r 19 8 0 1 , 5 5 5                  60 0 3 8 5 0 1 5 J a n ‐19 9 3 3 , 0 0 0                        2030 2 0 3 3 1 , 3 5 1 , 2 6 2        1,351,262        2 P o l i c e Po l i c e  St a t i o n 19 7 3 6 0 , 0 0 0            80 0 4 5 5 0 1 7 J a n ‐19 4 8 , 0 0 0 , 0 0 0            2032 2 0 3 5 7 3 , 0 3 7 , 6 7 7     73,037,677      36 R e c  Fa c i l i t y Cl i f f  Dr i v e  Co m m u n i t y  Ro o m 19 6 0 7 5 0                        60 0 5 8 5 0 1 8 J a n ‐19 4 5 0 , 0 0 0                        2033 2 0 3 6 701,846           701,846            35 R e c  Fa c i l i t y Bo n i t a  Cr e e k  Co m m u n i t y  Ct r . 19 8 8 2 , 8 7 6                  60 0 3 0 5 0 2 0 J a n ‐19 1 , 7 2 5 , 6 0 0 2 0 3 5 2 0 3 8 2 , 8 2 7 , 5 9 7        2,827,597        38 R e c  Fa c i l i t y La w n  Bo w l i n g  Fa c i l i t y  (S a n  Jo a q u i n  Hi l l s  Pa r k ) 19 7 4 2 , 7 5 0                  57 5 4 4 5 0 2 1 M a r ‐14 1 , 5 8 1 , 2 5 0 2 0 3 6 2 0 3 9 2 , 6 5 5 , 8 3 9        2,655,839        12 F i r e Li f e g u a r d  HQ  Re p l a c e m e n t 5, 5 0 0                  80 0 * * 2 5 2 2 J a n ‐19 4 , 4 0 0 , 0 0 0 2 0 3 8 2 0 4 0 7 , 5 7 4 , 9 1 4        7,574,914        7 F i r e FS  4  ‐   Ba l b o a  Is l a n d   19 9 4 4 , 4 0 0                  80 0 2 4 5 0 2 6 J a n ‐19 3 , 5 2 0 , 0 0 0 2 0 4 1 2 0 4 4 6 , 6 8 9 , 0 3 0        6,689,030        11 F i r e FS  8  ‐   Np t .  Co a s t 19 9 5 1 1 , 0 2 7            80 0 2 3 5 0 2 7 J a n ‐19 8 , 8 2 1 , 6 0 0 2 0 4 2 2 0 4 5 1 7 , 1 8 2 , 7 1 3     17,182,713      18 L i b r a r y Li b r a r y ‐Ce n t r a l 19 9 7 6 5 , 0 0 0            60 0                      21 5 0 3 4 J a n ‐19 3 9 , 0 0 0 , 0 0 0            2049 2 0 5 2 9 0 , 2 9 7 , 5 6 3     90,297,563      17 L i b r a r y Li b r a r y ‐Ma r i n e r s 20 0 6 1 5 , 3 0 5            60 0                      12 5 0 3 8 J a n ‐19 ‐2053 2 0 5 6 ‐‐ 10 F i r e FS  7  ‐   SA H 20 0 7 6 , 5 0 0                  80 0 1 1 5 0 3 9 J a n ‐19 5 , 2 0 0 , 0 0 0 2 0 5 4 2 0 5 7 1 3 , 6 2 1 , 7 8 7     13,621,787      21 R e c  Fa c i l i t y Ne w p o r t  Co a s t  Ct r 20 0 7 1 6 , 8 6 5            60 0 1 1 5 0 3 9 J a n ‐19 1 0 , 1 1 9 , 0 0 0            2054 2 0 5 7 2 6 , 5 0 7 , 4 7 4     26,507,474      23 R e c  Fa c i l i t y OA S I S  Sr .  Ct r 20 1 0 4 3 , 2 3 2            60 0 8 6 0 4 2 J a n ‐19 2 5 , 9 3 9 , 2 0 0            2057 2 0 6 0 7 3 , 1 7 4 , 3 5 9     73,174,359      15 L i b r a r y Li b r a r y ‐Ba l b o a  (C o n s t r u c t  w/  FS ‐1) 19 6 2 3 , 0 0 0                  65 0                      56 5 0 4 4 J a n ‐19 ‐2059 2 0 6 2 ‐‐ 40 M u n i c i p a l  Op e r a t i o n s Bi g  Ca n y o n  Au x .  Ya r d 20 1 5 9 , 0 0 0                  57 5 3 5 0 5 1 M a y ‐12 ‐2062 2 0 6 5 ‐ 20 R e c  Fa c i l i t y Ma r i n a  Pa r k   20 1 5 2 2 , 0 0 0            60 0 3 5 0 4 7 J a n ‐19 1 3 , 2 0 0 , 0 0 0            2062 2 0 6 5 4 2 , 1 3 0 , 4 0 2     42,130,402      8 F i r e FS  5  ‐   CD M  (&  Li b r a r y ) 20 1 9 6 , 5 1 3                  85 5 ‐1 5 0 5 2 J a n ‐19 5 , 5 6 8 , 6 1 5 2 0 6 9 2 0 7 0 ‐‐ 16 L i b r a r y Li b r a r y ‐CD M    (C o n s t r u c t  w/  FS ‐5) 20 1 9 3 , 8 0 0                  60 0                      ‐ 1 5 0 5 2 J a n ‐19 ‐2069 2 0 7 0 ‐‐ 1 G e n  Go v Ci v i c  Ce n t e r 20 1 3 1 0 0 , 0 0 0        67 5 5 6 0 5 5 J u n ‐13 6 7 , 5 0 0 , 0 0 0            2070 2 0 7 3 ‐‐ 4 G e n  Go v Co u n c i l  Ch a m b e r s 20 1 3 2 9 , 0 0 0            67 5 5 6 0 5 5 J u n ‐13 1 9 , 5 7 5 , 0 0 0            2070 2 0 7 3 ‐‐ 41 G e n  Go v Ci v i c  Ce n t e r  Pa r k i n g  St r u c t u r e 20 1 3 4 5 0                        16 , 0 0 0            5 6 0 5 5 J u n ‐13 7 , 2 0 0 , 0 0 0 2 0 7 0 2 0 7 3 ‐‐ 5 F i r e FS  2  ‐   Li d o   19 5 2 1 1 , 5 0 0            82 0 6 6 5 0 2 J a n ‐19 9 , 4 3 0 , 0 0 0 2 0 1 9 2 0 2 0 9 , 9 0 7 , 3 9 4        9,907,394        9 F i r e FS  6  ‐   Ma r i n e r s  (a p p a r a t u s  ba y  on l y ) 20 1 8 1 , 4 3 6                  86 6 0 5 0 0 J a n ‐19 1 , 2 4 3 , 5 7 6 2 0 6 9 2 0 7 0 1 , 2 4 3 , 5 7 6        1,243,576        TB D L i b r a r y Li b r a r y  Le c t u r e  Ha l l TB D T B D T B D T B D T B D T B D T B D T B D TBD TBD TBD TBD TBD 326,513,441        430,218,328   18,709,622     411,508,706    FF P  Pr o j e c t  Pl a n n i n g 1  of  1 2/14/2019 1 City of Newport Beach General FundLong Range Financial Forecast Fiscal Years 2020 to 2039 Newport Beach Long-Range Financial Forecast About Whitebirch •Whitebirch is SaaS-based financial modeling platform designed for mission-critical decision support. •Allows users to perform multi-dimensional projections using various assumptions simultaneously. •More stable than Excel - no more crashing. •It allows staff to validate projection logic and results, and manage model among multiple users. •Whitebirch is owned by PFM. •Annual subscription fee is $12,500. 2 2/14/2019 2 Newport Beach Long-Range Financial Forecast Model Hierarchy and Development 3 Baseline growth projections are based on historical CAGR, averages, and adjustments based on known one-time events. Impacts allows us to model the fiscal impact of any projected deviation from the baseline on $ or % basis Baseline, alternate baselines, and impacts can be packaged and organized into high-level scenarios REVENUE AND EXPENDITURE IMPACTS (INFINTE) SCENARIOS BASELINE SCENARIO (BASED ON FY19 ORIGINAL BUDGET) Step 1 Step 2 Step 3 Baseline Revenue Assumptions Fiscal Years 2020 to 2039 2/14/2019 3 Newport Beach Long-Range Financial Forecast Property Tax 5 •Secured Property Tax •Unsecured Property Tax •Supplemental Taxes •RDA Residual •Prior Year Penalty/Interest Accounts/Groupings in This Category Newport Beach Long-Range Financial Forecast Sales Tax 6 2/14/2019 4 Newport Beach Long-Range Financial Forecast Transient Occupancy Tax 7 Newport Beach Long-Range Financial Forecast Other General Fund Revenues 8 •Business License tax •Property Tax Transfer •License Fees and Permits •Service Fees, Property Income, Donations •Intergovernmental Transfers Accounts/Groupings in This Category 2/14/2019 5 Baseline ExpenditureAssumptions Fiscal Years 2020 to 2039 Newport Beach Long-Range Financial Forecast Salaries and Benefits (General Fund) 10 •Regular Salaries •Health/Dental/Vision •Overtime Pays •Personnel Internal Service Premiums •Retiree Health Program •Other Benefits Accounts/Groupings in This Category 2/14/2019 6 Newport Beach Long-Range Financial Forecast Pension (General Fund) 11 •Pension Normal Cost •Pension UAL •Pension Employee Contribution •Discretionary UAL •Retirement Part Time/Temp Accounts/Groupings in This Category Newport Beach Long-Range Financial Forecast Maintenance and Operations (General Fund) 12 •Professional and Contract Services •O&M Internal Service Premiums •Maintenance and Repair •Supplies and Materials •General Expense •Travel and Training Accounts/Groupings in This Category Increase due to changes in outsourcing and change in Cost Allocation Plan methodology 2/14/2019 7 ForecastScenarios Fiscal Years 2020 to 2039 Newport Beach Long-Range Financial Forecast Forecast Scenarios Overview •Scenario 1 – Includes pension UAL contribution Option 3A (discussed with Finance Committee on November 29, 2018) - UAL over a level $35m dollar payment plan over 15 years •Scenario 2 – Same as Scenario 1, except with higher annual salary growth than Scenario 1 •Scenario 3 – CalPERS assets underperforming 1% (6% return) for 10 years •Scenario 4 – CalPERS change in actuarial assumption reducing the discount rate 1% (6% return) for the entire forecast period (20 years) and beyond 14 •All projections are based on the FY19 Original Budget with some adjustment for one-time items. •Aforementioned growth assumptions are used with mild recessions occurring in FY21, FY28, and FY35 the impact the City’s Top 3 revenue sources. •100% of revenues and expenditures are