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HomeMy WebLinkAboutFinance Committee - February 18 2021CITY OF NEWPORT BEACH FINANCE COMMITTEE MEETING WILL BE HELD VIA ZOOM. PLEASE SEE SPECIAL NOTICE REGARDING COVID-19 FOR PUBLIC COMMENT INFORMATION. AGENDA - FinalThursday, February 18, 2021 - 3:00 PM Finance Committee Members: Will O'Neill, Chair Brad Avery, Mayor Noah Blom, Council Member William Collopy, Committee Member John Reed, Committee Member Joe Stapleton, Committee Member Larry Tucker, Committee Member Staff Members: Grace K. Leung, City Manager Scott Catlett, Finance Director/Treasurer Steve Montano, Deputy Director, Finance Marlene Burns, Administrative Specialist to the Finance Director SPECIAL NOTICE REGARDING COVID-19 On March 4, 2020, Governor Newsom proclaimed a State of Emergency in California as a result of the threat of COVID-19. On March 12, 2020, Governor Newsom issued Executive Order N-25-20, which allows Finance Committee Members to attend Finance Commission meetings by electronic means. Please be advised that to minimize the spread of COVID-19, Finance Committee Members may attend this meeting either electronically or telephonically. Also, please be advised that on March 17, 2020, Governor Newsom issued Executive Order N-29-20, which allows for the public to participate in any meeting of the Finance Committee telephonically or by other electronic means. Given the health risks associated with COVID-19, the City of Newport Beach will conduct this meeting via Zoom. As a member of the public, if you would like to participate in this meeting, you can participate via the following options: 1.You can submit your questions and comments in writing for the Finance Committee’s consideration by sending them to Scott Catlett Finance Director/Treasurer, at scatlett@newportbeachca.gov. To give the Finance Committee adequate time to review your questions and comments, please submit your written comments by Wednesday, February 17, 2021, at 5 p.m. All emails will be made part of the record. 2.You can connect with a computer by joining through Zoom. Use the link below to register for the meeting using a valid email address. You will receive a confirmation email allowing you to join the meeting: https://zoom.us/webinar/register/WN_LRrpQFIjTTKW_6aAHkXXWw 3.Or you may connect by Phone/Audio Only by calling: 669-900-9128. The meeting ID is 935 6836 9329# 4.Attendees must raise their hand in the Zoom module if they would like to speak. If attending by phone, press *9 to raise hand. Please know that it is important for the City to allow public participation at this meeting. While the City does not expect there to be any changes to the above process for participating in this meeting, if there is a change, the City will post the information as soon as possible to the City’s website. The City of Newport Beach thanks you in advance for continuing to take precautions to prevent the spread of the COVID 19 virus. 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. February 18, 2021 Page 2 Finance Committee Meeting I.CALL MEETING TO ORDER II.ROLL CALL III.PUBLIC COMMENTS Public comments are invited on agenda and non-agenda items generally considered to be within the subject matter jurisdiction of the Finance Committee. Speakers must limit comments to three (3) minutes. Before speaking, we invite, but do not require, you to state your name for the record. The Finance Committee has the discretion to extend or shorten the speakers’ time limit on agenda or non-agenda items, provided the time limit adjustment is applied equally to all speakers. As a courtesy, please turn cell phones off or set them in the silent mode. IV.CONSENT CALENDAR MINUTES OF JANUARY 21, 2021A. Recommended Action: Approve and file. DRAFT MINUTES 01212021 V.CURRENT BUSINESS FISCAL YEAR 2020-21 SECOND QUARTER FINANCIAL REPORTA. Summary: Staff will present results as of the quarter ending December 31 to the Finance Committee, and subsequently will present it to the City Council. Recommended Action: Review and discuss this report and provide any recommendations for consideration by the City Manager and City Council. STAFF REPORT FEE STUDY UPDATEB. Summary: Staff will present the Master Fee Schedule to the Finance Committee and subsequently will present it to the City Council. Recommended Action: Receive and file. STAFF REPORT ATTACHMENT A ATTACHMENT B ATTACHMENT C ATTACHMENT D February 18, 2021 Page 3 Finance Committee Meeting LONG RANGE FISCAL FORECAST (LRFF)C. Summary: Staff will provide an update to the latest version of the LRFF. Recommended Action: Receive and file. DEEP DIVE OF UTILITIES DEPARTMENT BUDGETD. Summary: Discussion of the budget for the Water and Wastewater Enterprise Funds’ and other Utilities Department functions. Recommended Action: Receive and file. WORK PLAN REVIEWE. Summary: Staff and Finance Committee to review the proposed work plan and adjust as necessary. 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 21, 2021 Page 1 of 6 CITY OF NEWPORT BEACH FINANCE COMMITTEE JANUARY 21, 2021 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:00 p.m. via teleconference. Chair O’Neill announced the resignation of Council Member Joy Brenner from the Finance Committee due to a scheduling conflict with the Orange County Mosquito and Vector Control Board. He noted the Mayor will select a new Council Member as a replacement and thanked Council Member Brenner for her service to the Finance Committee. II. ROLL CALL PRESENT: Chair Will O’Neill, Mayor Brad Avery, Committee Member William Collopy, Committee Member John Reed, Committee Member Joe Stapleton, and Committee Member Larry Tucker ABSENT: Committee Member (VACANT POSITION) STAFF PRESENT: City Manager Grace K. Leung, Finance Director/Treasurer Scott Catlett, Deputy Director/Finance Steve Montano, Administrative Specialist to the Finance Director Marlene Burns, Public Works Finance/Administrative Manager Angela Crespi, Budget Manager Shannon Espinoza; Senior Budget Analyst Amy Lewis, Payroll Specialist Rochelle Myers, Public Works Administrative Analyst Raymund Reyes, Public Works Director Dave Webb, Deputy Public Works Director/City Engineer Jim Houlihan, Human Resources Analyst Jyll Ramirez, and Recreation & Senior Services Director Laura Detweiler MEMBERS OF THE PUBLIC: Brian Ouzounian, Charles Klobe, and Nancy Scarbrough III. PUBLIC COMMENTS Brian Ouzounian addressed the Finance Committee regarding his belief the City is charging ten times what the mooring rate should be based on information received from the State Lands Commission. He advised he has reached out to City Council and Harbor Commission on many occasions but has never received a reply. He encouraged the Finance Committee to look at the issue from a risk management standpoint. IV. CONSENT CALENDAR MINUTES OF NOVEMBER 19, 2020 Recommended Action: Approve and file. Chair O’Neill called for public comments and hearing none, closed the public comments. MOTION: Mayor Avery moved to approve the minutes, as amended, seconded by Committee Member Stapleton. The motion carried 6 ayes – 0 noes, 1 Committee Member position vacant. V. CURRENT BUSINESS A. BUDGET AMENDMENTS FOR THE QUARTER ENDING DECEMBER 31, 2020 Finance Committee Meeting Minutes January 21, 2021 Page 2 of 6 Summary: Staff will report on the budget amendments for the prior quarter. Recommended Action: Receive and file. There were no comments from the Finance Committee. Chair O’Neill called for public comments and hearing none, closed public comments. The item was received and filed. B. CIP FUNDING STRATEGY NEXT YEAR BUDGET Summary: Staff will review actions taken to align the FY 2020-21 budget with reduced revenues, review the list of deferred CIP projects, and discuss the potential of restoring project funding should fiscal trends continue to improve. Recommended Action: Receive and file. Public Works Director Dave Webb provided a brief update on upcoming funding strategies related to deferrals from last year. He reported the deferrals totaled $20.2 million and noted staff is looking for direction on what deferred projects to program in the next year. He provided a brief overview of projects that will move forward with alternate funding sources. He recommends requesting $3.5 million in suggested programming leaving $14.5 million for deferrals which would allow time for discussion with City Council. In response to Chair O’Neill’s inquiries, Public Works Director Webb clarified the highlighted items in the Project Adjustment presentation represent conflicts with City Council. He clarified the first column signifies the deferrals from last year which total $20.2 million and he is suggested returning $3.5 million of those deferrals for possible projects. He further explained the items in column 2 denoted with an “X” have funding supplied by other sources. In response to Chair O’Neill’s inquiry, City Manager Grace Leung reported the City is still operating in a COVID environment and while the revenue estimates were conservative, they are still unknown for the full year. She noted the charge today is to determine which projects are the highest priority if Surplus Funds or One-Time Funds come available. Chair O’Neill commented the Finance Committee does not normally make recommendations for prioritizing projects but makes recommendations to the City Council on how much funding is available. He noted the challenge is that the Finance Committee currently does not know how much funding is available for projects. Public Works Director Webb clarified the project list will be discussed during the planning sessions with City Council to determine the priority. In response to Mayor Avery’s inquiry, Public Works Director Webb clarified staff suggests which projects would take priority but ultimately it is City Council’s position where best to put the money but believes each project would require some discussion. He noted some projects need attention but none of them are critical and could be deferred. In response to Chair O’Neill’s inquiry, Public Works Director Webb reported a portion of the Balboa Boulevard Median Improvement Project was partially funded by Balboa Village Advisory Committee (BVAC) funding. In response to Chair O’Neill’s inquiry, Public Works Director Webb advised he is working with Deputy Public Works Director/City Engineer Jim Houlihan to prioritize the list of major facility improvements but does not see any becoming more expensive if they are deferred. He did note there are opportunities to build facilities at a cheaper cost now than in the future. Deputy Public Finance Committee Meeting Minutes January 21, 2021 Page 3 of 6 Works Director/City Engineer Houlihan concurred with Public Works Director Webb’s findings. Chair O’Neill commented the discussion will need to take place at the Budget Planning Session. In response to Committee Member Collopy’s inquiry, City Manager Leung reported staff will have full sales tax results through December at the February 18 meeting of the Finance Committee. She acknowledged it is difficult to talk through the expenditures without knowing the revenue. Committee Member Larry Tucker commented the City Council will need to prioritize the projects. He believes projects that have potential liability associated with not doing them should be at the top of the list. Lastly, he commented the pandemic has created a unique situation that will require the City Council to make some last-minute decisions. In response to Committee Member Collopy’s inquiry, Public Works Director Webb clarified the Cliff Drive Mobility Improvements Project is related to congestion and since the school is currently not being used due to the pandemic there is no immediate liability but the City should wait for at least a year before everything is settled to determine the choke points. Mayor Avery concurred. Committee Member Joe Stapleton commented he believes the Balboa Boulevard Median Improvement is a need to have for residents of the west side. Chair O’Neill opened public comments. Charles Klobe inquired about the source of alternate funds for the Cliff Drive Park Clubhouse. He reported residents are not in support of the idea of widening Cliff Drive in the area and agrees with Public Works Director Webb’s suggestion to revisiting the project when school resumes. In response to Nancy Scarborough’s inquiry, Public Works Director Webb’s clarified the project lists are from May and at that time there was no action on the Dover Shores Traffic Study. He reported the $130,000 was part of General Fund money that was taken out but will be put back in the future budget when it comes back to the City Council per their recent direction. In response to Ms. Scarborough’s inquiry, Public Works Director Webb reported staff is not being reduced because there is no shortage in the workflow. He noted the City historically uses consultants to deliver the CIP projects. He confirmed some consultant contracts have been cut back or delayed due to delays in the projects but noted there is no shortage of workflow at this time. Chair O’Neill closed public comments. The item was received and filed. C. FACILITIES FINANCIAL PLAN UPDATE Summary: Staff will present a draft of Facilities Financial Plans reviewing the timing, means of financing, and fiscal impacts associated with funding Council prioritized capital projects. Recommended Action: Receive and file. Public Works Director Webb reported the plan forecasts the timeline when major facilities need to be designed and constructed so the City can plan its financing. He reported some adjustments have been made to the useful life of buildings as they are lasting longer. He reported Fire Station 2 has been bid and the report change to reflect that a new station should be built in 2080. Finance Committee Meeting Minutes January 21, 2021 Page 4 of 6 Public Works Director Webb reported staff will recommend two major changes in the FFP plan to City Council which are the 15th Street Beach Restrooms and Newport Coast Pickleball Court. He explained the 15th Street Beach Restrooms will take a few years because it is in a coastal zone and there are potential design and permitting issues. He noted the Newport Coast Pickleball Court is a Community Request Project and the homeowner’s association in that area is willing to donate the land to the City. Deputy Director/Finance Steve Montano provided a brief overview FY 2020-21 Multi-Tiered Balancing Budget Strategy. He reported in planning the FY 2020-21 Budget there were plans to transfer $22.6 million of the City’s General Fund for Capital Funding, but due to COVID, $16.6 million was deferred to balance the General Fund Operating Budget for FY 2020-21. He reported $5 million was transferred to the General Fund CIPS and $1 million to Facilities Maintenance Plan (FMP). Deputy Director/Finance Montano presented an updated version of the General Fund Sources and Uses that summarize the net result between all General Fund Sources and Uses which indicates $8.4 million in Unrestricted Resources or Surplus. He noted the City is only halfway through its fiscal year and only at the beginning stages of developing the FY 2021-22 Budget, but the City is likely to realize higher revenue than budgeted in certain areas. City Manager Leung commented she anticipates the Operating Revenues totals to be revised to a higher number in February. She noted the Operating Expenditures are listed at $228 million which includes a $5 million additional payment to CalPERS. Lastly, she reported departments are submitting their baseline budgets. In response to Committee Member Collopy’s inquiry, Deputy Director/Finance Montano clarified the $19 million Transfers-In was another tier of the City’s Budget Balancing Strategy. City Manager Leung clarified there are some Transfers-In from various funds and noted that the entire amount was not just due to COVID-19. In response to Mayor Avery’s inquiry, Deputy Director/Finance Montano clarified Unrestricted Resources mainly come from carrying forward encumbrances for projects and tasks that were not complete the prior year. Deputy Director/Finance Montano noted there are two main objectives when reviewing the FFP each year which are to review any fiscal impacts associated with funding high-priority projects and to develop a consistent level of funding to minimize peaks and valleys of General Fund support levels. He presented the FFP Dashboard to the Finance Committee and reported the $8.0 million FFP Reserve Fund minimum target fund balance is maintained above the Maximum Annual Debt Service (MADS) of $8.7 million over the 30-year planning period and debt service will be maintained at less than 8% of General Fund revenues, consistent with City Council (F-6) Debt Management Policy. In response to Committee Member Collopy’s inquiry, Deputy Director/Finance Montano reported the interest rates are at 4% for debt service for the Fire Station and the Civic Center. Deputy Director/Finance Montano reported that over the 30-year planning period, the maximum annual General Fund contribution to the FFP Reserve Fund is 3.5% and averages 2.9% of General Fund revenues. Lastly, he reported $66 million in private contributions to the FFP are expected between 2021 and 2031 with the largest contribution coming from the Uptown Newport Development which makes up 63% of the total. In response to Chair O’Neill’s inquiry, Deputy Director/Finance Montano recommends continuing the fiscal discipline of setting aside $8.5 million to keep pace with the FFP as it is currently constituted. He advised it is an important element of the General Fund covering the Debt Service. Finance Committee Meeting Minutes January 21, 2021 Page 5 of 6 In response to Committee Member Tucker’s inquiries, Deputy Director/Finance Montano reported the Park In-Lieu fees are dedicated to park projects. He also confirmed the $8.5 million is unrestricted and the funds from the Uptown Newport Development are not expected until the 2030s. Mayor Avery commented the $66 million is pretty speculative. In response to Committee Member Collopy’s inquiry, Committee Member Tucker reported Tower Jazz would like to stay longer than the lease expiry date in 2027 which could impact the Development Agreement timeframe. In response to Mayor Avery’s inquiry, Committee Member Tucker reported former Mayor Ed Selich and former Council Member Steve Rosansky negotiated the $41 million. He also noted the City was trying to get a fair amount while not putting the project in jeopardy. Mayor Avery expressed concern that the timeframe is so far out the City may not see the entire $41 million. In response to Committee Member John Reed’s inquiry, Chair O’Neill confirmed the Newport Coast Pickleball Court would be open to the public. He explained one of the negotiating points is to dedicate one or two courts to the HOA. In response to Committee Member Reed’s inquiry, Deputy Director/Finance Montano reported he would send details on the revenue per unit for the Park In-Lieu to Committee Member Reed as he did not have it offhand. Chair O’Neill called for public comments and hearing none, closed public comments. In response to Committee Member Tucker’s inquiry, Deputy Director/Finance Montano confirmed no additional dollar amounts concerning the City’s Housing Element numbers were included in the FFP. Chair O’Neill commented those funds should not be programmed in yet as part of the problem will be to determine what portion will need to be programmed for affordable housing. The item was received and filed. D. WORK PLAN REVIEW Summary: Staff and Finance Committee to review the proposed work plan and adjust as necessary. Recommended Action: Receive and file. Chair O’Neill reported there will be a City Council Planning Session on January 30, 2021, at 9:00 a.m. but Finance Committee members are not required to attend. He advised the Finance Committee will meet on February 18, 2021, to review the Quarterly Budget Update, Fee Study Update, Long Range Fiscal Forecast (LRFF), and a deep dive of the Utilities Department Budget. Chair O’Neill reported the City Council is quickly getting into the budget cycle. He advised attendance for the Finance Committee is optional at the March 9, 2021, City Council Study Session. He noted the Finance Committee will start wrapping up non-budget items on March 11, 2021. Chair O’Neill called for public comments and hearing none, closed public comments. City Manager Leung introduced Finance Director/Treasurer Scott Catlett to the Finance Committee. Finance Director/Treasurer Catlett commented he is looking forward to working with the Finance Committee and taking a more active role in the Finance Committee in the future. Finance Committee Meeting Minutes January 21, 2021 Page 6 of 6 VI. FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON-DISCUSSION ITEM) None VII. ADJOURNMENT The Finance Committee adjourned at 4:11 p.m. to the next regular meeting of the Finance Committee. The agenda for the Regular Meeting was posted on January 15, 2021, at 2:21 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 February 18, 2021, Finance Committee Agenda Comments These comments on an item on the Newport Beach City Council Finance Committee agenda are submitted by: Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229) Item IV.A. MINUTES OF JANUARY 21, 2021 Changes to the draft minutes passages shown in italics are suggested in strikeout underline format. Page 2 (agenda packet page 5), Item B, paragraph 2, sentence 2: “He clarified the first column signifies the deferrals from last year which total $20.2 million and he is suggested suggesting returning $3.5 million of those deferrals for possible projects.” [or “is suggested”] Page 2 (agenda packet page 5), paragraph 3 from end, last sentence: “He noted some projects need attention but none of them are critical and all could be deferred.” Page 3 (agenda packet page 6), full paragraph 6, sentence 2: “He reported residents are not in support of the idea of widening Cliff Drive in the area and agrees with Public Works Director Webb’s suggestion to revisiting revisit the project when school resumes.” Page 3 (agenda packet page 6), full paragraph 7, sentence 1: “In response to Nancy Scarborough’s Scarbrough’s inquiry, Public Works Director Webb’s clarified the project lists are from May and at that time there was no action on the Dover Shores Traffic Study.” Page 3 (agenda packet page 6), full paragraph 8, sentence 1: “In response to Ms. Scarborough’s Scarbrough’s inquiry, Public Works Director Webb reported staff is not being reduced because there is no shortage in the workflow.” Page 3 (agenda packet page 6), last paragraph, last sentence: “He reported Fire Station 2 has been bid and the report change changed to reflect that a new station should be built in 2080.” Page 4 (agenda packet page 7), paragraph 2, sentence 1: “Deputy Director/Finance Steve Montano provided a brief overview of the FY 2020-21 Multi-Tiered Balancing Budget Strategy.” Page 4 (agenda packet page 7), paragraph 2, sentence 3: “He reported $5 million was transferred to the General Fund CIPS CIPs and $1 million to the Facilities Maintenance Plan (FMP).” Page 4 (agenda packet page 7), paragraph 3 from end: “In response to Committee Member Collopy’s inquiry, Deputy Director/Finance Montano reported the interest rates are at 4% for debt service for the Fire Station and the Civic Center.” [I did not attend the meeting. Is this what was said? I thought the interest rate for the Fire Station 2 debt was much lower than for the Civic Center and Library.] Page 4 (agenda packet page 7), paragraph 2 from end, last sentence: “Lastly, he reported $66 million in private contributions to the FFP are expected between 2021 and 2031 with the largest contribution coming from the Uptown Newport Development Agreement which makes up 63% of the total.” [or “Development development”] Page 5 (agenda packet page 8), paragraph 1, sentence 2: “He also confirmed the $8.5 million is unrestricted and the funds from the Uptown Newport Development Agreement are not expected until the 2030s.” [or “Development development”] CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Agenda Item No. 5A February 18, 2021 TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE FROM: Finance Department Scott Catlett, Finance Director/City Treasurer 949-644-3218, scatlett@newportbeachca.gov SUBJECT: Fiscal Year 2020-21 Second Quarter Financial Report SUMMARY: The City of Newport Beach Finance Department prepares quarterly financial reports to review the status of revenues and expenditures for the City’s funds. This report contains information on resources through the second quarter of Fiscal Year 2020-21, which is the period between July 1, 2020, and December 31, 2020. Year-to-date activity of the General Fund shows that revenues through the end of the second quarter are coming in higher than the revised budget, with expenditures projected to be lower than the revised budget. As the economy gradually improves, these trends are likely to continue; however, a great deal is unknown as the global pandemic and related restrictions are still evolving. RECOMMENDED ACTION: Review and discuss this report and provide any recommendations for consideration by the City Manager and City Council. DISCUSSION: Economic Overview The unemployment rate in Orange County was 7.4 percent in December 2020, up from a revised 6.4 percent in November 2020. This compares with an unadjusted unemployment rate of 8.8 percent for California and 6.5 percent for the nation during the same period. Chapman University’s recent annual economic forecast predicts that Orange County jobs, will rise 2.6% in 2021 but will still leave countywide payrolls 105,000 workers short of pre- coronavirus employment. FY 2020-21 Q2 Financial Report February 18, 2020 Page 2 A key factor for the meek recovery is Orange County’s dependence on leisure businesses — from tourism to dining out. Those industries, while resilient, have proved slower to recover or adapt given the State’s pandemic-related restrictions that made most gatherings off limits and intermittently shuttered businesses. Leisure and hospitality jobs still will be 40,000 short of pre-pandemic days after growing an estimated 8.8% in 2021. The sector lost 24% of its jobs in 2020 after a 2.4% rise in 2019. One key yardstick for leisure industries is spending on food and drink. Chapman’s forecast sees a jump of 13% in 2021 following a drop of 24% in 2020. Powering the 2021 rebound will be housing, as new home construction should be strong, and economists predict that construction jobs should grow 13.5% in 2021. Home prices are forecast to rise 4.4% in 2021 following an increase of 7.8% this year and 0.9% in 2019. Among other big-ticket purchases, Orange County spending on motor vehicles and parts is projected to jump 13% in 2021, after plunging 24% this year and rising 3.6% in 2019. Many economists, along with the Federal Reserve’s policymakers, say they’re hopeful that once the coronavirus vaccines are more widely distributed, the economy will achieve a broader recovery in the second half of the year. Job growth is expected to pick up in the spring as vaccine distribution continues, better weather allows for more outdoor activities, and the State gradually loosens restrictions. Despite the expected improvement, California’s jobless claims represent 20.3% of the jobless claims filed in the entire nation for the week that ended January 2nd. General Fund Revenues Most revenue categories have performed at or higher than their budgeted levels this year due to more favorable economic conditions than anticipated when the budget was developed in April 2020. Through the second quarter, revenues have come in $11.5 million higher than currently budgeted. FY 2020-21 Actual General Fund Revenues Through Q2 (December 2020) A B C=B-A D=C/A Revenues by Category PY Q2Actual Adopted Budget Through Q2 Revised Budget Through Q2 YTD Q2Actual Variance % Variance Property Taxes 53,424,224$ 56,462,188$ 56,462,188$ 56,776,541$ 314,353$ 0.6% Sales Tax 13,417,227 9,605,803 9,605,803 13,010,468 3,404,665 35.4% Transient Occupancy Tax 12,689,626 1,543,553 1,543,553 7,790,737 6,247,184 404.7% Other Taxes 4,755,170 3,804,296 3,804,296 4,122,531 318,235 8.4% Service Fees & Charges 12,697,422 10,329,046 10,591,061 8,576,662 (2,014,399) -19.0% Parking Revenue 2,870,199 2,295,867 2,295,867 3,692,174 1,396,307 60.8% Licenses & Permits 2,544,656 2,034,464 2,034,464 2,512,787 478,323 23.5% Property Income 2,387,949 1,958,264 1,958,264 2,310,056 351,792 18.0% Fines & Penalties 1,728,265 1,369,103 1,369,103 2,092,571 723,468 52.8% Intergovernmental Revenues 802,580 431,446 1,605,228 1,750,146 144,918 9.0% Investment Earnings 585,882 115,184 115,184 537,542 422,358 366.7% Miscellaneous Revenues 1,554,206 298,961 655,531 374,325 (281,206) -42.9% Total Revenues 109,457,406$ 90,248,175$ 92,040,542$ 103,546,540$ 11,505,998$ 12.5% FY 2020-21 Q2 Financial Report February 18, 2020 Page 3 Property Taxes - Property taxes are the single largest funding source and represent just under 50% of all General Fund revenues. Property tax revenues for FY 2020-21 were budgeted conservatively anticipating the potential for delayed payments due to economic hardship and the Governor’s Executive Order (N-61-20) suspending penalties and interest of property taxes. For FY 2020-21, property taxes are so far $314,000 higher than projected through the second quarter. This is largely due to a timing difference for receipt of the City’s first RDA (Redevelopment Agency) residual payment being booked in December when it is typically booked in January. Otherwise property taxes would have been down approximately $466,000. The City’s first of three unsecured property tax payments came in less than projected; however, the second payment, received in January 2021, came in higher than projected and overall unsecured property taxes are now back on track at 4.6% higher than the previous year. These are value-based taxes not secured by property (e.g. business property, boats, and airplanes) and make up only about 2.6% of property tax revenue. Supplemental taxes (levied after change in ownership or completion of new construction) continued to be down through the second quarter; however, the latest payment received in January 2021 was flat compared to the prior year. With the recent surge of home sales, this category will likely continue to improve, which bodes well for future secured property taxes. Secured property tax payments continue to come in strong which is an indication of timely property tax payments. Staff have made no changes to the property tax revenue estimates based on the revenues received through the end of the second quarter. Sales Tax - The second largest funding source for the General Fund is sales tax revenue, typically making up more than 15% of General Fund revenues. The City’s sales tax base is largely generated from three main industry categories including Autos and Transportation, General Consumer Goods, and Restaurants/Hotels. Most of these industries are also heavily impacted by tourism. Sales Tax revenues through the second quarter of FY 2020-21 are $3.4 million higher than anticipated. Businesses pivoted in creative ways to reach their customers as they were able to open at some capacity sooner than expected resulting in relatively strong consumer spending. For these reasons all three main industry categories performed better than expected. Although second quarter revenues are higher than expected thus far, sales taxes receipts are still less than the prior year. The latest sales tax information shows that retail and restaurants have been hit especially hard while transportation is showing quarter over quarter increases. Also, the California Department of Tax and Fee Administration (CDTFA) has extended due dates and offered payment plans to small businesses. This has, and will continue to create, timing issues related to when revenues are received. The City’s sales tax consultant has provided an updated sales tax estimate of $34.5 million for FY 2020-21, $5.8 million or 20.4% higher than budgeted, resulting from increased consumer spending, vaccination roll-out, and reduced case counts. There is still room for additional positive improvement in sales tax revenues by the end of the fiscal year; however, staff and the City’s consultant remain conservative in projecting sales tax revenues and will wait to FY 2020-21 Q2 Financial Report February 18, 2020 Page 4 evaluate additional receipts before making additional adjustments to the sales tax revenue projection. Transient Occupancy Tax – Transient occupancy tax (TOT) was the City’s most severely impacted revenue source as the pandemic unfolded, as most major hotels within the City were temporarily closed towards the end of March 2020 and many didn’t start reopening until late May or early June. Also, short term rentals were not allowed to operate in the City from early April 2020 until May 20, 2020. Although most hotels are operational, with the exception of the Island Hotel, they remain well under full capacity. The Renaissance Newport Beach hotel just reopened February 1, 2021. Staff budgeted FY 2020-21 TOT revenues very conservatively expecting to realize just 10% and 20% of prior year revenue in the first and second quarter, respectively. Staff also anticipated that residential and hotel TOT would be impacted similarly by the pandemic. In fact, the negative impact has been limited to hotel TOT, with residential TOT revenues for the first and second quarters of FY 2020-21 coming in 13% higher than prior years. The table below illustrates hotel TOT revenues by month this fiscal year versus the same month in the prior fiscal year. It is notable that revenues continued to improve from July through October and then had a dramatic fall in December 2020 when Governor Newsom enacted a stay at home order that largely prohibited travel. Month % of Prior Year Revenues July 2020 37% August 2020 48% September 2020 55% October 2020 59% November 2020 51% December 2020 31% In spite of these restrictions, revenues through the second quarter of FY 2020-21 were approximately $6.2 million over the projected budget. Staff expects the hotel industry to continue to operate at reduced, but increasing, occupancy throughout the remainder of the Fiscal Year. Due to the lifting of the stay at home order, the vaccination roll-out, and the likelihood of more travel by year end, the City’s tourist population is expected to gradually increase. Staff are projecting revenues to reach 60%, a level comparable to what was seen in October, by the end of the fiscal year. For these reasons, staff currently FY 2020-21 Q2 Financial Report February 18, 2020 Page 5 estimates TOT revenues of $15.2 million for FY 2020-21, which is $8.8 million or 136.4% higher than budgeted. All Other Revenue – This category includes all other revenue sources other than the top three (property tax, sales tax, and TOT). All Other Revenue is made up of the following: • Other Taxes – real property transfer taxes, business license taxes, marine charter taxes, and franchise fees. • Service Fees & Charges – plan check fees, recreation classes, emergency medical services fees, and numerous other cost-of-service fees. • Parking Revenue – all General Fund related metered parking fees that are assessed throughout the various parking zones of the City. • Licenses and Permits – fees charged to process building related permits, street closure permits, dog licenses, and police tow franchise fees. • Property Income – City owned and managed income producing properties, long- term ground leases to concessions, restaurants, hotels and other businesses and organizations, and rental of City facilities to the public. • Fines and Penalties – parking citation fines collected by the City, administrative citation fines, fines remitted to the City from the County for vehicle code violations, and false alarm penalties. • Intergovernmental Revenues – federal, state, and local grant revenues, which includes, but is not limited to, the City’s portion of the ½ cent sales tax revenue paid to the County for public safety, state mandate reimbursements, reimbursement for strike teams sent to assist with fires, and revenue sharing with the County of Orange under the Waste Disposal Agreement (WDA). • Investment Earnings – revenue generated from the investment of City funds. • Miscellaneous Revenues – restricted revenue, damage to City property, bad debt, donations and contributions, non-operating revenues such as proceeds from the sale of materials and equipment, and other miscellaneous revenues. Revenue accounts other than the top three were, reduced by 20% across the board in the FY 2020-21 budget. This was based on historical reductions to revenues during prior recessions and with the understanding that some accounts would come in higher than projected and others would come in lower. All other revenue (excluding the top three) through December 31, 2020, is $1.5 million higher than budgeted. Parking revenue through the second quarter came in strong at $1.4 million over budget. This is due to warm weather and people seeking local outdoor options for exercise and entertainment. Property Income through the second quarter is up $350,000 over budget and is due to rental property revenue coming in strong and to account for revenue that was deferred from FY 2019-20 to FY 2020-21. Fines and Penalties are $720,000 over budget as parking fines are coming in higher than projected. Other Taxes are $300,000 over budget, FY 2020-21 Q2 Financial Report February 18, 2020 Page 6 with business license taxes and property transfer taxes coming in strong, while marine charter taxes are below budget. Licenses and Permits revenues are almost $480,000 over budget primarily from building permits. Service Fees & Charges came in $2 million less than budgeted. This is partially due to a decrease in fees from police activity (jail booking and alarm permit) and the libraries being closed, but largely results from recreation programs and contract classes being severely limited. These decreased revenues were also partially offset by Community Development Department, Public Works, and the Fire Junior Lifeguard Services Fees & Charges revenues coming in higher than projected. Also partially offsetting the decrease in recreation revenue is expenditure savings resulting from reduced contract instructor payments. Other Revenue estimates have been further refined by the departments during the budget process and are now projected at $51.3 million for FY 2020-21, which is $2.6 million or 5.3% higher than budgeted. The following table shows staff’s projection for FY 2020-21 revenue through the end of the fiscal year and how it compares to current year budgets and prior year actuals. If revenues come in as projected below, staff estimates an additional $17.2 million beyond the revised budget amounts. FY 2020-21 Projected General Fund Revenues It should also be noted that the City has received approximately $4.0 million of CARES Act funding between fiscal years 2019-20 and 2020-21. Between March 2020 and September 30, 2020, we received a total of $3.5 million in CARES Act funding, with another $529,569 received in October of 2020. Of the total $4.0 million received to date, $72,314 was from the U.S. Department of Health & Human Services as part of the Provider Relief Fund to be used for healthcare related expenses or lost revenues; $2.1 million was from the County of Orange to provide grants to small business impacted by the pandemic; $769,758 from the County of Orange, and $1.0 million from the State of California were both used to offset public safety activities during the pandemic. In addition to the CARES Act Funding, the City also filed a $565,000 claim to the Federal Emergency A B C=B-A D=C/A Revenues by Category PY Actual Adopted Budget Revised Budget Projected Actual Variance % Variance Property Taxes 113,313,535$ 117,508,227$ 117,508,227$ 117,508,227$ -$ 0.0% Sales Tax 36,232,969 28,690,831 28,690,831 34,540,800 5,849,969 20.4% Transient Occupancy Tax 20,847,883 6,434,115 6,434,115 15,209,156 8,775,041 136.4% Other Taxes 11,846,082 9,652,973 9,652,973 11,081,175 1,428,202 14.8% Service Fees & Charges 20,913,897 17,350,903 17,612,918 14,508,830 (3,104,088) -17.6% Parking Revenue 5,503,053 4,599,800 4,599,800 5,503,097 903,297 19.6% Licenses & Permits 4,752,252 4,239,333 4,239,333 5,042,454 803,121 18.9% Property Income 4,619,106 3,892,635 3,892,635 4,341,939 449,304 11.5% Fines & Penalties 3,659,011 3,681,031 3,681,031 3,263,257 (417,774) -11.3% Intergovernmental Revenues 3,910,305 1,646,716 2,860,998 5,031,400 2,170,402 75.9% Investment Earnings 1,295,547 1,112,200 1,112,200 1,112,200 - 0.0% Miscellaneous Revenues 3,059,377 775,140 1,131,710 1,462,982 331,272 29.3% Total Revenues 229,953,017$ 199,583,904$ 201,416,771$ 218,605,517$ 17,188,746$ 8.5% FY 2020-21 Q2 Financial Report February 18, 2020 Page 7 Management Agency (FEMA), which given recent actions by the Biden Administration will be revised to request reimbursement for additional costs and to increase the amount requested to 100% of the City’s costs. However, the disposition of this claim will not be known for some time. The City also received $290,000 from the County of Orange for economic support initiatives for the community’s small businesses. Depending on the source and guidance associated with the different allocations of pandemic-related funding, certain portions will ultimately be transferred to the General Fund and provide additional resources to further offset pandemic-related costs. General Fund Expenditures With 50% of the year complete, FY 2020-21 General Fund expenditures total $104.7 million and are at 45.9% of the revised budget, which is 2.7% lower than projected. Some departments incur a greater or lower level of expenditures in the first half of the year than in the second half due to the timing and seasonality of their operations or programs, and the trends in the current fiscal year are generally consistent with prior years. Existing appropriations are on target to fund all current operational expenditures and likely generate year-end budget savings, with no further adjustments to the expenditure budget needed as of the end of the second quarter. Significant expenditure budget updates include the following (all currently expected to be covered with existing revised budget appropriations): • Many departments have seen an increase in operating costs for janitorial and cleaning expenses related to COVID-19, including street sweeping, beach clean-up and park maintenance, public facilities and restroom janitorial services, day porter services at the Central Library, power washing for public spaces and sidewalks including temporary outdoor dining, and additional weekly cleaning of city vehicles (mainly Public Safety departments). The current budget can fund all expenditures as of the end of Q2. • The Fire Department continues to provide staffing for Strike Team deployments. Reimbursement will be requested through Cal OES and expected to be received within the 2nd – 3rd quarters of Fiscal Year 2020-21. The Fire Department has a new line item for the transparency of Strike Team expenditures, Strike Teams/Mutual Aid - 713010, which had expenditures of $775,000 through Q2. • Public Safety has seen increased expenditures relating to COVID-19 for disposable medicine/EMS supplies for personal protective equipment, emergency cleaning services, and related supplies. These costs are expected to be absorbed through Q2, with CARES Act & FEMA reimbursement expected to offset any overages in department budgets at year-end. • Departments have seen increased overtime costs relating to the pandemic for emergency clean-up services such as beach and street clean-up relating to more people enjoying the beach for outdoor recreational activities due to the shutdown orders, and staffing COVID testing sites and vaccinations PODs. FY 2020-21 Q2 Financial Report February 18, 2020 Page 8 FY 2020-21 Projected General Fund Expenditures While the table only reflects $0.5 million of budget savings, consistent with prior fiscal years, it is anticipated that year-end budget savings will exceed this amount. However, it is important to note that the non-personnel budget was reduced by $2.7 million prior to adoption and $2.0 million of salary savings is already assumed. Savings are therefore likely to be less than what is seen in a typical fiscal year. General Fund Reserves We are fortunate that the City was in excellent financial health prior to the global pandemic. Conservative budgeting and sound financial policies have resulted in a trend of General Fund operating surpluses and strong reserve levels for several years. This is still no less the case even amid the significant economic downturn the City is experiencing. Conservative budgeting practices coupled with better than expected consumer demand have resulted in higher revenues and lower expenditures than budgeted. This has contributed towards the realization of projected unrestricted General Fund resources of $27.5 million at the end of Fiscal Year 2020-21 as shown in the table below. A B C=B-A D=C/A Expenditures by Category Adopted Budget Revised Budget Projected Actual Variance % Variance Salary & Benefits 149,193,630$ 154,425,087$ 154,300,338$ (124,749)$ -0.08% Contract Services 24,088,461 25,340,657 25,352,004 11,348 0.04% Grant Operating 600,000 1,155,371 1,149,858 (5,513) -0.48% Utilities 2,961,757 2,961,757 2,961,757 - 0.00% Supplies & Materials 3,740,696 4,425,375 4,015,467 (409,908) -9.26% Maintenance & Repair 8,822,276 8,987,338 9,104,698 117,359 1.31% Travel & Training 813,368 809,309 808,995 (314) -0.04% General Expenses 2,125,501 2,295,759 2,281,206 (14,553) -0.63% Internal Svc Charge 25,977,295 25,977,295 25,962,004 (15,291) -0.06% Risk Management 750,915 750,915 750,915 - 0.00% Capital Expenditures 785,138 854,412 826,367 (28,046) -3.28% Total 219,859,037 227,983,275 227,513,609 (469,667) -0.21% FY 2020-21 Q2 Financial Report February 18, 2020 Page 9 General Fund Sources and Uses As the data presented in this report reflects