realized as forecasted each year. •Annual General Fund transfers in support of: •FFP - $8.5m •CIP - $5m with construction cost escalation of 3% annually •Facilities Maintenance - $1.5m •800 Mhz Radio – $0.5m •Tidelands – ranging from $3.5m to $6m, fixed at $4.5m starting in 2028 •Contingency Reserve (25% of expenditures, less discretionary pension funding) Assumptions Common to All Scenarios 2/14/2019 8 Newport Beach Long-Range Financial Forecast Scenario 1 – Level Dollar UAL Payment Plan Over 15 Years (Option 3A) 15 Newport Beach Long-Range Financial Forecast Scenario 1: Pension 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. •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. 16 2/14/2019 9 Newport Beach Long-Range Financial Forecast Model Hierarchy 17 Newport Beach Long-Range Financial Forecast Pension UAL Funding Options 18 2/14/2019 10 Newport Beach Long-Range Financial Forecast Scenario 2 – Salary Growth at 4% Annually Instead of 3% 19 Newport Beach Long-Range Financial Forecast 20 2/14/2019 11 Newport Beach Long-Range Financial Forecast CalPERS Risk Mitigation Policy 21 Newport Beach Long-Range Financial Forecast Amortization Schedule 1a - CalPERS assets underperforming 1% (6% return) for 10 years 22 2/14/2019 12 Newport Beach Long-Range Financial Forecast Amortization Schedule 1b - CalPERS assets underperforming 1% (6% return) for 10 years 23 Newport Beach Long-Range Financial Forecast Scenario 3 - CalPERS Assets at 6% Return for 10 Years 24 2/14/2019 13 Newport Beach Long-Range Financial Forecast Amortization Schedule - CalPERS change in actuarial assumption reducing the discount rate 1% (6% return) for the entire forecast period (20 years) and beyond 25 Newport Beach Long-Range Financial Forecast Amortization Schedule 2 - CalPERS assets underperforming 1% (6% return) for 10 years 26 2/14/2019 14 Newport Beach Long-Range Financial Forecast Scenario 4 - CalPERS Change in Discount Rate Assumption to 6% 27 Fiscal Strategies Fiscal Years 2020 to 2039 2/14/2019 15 Newport Beach Long-Range Financial Forecast GFOA Research Regarding Recession Risk in Newport Beach In “A risk-Based Analysis of General Fund Reserve Requirements for the City of Newport Beach” (2018) found that: 1.Average length of recession for Newport Beach was 4 and 1/3 quarters. 2.“THE GREAT RECESSION”- From March 2008 to January 2010, the moving average of City revenues declined 14.7%. 3.“THE DOT-BOMB RECESSION”- From February 2001 to May 2002, the moving average for revenues only declined 4.4% 4.GFOA found that for a hypothetical 4-quarter recession, there was only a 1% chance of a decline in revenue of 14.95% or more and a 10% chance of a decline of 10.53% or more. 29 Newport Beach Long-Range Financial Forecast Fiscal Strategies to Address Economic or Other Short-Term Financial Impacts •The City can temporarily cut about 2-3% of its budget in order to absorb unexpected financial impacts in a given year. The cut could be accomplished by deferring maintenance of existing city assets, deferring purchases of new assets, cutting back on some operating transfers out of the General Fund, and smaller cuts in the City’s operating expenditures. •Barring a structural deficit that would necessitate a permanent shift in the City’s service delivery model, the Contingency Reserve could be used in lieu or in concert with, spending cuts in the event of an extreme event, like a recession or natural disaster (either increased costs or revenue losses). •Much of the City’s expenditure budget is contractually committed and cannot be cut unilaterally. While some budgetary challenges can be absorbed by temporary cost cutting, opportunities to cut such things as salaries and benefits, and professional contract services expenditures are limited. 