only half of the fiscal year, there remain opportunities for positive or negative variances. The risks associated with variances are further amplified by the pandemic and related restrictions. The degree to which these restrictions are lifted or reinstated for the balance of the fiscal year will have a material impact on revenues and possibly expenditures. While this report reflects the best information currently available to staff, variances will occur. Staff therefore recommends caution when viewing the projected ending unrestricted fund balance (surplus) of $27.5 million, which is still very much subject to revision as the year progresses. The Tiered Budget Balancing Framework The strategy employed to balance the budget for FY 2020-21 includes utilization of a tiered budget balancing framework, which is illustrated below. A B C=B-A D=C/A 2019-20 2020-21 2020-21 Sources Beginning Unrestricted Fund Balance 23,119,513$ 24,081,225$ 24,081,225$ -$ 0.0% Operating Revenues 229,953,017 201,416,771 218,605,517 17,188,746 8.5% Less: Restricted Revenues (2,785,622) (765,967) (765,967) - 0.0% Use of Restricted Revenues and Encumbrances - 2,095,632 2,095,632 - 0.0% Transfers In 17,207,099 19,160,543 19,160,543 - 0.0% Total Sources 267,494,007$ 245,988,204$ 263,176,950$ 17,188,746$ 7.0% Uses Operating Expenditures 211,066,539 227,983,275 227,513,609 (469,666) -0.2% Transfers Out 32,346,243 8,200,000 8,200,000 - 0.0% Total Uses 243,412,782$ 236,183,275$ 235,713,609$ (469,666)$ -0.2% Ending Unrestricted Fund Balance 24,081,225$ 9,804,929$ 27,463,341$ 17,658,412$ 180.1% Contingency Reserve 52,618,059$ 52,618,059$ Actual Projected Actual Revised Budget Variance % Variance Tier 1 Tier 2 Tier 3 Tier 4 Tier 5 Tier 6 Operating Cuts Temporary Hiring Freeze Deferred Capital ISF Charge Reductions Contingency Reserve Service Level Cuts Professional and Contract Svcs.1,621,760$ -$ -$ -$ -$ -$ 1,621,760$ Other Non-Personnel Budgets 1,136,807 - - - - - 1,136,807 Personnel Services - 2,000,000 - - - - 2,000,000 Transfers Out - - 18,477,137 500,000 - - 18,977,137 Capital Budgets - - 2,500,000 - - - 2,500,000 Insurance - - - 2,000,000 - - 2,000,000 Equipment Replacement - - - 2,500,000 - - 2,500,000 Contingency Reserve Draw - - - - 2,304,399 - 2,304,399 Total 2,758,567$ 2,000,000$ 20,977,137$ 5,000,000$ 2,304,399$ -$ 33,040,103$ Cuts Restored in First Quarter - - - (500,000) (2,304,399) - (2,804,399) Revised Total 2,758,567$ 2,000,000$ 20,977,137$ 4,500,000$ -$ -$ 30,235,704$ Total FY 2020-21 Q2 Financial Report February 18, 2020 Page 10 Tier 5 – Contingency Reserve Per City Council Reserve Policy F-2, the Contingency Reserve shall have a target balance of 25 percent of the General Fund operating budget as originally adopted, excluding the amount allocated for additional discretionary pension payments. In order to balance the budget and under the emergency provisions of Policy F-2, this current year budget has a $2.3 million draw from the Contingency Reserve. Pursuant to policy, staff must present a plan to City Council to replenish the reserve within five years after the economy has stabilized. Based on the positive budget to actual variances realized in FY 2019-20 that resulted in a surplus, the better than expected quarter one results, and the positive revenue results projected for FY 2020-21, Council approved the replenishment of the $2.3 million Contingency Reserve at the 11/24/20 Council meeting. The Contingency Reserve is now fully funded pursuant to Council Policy F-2 for the FY 2020-21 fiscal year. Tier 4 – Internal Service Fund Charges Funds in the amount of $4.5 million were transferred in from other funds to partially backfill the anticipated General Fund revenue shortfall for FY 2020-21. These funds derived from prior year internal service funds (ISF) charges that originated from the General Fund. These charges are intended to reimburse ISF operations related to equipment replacement charges, or centrally managed insurance reserves and most were returned without significantly impacting the replacement schedule or funding for liabilities. At the 11/24/20 Council meeting, Council approved the replenishment of the $500,000 taken from the Equipment Replacement Fund, which improves the percent of that Fund’s reserve that is set aside to cover the accumulated depreciation. No further changes to the Tier 4 reductions are recommended at this time. However, should the fiscal year end with a surplus as is currently anticipated, staff will evaluate the health on the City’s Internal Service Funds and may make recommendations for further restoration of Tier 4 cuts at year-end. These restorations would be proposed for evaluation prior to the disposition of the balance of the budget surplus being considered under City Council Policy F-5 – General Fund Surplus Utilization. Tier 3 – Deferred Capital Funding Staff recommends maintaining the reductions at this time. A review of the CIP program is recommended in the context of developing the FY 2021-22 budget. This will be discussed in more detail as the FY 2021-22 budget is being developed, at which time deferred capital projects would be considered for funding. Tier 2 – Temporary Hiring Freeze Staff recommends the continuation of selected hiring with approval by City Manager, with the City targeting an estimated $2 million in personnel savings. Current projections are that this savings will be achieved. Tier 1 – Operating Reductions No changes are recommended at this time. Departments have indicated that they can complete the fiscal year without restoration of any of these reductions. FY 2020-21 Q2 Financial Report February 18, 2020 Page 11 Other Funds Other funds that are subject to revenue volatility include Tidelands, Gas Tax, Measure M, SB1 RMRA (Road Maintenance and Rehabilitation Account), and the Water and Wastewater funds. An analysis of the budget performance for these funds through the second quarter of this fiscal year indicates that no budget adjustments are currently necessary. Staff will continue to monitor these and all funds on a monthly basis. Conclusion Staff recommends that the Finance Committee review and discuss this report and provide any recommendations for City Manager and City Council consideration prior to the February 23, 2021, City Council meeting, at which time this report will next be presented. Prepared and Submitted by: /a/ Steve Montano ____________________________ Steve Montano Deputy Finance Director Fiscal Year 2020-21 Second Quarter Budget Update Finance Committee February 18, 2021 City of Newport Beach –Finance Department 2 Economic Overview •Economic activity and employment have picked up somewhat in recent months but remain well below their levels before the pandemic •Ec0nomists expect recovery during 2021, but not to pre-pandemic levels •Transient occupancy tax revenues rebounded to 60% of pre-pandemic levels in October before dropping due to the new stay-at-home order, but are now expected to rebound again •The return to the State’s purple tier is expected to have a positive impact on sales tax and transient occupancy tax revenues Unemployment December 2020 United States 6.5% California 8.8% Orange County 7.4% Economic Indicators 2020 2021 Leisure and Hospitality Jobs -24%+ 9% Food and Drink Spending -24%+ 13% Home Prices + 8%+ 4% Vehicle Purchases -24%+ 13% City of Newport Beach –Finance Department 3 Year-To -Date General Fund Revenue Performance •Most categories of revenue higher than budgeted levels •$11.5 million of net positive variance City of Newport Beach –Finance Department 4 Projected General Fund Revenues Adopted Budget $ 199.6 million Revised Budget $ 201.4 million Second Quarter Projection $ 218.6 million •$17.2 million of pr0jected positive variance •Continuing positive trends as seen in the first half of the fiscal year •Growth primarily driven by positive changes in sales tax and TOT revenues $- $50 $100 $150 $200 $250 Adopted Revised ProjectedMillions Property Tax Sales Tax TOT Other City of Newport Beach –Finance Department 5 Projected General Fund Revenues •While trends are very positive, even if the projection is realized actual revenues will be well below prior year actuals City of Newport Beach –Finance Department 6 Historical General Fund Revenues $204 $217 $230 $230 $219 $170 $180 $190 $200 $210 $220 $230 $240 $250 $260 $270 2016-17 Actual 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 ProjectedMillions Trend Line Actual and Projection City of Newport Beach –Finance Department 7 Property Tax •Minimally impacted by the pandemic (at least in the short term) •Represents just under 50% of General Fund revenues •Variances within revenue categories, but in total on track •No changes have been made to the original revenue estimate $97 $102 $108 $113 $118 $80 $85 $90 $95 $100 $105 $110 $115 $120 $125 $130 2016-17 Actual 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 ProjectedMillions City of Newport Beach –Finance Department 8 Sales Tax •Sales tax revenues have been impacted by the pandemic-related restrictions and a decline in tourism •Businesses pivoted in creative ways to reach their customers •Businesses able to open at some capacity sooner than expected •Consumer spending strengthening and adapting •Stronger pool revenues •$5.8 million (20.4%) projected improvement versus the $28.7 million adopted budget $34 $35 $39 $36 $35 $30 $32 $34 $36 $38 $40 2016-17 Actual 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 ProjectedMillions City of Newport Beach –Finance Department 9 Transient Occupancy Tax •Transient occupancy tax was the City’s most severely impacted revenue source as a result of the pandemic •All but one hotel have reopened and have worked hard to adapt to the current environment •Business travelers have largely not returned, but leisure travelers, although primarily regional, remain •Revenues recovered to 60% of pre-pandemic levels in October before the new stay at home order and are projected to return to that level by June •$8.8 million (136.4%) projected improvement versus the $6.4 million adopted budget $22 $23 $25 $21 $15 $10 $12 $14 $16 $18 $20 $22 $24 $26 2016-17 Actual 2017-18 Actual 2018-19 Actual 2019-20 Actual 2020-21 ProjectedMillions Month % of Prior Year Revenues July 2020 37% August 2020 48% September 2020 55% October 2020 59% November 2020 51% December 2020 31% City of Newport Beach –Finance Department 10 Other General Fund Revenues •20% reduction in the adopted budget •$1.5 million above budget through December •Parking revenues very strong •Property transfer tax higher than expected •Reduced fees and charges revenues primarily due to recreation programs (partially offset by reduced expenditures) •$2.6 million (5.3%) projected improvement versus the $48.7 million adopted budget City of Newport Beach –Finance Department 11 Projected General Fund Expenditures Adopted Budget $ 219.9 million Revised Budget $ 228.0 million Second Quarter Projection $ 227.5 million •$0.5 million projected budget savings, but expected to increase as the year progresses •Savings may be below typical level due to budget reductions and assumed salary savings •Through December 45.9% of revised budget expended, which is 2.7% lower than projected •All departments are performing as expected •Additional $5 million pension payment made, bringing the total to $40 million City of Newport Beach –Finance Department 12 Projected General Fund Expenditures •Primary drivers of additional costs include COVID-19 response-related expenses including facility cleaning, public safety costs, and related overtime •Other budget savings anticipated to offset these costs •Additional CARES Act and FEMA reimbursements will provide further savings City of Newport Beach –Finance Department 13 General Fund Reserves •Higher than originally budgeted revenues and lower than budgeted costs are anticipated to result in a strong year-end budget surplus •Currently projected to be $27.5 million •Opportunities for positive or negative variances remain •Highly dependent on pandemic- related recovery and restrictions City of Newport Beach –Finance Department 14 Context for Projected Budget Surplus •Of the $27.5 million of currently projected year-end surplus, only $3.4 million relates to the current fiscal year •$24.1 million attributable to carried forward surplus from the prior two fiscal years that was intended to balance the budget •$11.5 million FY 2018-19 surplus •$12.6 million FY 2019-20 surplus •Need has been offset by higher revenues •Budget cuts that have not yet been restored total $30.2 million 2020-21 Sources Operating Revenues 218,605,517 Less: Restricted Revenues (765,967) Use of Restricted Revenues and Encumbrances 2,095,632 Transfers In 19,160,543 Total Sources 239,095,725$ Uses Operating Expenditures 227,513,609 Transfers Out 8,200,000 Total Uses 235,713,609$ Current Year Contribution to Surplus 3,382,116$ Projected Actual City of Newport Beach –Finance Department 15 Tiered Budget Balancing Framework •Tier 5 and partial Tier 4 cuts restored at the first quarter budget review •Tier 1 and Tier 2 cuts expected to be achieved •Tier 3 cuts to be evaluated during the budget process •Staff are recommending evaluation of the Tier 4 cuts at year-end City of Newport Beach –Finance Department 16 Recommended Action Staff recommends that the Finance Committee: •Review and discuss this report •Provide any recommendations for consideration by the City Manager and the City Council City of Newport Beach –Finance Department 17 Questions? Agenda Item No.5B February 18, 2021 TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE FROM: Finance Department Scott Catlett, Finance Director/City Treasurer 949-644-3123, scatlett@newportbeachca.gov SUBJECT: FEE STUDY UPDATE SUMMARY: Fees are regularly studied and updated by department to ensure the proper recovery for cost of services in accordance with the cost recovery rates established by the City Council. Departments are reviewed on a rotating basis such that each department’s fees are comprehensively studied and updated every 3-5 years. This year, staff recommends fee updates for the following departments: •Finance •Harbor •Public Works •Utilities The results of the fee study updates are as follows: Department Increasing Decreasing Eliminated No Change New Fees Totals Finance 19 5 1 6 6 37 Harbor 18 2 0 0 5 25 Public Works 18 12 3 5 2 40 Utilities 7 4 2 5 4 22 Total 62 23 6 16 17 124 PCT of Total 50% 19% 5% 13% 14% 100% CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT Fee Study Update February 18, 2021 Page 2 There are also a few fee updates outside of these departments: • All Departments – Lobbyist registration fee, Public Records Act Request (PRAR) photocopies, flash drive • Community Development Department – Title 17 related appeals fees • Library – black & white and color copies Staff recommends that the fee schedule updates become effective July 1, 2021, pending City Council approval. RECOMMENDED ACTION: Receive and file. DISCUSSION: Background Newport Beach Municipal Code (NBMC) Section 3.36, Council Policy F-4 (Revenue Measures) and Item 12 of the Fiscal Sustainability Plan (FSP) provide staff and the City Council with policy guidance related to setting cost recovery targets and updating user fees. User fees, or cost-of-service fees, are charged to a private citizen or group for services performed or provided by a government agency on their behalf. If the service benefits primarily an individual or group of people, then the burden of that cost should be borne by the person receiving the benefit. NBMC Section 3.36.030 sets the cost recovery for user fees at one hundred percent (100%), with the exception of the subsidized fees listed in Exhibit “A” of that same section, as well as those limited by California or Federal statutes. A recommendation for less than a hundred percent (100%) cost recovery rate may occur when a service is beneficial to the community at large along with specific individuals or groups, and/or when there is an economic incentive, or disincentive, to do so. In these cases, the General Fund typically subsidizes the service. Any newly proposed fee or fee increase that is not approved will be absorbed through General Fund subsidy. The Schedule of Rents, Fines, and Fees (SRFF) is a customer service document maintained by the Revenue Division, available online, which includes cost-of-services fees, as well as fines and penalties, rents, and other charges imposed by the City or mandated by the State of California. Fees approved by City Council update the cost-of-services fees within the SRFF. This latest fee study was conducted by the City’s consultant, MGT of America (MGT). In order to establish fees on the basis of full cost recovery, it is necessary to determine the cost of services. MGT conducts a comprehensive review and update of the City-wide cost allocation plan and direct user fee calculations for each department on a rotating basis every three to five years. MGT uses well-established cost accounting methodologies to calculate our municipal fees on a full cost recovery basis and contracts with significant number of municipalities in California. Fee Study Update February 18, 2021 Page 3 This year, MGT studied the following departments: • Finance • Harbor • Public Works • Utilities The complete list of studied fees can be found in Attachment A. MGT meets with each of the studied departments to discuss the services provided, the annual volume for those services, and the staff and time estimates for working on said services. MGT then calculates the department staff’s fully burdened hourly rate, which includes both internal administrative as well as citywide overhead costs. The fully burdened hourly rates are applied to the time estimates provided by staff and the fee is calculated. MGT reviews and cross checks the results to ensure the data is valid and asks each department to review the calculations for accuracy and reasonableness. Once the calculations are confirmed, department staff then recommends that the fee should either be fully recovered or subsidized. An example of this process is provided in Attachment B. NBMC Section 3.36.030 Exhibit “A” subsidy changes can be found in Attachment C. The most common reasons for fees to go up or down are: 1) costs changing over time, most often increasing 2) the staff performing the service changes, and/or 3) the amount of time to perform the service changes. Below is a summary of how studied department fees are changing: Finance The Revenue Division of the Finance Department maximizes and safeguards the City’s revenues by implementing and enforcing Municipal Code revenue programs. These programs include, but are not limited to, tax collection, short term lodging, film permitting and parking. The Revenue Division was last studied in 2016. The results of the Finance fee study updates are as follows: Department Increasing Decreasing Eliminated No Change New Fees Totals Finance 19 5 1 6 6 36 PCT of Total 51% 13% 3% 16% 16% 100% Staff recommends changes to the following fees: • Delinquent Transient Occupancy Tax (TOT) Payment fee ($54) – Delete. A 10% penalty, as well as interest at the rate of 1½% per month, is already charged when TOT payments are submitted past the due date. • TOT Reprint fee ($14) - Rename to “Zero Bill Reprints” and add fee as subsidy to NBMC Section 3.36.030 that will establish the recovery at 0% to reflect current administrative practice. Zero bills are based on forms that customers complete to Fee Study Update February 18, 2021 Page 4 calculate the tax owed. Staff time to process is minimal and current practice is not to charge the fee. The following new fees are recommended: 1. Short Term Lodging Permit (STLP) Reinstatement ($91) – Applies if an owner’s short term lodging permit is suspended and after the designated time within NBMC Section 5.95.065 the owner wishes to reapply. This fee covers staff time to reinstate the permit. 2. STLP Suspension or Revocation Hearing ($509) – Pursuant to NBMC Section 5.95.065, an owner may request a hearing after their permit is suspended or revoked. This fee covers staff time as well as the cost of the hearing officer. Staff recommends subsidizing this fee at 50% so there is equal cost sharing between the City and the appellant; and subsidizing this fee at 100% if the appellant is successful. 3. Film Permit – Review (5 or fewer cast & crew) ($12) – The City has a contract with FilmLA to process film permits; however, all permits require staff review prior to final approval. Smaller shoots with five or fewer cast and crew, like family portraits and school photos, take less staff time to review. 4. Film Permit – Review Fee (6 or more cast & crew) ($51) – Larger productions, those with 6 or more cast and crew, may require additional department review, have multiple locations, and/or parking requirements. 5. Film Permit Staff Time Outside of Permit Application (fully burdened hourly rate of staff and actual time) – Some film permits require scheduling and coordinating Police and Fire – Lifeguard staff or other City staff to be present at the production. 6. Film Permit – Cancellation (for permits requiring additional City services) (fully burdened hourly staff rate and actual time) – at times a permittee will decide they no longer require additional City services at the production or reduce the amount of time staff are required to be present. These amendments or cancellations require administrative staff time to coordinate the staff cancellation and scheduling. Fee Study Update February 18, 2021 Page 5 Harbor On July 1, 2017, the City took over responsibility for managing harbor operations from the Orange County Sheriff. Initially, the City utilized the fee schedule from the County of Orange to charge for fees. A fee study was conducted about a year later after staff was able to evaluate the services provided. The last Harbor Department fee study update was adopted January 22, 2019, through Resolution 2019-03. This Harbor Department fee study was taken to the Harbor Commission on January 13, 2021. The results of the Harbor fee study updates are as follows: Department Increasing Decreasing Eliminated No Change New Fees Totals Harbor 18 2 0 0 5 36 PCT of Total 72% 8% 0% 0% 20% 100% Staff recommends changes to the following fees: • Appeals or Calls for Review ($1,250 for appeals to Harbor Commission; $940 for appeals to City Council) - Harbor appeal fees are currently set to charge on an hourly basis at staff’s 100% fully loaded hourly rate. NBMC Section 17.65 was revised last year to outline the procedures for appealing a decision from the Community Development Director, Public Works Director, Harbormaster, and Harbor Commission. The studied fees varied between departments due to different staff and time estimates (shown in the table below). In order to provide continuity and remain in line with other subsidized appeals fees within the City, staff recommends a flat appeal fee which is approximately 50% of the average fee between departments. Staff also recommends a subsidy of 100% if the appellant is successful. Service Full Cost 50% Subsidy Recommended Flat Rate a. Appeal of CDD Director Decision to Harbor Commission 3,030 1,515 1,250 b. Appeal of Harbor Commission Decision to City Council (CDD) 2,073 1,036 940 c. Appeal of Harbormaster Decision to Harbor Commission 1,796 898 1,250 d. Appeal of Harbor Commission Decision to City Council (Harbor Dept) 1,551 775 940 e. Appeal of PW Director Decision to Harbor Commission 2,699 1,350 1,250 f. Appeal of Harbor Commission Decision to City Council (PW) 2,030 1,015 940 g. Average Appeal to Harbor Commission (a+c+e)/3=g 2,509 1,254 1,250 h. Average Appeal to City Council (b+d+f)/3=h 1,885 942 940 • Harbor Special Events – Simple ($95) - Staff recommends changing the “Raft Up Permit” name to “Harbor Special Events – Simple” in order expand permit approvals to include events such as boat races and raft ups. • Marine Activities Permit (MAP) application (initial) – Service Provider ($365); Fee Study Update February 18, 2021 Page 6 MAP application (initial) – Charters ($1,137); MAP application (initial) - Boat Rentals ($1,137); MAP application (initial) - Human-Power Rentals ($1,137) - NBMC Section 17.10 was recently revised to require most commercial activity in the Harbor to obtain a MAP. Staff worked with Harbor Commission to identify the most common business types, listed above in bold, in the Harbor who would be required to obtain a MAP pursuant to the new ordinance. Staff recommends adding the following new fees: 1. Environmental Response ($73 per hour plus actual materials cost) - Applies when a boater experiences mechanical or vessel system failure that results in hazardous materials being introduced into the harbor, necessitating staff to contain the hazardous material and a contractor to clean it. 2. Harbor Special Events – Complex ($491) - Large scale harbor events require assignment of Harbor Department resources during the planning and execution of the activity. 3. Large Boat Permit (≥ 80 Linear Feet), Requiring Interagency Coordination ($736) Applies when a large motor yacht or vessel requests temporary mooring permits within the Harbor, where coordination with the owners’ representatives, the United States Coast Guard, and/or third-party service providers is required. 4. Large Boat Escort (per escort and per vessel) ($102) – Applies when Harbor Department vessels are required to provide escort services to large vessels entering or departing the Harbor. 5. Multiple Vessel Mooring System Application ($503) – Applies to permittees requesting consideration for the installation of approved float systems on a permitted off-shore mooring. Due to the recent updates to Title 17, staff recommends deleting the current subsidy of $100 for “Appeal of lease/permit under Chapter 17.65”. This subsidy was intended for appealing a lease/permit decision rendered by a hearing officer. Because hearing officers are no longer hearing these appeals, this subsidy is no longer relevant. Public Works The Public Works Department is responsible for managing a comprehensive capital improvement program, including the promotion of a safe and efficient transportation system. Public Works also manages public property through permitted encroachments; ensures the safety of utility company activities, private construction and special events in the public right-of-way; reviews plans for residential and commercial development as they relate to the public right of-way; and oversees activities that protect and improve the harbor and upper bay. The proposed changes to the Public Works fees cover the following areas which have not been updated since 2015: Engineering & Transportation, Refuse, and Water Quality. Fee Study Update February 18, 2021 Page 7 The results of the Public Works fee study updates are as follows: Public Works Department Increasing Decreasing Eliminated No Change New Fees Totals Engineering & Transportation 12 12 3 5 2 34 Refuse 2 0 0 0 0 2 Water Quality 4 0 0 0 0 4 Total 18 12 3 5 2 40 PCT of Total 45% 30% 8% 13% 5% 100% Engineering & Transportation Staff recommends changes to the following fees: • Encroachment With Other Department/Division Review and the Encroachment Without Other Department/Division Review – NBMC Section 3.36 currently subsidizes these services at 57% and 88% recovery. Staff recommends removing both subsidies so these fees can be charged at full cost recovery. • Engineering Field Inspection ($138) – Currently, there are three separate fees at the same cost for engineering field inspections. Staff recommends combining them into one fee. • Plan Check with Pre-Permit Review ($155) – Delete. There is no material difference in staff time or process from that of a regular plan check. • The same recommendation for Chapter 17.65 appeals as described under the Harbor Department applies to appeals related to Public Works Director decisions. Staff recommends adding the following new fees: 1. Encroachment & Engineering Agreement Prep – Planning Commission ($3,139) The City currently has an Encroachment & Engineering Agreement Prep fee; however, some agreements require Planning Commission Review while others do not. Creating a separate fee when Planning Commission review is required applies a fairer distribution of costs. This new fee covers the increased amount of staff time required, coordination between multiple departments, and public hearing expenses, such as the cost of mailings and the posting of the public notice. The current Encroachment & Engineering Agreement Prep fee will decrease as a result of this split. 2. Plan Check (new construction) add-on for Harbor Commission Public Hearings($2,130) – The City currently has a Plan Check Fee; however, similar to the fee above, some plan check fees require Harbor Commission Review while others do not. The addition of this fee ensures that costs are more fairly distributed based on the complexity of the project. Fee Study Update February 18, 2021 Page 8 Refuse The fees in this latest study were updated based on current staff and time estimates appropriate for those services. Staff recommends adding the following pass through fees: 1. Tree Planting/Removal (actual contract expense) 2. Supplemental Tree Trimming (actual contract expense) Water Quality Activities within this service area are designed to maintain compliance with state and federal permits and regulations that promote clean water environments for the Newport Bay, ocean, shoreline, and other sensitive areas. Staff recommends changes to the following fees: 1. Water Quality Construction Site Inspections – Staff recommends a tiered fee structure based on the complexity and size of the project. The number of inspections required can be as low as just one during the life of the project and other circumstances can require as many as eight or more. In order to ensure full cost recovery, staff recommends this tiered fee structure. 2. Electric Vehicle (EV) Charger ($0.46 per kWh) – Historically, this fee only included the pass-through cost of electricity and the cost of the EV provider contract agreement. Staff recommends updating the fee to include staff time for the administration of the EV program. Utilities The Utilities Department provides clean, safe, and responsive utility and infrastructure maintenance services to the community. They were last studied in 2016. The results of the Utilities fee study updates are as follows: Department Increasing Decreasing Eliminated No Change New Fees Totals Utilities 7 4 2 5 4 22 PCT of Total 32% 18% 9% 23% 18% 100% Staff recommends changes to the following fees: • Lifting Eye for Trench Plates ($121) and Trench Plate Delivery ($452) – Delete. The Utilities Department no longer provides or delivers trench plates for Fee Study Update February 18, 2021 Page 9 construction projects because they are provided by a contractor. • Construction Water Meter – Per Month ($99.89) – This fee is the same as the 2-inch water meter within the water rate study and should be updated in conjunction with that rate each year. • Utilities water meter and water and sewer meter box and lids (actual cost) - These charges are detailed in Attachment D. Staff recommends adding the following new fees: 1. Sewer Only Establishment Fee ($49) – This fee would apply when a property owner receives their water supply entirely from an entity other than the City (ex. Mesa Water or Irvine Ranch Water District) but their property connects into the City sewer system. This fee would cover the cost of the initial access into the sewer system and setting up the customer’s account. 2. FOG (Fats, Oils, and Grease) Non-Compliance (additional inspections) ($70) The City currently covers the cost of the initial annual inspection. This fee would cover the cost of additional inspections should they remain non-compliant with NBMC. 3. Water and Sewer Service Establishment – Non-Business Hours (turn-ons) ($321) This fee would apply when a customer requests their services be turned on outside of normal business hours. The City is required to pay overtime to the on-call employee tasked with performing this service and this additional fee would help recover that cost. 4. Re-Inspection Fee (hourly) ($165) - This fee will be charged when re-inspection(s) are required due to non-compliance with prior inspection instructions or the terms and conditions of the permit have not been met. Fee Study Update February 18, 2021 Page 10 Other Fee Updates Staff recommends the following: 1. Lobbyist Registration (pass through contractor cost) - Currently, the contractor does not charge a fee to register lobbyists, but if the contractor does charge a fee in the future, that cost would be passed to the individual registering. 2. Regular Photocopies ($5 per 5 minutes) – Delete. The current $5 per increment charge was calculated using the Deputy City Clerk salary and benefits. The staff positions can vary and are calculated using the appropriate staff who conducts the copies. With advancements in technology this fee is rarely charged as most PRAR requests are no longer copied, but rather emailed or loaded onto a flash drive. 3. Flash Drive ($6) – At times the City Clerk’s Office is requested to provide documentation for PRARs on flash drives. Adding this pass-through fee will make the amount of the fee available to the public. 4. Appeals or Calls for Review ($1,250 for appeals to Harbor Commission; $940 for appeals to City Council) – As stated above, the revised NBMC Chapter 17.65 addresses appeals of the Community Development Director decisions to the Harbor Commission and Harbor Commission decisions to City Council. 5. Per Page Copies ($0.35 black and white; $0.45 color) – The Library provides copiers to the public for making black and white and/or color copies. The per copy cost for Library copies is different than the average cost of copies for City departments. The cost is calculated using the replacement cost of the copier, its useful life, the annual number of copies, the maintenance cost of the copiers, and paper costs. The study calculated the cost of Library black and white copies at $0.39 per copy and color copies at $0.49. Staff recommends these costs be rounded down to the nearest nickel for easy application. The Library currently charges $0.15 per black and white copy and $0.75 per color copy. Resolution No. 2018-55 provides that Harbor rents (approved by Resolution No. 2019-3) and facility rentals (approved by Resolution No. 2018-55) shall increase annually by changes to the Consumer Price Index (CPI), but limits the annual increases to 3 consecutive increases. The limitation was to ensure that cost of service fees is studied within the 5-year timeframe as directed in NBMC Section 3.36.010. However, because rental fees are outside of the rotating comprehensive fee studies, staff recommends clarifying the CPI language to exclude those charges from the 3-year cap. Fee Study Update February 18, 2021 Page 11 Conclusion: Staff estimates that these fees, if approved by Council as recommended, will amount to approximately $216,000 in additional revenues for the Water or Sewer Funds and a decrease in revenues of approximately $65,000 in the General Fund. However, this projection does not account for any fees where volume statistics are unavailable. Staff intends to bring the proposed recommendations to the City Council for formal action next month. Any newly proposed fee or fee increase that is not approved will be absorbed either through General Fund, Water Fund, or Sewer Fund subsidy. Prepared and Submitted by: /s/ Theresa Schweitzer Theresa Schweitzer Senior Accountant Attachments: A. FY 2020-21 Studied Department Changes B. Application of Indirect Costs to the Calculation of Fees for Services C. Newport Beach Municipal Code Section 3.36.030 Exhibit A Changes D. Utilities Pass Through Fee Updates ATTACHMENT A FISCAL YEAR 2020-21 STUDIED DEPARTMENT CHANGES User Fee Study Summary SheetCity of Newport BeachFinance ‐ Revenue (0103031)2020‐2021Ord Service Name Fee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended Subsidy1 Adult Oriented Business Permits Flat‐            1,138.00$       1,308.53$       100% 1,308.00$       170.00$          15%‐$                  ‐$                  ‐$                 2 Business License ‐ change in information Flat 164           24.00$            24.13$            100% 24.00$              ‐$                 0% 3,936$              ‐$                 22$                  3 Business License ‐ duplicate Flat 123           11.00$            11.42$            100% 11.00$              ‐$                 0% 1,353$              ‐$                 52$                  4 Business License Initial Application Process Flat 280           62.00$            60.47$            100% 60.00$             (2.00)$              ‐3% 16,800$          (560)$               130$                5 Dance Permit Flat 2               172.00$          176.68$          100% 176.00$          4.00$               2% 352$                8$                    1$                    6 Delinquent TOT PaymentDelete‐            54.00$             ‐$                ‐‐  Staff recommends removing this fee ‐‐7 Dog License ‐ Late Charge Pass Thru 585           2.50$              2.50$              100% 2.50$                ‐$                 0% 1,463$              ‐$                  ‐$                 8 Dog License ‐ Tag Replacement Flat 63             7.00$              10.67$            100% 10.00$             3.00$               43% 630$                189$                42$                  9 Dog License ‐ Unaltered Flat 379           44.00$            53.70$            100% 53.00$             9.00$               20% 20,087$          3,411$             266$                10 Dog License ‐ Sterilized Flat 4,459        22.00$            53.70$            50% 26.00$             4.00$               18% 115,934$        17,836$          123,526$        11 Escort Service Per Employee Flat‐            507.00$          576.04$          100% 576.00$          69.00$             14%‐$                  ‐$                  ‐$                 12 Escort Service Permit Flat‐            987.00$          1,121.54$       100% 1,121.00$       134.00$          14%‐$                  ‐$                  ‐$                 13 EV Chargers Per kWh‐            0.368$             ‐$                ‐‐  Fee is now moved over to Public Works Engineering ‐‐14 Film Permit Fee Suspended‐             ‐$                 ‐$                ‐‐ Fee was suspended through Resolution 2014‐100 ‐‐15 Film Prod Appl ‐ With Film Liaison Suspended‐             ‐$                 ‐$                ‐‐ Fee was suspended through Resolution 2014‐100 ‐‐16 Film Prod Appl ‐ Without Film Liaison Flat‐            289.00$          296.10$          100% 296.00$          7.00$               2%‐$                  ‐$                  ‐$                 17 Fire Arms Sales Permit Flat 2               115.00$          108.64$          100% 108.00$          (7.00)$              ‐6% 216$                (14)$                 1$                    18 Live Entertainment Permit Flat 3               172.00$          174.66$          100% 174.00$          2.00$               1% 522$                6$                    2$                    19 Parking Permit Replacement Fee Flat 225           11.00$            12.04$            100% 12.00$             1.00$               9% 2,700$             225$                9$                    20 Payment Plan  (except Parking) Flat‐            25.00$            29.22$            86% 25.00$              ‐$                 0%‐$                  ‐$                  ‐$                 21 Payment Plan (Parking) $5 indig/$25 oth‐            25.00$            34.45$            73% 25.00$              ‐$                 0%‐$                  ‐$                  ‐$                 22 Preferential Parking Permit Flat 781           18.00$            19.61$            100% 19.00$             1.00$               6% 14,839$          781$                474$                23 Review of Hotel Special Package Application Flat 1               199.00$          194.88$          100% 194.00$          (5.00)$              ‐3% 194$                (5)$                   1$                    24 Sidewalk Vending Permit Application Flat 2               159.00$          173.58$          100% 173.00$          14.00$             9% 346$                28$                  1$                    25 Short Term Lodging Permits ‐ Initial Flat 170           169.00$          165.95$          100% 165.00$          (4.00)$              ‐2% 28,050$          (680)$               162$                26 Short Term Lodging Permits ‐ Renewal Flat 1,054        96.00$            87.44$            100% 87.00$             (9.00)$              ‐9% 91,698$          (9,486)$           468$                27 Short Term Lodging Permits ‐ Reprint Flat‐            13.00$            13.21$            100% 13.00$              ‐$                 0%‐$                  ‐$                  ‐$                 28 Sound Amp Permit Flat 10             72.00$            73.78$            100% 73.00$             1.00$               1% 730$                10$                  8$                    29 TOT Reprint Flat 60             14.00$            14.30$            100% 14.00$              ‐$                 0% 840$                 ‐$                 18$                  30 Vehicles For Hire ‐ Annual Per Vehicle Fee Flat‐            202.00$          236.74$          100% 236.00$          34.00$             17%‐$                  ‐$                  ‐$                 31 Vehicles For Hire ‐ Certificate Flat 1               2,000.00$       2,156.72$       100% 2,156.00$       156.00$          8% 2,156$             156$                1$                    32 Vehicles For Hire ‐ Driver's Permit Flat‐            379.00$          429.58$          100% 429.00$          50.00$             13%‐$                  ‐$                  ‐$                 33 Vehicles For Hire ‐ Driver's Permit Renewal Flat‐            369.00$          419.46$          100% 419.00$          50.00$             14%‐$                  ‐$                  ‐$                 34 Vehicles For Hire ‐ Fee Per Vehicle Flat‐            202.00$          236.74$          100% 236.00$          34.00$             17%‐$                  ‐$                  ‐$                 Current RecommendationsPer UnitAnnualPer Unit User Fee Study Summary SheetCity of Newport BeachFinance ‐ Revenue (0103031)2020‐2021Ord Service Name Fee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended SubsidyCurrent RecommendationsPer UnitAnnualPer Unit35 STLP Reinstatement FeeNew ‐ Flat Fee‐             ‐$                91.60$            100% 91.00$             91.00$             N/A‐$                  ‐$                  ‐$                 36 STLP Suspension or Revocation HearingNew ‐ Flat Fee‐             ‐$                1,019.06$       50% 509.00$          509.00$          N/A‐$                  ‐$                  ‐$                 37 Film Permit ‐ Review Fee (5 or fewer cast & crew)New ‐ Flat Fee‐             ‐$                12.90$            100% 12.00$             12.00$             N/A‐$                  ‐$                  ‐$                 38 Film Permit ‐ Review Fee (6 or more cast & crew)New ‐ Flat Fee‐             ‐$                51.58$            100% 51.00$             51.00$             N/A‐$                  ‐$                  ‐$                 39 Film Permit ‐ Staff Time Outside of Permit Application ReviewNew ‐ Hourly‐             ‐$                 ‐$                ‐‐ Fee to be charged on an actual cost basis, using fully burdened rates ‐‐40 Film Permit ‐ Cancellation Fee (for permits req add'l City svcs)New ‐ Hourly‐             ‐$                 ‐$                ‐‐ Fee to be charged on an actual cost basis, using fully burdened rates ‐‐41 Sewer Only Establishment Fee X‐suppt to Util 2                ‐$                35.41$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 42 Construction Water Meter ‐ Establishment (set‐up) X‐suppt to Util 29              ‐$                28.59$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 43 Delinq Water Service Discontinuance X‐suppt to Util 49              ‐$                52.38$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 44 Delinq Water Svc Restoration ‐ Business Hrs X‐suppt to Util 23              ‐$                26.19$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 45 Delinq Water Svc Restoration ‐ Non Busi Hrs X‐suppt to Util 3                ‐$                42.34$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 46 Delinq Water Svc Restoration ‐ Business Hrs (low income) X‐suppt to Util‐             ‐$                75.42$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 47 Delinq Water Svc Restoration ‐ Non Busi Hrs (low income) X‐suppt to Util‐             ‐$                63.33$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 48 Hydrant Flow Test ‐ Non‐Highway (regular hours) X‐suppt to Util 60              ‐$                14.28$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 49 Hydrant Flow Test ‐ Highway (night time) X‐suppt to Util‐             ‐$                14.28$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 50 Water and Sewer Service Establishment Fee (turn ons) X‐suppt to Util 472            ‐$                19.71$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 51 Water and Sewer Service Establishment Fee ‐ Online (turn ons) X‐suppt to Util 2,459         ‐$                16.13$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 52 Water Service Installation Fee (new meter) X‐suppt to Util 251            ‐$                50.58$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 53 Water Shut Off ‐ Tag Placement X‐suppt to Util 11              ‐$                25.57$            ‐‐  this expense added to Utilities for recovery through that fee structure ‐‐ 54 Solid Waste Franchise Application X‐suppt to PW 4                ‐$                23.83$            ‐‐  this expense added to Public Wks for recovery through that fee structure ‐‐ 55 Admin Cite Hearings No Fee 50              ‐$                89.33$            0%‐$                  ‐$                 N/A‐$                  ‐$                 4,466$             56 Parking Hearings No Fee 248            ‐$                42.09$            0%‐$                  ‐$                 N/A‐$                  ‐$                 10,439$          57 Parking Reviews No Fee 7,711         ‐$                39.74$            0%‐$                  ‐$                 N/A‐$                  ‐$                 306,405$        Total User Fees$302,846 $11,905 $446,495Footnotes6 Delinquent TOT Payment This fee is not currently charged; a 10% penalty plus interest is charged when payment is late.29 TOT Reprint Staff recommends renaming this fee to "Zero Bill Reprints".  