30 2/14/2019 16 Newport Beach Long-Range Financial Forecast 3 Percent Reduction in General Fund Expenditures – An Example 31 5.0% Expenses 2020 Projected Tier 1  Reductions Tier 2  Reductions Total Reductions Total Net  Expenses General Fund Expenditures     Salaries And Benefits 153,728,424 153,728,424     Maintenance And Operations         Professional & Contract Services 22,912,330 22,912,330         O&M Internal Service Premiums 10,872,779 10,872,779         Maintenance & Repair 9,967,080 ‐498,354 ‐498,354 9,468,726         Insurance, Claims, Judgments And Legal Def 6,369,981 6,369,981         Supplies & Materials 5,336,513 ‐160,095 ‐160,095 5,176,418         Utilities 3,082,899 3,082,899         General Expenses 2,192,653 ‐65,780 ‐65,780 2,126,873         Travel & Training 912,849 ‐27,385 ‐27,385 885,464         Grant Operating Expenses 130,000 130,000     Total Maintenance And Operations 61,777,084 ‐751,614 ‐751,614 61,025,470     Transfers Out         Transfers             Transfer Out Ffp 8,500,000 ‐2,500,000 ‐2,500,000 6,000,000             Transfer Out CIP Fund 5,000,000 ‐1,000,000 ‐1,000,000 4,000,000             Transfer Out Contingency Reserve 1,808,025 1,808,025             Transfer Out Facilities Maint 1,500,000 ‐1,000,000 ‐1,000,000 500,000             Transfer Out 800 Mhz Radio 534,000 534,000             Transfer Out Tideland Fund 3,500,000 ‐2,500,000 ‐2,500,000 1,000,000         Total Transfers 20,842,025 ‐7,000,000 ‐7,000,000 13,842,025     Total Transfers Out 20,842,025 ‐7,000,000 ‐7,000,000 13,842,025     Capital 792,163 792,163 Total General Fund Expenditures 237,139,696 ‐751,614 ‐7,000,000 ‐7,751,614 229,388,082 Newport Beach Long-Range Financial Forecast Conclusion and Other Considerations •The General Fund is projected to be in a financially sound position over the next 20-year period. •Any projected deficit in the model is not reflective of likely and typical budget performance (actual revenues higher than budgeted, expenditures less than budgeted). •Short term deficits can be absorbed without long-term reliance on Contingency Reserve – No structural deficit is apparent. •The City is not without its fiscal challenges. The City is confronting two financially impactful events in the near term. These include the potential for significant increases to CalPERS pension plans and the need to ramp-up savings to meet substantial near-term harbor improvements in accordance with the Harbor & Beaches Master Plan. 32 2/14/2019 17 Questions? City of Newport Beach Finance Department 2/8/19 Scheduled Date Agenda Title Agenda Description Harbor and Beaches Master Plan Update Review Harbor and Beaches Master Plan for financial solvency based on known Council priorities. Facilities Financial Plan Update Review Facilities Financial Plan for financial solvency based on known Council priorities. Long-Range Financial Forecast (LRFF) Staff will provide an update to the latest version of the LRFF. Work Plan Review Staff will review with the Committee the agenda topics scheduled for the remainder of the calendar year. Review of Operating Budget (Harbor Department) The goal of this presentation will be to familiarize members of the Finance Committee with the elements of the FY 2018-2019 Harbor Department budget, provide opportunity for questions, and to gain clarity in the funding allocations for departmental programs. Review of Revenue Assumptions Staff will provide of an overview for revenue assumptions for the FY 2019- 2020 budget. Thursday, April 25, 2019 Proposed FY 2019-2020 Budget Overview Staff will provide an overview of the Proposed FY 2019-2020 Operating Budget and or CIP. Thursday, May 16, 2019 Proposed FY 2019-2020 Budget Overview Staff will provide an overview of the Proposed FY 2019-2020 Operating Budget and or CIP. Tuesday, May 28, 2019 JOINT CITY COUNCIL/FINANCE COMMITTEE MEETING Thursday, June 27, 2019 TBD City of Newport Beach Finance Committee Work Plan 2018-19 February March April Thursday, March 14, 2019 Thursday, February 14, 2019 June May I:\Users\FIN\Shared\Admin\Finance Committee\WORKPLAN\2019\2019 FC Workplan 1