If there is no way to charge this fee, staff will recommend council adopt a 100% subsidy.35 STLP Reinstatement 36 STLP Suspension or Revocation Hearing NBMC 5.95.065 (B)(2) authorizes a hearing fee for short term lodging suspension or revocation hearings. Staff recommends that this hearing fee be subsidized by 50%.NBMC 5.95.065 (D) allows an owner to reapply for a short term lodging permit after suspension. This fee is to cover staff time to verify payments up to date, update the database, and reissue the permit. User Fee Study Summary SheetCity of Newport BeachFinance ‐ Revenue (0103031)2020‐2021Ord Service Name Fee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended SubsidyCurrent RecommendationsPer UnitAnnualPer Unit37 Film Permit ‐ Review Fee (5 or fewer cast & crew)38 Film Permit ‐ Review Fee (6 or more cast & crew)39 Film Permit ‐ Staff Time Outside of Permit Application Review40 Film Permit ‐ Cancellation Fee (for permits req add'l City svcs)41‐54 Crossover Support ServicesThe costs identified above are for time spent in support of fees charged by other departments.  These costs are forwarded to those departments for inclusion into their cost‐of‐service analysis.This fee is to cover staff time required to review a FilmLA film permit.  Although FilmLA processes the permit, the permit requires some level of City staff oversight to ensure it meets all our time, location, and equipment standards. Smaller shoots tend to be family portraits, school photos, etc. that have little impact to the City and take less staff time to review. This fee is to cover staff time required to review a FilmLA film permit.  Although FilmLA processes the permit, the permit requires some level of City staff oversight to ensure it meets all our time, location, and equipment standards. Larger productions may have multiple locations, parking requirements, and/or additional internal department reviews resulting in increased staff time. Some film permits require the scheduling and coordinating of Police and Fire ‐ Lifeguard staff or other City staff to be present at the production. This fee will cover that staff time. This fee covers the staff time to amend staffing schedules after a film permittee has decided they no longer need Police or Fire ‐ Lifeguard present Attachment A– Harbor Department Updated Cost of Service Fees City of Newport BeachHarbor Department (10045451)2020/2021Ord Service Name Fee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended Subsidy1 Appeal of Harbormaster Decision to Harbor Commission Flat Fee 3                ‐$                1,796.43$      70% 1,250.00$      1,250.00$      N/A 3,750$            3,750$            1,639$                  2 Appeal of Harbor Commission Decision to City Council Flat Fee 2                ‐$                1,550.89$      61% 940.00$          940.00$          N/A 1,880$            1,880$            1,222$                  3 Dinghy Rack Rental Application Fee Flat Fee 30             17.00$            19.29$            100% 19.00$            2.00$              12% 570$               60$                 9$                          4 Environmental ResponseNew ‐ Hrly + Mat'ls‐             ‐$                73.32$            100% 73.00$            73.00$            N/A‐$                 ‐$                 ‐$                      5 Harbor Special Events ‐ ComplexNew ‐ Flat3                ‐$                491.07$          100% 491.00$          491.00$          N/A 1,473$            1,473$            0$                          6 Harbor Special Events ‐ Simple (Raft Up, Boat Race, etc) Flat Fee 24             63.00$            95.58$            100% 95.00$            32.00$            51% 2,280$            768$               14$                       7 Impound Fee ‐ Initial Flat Fee 118           69.00$            104.33$          100% 104.00$          35.00$            51% 12,272$          4,130$            39$                       8 Impound Fee ‐ Loose or Lost and Found Boats/Vessels Flat Fee 100           47.00$            52.99$            100% 52.00$            5.00$              11% 5,200$            500$               99$                       9 Key Card Replacement Flat Fee 100           23.00$            12.86$            100% 12.00$            (11.00)$           ‐48% 1,200$            (1,100)$          86$                       10 Large Boat Permit (80+ LF) Flat Fee 45             65.00$            73.79$            100% 73.00$            8.00$              12% 3,285$            360$               36$                       11 Large Boat Permit (80+ ft), Requiring Interagency CoordinationNew ‐ Flat1                ‐$                736.61$          100% 736.00$          736.00$          N/A 736$               736$               1$                          12 Large Boat Escort (per escort and per vessel)New ‐ Flat10              ‐$                102.05$          100% 102.00$          102.00$          N/A 1,020$            1,020$            1$                          13 Live Aboard Permit Flat Fee 22             282.00$          373.55$          100% 373.00$          91.00$            32% 8,206$            2,002$            12$                       14 Lost/Broken Line Flat Fee 5               104.00$          60.86$            100% 60.00$            (44.00)$           ‐42% 300$               (220)$              4$                          15 Marina Park Cancellation Fee Flat Fee 15             11.00$            12.86$            100% 12.00$            1.00$              9% 180$               15$                 13$                       16 Marina Park Deposit Deposit‐            50.00$             ‐$                ‐‐ deposit fee; not cost‐of‐service; recommend no change to current fee ‐‐17 Marina Park ‐ Flat Rate for Electricity Flat + per kWh 417           12.00$            13.18$            100% 13.00$            1.00$              8% 5,421$            417$               75$                       18 MAP (initial) ‐ Service Provider Flat Fee 5               350.00$          365.79$          100% 365.00$          15.00$            4% 1,825$            75$                 4$                          19 MAP (initial) ‐ Charters, Boat Rentals, Human‐Powered Rentals Flat Fee 5               350.00$          1,137.45$      100% 1,137.00$      787.00$          225% 5,685$            3,935$            2$                          20 MAP (renewal) Flat Fee 33             282.00$          439.78$          100% 439.00$          157.00$          56% 14,487$          5,181$            26$                       21 Mooring Extension Permit Flat Fee 35             335.00$          503.93$          100% 503.00$          168.00$          50% 17,605$          5,880$            33$                       22 Multiple Vessel Mooring System Application FeeNew ‐ Flat4                ‐$                503.93$          100% 503.00$          503.00$          N/A 2,012$            2,012$            4$                          23 Temporary Sea Lion Deterrent Flat Fee 100           139.00$          140.85$          100% 140.00$          1.00$              1% 14,000$          100$               85$                       24 Towing Fee (Boats over 14') Flat + Contr Cost 10             23.00$            25.72$            100% 25.00$            2.00$              9% 250$               20$                 7$                          25 Towing Fee (Boats under 14') Flat Fee 100           69.00$            70.43$            100% 70.00$            1.00$              1% 7,000$            100$               43$                       26 Wait List for Balboa Yacht Basin Slips and Garages Flat Fee 37             28.00$            33.00$            100% 33.00$            5.00$              18% 1,221$            185$                ‐$                      27 Wait List for Balboa Yacht Basin or Marina Park Dinghy Racks Flat Fee 12             23.00$            25.72$            100% 25.00$            2.00$              9% 300$               24$                 9$                          28 Wait List for Live Aboards Flat Fee 14             5.00$              25.72$            100% 25.00$            20.00$            400% 350$               280$               10$                       Total User Fees$112,508 $33,583 $3,470Current RecommendationsPer UnitAnnualPer Unit Attachment A– Harbor Department Updated Cost of Service Fees City of Newport BeachHarbor Department (10045451)2020/2021Ord Service Name Fee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended SubsidyCurrent RecommendationsPer UnitAnnualPer UnitFootnotes1, 2 Appeal fees4Environmental Response fee5Harbor Special Events ‐ Complex 6Harbor Special Events ‐ Simple11Large Boat Permit (80+ LF), Requiring Interagency Coordination12Large Boat Escort (per escort and per vessel)18,19The initial MAP fee is being split into two fees.22Multiple Vessel Mooring System Application FeeThis fee would apply when Harbor Department vessels are required to provide escort services to large vessels entering or departing the Harbor (typically mega‐yachts making use of temporary anchorage/mooring in the harbor).This fee would apply to permittees requesting consideration for the installation of approved float systems on a permitted off‐shore mooring.The recommended fees for Appeal fees shown above are based on the calculated average cost of an appeal of CDD Director, PW Director, and Harbormaster decisions and are pursuant to Newport Beach Municipal Code 17.65.  Staff also recommend the removal of the $100 fee for Appeal of Lease/Permit under 17.65.  This subsidy was intended for appealing a lease/permit decision rendered by a hearing officer.  Recent updates to Title 17 removed this language and these appeals are no longer heard by a hearing officer; this subsidy is no longer relevant.This fee would be applicable in those situations where a boater experiences some form of mechanical or other vessel system failure that results in materials being introduced into the Harbor (typically a spill) that could result in environmental damage to the Harbor.  This fee is intended to recover staff time, materials costs (such as boom to contain spills), and contracted services (if required).This fee would be applied to large scale harbor events, requiring the assignment of harbor Department resources during the planning and execution of the activity.The existing Raft‐Up permit is being renamed and will include more than just raft‐ups.This fee would apply to large motor yachts or other vessels requesting temporary mooring permits within the Harbor's turning basin (or other locations) where coordination with owners, representatives, USCG and/or third party service providers (such as marine contractors) to set up and remove mooring equipment is required. User Fee Study Summary SheetCity of Newport BeachPW ‐ Engr Svcs (01080801) and Traf&Trans (0108012)2020/2021Ord Service Name Fee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended Subsidy1 Covenant Agreement Research & Review Fee Hourly 1                155.00$          168.10$          100% 168.00$          13.00$            8% 168$                13$                  0$                    2 Dining Encr Permit ‐ Appl Flat Fee 1                417.00$          459.92$          100% 459.00$          42.00$            10% 459$                42$                  1$                    3 Dining Encr Permit ‐ Transfer Flat Fee 1                232.00$          211.23$          100% 211.00$          (21.00)$            ‐9% 211$                (21)$                 0$                    4 Dining Encr Permit ‐ Outside Dining 100 sq ft or less Lease‐            162.00$           ‐$                 ‐‐ lease fee; not cost‐of‐service ‐‐5 Dining Encr Permit ‐ Outside Dining over 100 sq ft Lease‐            306.00$           ‐$                 ‐‐ lease fee; not cost‐of‐service ‐‐6 Document Recordation Fee Flat Fee 1                213.00$          204.45$          100% 204.00$          (9.00)$              ‐4% 204$                (9)$                   0$                    7 Easement Deed Research, Reviews/Processing Flat Fee 10              232.00$          252.14$          100% 252.00$          20.00$            9% 2,520$            200$                1$                    8 Encroachment & Engr Agreement Prep Flat Fee 59              909.00$          576.31$          100% 576.00$          (333.00)$          ‐37% 33,984$          (19,647)$         19$                  9 Encroachment & Engr Agreement Prep ‐ Planning CommissionNew Fee5                 ‐$                 3,139.99$       100% 3,139.00$       3,139.00$       N/A 15,695$          15,695$          5$                    10 Encroachment Permit With Other Dept/Div Review Flat Fee 7                306.00$          442.92$          100% 442.00$          136.00$          44% 3,094$            952$                6$                    11 Encroachment Permit Without Other Dept/Div Review Flat Fee 604            268.00$          252.14$          100% 252.00$          (16.00)$            ‐6% 152,208$        (9,664)$           87$                  12 Engineering Field Inspection Flat Fee 5,574        183.00$          138.04$          100% 138.00$          (45.00)$            ‐25% 769,212$        (250,830)$       216$                13 Engineering Field Inspection (swr/wtr meter/fire svc)Delete‐            183.00$           ‐$                 ‐‐ combined with #12 above; remove this fee from SRFF ‐‐14 Engineering Field Inspection (parkway drains ‐ ea insp)Delete‐            183.00$           ‐$                 ‐‐ combined with #12 above; remove this fee from SRFF ‐‐15 Escrow Account Administration Flat Fee 1                109.00$          125.66$          100% 125.00$          16.00$            15% 125$                16$                  1$                    16 Fair Share Fee Impact Fee‐            225.64$           ‐$                 ‐‐ impact fee; not cost‐of‐service ‐‐17 Lot Line Adjustment Checking Fee Flat Fee 17              1,201.00$       1,174.21$       100% 1,174.00$       (27.00)$            ‐2% 19,958$          (459)$              4$                    18 Monitoring Wells Flat Fee 5                559.00$          347.53$          100% 347.00$          (212.00)$          ‐38% 1,735$            (1,060)$           3$                    19 News Rack Permit Flat Fee 1                120.00$          61.37$            100% 61.00$            (59.00)$            ‐49% 61$                  (59)$                 0$                    20 Oceanfront Encr Annual Permit: 0 ‐ 5 ft depth Lease‐            391.00$           ‐$                 ‐‐ lease fee; not cost‐of‐service ‐‐21 Oceanfront Encr Annual Permit: 5 ‐ 7.5 ft depth Lease‐            587.00$           ‐$                 ‐‐ lease fee; not cost‐of‐service ‐‐22 Oceanfront Encr Annual Permit: 7.5 ‐ 10 ft depth Lease‐            783.00$           ‐$                 ‐‐ lease fee; not cost‐of‐service ‐‐23 Oceanfront Encr Annual Permit: 10 ‐15 ft depth Lease‐            1,176.00$        ‐$                 ‐‐ lease fee; not cost‐of‐service ‐‐24 Parcel Map  Check Flat Fee 18              2,768.00$       3,107.25$       100% 3,107.00$       339.00$          12% 55,926$          6,102$            5$                    25 Plan Check Hourly 310            172.00$          203.91$          100% 203.00$          31.00$            18% 62,930$          9,610$            283$                26 Plan Check with Pre‐Permit ReviewDelete‐            155.00$           ‐$                 ‐‐ department recommends removing this fee from SRFF ‐‐27 Street Closure Permit ‐ With Engineering Review Flat Fee 225            73.00$            78.38$            100% 78.00$            5.00$               7% 17,550$          1,125$            85$                  28 Street Closure Permit ‐ Without Engineering Review Flat Fee 675            30.00$            30.69$            100% 30.00$             ‐$                 0% 20,250$           ‐$                 463$                29 Street Easement and Vacation Processing Fee Flat + Hrly 5                1,137.00$       1,015.23$       100% 1,015.00$       (122.00)$          ‐11% 5,075$            (610)$              1$                    30 Temporary No Parking Signs Flat Fee 3,000        0.80$               0.80$               100% 0.80$               0.00$               1% 2,412$            12$                   ‐$                 31 Tract Plan Check: up to $100,000 Calculated‐             ‐$                  ‐$                 ‐‐ no recent activity; department recommends no change to this fee ‐‐32 Tract Plan Check: $100,000 to $400,000 Calculated‐             ‐$                  ‐$                 ‐‐ no recent activity; department recommends no change to this fee ‐‐33 Tract Plan Check: over $400,000 Calculated‐             ‐$                  ‐$                 ‐‐ no recent activity; department recommends no change to this fee ‐‐34 Traffic Control Plan Check ‐ 8.5 x 11 / 11 x 17 Per Sheet 500            73.00$            78.38$            100% 78.00$            5.00$               7% 39,000$          2,500$            189$                35 Traffic Control Plan Check ‐ 24 x 36 Per Sheet 25              159.00$          173.76$          100% 173.00$          14.00$            9% 4,325$            350$                19$                  36 Traffic Study Actual Cost 10               ‐$                  ‐$                 100%‐$                  ‐$                 N/A‐$                  ‐$                  ‐$                 37 Traffic Subdivision Plan Check Hourly 200            155.00$          168.10$          100% 168.00$          13.00$            8% 33,600$          2,600$            19$                  38 Crane Deposit Deposit‐            1,000.00$        ‐$                 ‐‐ deposit fee; not cost‐of‐service ‐‐Current RecommendationsPer UnitAnnualPer Unit User Fee Study Summary SheetCity of Newport BeachPW ‐ Engr Svcs (01080801) and Traf&Trans (0108012)2020/2021Ord Service Name Fee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended SubsidyCurrent RecommendationsPer UnitAnnualPer Unit39 Improvements Required By City Deposit‐             ‐$                  ‐$                 ‐‐ deposit fee; not cost‐of‐service ‐‐40 Piers ‐ Residential Rental‐             ‐$                  ‐$                 ‐‐ rental fee; not cost‐of‐service ‐‐41 Appeal of PW Director Decision ‐ to Harbor Comm Actual Cost 1                 ‐$                 2,130.66$       59% 1,250.00$       1,250.00$       N/A 1,250$            1,250$            881$                42 Appeal of PW Director Decision ‐ to City Council Actual Cost‐             ‐$                 1,461.48$       64% 940.00$          940.00$          N/A‐$                  ‐$                  ‐$                 43 Appeal of Lease/Permit under Section 17.60.080Delete‐            100.00$           ‐$                 ‐‐ department recommends removing this fee from SRFF ‐‐44 Pier Permit Transfer Flat Fee 55              260.00$          245.49$          100% 245.00$          (15.00)$            ‐6% 13,475$          (825)$              27$                  45 Plan Check Fee (new const) Flat Fee 19              582.00$          245.49$          100% 245.00$          (337.00)$          ‐58% 4,655$            (6,403)$           9$                    46 Plan Check Fee (new constr) add‐on for Harbor Commi Public HearingNew Fee6                 ‐$                 2,130.66$       100% 2,130.00$       2,130.00$       N/A 12,780$          12,780$          4$                    47 Plan Check Fee (maintenance) Flat Fee 50              136.00$          61.37$            100% 61.00$            (75.00)$            ‐55% 3,050$            (3,750)$           19$                  48 RGP Dredging Permit Flat Fee 20              1,900.00$       3,203.51$       100% 3,203.00$       1,303.00$       69% 64,060$          26,060$          10$                  Total User Fees$1,339,972‐$214,030 $2,357Footnotes9 Encroachment & Engr Agreement Prep ‐ Planning Commission10 Encroachment Permit With Other Dept/Div Review Staff is recommending removal of the current subsidy of 57%.11 Encroachment Permit Without Other Dept/Div Review Staff is recommending removal of the current subsidy of 88%.26 Plan Check with Pre‐Permit Review41‐43 Appeal fees46 Plan Check Fee (new constr) add‐on for Harbor Commi Public HearingThe recommended fees for Appeal fees shown above are based on the calculated average cost of an appeal of CDD Director, PW Director, and Harbormaster decisions and are pursuant to Newport Beach Municipal Code 17.65.  Staff also recommend the removal of the $100 fee for Appeal of Lease/Permit under 17.65.  This subsidy was intended for appealing a lease/permit decision rendered by a hearing officer.  Recent updates to Title 17 removed this language and these appeals are no longer heard by a hearing officer; this subsidy is no longer relevant.This fee was split from the standard Encroachment and Engineering Agreements to be applied to those agreements that require Planning Commission Review and to capture the associated costs of the additional review.  The related expenses include the cost of a public hearing, as well as staff time provided by both the Community Development Department and the City Attorney’s Office.  Staff is recommending deletion of this fee item due to the fact that there is no material difference in staff time or process from that of a regular plan check.This fee was split from the standard (HR) Plan Check Fee (new const) to be applied to those plan checks that require Harbor Commission Review and to capture the associated costs of the additional review.  The related expenses include the cost of a public hearing, required notifications, and additional Public Works Department staff time.    User Fee Study Summary SheetCity of Newport BeachPW ‐ Refuse (0108051)2020‐2021Ord Service Name Fee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual Revenue2Increased RevenueRecommended Subsidy1 Annual Grease Disposal Mitigation FeeDelete‐            576.00$           ‐$                 ‐‐ now performed by Utilities; move to that department ‐‐2 FOG Annual PermitDelete‐             ‐$                  ‐$                 ‐‐ now performed by Utilities; move to that department ‐‐3 Recycling Service Fee Per Month‐            3.00$                ‐$                 ‐‐  analyzed separately from all other Refuse fees (earlier in FY21) ‐‐4 Solid Waste Franchise Application Flat Fee 4                837.00$          950.51$          100% 950.00$          113.00$          14% 3,800$             452$                2$                     5 Washington Street Trash Bin Variable‐             ‐$                  ‐$                 ‐‐  analyzed separately from all other Refuse fees (earlier in FY21) ‐‐6 Demo Deposit ‐ Valuation of $0 to $4,999 Deposit‐            564$                 ‐$                 ‐‐  refundable deposit; not cost‐of‐service fee ‐‐7 Demo Deposit ‐ Valuation of $5,000 to $9,999 Deposit‐            1,127$              ‐$                 ‐‐  refundable deposit; not cost‐of‐service fee ‐‐8 Demo Deposit ‐ Valuation of $10,000 and above Deposit‐            1,692$              ‐$                 ‐‐  refundable deposit; not cost‐of‐service fee ‐‐9 Waste Management Administration Fee Flat Fee 145           219$                265.94$          100% 265.00$          46.00$             21% 38,425$          6,670$             136$                10 Construction Recycling Admin FeeNew ‐ Flat Fee‐             ‐$                  ‐$                 ‐‐  will be analyzed separately from all other Refuse fees (later in FY21) ‐‐11 Tree Planting/RemovalNew ‐ Contr Cost‐             ‐$                  ‐$                 ‐‐  recommend setting fee to equal actual contractual expense ‐‐12 Supplemental Tree TrimmingNew ‐ Contr Cost‐             ‐$                  ‐$                 ‐‐  recommend setting fee to equal actual contractual expense ‐‐Total User Fees$42,225 $7,122 $138Footnotes3 Recycling Service Fee Prop 218 hearing will be held on March 23, 2021.10 Construction Recycling Admin Fee11 Tree Planting/Removal12 Supplemental Tree TrimmingStaff does not have adequate information to move forward and therefore recommends excluding this item from this current Fee Study and including when staff goes to Council for Washington Street bins – after Recycling Prop 218).  A deposit fee may also need to be added.This item is added to the SRFF to confirm the presence of a pass‐through fee for staff to charge residents for the actual costs associated with having the City’s contractor plant or remove trees at the resident’s request.This item is added to the SRFF to confirm the presence of a pass‐through fee for staff to charge residents for the actual costs associated with having the City’s contractor provide additional tree trimmings outside of the normal trimming schedule at the resident’s request.Per UnitCurrent RecommendationsPer UnitAnnual User Fee Study Summary SheetCity of Newport Beachcosts added to CDD Building & Safety analysis for recoveryPW ‐ WQ/Conserv/Envtal (0108011)2020‐2021Ord Service NameFee DescriptionAnnual VolumeVolume BilledCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended Subsidy1WQ Construction Site InspectionsDelete‐             ‐            120.00$           ‐$                                                          ‐‐ replaced with fees 2 ‐ 4, below  ‐‐2WQ Constr Site Insp ‐ LowNew  ‐ Flat Fee353           353           120.00$          152.58$          100% 152.00$          32.00$             27% 53,656$          11,296$          205$                3WQ Constr Site Insp ‐ MediumNew  ‐ Flat Fee‐             ‐            120.00$          457.739$        100% 457.00$          337.00$          281%‐$                  ‐$                  ‐$                 4WQ Constr Site Insp ‐ HighNew ‐ Base +69              69              120.00$          1,220.64$       100% 1,220.00$       1,100.00$       917% 84,180$          75,900$          44$                  5 WQMP Inspections Xsuppt to CDD 30              30               ‐$                 195.65$                                                   ‐‐ costs added to CDD Building & Safety analysis for recovery  ‐‐6EV Chargers per kWh 90,318      90,318      0.368$             0.468$             100% 0.460$             0.09$               25% 41,546$          8,309$             731$                Total User Fees$179,382 $95,505 $979Footnotes1WQ Construction Site Inspections Staff recommends this fee be removed and replaced with the tiered fee structure, below.2WQ Constr Site Insp ‐ Low This fee would be a fixed fee, based on one inspection per site.3WQ Constr Site Insp ‐ Medium This fee would be a fixed fee, based on three inspections per site.4WQ Constr Site Insp ‐ High This fee would be charged as a base fee of $1,220 plus an incremental fee of $152 per inspection if more than eight inspections required.6EV Chargers In addition to the fee per kWh shown above, staff recommend implementing an overstay penalty of $6.00 per hour, after a 10‐minute grace period.Current RecommendationsPer UnitAnnualPer Unit User Fee Study Summary SheetCity of Newport BeachUtilities (7019052 & 7119061)2020/2021Ord Service NameFee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended Subsidy1 Lifting Eye For Trench PlatesDelete‐            121.00$           ‐$                                                          ‐‐ Department recommends removing this fee  ‐‐2 Trench Plate Delivery FeeDelete‐            452.00$           ‐$                                                          ‐‐ Department recommends removing this fee  ‐‐3 Utility Field Inspection Flat Fee 215           135.00$          269.34$          100% 269.00$          134.00$          99% 57,835$          28,810$          73$                  4 New Sewer Connection Fee ‐ City Per Connection‐            250.00$           ‐$                                                          ‐‐ This fee is set in the Municipal Code; not cost‐of‐service ‐‐5 Construction Water Meter ‐ Establishment (set‐up) Flat Fee 29              114.00$          200.48$          50% 100.00$          (14.00)$            ‐12% 2,900$            (406)$               2,914$            6 Construction Water Meter ‐ Per Month (read) Rental 29              92.00$            92.12$            100% 99.89$            7.89$               9% 2,897$            229$                (225)$               7 Construction Water Meter ‐ Meter Deposit Deposit 29              973.00$          1,250.00$                                                ‐‐ Deposit; not cost‐of‐service ‐‐8 Delinq Water Svc Discontinuance Flat Fee 49              103.00$          140.21$          100% 140.00$          37.00$            36% 6,860$            1,813$            10$                  9 Delinq Water Svc Restoration ‐ Business Hrs Flat Fee 23              188.00$          160.24$          100% 160.00$          (28.00)$            ‐15% 3,680$            (644)$               6$                    10 Delinq Water Svc Restoration ‐ Non Busi Hrs Flat Fee 3                314.00$          179.01$          100% 179.00$          (135.00)$          ‐43% 537$                (405)$               0$                    11 Delinq Water Svc Restoration ‐ Business Hrs (low income) State Set‐            50.00$            195.36$          26% 50.00$             ‐$                 0%‐$                  ‐$                  ‐$                 12 Delinq Water Svc Restoration ‐ Non Busi Hrs (low income) State Set‐            150.00$          214.13$          70% 150.00$           ‐$                 0%‐$                  ‐$                  ‐$                 13 Hydrant Flow Test ‐ Non‐Highway (regular hours) Flat Fee 60              558.00$          449.18$          100% 449.00$          (109.00)$          ‐20% 26,940$          (6,540)$           11$                  14 Hydrant Flow Test ‐ Highway (night time) Flat Fee‐            376.00$          506.38$          100% 506.00$          130.00$          35%‐$                  ‐$                  ‐$                 15 Water and Sewer Service Establishment Fee (turn ons) Flat Fee 472           74.00$            120.25$          100% 120.00$          46.00$            62% 56,640$          21,712$          117$                16 Water and Sewer Service Establishment Fee ‐ Online (turn onsFlat Fee 2,459        74.00$            116.66$          100% 116.00$          42.00$            57% 285,244$        103,278$        1,634$            17 Water Service Installation Fee (new meter) Flat Fee 251           587.00$          713.32$          100% 713.00$          126.00$          21% 178,963$        31,626$          81$                  18 Water Shut Off Tag Placement Flat Fee 1,025        32.00$            32.04$            100% 32.00$             ‐$                 0% 32,800$           ‐$                 39$                  19 Annual Grease Disposal Mitigation Fee (annual restaurant inspAnnual 63              576.00$          599.47$          100% 599.00$          23.00$            4% 37,737$          1,449$            29$                  20 Fats, Oils and Grease (FOG) Annual Permit No Fee Chg'd 354            ‐$                 179.74$          0%‐$                  ‐$                 N/A‐$                  ‐$                 63,627$          21 Sewer Only Establishment FeeNew ‐ Flat Fee2                 ‐$                 49.22$            100% 49.00$            49.00$            N/A 98$                  98$                  0$                    22 FOG Non‐Compliance (additional inspections)New ‐ Flat Fee244            ‐$                 70.00$            100% 70.00$            70.00$            N/A 17,080$          17,080$           ‐$                 23 Water and Sewer Service Establishment Fee ‐ Non Busi Hrs (tuNew ‐ Flat Fee58               ‐$                 321.30$          100% 321.00$          321.00$          N/A 18,458$          18,458$          17$                  24 Re‐Inspection Fee (hourly)New ‐ Hourly‐             ‐$                 165.69$          100% 165.00$          165.00$          N/A‐$                  ‐$                  ‐$                 Total User Fees$728,668 $216,557 $68,335Per UnitCurrent RecommendationsPer UnitAnnual User Fee Study Summary SheetCity of Newport BeachUtilities (7019052 & 7119061)2020/2021Ord Service NameFee DescriptionAnnual VolumeCurrent Fee Full CostRecovery Level Fee @ Policy Level  Variance  % Change Annual RevenueIncreased RevenueRecommended SubsidyPer UnitCurrent RecommendationsPer UnitAnnualFootnotes1 Lifting Eye For Trench Plates2 Trench Plate Delivery Fee6 Construction Water Meter ‐ Per Month (read)7 Construction Water Meter ‐ Meter Deposit This is a deposit; not a cost‐of‐service fee.21 Sewer Only Establishment Fee22 FOG Non‐Compliance (additional inspections)23 Water and Sewer Service Est Fee ‐ Non Busi Hrs (turn ons)24 Re‐Inspection Fee (hourly) The re‐inspection fee would be charged to the entity that pulls an encroachment permit (i.e. a developer/property owner/contractor) when the Utilities Field Inspector is required to perform a re‐inspection(s) due to non‐compliance with prior inspection instructions or fails to meet the terms and conditions of the pulled permit. This charge would be an hourly fee and the total cost would be based on the number of hours the Utilities Field Inspector spends to re‐inspect the project site.The Utilities Department no longer provides or delivers trench plates for construction projects.  The trench plates are now provided by and transported to a project site by the contractor or subcontractor.Customer is charged for actual meter costs and water per the water rate structure ‐ Fixed charge per month for a 2" meter which is $92.12; No labor costs involved.The Sewer Only Establishment Fee would be for those property owners that receive their water supply from an entity other than the City (Mesa Water or Irvine Ranch Water Districts), but their property parcel would connect or “tap” into the City’s sewer system. This fee would be charged to the property owner/developer for their initial“tapping” into or accessing sewer capacity of the City’s sewer pipeline system.Each year, the City’s contract inspector performs an annual inspection of all Food Service Establishments (FSEs) within the City for the Fats, Oil, and Grease (FOG) program as provided in NBMC Chapter 14.30. This program is to provide for the maximum beneficial public use of the City’s sewer system, to prevent sanitary sewer overflows (SSOs) into Newport Bay and the Pacific Ocean resulting from blockages of that system caused by buildups of fats, oils and grease (FOG), to ensure the cost of maintaining the public sewer system is equitably distributed amongst users, to clarify grease disposal requirements for existing commercial kitchens, and to promote public health, safety and welfare.Currently, the City covers the cost of the initial annual inspection fee. The FOG Non‐compliance fee would charge those owners and operators of FSE’s the cost of additional inspection(s) should they remain non‐compliant with the provisions of NBMC 14.30 and continue to neglect the best management practices and requirements set forth in the City’s municipal code. The Water and Sewer Establishment Fee, for turn‐ons during non‐business hours, would be for those customers that request their services be “turned on or made available” during non‐regular business hours. For the Utilities Department, the normal business hours are Monday through Thursday, from 7:00 am to 4:30pm and from 7:00am to 3:30pm on Fridays. The establishment or “turning on” the service during non‐business hours requires the City’s Utilities Department to pay staff overtime as the on‐call employee would perform this task on‐site of the requestor’s property outside those normal working hours. ATTACHMENT B APPLICATION OF INDIRECT COSTS TO THE CALCULATION OF FEES FOR SERVICES 1   Attachment B: Application of Indirect Costs to the Calculation of Fees for Services The purpose of this exhibit is to provide a detailed explanation of the methodology used by the City of Newport Beach to incorporate indirect overhead costs in the development of the municipal fee schedule, using the Harbor Department, Special Event Permit – Simple fee as the example. Permitted special events held on the waters of Newport Harbor allow for an array of unique organized programs and activities to take place in the bay. Sailing race events, rowing regattas, fishing tournaments, and anchorage raft-up activities are just a few examples. In order to ensure that a special event can take place safely and successfully, staff collects information about the scope of the event, time, dates, and other important event details. The Harbor Department staff will review details of the program, confirming, among other things, that the proposed program: does not conflict with other previously approved special uses of the Harbor; unreasonably impact regular activities on the bay; or impose on the neighboring residents. Following the review of application materials and planned activities, specific conditions are incorporated into the permit as part of the approval process. These conditions provide guidance for issues such as: use of amplified music, locations, set up requirements, etc. On the day of the scheduled events, Harbor Service Workers will check with event organizers to ensure the terms and conditions set for the event to be successful are being met. The following steps demonstrate how the Harbor Department, Special Event Permit – Simple fee is derived: Step 1: Calculate Hourly Staffing Rates and Burdened Factors The first step is to determine the hourly rates of staff providing the services associated with the fee. Table 1 below provides the hourly salary and benefit rates plus the hourly burden factors for the staff that are responsible for performing this task within Harbor Department. Indirect overhead costs or “burdened factors” are costs that are not directly accountable to the expenses incurred for a user fee service, but are necessary and contribute to the total cost of that service delivery, i.e. - managerial administration, utilities, insurance, legal, information technology, payroll, and finance, which are all valid components to the analysis of what it costs the City to provide municipal services. 2   Table 1- Hourly Rates for Salary, Benefit and Overhead Factors Salary and Benefits Burdened Factors Total Burdened Rate Hourly Rate Hourly Rate Harbor Services Worker $29.85 + $34.14 = $63.99 Harbormaster $114.53 + $131.00 = $245.53 Department Assistant $35.99 + $41.17 = $77.16 The City’s cost allocation plan consultant uses the Federal Office of Management and Budget (OMB) Super Circular 2 CFR Part 200 as a guideline to determine the allowable burdened, or indirect, cost elements. The Super Circular is a document that state and local governments use to identify allowable indirect costs when applying for reimbursement of cost from state or federal programs. Although the calculation of user fee services is not specific to applying for reimbursement from any state or federal program, the underlying methodology of identifying costs is much the same. The relevant sections of the Super Circular that specify how direct and indirect costs shall be applied to the calculation of the Fee follows below. Composition of Cost Direct Costs 1. General. Direct costs are those that can be identified specifically with a particular final cost objective. 2. Application. Typical direct costs include: a) Compensation of employees for the time devoted and identified specifically to the performance of the operation. b) Cost of materials acquired, consumed, or expended specifically for the purpose of fulfilling the mission of the operation. c) Equipment and other approved capital expenditures.1 d) Travel expenses incurred specifically to carry out the operation. Using the personnel identified in Table 1, the direct costs for the Special Event Permit – Simple fee are found on line 1.1 (total salary and benefits on an hourly basis) in Table 1a below.   1 Includes maintenance and/or depreciation expense only, not equipment purchases, which are capitalized over a  number of years.    3   Table 1a Indirect Costs 1. General. Indirect costs are those: (a) incurred for a common or joint purpose benefiting more than one cost objective, and (b) not readily assignable to the cost objectives specifically benefitted. The term “indirect costs,” as used herein, applies to costs of this type originating from staff within Harbor Department, their operating expenditures and administration support, as well as those incurred by administrative departments in supplying goods, services, and facilities. The cost of service analysis includes four types of indirect overhead categories or “cost pools” consisting of compensated absences, general administration, operating expenses, and citywide overhead. a) Compensated Absences – The compensated absences cost pool is used to account for employees' time off with pay for vacations and sick days. The City is obligated to pay for these days off and is required by the matching principle to record the expense when the employees are working, since the benefits are a part of the employees' compensation. It is estimated that 280 out of 2,080 total available hours per year per full-time equivalent (FTE) are taken as compensated absences. This translates into a 13.4% burden factor applied to the hourly salary and benefit rate as indicated on line 2.1 in Table 1a above. Harbor  Services  Worker Harbormaster Department  Assistant 51,426$     197,306$        62,000$         1. Calculate hourly salary & benefits 1.1 Divide annual cost by direct hours available (1723) $29.85 $114.53 $35.99 Total Salary and Benefits $29.85 $114.53 $35.99 2. Indirect Overhead 2.1 Compensated Absences 13.4% $4.01 $15.35 $4.83 (vacation, sick leave) 2.2 General Administration 14.7% $4.39 $16.84 $5.29 (supervision, support services) 2.3 Operating Expense 32.7% $9.75 $37.41 $11.76 (training, supplies, maint & repair) 2.4 Citywide Overhead 53.6% $16.00 $61.40 $19.29 (Finance, City Manager, Human Resources) Total Indirect Overhead 114.4% $34.15 $131.00 $41.17 Total Burdened Rate: $64.00 $245.54 $77.16 Fully Burdened Hourly Rates Annual Salary & Benefits: 4   b) General Administration – The general administration cost pool includes the cost of staff time spent on such activities as budget planning and staffing allocations; public counter and telephone time, meetings, and training and education. The wages of management staff and the workers engaged in administration and support activities are considered an indirect labor cost. It is calculated that 14.7% of Harbor Department’s overall workload is spent on this general administrative function as indicated on line 2.2 in Table 1a above. c) Operating Expenditures – The operating expenditure cost pool consists largely of Internal Service Fund (ISF) charges to the divisions on a cost reimbursement basis. The City’s internal service funds are used to allocate the cost of providing general liability insurance and workers’ compensation; maintaining and replacing the City’s rolling stock fleet; and the cost of maintaining and replacing the City’s computers, printers, copiers, and telecommunication services. This cost pool also includes other general operating expenses such as publications, supplies, and training. The operating expenditure burden factor of 32.7% for Harbor Department as indicated on line 2.3 in Table 1a above is calculated by comparing the total cost of (allowable indirect) operating expenditures to the total (allowable direct) labor pool. d) Citywide Overhead - The Cost Allocation Plan (CAP) distributes the costs of City departments that serve a central service function supporting Harbor Department operations. These “Central Service Departments/Divisions” include: City Council, City Clerk, City Manager, Finance & Treasury Financial Planning, and Financial Reporting, as well as Human Resources Risk Management. The citywide overhead burden factor of 53.6% for Harbor Department is calculated by comparing the total cost of Harbor Department’s share of citywide overhead to the total (allowable direct) labor pool (see line 2.4 in Table 1a above). Step 2: Calculate Time Spent on the Service The second step is to calculate the time spent on the service. The task and time in minutes estimated to complete the task is captured in Table 2 below. Table 2: Task Description & Time Estimates in minutes Time Estimate Harbor Services Worker 20 minutes Harbormaster 15 minutes Department Assistant 10 minutes Step 3: Calculate the Cost to Provide the Service The third and final step is to calculate the cost to provide the service by converting the total minutes to hours per unit (or staff person). The product of the hourly rate calculation times the time spent yields the cost of providing the service (see Table 3 below). 5   Table 3 – Fee is Product of Times and Rates Summary The purpose of a CAP is to accurately, fairly, and reasonably distribute the City’s central administrative costs to the operating departments in the City. The development of a CAP follows a series of general guidelines and principles, which originate from federal guidelines established in OMB Super Circular. These principles ensure that allocated costs are necessary and reasonable to the operation of the government. A cost analysis study is almost entirely reliant upon the data provided by the City. Since all study components are interrelated, bad data at any step in the process will cause the ultimate results to be flawed. To avoid accuracy problems and other quality flaws, the study included a series of quality control measures including reasonableness tests and validation; balance and cross checks; and internal City review. Finally, it should be noted that private businesses typically add a layer of profit margin to their cost analysis, public agencies are not allowed to do so. Total Fully Total Cost  Total Hours per Burdened to Provide  Minutes Unit Hourly Rates the Service Harbor Services Worker 20.00 0.33 $63.99 $21.33 Harbormaster 15.00 0.25 X $245.53 =$61.38 Department Assistant 10.00 0.17 $77.16 $12.86 $95.57 Proposed Fee $95.00 ATTACHMENT C NEWPORT BEACH MUNICPAL CODE SECTION 3.36.030 EXHIBIT A CHANGES Newport Beach Municipal Code Page 1/6 The Newport Beach Municipal Code is current through Ordinance 2020-28, passed November 10, 2020. 3.36.030 Cost Recovery Percentages. A. The municipal functions the City Council has determined to be user services and for which the City Council has initially determined the actual costs and the appropriate cost recovery percentage are described in the fee resolution. The cost recovery percentage appropriate for each user service shall be one hundred (100) percent with the exception of the user services listed in Exhibit “A” and those services for which the fee is limited by statute. The City Council may include in the fee resolution a schedule to phase in specific fee increases over a period not to exceed four years. B. The City Council shall establish, pursuant to the fee resolution, the actual fee or charge for each user service described in the fee resolution. The fee or charge shall be based upon the actual cost of providing the user service, multiplied by the relevant cost recovery percentage. C. The City Council may, without amending this chapter, modify (increase or decrease) the fee resolution to amend the amount of any fee or charge for, and the actual cost of providing, any user service upon a determination that there has been an increase or decrease in one or more of the cost factors relevant to the calculation of the actual cost of providing that service. D. The City Council may modify the municipal functions determined to be user services in the fee resolution and the cost recovery percentage for any service only by amending this chapter. E. Fees for service established in the fee resolution may be waived by the City Council. The City Manager may waive fees imposed on nonprofit organizations for nonprofit sponsored events in an amount not to exceed one thousand dollars ($1,000.00) per year. Exhibit A The City’s cost of providing the following services shall be recovered through direct fees charged for services. Exhibit “A” limits cost recovery fees to the percentages or dollar amounts indicated below. Service Percentage of Cost or Amount to Be Recovered from Direct Fees Community Development Department Chapter 17.65 Appeal—Applicant Successful 0% Chapter 17.65 Appeal to City Council – Applicant Unsuccessful $940 Chapter 17.65 Appeal to Harbor Commission – Applicant Unsuccessful $1,250 Building Appeals Board Hearing—Applicant Successful 0% Appeals Board Hearing—Applicant Unsuccessful $1,715 Harbor Construction 50% Preliminary Plan Review First Two Hours Free, Full Cost Thereafter Planning Appeals to City Council $1,715 Appeals to Planning Commission $1,715 Newport Beach Municipal Code Page 2/6 The Newport Beach Municipal Code is current through Ordinance 2020-28, passed November 10, 2020. Service Percentage of Cost or Amount to Be Recovered from Direct Fees Coastal Development Permit Application Appeals from Zoning Administrator to Planning Commission 0% Reasonable Accommodation 0% Finance Department Admin. Cite Hearings 0% Parking Hearings 0% Payment Plans (Except Parking) $25 Short Term Lodging Permit Suspension or Revocation Hearing – Applicant Successful 0% Short Term Lodging Permit Suspension or Revocation Hearing— Applicant Unsuccessful 50% Zero Bill Reprint 0% Fire Department Emergency Medical Services Advanced Life Support (ALS)— Nontransport $400 Basic Life Support (BLS)—Nontransport $400 ALS First Responder Fee $400 BLS First Responder Fee $400 Fire Prevention Candle Permit Program 76% Care Facilities 7—99 Clients 36% Care Facilities > 99 Clients 40.8% Commercial Day Care Facilities 36% Hotels/Motels 50—299 Rooms 36% Hotels/Motels 300 or More Rooms 92.4% Operational Permits—Level 1 40% Operational Permits—Level 2 38.1% Residential Care Facility Prelicense Inspection 96% Special Event Permits—Single Event 88% State Fire Clearance 82% Junior Lifeguards Newport Beach Municipal Code Page 3/6 The Newport Beach Municipal Code is current through Ordinance 2020-28, passed November 10, 2020. Service Percentage of Cost or Amount to Be Recovered from Direct Fees Junior Guards—Participation Fee $727 Harbor Department Chapter 17.65 Appeal—Applicant Successful 0% Chapter 17.65 Appeal to City Council – Applicant Unsuccessful $940 Chapter 17.65 Appeal to Harbor Commission – Applicant Unsuccessful $1,250 Library Services Department Passport Photo $10 Use Fees—Materials $1 Inter-Library Loan $5 Police Department Bike Licenses 17% Secondhand/Pawn Dealer Tag Check 0% Registrant—Narcotics 0% Animal Shelter Adoption Fee—Dogs $150 Adoption Fee—Puppies $225 Adoption Fee—Cats $90 Adoption Fee—Kittens $110 Adoption Fee—Small An-imals $45 Boarding Fee (per day)—Animals $25 Boarding Fee (per day)—Small Animals $10 Owner Turn-In Fee $100 Impound Fee—Dogs, Cats, Small Animals $55 Public Works Department Chapter 17.65 Appeal—Applicant Successful 0% Chapter 17.65 Appeal to City Council – Applicant Unsuccessful $940 Chapter 17.65 Appeal to Harbor Commission – Applicant Unsuccessful $1,250 Recreation and Senior Services Department Adult Sports 50%—95% Newport Beach Municipal Code Page 4/6 The Newport Beach Municipal Code is current through Ordinance 2020-28, passed November 10, 2020. Service Percentage of Cost or Amount to Be Recovered from Direct Fees Administrative Processing Fee $5 Badge Replacement $5 After School/Camp Programs Camps 20%—50% After-School/Teen Program 20%—50% Pre-School Program 20%—50% Aquatics 20%—50% Contract Classes 50%—95% Class Refunds $74 or less $10 $75 or more $20 Youth Sports 20%—50% Special Events—Levels 1, 2, and 3 Resident, Level 1 and Late Fees for Level 1 0%—20% Resident, Levels 2—3 and Late Fees for Levels 2—3 20%—50% Nonresident, Levels 1—2 and Late Fees for Level 1 20%—50% Nonresident, Level 3 and Late Fees for Levels 2—3 50%—95% Appeal to City Council 50%—95% Natural Resources Programs 0%—20% Senior Services Oasis Transportation $1—$3 each way Contract Classes 20%—50% Fitness Center 50%—95% Library Services Department Passport Photo $10 Use Fees—Materials $1 Inter-Library Loan $5 Fire Department Emergency Medical Services Advanced Life Support (ALS)— Nontransport $400 Newport Beach Municipal Code Page 5/6 The Newport Beach Municipal Code is current through Ordinance 2020-28, passed November 10, 2020. Service Percentage of Cost or Amount to Be Recovered from Direct Fees Basic Life Support (BLS)—Nontransport $400 ALS First Responder Fee $400 BLS First Responder Fee $400 Fire Prevention Candle Permit Program 76% Care Facilities 7—99 Clients 36% Care Facilities > 99 Clients 40.8% Commercial Day Care Facilities 36% Hotels/Motels 50—299 Rooms 36% Hotels/Motels 300 or More Rooms 92.4% Operational Permits—Level 1 40% Operational Permits—Level 2 38.1% Residential Care Facility Prelicense Inspection 96% Special Event Permits—Single Event 88% State Fire Clearance 82% Junior Lifeguards Junior Guards—Participation Fee $727 Police Department Bike Licenses 17% Secondhand/Pawn Dealer Tag Check 0% Registrant—Narcotics 0% Animal Shelter Adoption Fee—Dogs $150 Adoption Fee—Puppies $225 Adoption Fee—Cats $90 Adoption Fee—Kittens $110 Adoption Fee—Small An-imals $45 Boarding Fee (per day)—Animals $25 Boarding Fee (per day)—Small Animals $10 Owner Turn-In Fee $100 Newport Beach Municipal Code Page 6/6 The Newport Beach Municipal Code is current through Ordinance 2020-28, passed November 10, 2020. Service Percentage of Cost or Amount to Be Recovered from Direct Fees Impound Fee—Dogs, Cats, Small Animals $55 Public Works Department Engineering Encroachment Permit without Other Department/Division Review 88% Encroachment Permit with Other Department/Division Review 57% Harbor Department Appeal of Lease/Permit under Chapter 17.65 $100 Finance Department Payment Plans (Except Parking) $25 Parking Hearings 0% Admin. Cite Hearings 0% Municipal OperationsUtilities Construction Water Meter Establishment 50% Fats, Oils, and Grease (FOG) Annual Permit 0% City Council, Board, Commission, Committee or Any Individual Member Thereof When Acting within the Scope of Their Official Duties Review from a Lower Body or Official $0 (Ord. 2020-10 § 1, 2020; Ord. 2020-5 § 4, 2020; Ord. 2018-15 § 1, 2018; Ord. 2018-13 § 1, 2018; Ord. 2016-14 § 1, 2016; Ord. 2015-29 § 1, 2015; Ord. 2015-9 § 1, 2015; Ord. 2013-18 §§ 1, 2, 2013; Ord. 2013-1 § 1, 2013; Ord. 2011-28 § 1, 2011; Ord. 2011-10 § 1, 2011; Ord. 2009-32 § 1 (Exh. A), 2010; Ord. 2009-21 § 1 (Att. 1), 2009; Ord. 2008-14 § 1 (Exh. 1) (part), 2008: Ord. 2004-4 § 3, 2004; Ord. 2002-26 Exh. A, 2002; Ord. 2000-24 § 1, 2000; Ord. 98-18 § 1, 1998; Ord. 97-8 §§ 1 (part), 2, 1997) ATTACHMENT D UTILITIES PASS THROUGH FEE UPDATES EXISTING TOTALNEW BASE FEENOTES FOR FEESERVICE NAME DESCRIPTION OR BASE FEEWITH TAXES 7.75% SEWER/WATER 4TT BOX (MAIN LINE) Sewer Clean Out/Water Valve Box 34.00$                38.79$                     New Actual Costs + TaxSEWER/WATER 4TT BOX LID (MAIN LINE) Sewer Clean Out/Water Valve Box Lid 30.00$                34.48$                     New Actual Costs + Tax5/8 X 3/4 WATER METER Mueller AMI 50.25$                172.40$                   New Actual Costs + Tax1 INCH WATER METER Mueller AMI 121.50$              193.95$                   New Actual Costs + Tax1.5 INCH WATER METER Mueller AMI 285.00$              463.33$                   New Actual Costs + Tax1.5 INCH TURBINE WATER METER Mueller AMI 700.00$              491.34$                   New Actual Costs + Tax2 INCH WATER METER Mueller AMI 425.00$              565.69$                   New Actual Costs + Tax2 INCH TURBINE WATER METER Mueller AMI 845.00$              573.23$                   New Actual Costs + Tax3/4 INCH WATER METER BOX DFW, MULTI PURPOSE 9.25$                  52.79$                     New Actual Costs + Tax3/4 INCH WATER METER BOX LID DFW, MULTI PURPOSE 18.25$                25.86$                     New Actual Costs + Tax1 INCH WATER METER BOX DFW, MULTI PURPOSE 61.18$                78.32$                     New Actual Costs + Tax1 INCH WATER METER BOX LID DFW, MULTI PURPOSE 35.48$                42.02$                     New Actual Costs + Tax2 INCH WATER METER BOX DFW, MULTI PURPOSE 125.53$              138.69$                   New Actual Costs + Tax2 INCH WATER METER BOX LID DFW, MULTI PURPOSE 77.71$                72.19$                     New Actual Costs + TaxRemove3/4 INCH METER BOXFOR PARKWAY & SIDEWALK9.25$                  Replaced by MultiPurp3/4 INCH METER BOXFOR TRAFFIC & ALLEY9.25$                  Replaced by MultiPurp3/4 INCH METER BOX LIDFOR PARKWAY & SIDEWALK18.25$                Replaced by MultiPurp3/4 INCH METER BOX LIDFOR TRAFFIC & ALLEY20.50$                Replaced by MultiPurp1 INCH METER BOXFOR PARKWAY & SIDEWALK13.00$                Replaced by MultiPurp1 INCH METER BOX FOR TRAFFIC & ALLEY13.00$                Replaced by MultiPurp1 INCH METER BOX LIDFOR PARKWAY & SIDEWALK37.00$                Replaced by MultiPurp1 INCH METER BOX LIDFOR TRAFFIC & ALLEY38.00$                Replaced by MultiPurp2 INCH METER BOXFOR PARKWAY & SIDEWALK27.00$                Replaced by MultiPurp2 INCH METER BOXFOR TRAFFIC & ALLEY27.00$                Replaced by MultiPurp2 INCH METER BOX LIDFOR PARKWAY & SIDEWALK61.25$                Replaced by MultiPurp2 INCH METER BOX LIDFOR TRAFFIC & ALLEY162.00$              Replaced by MultiPurp3 INCH NEPTUNE TRU/FLO METERNeptune TruFlo Compound 3,310.00$           NB‐doesn’t sell anymore4 INCH NEPTUNE TRU/FLO METER Neptune TruFlo Compound 4,730.00$           NB‐doesn’t sell anymore6 INCH NEPTUNE TRU/FLO METER Neptune TruFlo Compound 7,190.00$           NB‐doesn’t sell anymore8 INCH NEPTUNE TRU/FLO METER6 inch x 8 inch Neptune TruFlo Compound8,345.00$           NB‐doesn’t sell anymore Fee Study Update Finance Committee Meeting February 18, 2021 City of Newport Beach –Finance Department 2 Tax vs. Fee A monetary imposition by a government on persons or property for the purpose of raising revenue to support the purposes of the government. A tax need not be levied in proportion to a specific benefit to a person or property. Charge imposed for a specific benefit conferred, benefit, or product to the payer that is not provided to those not charged (should not exceed reasonable cost of service). Charge imposed for reasonable regulatory costs to a local government for issuing licenses and permits, investigations, etc. Charge imposed for entrance, use, or lease of government property. Fine, penalty, or charge imposed as a result of violation of law. City of Newport Beach –Finance Department 3 Authority for Cost of Service Fees Fiscal Sustainability Plan Establish appropriate cost-recovery targets and adjust fee structure to ensure that the fees continue to meet cost recovery targets. Revenue Measures F-4 The City will establish appropriate cost-recovery targets for its fee structure and will annually adjust its fee structure to ensure that the fees continue to meet cost recovery targets. NBMC §3.36.030 mandates 100% cost recovery (except for subsidies identified in the code) City of Newport Beach –Finance Department 4 Fee for Service Methodology MGT of America performs cost of service analysis for developing user fees Scope of Work: 1.Calculate the fully burdened (labor and overhead)cost of providing user fee services; 2.Applied fully burdened labor rates to time requirement estimates and annual workload figures; 3.Calculate the cost of providing the service; and 4.Review and cross check results to ensure data validity. City of Newport Beach –Finance Department 5 Fee Calculation Example (Harbor Special Events –Simple (Raft up, Boat Race) Step 1: Calculate Hourly Staffing Rates and Burdened Factors Salary and Benefits Burdened Factors Hourly Rate Hourly Rate Harbor Services Worker $29.85 +$34.14 =$63.99 Harbormaster $114.53 +$131.00 =$245.53 Department Assistant $35.99 +$41.17 =$77.16 Total Burdened Rate City of Newport Beach –Finance Department 6 Fee Calculation Example (Harbor Special Events –Simple (Raft up, Boat Race) Step 2: Estimate Time Spent on the Service Harbor Services Worker Harbormaster Department Assistant Time Estimate 10 minutes 15 minutes 20 minutes City of Newport Beach –Finance Department 7 Fee Calculation Example (Harbor Special Events –Simple (Raft up, Boat Race) Step 3: Calculate the Cost to Provide the Service Step 4: Review for Accuracy and Reasonableness Total Fully Total Cost Total Hours per Burdened to Provide Minutes Unit Hourly Rates the Service Harbor Services Worker 20.00 0.33 $63.99 $21.33 Harbormaster 15.00 0.25 X $245.53 =$61.38 Department Assistant 10.00 0.17 $77.16 $12.86 $95.57 Proposed Fee $95.00 City of Newport Beach –Finance Department 8 Summary Fee Study Results Department Increasing Decreasing Eliminated No Change New Fees Totals Finance 19 5 1 6 6 37 Harbor 18 2 0 0 5 25 Public Works 18 12 3 5 2 40 Utilities 7 4 2 5 4 22 Total 62 23 6 16 17 124 PCT of Total 50%19%5%13%14%100% Impact: $216,000 in additional revenues for the Water and Sewer Funds and a decrease in revenues of approximately $65,000 in the General Fund City of Newport Beach –Finance Department 9 Reasons for Change Changes In: Costs Staffing Time Increases Combine FeesDecreases New Fees: •Short Term Lodging Permit (STLP) Reinstatement $91 •STLP Suspension/Revocation Hearing $509 and 50% subsidy in NBMC Section 3.36.030 •Film Permit –Review (5 or fewer cast & crew) $12 •Film Permit –Review (6 or more cast & crew) $51 •Film Permit Staff Time Outside of Permit Application –staff hourly rate •Film Permit Cancellation (for permits requiring additional City services) –staff hourly rate City of Newport Beach –Finance Department 10 Finance Department Department Increasing Decreasing Eliminated No Change New Fees Totals Finance 19 5 1 6 6 36 PCT of Total 51%13%3%16%16%100% Fees Last Updated: 2016 Sample Services: Dog licensing and permit review and issuance for vehicles for hire, live entertainment, and short term lodging Fee Changes: •Delinquent Transient Occupancy Tax (TOT) –Delete •TOT Reprint –Rename “Zero Bill Reprints” and 100% subsidy in NBMC Section 3.36.030 City of Newport Beach –Finance Department 11 Harbor Department Fees Last Updated: 2019 Sample Services: Permit application review (marine activities, live aboard, mooring extension), wait lists, impounds, appeals Fee Changes: •Appeals –staff hourly rate to flat fee •Raft Up Permit –rename to “Harbor Special Events –Simple” •Marine Activities permit application (initial) –split into multiple fees New Fees: •Environmental Response $73 per hour plus materials •Harbor Special Events –Complex $491 •Large Boat Permit (≥ 80 Linear Feet) Requiring Interagency Coordination $736 •Large Boat Escort (per escort and per vessel) $102 •Multiple Vessel Mooring System Application $503 Department Increasing Decreasing Eliminated No Change New Fees Totals Harbor 18 2 0 0 5 36 PCT of Total 72%8%0%0%20%100% City of Newport Beach –Finance Department 12 Public Works Department Fees Last Updated: 2015 Sample Services: Plan check, permits, inspections, and compliance reviews Fee Changes: •Encroachment With Dept/Div Review –remove NBMC Section 3.36.030 subsidy •Encroachment Without Dept/Div Review –remove NBMC Section 3.36.030 subsidy •Engineering Field Inspection –combine into one fee •Plan Check with Pre-Permit Review –Delete •Chapter 17.65 Appeals –staff hourly rate to flat fee •Water Quality Construction Site Inspections –split into tiered fee structure •Electric Vehicle (EV) Charger –include staff time Public Works Department Increasing Decreasing Eliminated No Change New Fees Totals Engineering & Transportation 12 12 3 5 2 34 Refuse 2 0 0 0 0 2 Water Quality 4 0 0 0 0 4 Total 18 12 3 5 2 40 PCT of Total 45%30%8%13%5%100% City of Newport Beach –Finance Department 13 Public Works Department (cont.) Fees Last Updated: 2015 Sample Services: Plan check, permits, inspections, and compliance reviews New Fees: •Encroachment & Engineering Agreement Prep –Planning Commission $3,139 •Plan Check (new construction) add-on for Harbor Commission Public Hearings $2,130 •Tree Planting/Removal –pass through actual contract expense •Supplemental Tree Trimming –pass through actual contract expense Public Works Department Increasing Decreasing Eliminated No Change New Fees Totals Engineering & Transportation 12 12 3 5 2 34 Refuse 2 0 0 0 0 2 Water Quality 4 0 0 0 0 4 Total 18 12 3 5 2 40 PCT of Total 45%30%8%13%5%100% City of Newport Beach –Finance Department 14 Utilities Department Fees Last Updated: 2016 Sample Services: Water service installation and establishment, delinquent water restoration, hydrant flow test, construction water meter establishment Fee Changes: •Lifting Eye for Trench Plates –delete •Trench Plate Delivery –delete •Construction Water Meter –Per Month –same as 2” water meter in the water rate study •Utilities water meter and water and sewer meter box and lids (actual costs) New Fees: •Sewer Only Establishment Fee $49 •FOG (Fats, Oils, and Grease) Non-Compliance (additional inspections) $70 •Water and Sewer Service Establishment –Non-Business Hours (turn-ons) $321 •Re-inspection Fee $165 per hour Department Increasing Decreasing Eliminated No Change New Fees Totals Utilities 7 4 2 5 4 22 PCT of Total 32%18%9%23%18%100% City of Newport Beach –Finance Department 15 Other Updates •Lobbyist Registration –pass through contractor costs (currently $0) •Regular Photocopies ($5 per 5 minutes) –delete •Flash Drive $6 •Chapter 17.65 Appeals of Community Development Director decisions - $1,250 appeals to Harbor Commission; $940 appeals to City Council •Library per page copies $0.35 black and white, $0.45 color •Update automatic CPI language related to Harbor rents (approved by Resolution 2019-3) and facility rents (approved by Resolution 2018-55) City of Newport Beach –Finance Department 16 Additional Updates (not in staff report) •Electric Vehicle Surcharge -$0.10 per minute after 10 minute grace period •Junior Lifeguard –remove NMBC Section 3.36.030 subsidy City of Newport Beach –Finance Department 17 Junior Lifeguard Program Fee •Current fee is $727, proposed to increase to $856 by removing subsidy •$727 fee generates $981,450 per year (1,350 participants) •$856 fee will generate an additional $174,150 per year •New MOU with the Junior Lifeguard Foundation for new facility will be before the City Council on March 9th •Significant capital investment will be required of the City •Removing the fee subsidy will help defray costs associated with the enhanced program •A scholarship program for attendees may be considered concurrently with future application to Coastal Commission City of Newport Beach –Finance Department 18 Questions? City of Newport Beach General Fund Long Range Financial Forecast Fiscal Years 2022-2041 Finance Committee February 18, 2021 City of Newport Beach –Finance Department 2 Modeling Platform Synario 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, results, and manage model among multiple users Synario is owned by PFM Annual subscription fee is $12,500 City of Newport Beach –Finance Department 3 Model Hierarchy and Development Baseline growth projections are based on historical CAGR, averages, and adjustments based on known one-time events. Impacts and alternative growth scenarios allow us to model the fiscal impact of any projected deviation from the baseline on $ or % basis Any combination of alternate baselines and impacts can be packaged and organized into scenarios REVENUE AND EXPENDITURE IMPACTS (INFINTE) SCENARIOS BASELINE SCENARIO (BASED ON FY21 ORIGINAL BUDGET) Step 1 Step 2 Step 3 City of Newport Beach –Finance Department 4 Property Tax Baseline Assumptions Secured Property Tax Unsecured Property Tax Supplemental Taxes RDA Residual Prior Year Penalty/Interest Accounts/Groupings in This Category: City of Newport Beach –Finance Department 5 Sales Tax Baseline Assumptions City of Newport Beach –Finance Department 6 Transient Occupancy Tax Baseline Assumptions City of Newport Beach –Finance Department 7 Other Revenue Baseline Assumptions City of Newport Beach –Finance Department 8 General Fund Expenditures Baseline Assumptions City of Newport Beach –Finance Department 9 Assumptions Common to All Scenarios All projections are based on the FY21 Original Budget with some adjustment for one-time items. Annual General Fund transfers in support of: FFP -$8.5m up to $12m in out years CIP -$5m annually Facilities Maintenance -$1.5m 800 Mhz Radio –$0.5m Tidelands Harbor Capital –$4.5m annually Contingency Reserve (25% of expenditures, less discretionary pension funding) No assumed surpluses or use of FY20 surplus City of Newport Beach –Finance Department 10 Partnership with Costa Mesa on Permanent Homeless Shelter 20 beds allocated to Newport Beach, 5 Year Agreement Capital Contribution of $1.6M, funded from Affordable Housing Reserve and Hoag Development Agreement Annual operating cost of $1M to begin when Shelter opens, anticipated early April Hoag contribution: $300,000 annually for 10 years for homeless shelter costs Permanent Supportive Housing Partnership with PSH Developers Proposed City Contribution -$3,000,000 Potential Funding sources: Development Agreements –Affordable Housing contributions, General Fund surplus Funding for Homeless Strategies 2022 2023 2024 2025 2026 2027-2035 Total 2022-2041 Homeless Shelter $3,700,000 $730,000 $760,900 $792,727 $825,509 $20,061,239 $26,870,374 City of Newport Beach –Finance Department 11 Additional Annual Costs Alternative 1: Residential Refuse Collection –$2,900,000 increase with 2% annual adjustment Additional Revenue Opportunity Citywide Recycling Fee Increase to fully recover current recycling costs –potential new revenue of $1,361,000 Public Hearing on March 23, 2021 Alternative 2: Net Cost to the General Fund if fee approved -$1,539,000 Refuse/Recycling Contract Increase 2022 2023 2024 2025 2026 2027-2035 Total 2022-2041 Refuse Alt 1 $2,900,000 $2,958,000 $3,017,160 $3,077,503 $3,139,053 $55,370,656 $70,462,372 Refuse Alt 2 $1,539,000 $1,569,780 $1,601,176 $1,633,199 $1,665,863 $29,384,634 $37,393,652 City of Newport Beach –Finance Department 12 Scenario 1: Baseline 13 Scenario 2: Homeless Strategy and Refuse Opt 1 2022 2023 2024 2025 2026 2027-2035 Total 2022-2041 Homeless Shelter $3,700,000 $730,000 $760,900 $792,727 $825,509 $20,061,239 $26,870,374 Refuse Alt 1 $2,900,000 $2,958,000 $3,017,160 $3,077,503 $3,139,053 $55,370,656 $70,462,372 TOTAL $6,600,000 $3,688,000 $3,778,060 $3,870,230 $3,964,562 $75,431,895 $97,332,747 City of Newport Beach –Finance Department 14 Impact of Continued $35 Million Payments on Funded Status and UAL Source: CalPERS Pension Outlook Overview tool Assumed 7% investment return $329 $299 $283 $267 $249 $231 $211 $189 $166 $142 $115 $85 $52 $16 $0$35 $35 $35 $35 $35 $35 $35 $35 $35 $36 $37 $38 $38 73%75%77%79%80%82%84%86%89%91%93%95%97%99%100% $- $100 $200 $300 $400 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036UAL Balance (Mil)Payment (Mil)Funded Status City of Newport Beach –Finance Department 15 Additional Discretionary Pension Funding Options 2022-2041 Finance Committee and City Council reviewed several scenarios last year for addressing anticipated future CalPERS investment return challenges Current intention is to fund additional discretionary contributions from surplus Options available Option 1: Move forward with an additional $5 million contribution from surplus in FY22 Option 2: Additional $5 million for five years (FY 21-25) Option 3: Additional $5 million for five years (FY 21-25) followed by a reduced $2 million per year until UAL eliminated Option 4: Return to the prior $35 million per year contribution strategy (baseline) 2022 2023 2024 2025 2026 2027-2035 Total 2022-2041 Pension Option 1 $4,750,000 $4,750,000 Pension Option 2 $4,750,000 $4,750,000 $4,750,000 $4,750,000 $19,000,000 Pension Option 3 $4,750,000 $4,750,000 $4,750,000 $4,750,000 $1,900,000 $17,100,000 $38,000,000 General Fund 95% of Total Pension Contributions City of Newport Beach –Finance Department 16 Conclusion and Other Considerations •Any projected deficit in the model is not reflective of likely and typical budget performance (actual revenues higher than budgeted, expenditures less than budgeted) •The General Fund is projected to be in a financially sound position over the next 20- year period •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 facing financially impactful events in the near term. These include near-term revenue impacts related to COVID, the potential for significant increases to CalPERS pension plans, homelessness funding strategies, refuse/recycling mandates and the need to ramp-up savings to meet substantial near-term harbor improvements in accordance with the Harbor & Beaches Master Plan. City of Newport Beach –Finance Department 17 Recommended Action Staff recommends that the Finance Committee: •Review and discuss •Provide any recommendations for consideration by the City Manager and the City Council City of Newport Beach –Finance Department 18 Questions? Water, Wastewater, Storm Drains, Street Sweeping, Streetlights, Oil & Gas UTILITIES DEPARTMENT Mark Vukojevic, Director Financial Review Finance Committee February 18, 2021 UTILITIES DEPARTMENT On Today’s Agenda •Introduction •Our Team •Our Different Services •Our Financials •Some Financial Deep Dives •Closing Thoughts Mark Vukojevic Director Steffen Catron Superintendent - Water Casey Parks Superintendent - Wastewater, Storm Drains & Electrical Utilities Department Staff 53 Total 1 Director, 2 Managers 3 Admin/Finance 28 Water, 10 Wastewater 7 Storm Drains/Sweeping 2 Street Lights (+Up to 6 Part Time Staff) UTILITIES DEPARTMENT Our Team UTILITIES DEPARTMENT UTILITIES DEPARTMENT Master Plans & the CIP UTILITIES DEPARTMENT Water Enterprise Fund Water Production Division •On-call and 24-hour emergency service •Groundwater Wells •Reservoirs •Pumping and Pressurizing •Transmission System •Fire Fighting Support •Disinfection •Water Quality Testing & Public Health •Computer, Monitoring and Control System: SCADA UTILITIES DEPARTMENT Water Enterprise Fund Maintenance & Repair Division •On-call and 24-hour emergency service •Valve & Fire Hydrant Maintenance •Valve & Fire Hydrant Replacements •Water Main Repairs & Replacements •Service Line Repairs & Replacements •Meter Valve Replacements •Air Vac Replacements •Emergencies UTILITIES DEPARTMENT •Field Customer Service •Water Meters & Boxes •NEW AMI Digital Water Meters •Meter Reading •Water Conservation & Use Efficiency •Leak Detection •Permit Inspections •Underground Utility Marking {Protection} •Requests from residents/plumbers Water Enterprise Fund Water Meter Division . Water (Enterprise Fund) Salaries & Benefits 14,800 AF Actual FY 17/18 14,100 AF Actual FY 18/19 14,500 AF Actual FY 19/20 15,500 AF Current Budget FY 20/21 $ 4,582,000 $ 5,081,000 $ 5,200,000 $ 5,242,000 Contract Services $ 684,000 $ 799,000 $ 838,000 $ 1,133,000 Electricity, Phone...$ 1,162,000 $ 1,589,000 $ 1,272,000 $ 1,583,000 Water Cost Raw $ 10,924,000 $ 10,497,000 $ 11,661,000 $ 13,371,000 Maintenance, Repairs, Supplies & Materials $ 1,272,000 $ 1,593,000 $ 1,643,000 $ 2,170,000 Admin Service Charge $ 1,487,000 $ 1,465,000 $ 2,240,000 $ 2,189,000 Internal Services, IT, Fleet, OPEB $ 932,000 $ 920,000 $ 1,320,000 $ 1,599,000 Insurance $ 212,000 $ 583,000 $ 569,000 $ 932,000 Total Operating Budget $ 21,255,000 $ 22,527,000 $ 24,743,000 $ 28,219,000 CIP Costs $ 5,171,000 $ 4,141,000 $ 3,750,000 $ 20,659,000 TOTAL WATER EXPENSE $ 26,427,000 $ 26,668,000 $ 28,492,000 $ 48,879,000 TOTAL WATER REVENUE $ 27,097,000 $ 28,035,000 $ 28,313,000 $ 29,678,000 UTILITIES DEPARTMENT UTILITIES DEPARTMENT Water Fund Balance Projections $0 $5 $10 $15 $20 $25 $30 $35 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30Millions Target Reserve Level UTILITIES DEPARTMENT Cost of water –15,000 Acre Feet 77 % Groundwater –(OCWD) Annexation charge $115/AF Basin charges $490/AF Electricity $ 45/AF Treatment/testing $ 20/AF Avg cost $ 670/AF 77% of 15,000 x $670 = $7.74mil 23% Imported State Water –(MWD, MWDOC) Use Charge $1078/AF 23% of 15,000 x $1078 + $276 = $3.72mil Situational Comparison: 50% Groundwater & 50% Imported Groundwater cost:$5mil Imported water cost: $8mil UTILITIES DEPARTMENT Financial Thoughts (Water Fund) •New AMI Digital Water Meters will save $300k/year in meter reading costs & early leak detections •Insurance cost increases have been high but common across the industry •Internal cost allocations increases are needed for the Utility to pay its fair share •Fire Hydrants knockdowns -2018 (8), 2019 (13), 2020 (15), 2021 (1): Cost recovering is important •Credit card billing fees are a $300k+ annual expense •Lack of development “buy-in” or “Impact” fees •Bi-Monthly billing makes the bill seem high •Preparations for next drought Wastewater (Sewer) Division Responsibilities: •SEWER SPILL PREVENTION •Sewer Line Cleaning/Jetting/Rooting -18Month, Annual, Quarterly & Monthly Routes •Repairing mainlines and sewer laterals •Pump Station Maintenance & Repairs •Regulatory Compliance •Emergency Response, Customer Service, Plumber calls UTILITIES DEPARTMENT Master Plans & the CIP UTILITIES DEPARTMENT Sewer Rates •Average residential sewer bill $13/month •No rates were increased between 2006-2017 •Currently on 4th year of a 5-year rate increase •The 5th year sewer rate increase January 2022 is approx. 2% •Expenses have increased •CIP has increased •Below Reserve Targets •New sewer rate study is recommended Actual FY 17/18 Actual FY 18/19 Actual FY 19/20 Current Budget FY 20/21 Salaries & Benefits $ 1,519,000 $ 1,599,000 $ 1,734,000 $ 1,760,000 Contract Services $ 60,000 $ 42,000 $ 34,000 $ 101,000 Electricity, Phone...$ 65,000 $ 74,000 $ 71,000 $ 98,000 Maintenance, Repairs, Supplies & Materials $ 579,000 $ 655,000 $ 737,000 $ 916,000 Admin Service Charge $ 372,000 $ 412,000 $ 462,000 $ 407,000 Internal Services, IT, Fleet, OPEB $ 515,000 $ 539,000 $ 545,000 $ 663,000 Insurance $ 21,000 $ 184,000 $ 170,000 $ 396,000 Total Operating Budget $ 3,131,000 $ 3,505,000 $ 3,753,000 $ 4,341,000 CIP Costs $ 365,000 $ 189,000 $ 1,171,000 $ 2,694,000 TOTAL SEWER EXPENSE $ 3,495,000 $ 3,695,000 $ 4,925,000 $ 7,035,000 TOTAL SEWER REVENUE $ 3,464,000 $ 4,205,000 $ 4,257,000 $ 4,269,000 . Wastewater (Enterprise Fund) UTILITIES DEPARTMENT UTILITIES DEPARTMENT Wastewater Fund Balance Target Reserve Level $1.8mil CIP drawdown Carry over & new CIP $- $1.0 $2.0 $3.0 $4.0 $5.0 Actual Actual Actual Actual Estimate Estimate FY 17 FY 18 FY 19 FY 20 FY 21 FY 22Millions Total Ending Balance UTILITIES DEPARTMENT Financial Thoughts (Wastewater Fund) •Insurance cost increases have been high but common across the industry •Internal cost allocations increases are needed for the Utility to pay its fair share •Continued capital Investment is needed •New wastewater rate study is needed •Frequent cleaning and quick response time to protect water quality •Customer service intensive with plumbers and sewer laterals •Lack of development “buy-in” or “Impact” fees UTILITIES DEPARTMENT Storm Drains (General Fund) •Protecting Harbor Water Quality •87 miles of Storm Drains/channels/ditches •3,268 catch basins cleaned annually •23 inline large trash capture devices •400+ catch basin trash capture devices •300 annual tons of trash removed •Repairs to storm drain pipes, catch basins & ditches •Customer Service –car key recovery from catch basins-a frequent occurrence UTILITIES DEPARTMENT Tide Valves (General Fund) •89 tide valves, (daily turning) •0 number of permanent pump stations •40 mobile storm pumps •12 valves are electrically operated Lack of space & power outage realities Automation is not foolproof •Maintenance of all pumps & equipment •Tide valve maintenance during very low tides •Forecasted Rain + Predicted High Tides •Force multiply a staff of 7 to make 30-40 “pumpers” Street Sweeping (General Fund) •Residential Weekly •Commercial, Parking Lots, Boardwalk, 2-3/week •Contracted Service -New (2020) 10-year street sweeping contract with new street sweepers, 5 Street Sweepers every day! -700 miles a week -3800 tons a year •Alleys –every 2 weeks, New (2021) 5-year contract •City Sweeper is the backup & for emergencies •Customer Service intensive with questions, requests, special postings/sweepings •Enforcement through Police Dept. -Payments through Finance Dept. UTILITIES DEPARTMENT Graffiti Removal (General Fund) •Contracted Service (prevailing wage) •5 days a week, contracted service + Summer Spikes + Special Callouts •Graffiti -350+ locations removed, each location is documented, logged and reported to the County system •Customer Service –phone, website & app •Graffiti is removed with: -chemical removers -painted over & color matched -pressure washing •Stickers are growing nuisance… UTILITIES DEPARTMENT UTILITIES DEPARTMENT Actual FY 17/18 Actual FY 18/19 Actual FY 19/20 Current Budget FY 20/21 Salaries & Benefits $ 1,282,000 $ 1,276,000 $ 1,333,000 $ 1,287,000 Graffiti Removal $ 90,000 $ 114,000 $ 123,000 $ 105,000 Street Sweeping $ 629,000 $ 715,000 $ 646,000 $ 960,000 Storm Drain cleaning $ 198,000 $ 210,000 $ 263,000 $ 365,000 Maintenance & Repair $ 246,000 $ 677,000 $ 436,000 $ 472,000 Internal Services: IT, Fleet $ 269,600 $ 330,800 $ 368,200 $ 375,000 Insurance $ 144,000 $ 121,000 $ 120,000 $ 193,000 Total Expenses $ 2,858,600 $ 3,443,800 $ 3,289,200 $ 3,757,000 . Storm Drains, Tide Valves, Sweeping, Graffiti (General Fund) UTILITIES DEPARTMENT Financial Thoughts (General Fund) •Sweeping contract cost increases in 2019 •Catch basin cleaning cost increases in 2019 •Extra sweeping is needed in the summer •40% of the City is posted for sweeping •Extra graffiti services during the summer •Future Graffiti contract cost increases •Staff overtime for pumping is $55/hour vs. contractor overtime $160 •Important goal is to protect water quality Streetlights (General Fund) •6,950 Street lights (includes street, bollards, parking lots, beaches & city facilities) •90% of all lights are now LED, conversions by staff •3 circuits of 5000 High Voltage streetlights remain •2 City Staff Electricians + Contracted Assistance (as needed) + Contracted Assistance (knockdowns) •Customer Service –phone, website & app •Quarterly night-time drive-by inspection of all city lights •30 City Emergency Generators; maintained; + air quality regs •Street Light knockdowns -2018 (20), 2019 (19), 2020 (15), 2021 (4): Cost recovery is important UTILITIES DEPARTMENT Street Lights (General Fund) . Actual FY 17/18 Actual FY 18/19 Actual FY 19/20 Current Budget FY 20/21 Salaries & Benefits $ 73,000 $ 155,000 $ 178,000 $ 228,000 Contract Services $ 391,000 $ 352,000 $ 393,000 $ 183,000 Electricity $ 455,000 $ 603,000 $ 580,000 $ 500,000 Maint & Repair $ 205,000 $ 262,000 $ 153,000 $ 329,000 Internal Services: IT, Fleet $ 9,000 $ 58,000 $ 30,000 Insurance $ 13,000 $ 17,000 $ 17,000 $ 49,000 Total Expenses $ 1,137,000 $ 1,398,000 $ 1,379,000 $ 1,319,000 Total Revenue $ 842,231 $ 38,810 $ 73,119 $ 58,702 UTILITIES DEPARTMENT Oil & Gas (Tidelands Fund) •16 Oil Wells, producing 17,000 barrels/year •Crude Oil is sold and Natural Gas sent to Hoag •Horizontally Drilled in the 1950s •City Operated since 1981 •4 wells are currently offline UTILITIES DEPARTMENT Oil Operations (Tidelands Fund) . Actual FY 17/18 Actual FY 18/19 Actual FY 19/20 Current Budget FY 20/21 Salaries & Benefits 0 0 0 0 Contract Services $ 110,000 $ 107,000 $ 98,000 $ 126,000 Utilities $ 65,000 $ 69,000 $ 61,000 $ 69,000 Supplies & Materials $ 1,600 $ -$ -$ 12,000 Maintenance & Repair $ 239,000 $ 456,000 $ 285,000 $ 354,000 Royalties & Agency Fees $ 151,000 $ 128,000 $ 102,000 $ 196,000 Total Expenses $ 567,000 $ 760,000 $ 546,000 $ 757,000 Total Revenue $ 1,214,661 $ 1,135,520 $ 782,662 $ 600,000 UTILITIES DEPARTMENT UTILITIES DEPARTMENT Financial Thoughts •Cost of Oil: -Difficult to be profitable when oil is $30/barrel -Stopped pumping in April & May of 2020 -Oil is now >$50/barrel •Cost of Oil Production -Royalties cost of 19% of gross -Expenses have increased, especially regulatory permits costs and repair costs •Redrill and abandonments: -Offline wells need further studies to evaluate best course of action -Regulatory environment considerations Old City Landfill Newport Terrace Community (Environmental Fund) •1950s-1960s former City Dump •1972 Sold to a developer •City shares 50/50 responsibility with Home Owners Association •Managed/Monitored by City Staff •Contracted Resources used •Landfill gas control system -Extraction, pumping and treatment -Alarm system -Emergency call outs •Regulatory Compliance –State and County •System Repairs and Improvements UTILITIES DEPARTMENT Old City Landfill (Newport Terrace Condo Assoc.) (Environmental Fund) . Actual FY 17/18 Actual FY 18/19 Actual FY 19/20 Current Budget FY 20/21 Salaries & Benefits 0 0 0 0 Contract Services $ 65,000 $ 61,000 $ 61,000 $ 60,000 Utilities $ 2,800 $ 3,600 $ 4,000 $ 5,000 Maintenance & Repair $ 129,000 $ 12,000 $ 9,000 $ 77,000 Insurance $ 57,000 $ 57,000 $ 69,000 $ 162,000 Total Expenses $ 254,000 $ 134,000 $ 143,000 $ 304,000 Total Revenue $ 52,000 $ 39,000 $ 33,000 $ 40,000 UTILITIES DEPARTMENT Closing: Thank you for the opportunity to present Your Utilities Department: •Water •Wastewater •Storm Drains & Tide Valves •Street Sweeping & Graffiti •Streetlights •Oil & Gas •Former Landfill UTILITIES DEPARTMENT 2/12/21 Scheduled Date Agenda Title Agenda Description Thursday, February 18, 2021 Fiscal Year 2020-21 Second Quarter Financial Report Staff will present results as of the quarter ending December 31 to the Finance Committee, and subsequently will present it to the City Council. Fee Study Update Staff will present the Master Fee Schedule to the Finance Committee and subsequently will present it to the City Council. Long Range Fiscal Forecast (LRFF)Staff will provide an update to the latest version of the LRFF. Deep Dive of Utilities Department Budget Discussion of the budget for the Water and Wastewater Enterprise Funds’ and other Utilities Department functions. Work Plan Review Staff and Finance Committee to review the proposed work plan and adjust as necessary. Tuesday, March 9, 2021 Council Study Session - Capital Improvement Plan Early Look Finance Committee Attendance Optional Thursday, March 11, 2021 Financial Statement Audit Results and Related Communication The City’s external audit firm will meet with the Finance Committee to discuss the audit findings for the fiscal year ending 6/30/2020. The Committee will have an opportunity to discuss any potential areas of concern and the auditors can discuss any changes in accounting standards or disclosures that were relevant for the audit year. Internal Audit Program Update Staff will provide a progress to date report of the internal control and performance audit program. Discuss Revenue Assumptions Staff will provide of an overview of revenue assumptions for the FY 2021-22 Proposed Budget. Thursday, April 15, 2021 Audit Services Recommendation Staff will propose the selection of a new external financial reporting and disclosure auditor.Proposed FY 2021-22 Budget Overview Staff will provide an overview of the Proposed FY 2021-22 Operating Budget. Budget Amendments for Quarter Ending March 31, 2021 Staff will report on the budget amendments from the prior quarter. Thursday, April 29, 2021 Proposed FY 2021-22 Budget Overview (optional - if needed)Staff will provide an overview of the Proposed FY 2021-22 Operating Budget. Thursday, May 13, 2021 Quarterly Budget Update Present results of quarter ending March 31. Proposed FY 2021-22 Follow-Up Meeting Staff will be available to answer follow-up questions on the proposed Fiscal Year 2021-22 budget. Finance Committee may discuss their impending recommendation(s) to Council. Internal Audit Program Update Staff will provide a progress to date report of the internal control and performance audit program. Tuesday, May 25, 2021 Joint City Council/Finance Committee Budget Study Session FY 2021-22 Proposed budget review. April May Newport Beach Finance Committee Work Plan Calendar Year 2021 January February March I:\Users\FIN\Shared\Admin\Finance Committee\WORK PLAN\2021\CY21 FC Workplan 1 2/12/21 Scheduled Date Agenda Title Agenda Description Newport Beach Finance Committee Work Plan Calendar Year 2021 Thursday, June 10, 2021 Audit Entrance Conference (Optional)Auditors will contact members of the Finance Committee individually to discuss the work plan for the fiscal year ending 6/30/2021 CAFR audit. Alternatively, the auditor may request an audience with the Finance Committee as a whole, in which case a meeting may be convened during this month. The committee will have an opportunity to discuss any potential areas of concern they wish the auditors to review and the auditors can discuss any changes in accounting standards or disclosures that may be relevant for the audit year. Committee Recess Committee Recess Thursday, September 16, 2021 Investment Performance Review Staff and/or one or more investment advisors will describe the performance of the City's investment portfolio. Annual Investment Policy Review and Update In furtherance of Section K-2 of Council Policy F-1, Statement of Investment Policy (the Policy), the Finance Department has completed an annual review of the Policy to ensure its consistency with the overall objectives of preservation of principal, liquidity and return, and its relevance to current law and financial and economic trends. Staff is proposing no modifications to the Policy at this time as recommended by Chandler Asset Management and supported by the City’s Finance Director/Treasurer. Quarterly Budget Update Present results of quarter ending June 30. Budget Amendments for Quarter Ending June 30, 2021 Staff will report on the budget amendments from the prior quarter. Internal Audit Program Update Staff will provide a progress to date report of the internal control and performance audit program. Thursday, October 14, 2021 Financial Statement Audit Results and Related Communication The City’s external audit firm, will meet with the Finance Committee to discuss the audit findings for the fiscal year ending 6/30/2020. The Committee will have an opportunity to discuss any potential areas of concern and the auditors can discuss any changes in accounting standards or disclosures that were relevant for the audit year. External Audit Update External audit update for transient occupancy tax (hotels, agents and residential owners), charter boat companies, waste haulers and vendor agreements. Budget Amendments for Quarter Ending September 30, 2021 Staff will report on the budget amendments from the prior quarter. Thursday, November 4, 2021 CalPERS Update Staff will present the latest actuarial valuation changes to actuarial assumptions, a review of investment returns, the potential impact of future rates, and the results of employee cost sharing. Fiscal Year 2019-20 and Fiscal Year 2020-21 Financial Updates Staff will provide a fiscal year ending June 30, 2020, and first quarter FY 2020-21 budget performance update. Budget Amendments for the Previous Quarter Staff will report on the budget amendments for the prior quarter. Quarterly Budget Update Present results of quarter ending September 30. Internal Audit Program Update Staff will provide a progress to date report of the internal control and performance audit program. Thursday, December 16, 2021 Committee Recess December June October November September July August I:\Users\FIN\Shared\Admin\Finance Committee\WORK PLAN\2021\CY21 FC Workplan 2