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HomeMy WebLinkAbout06 - Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28Q SEW Pp�T CITY OF �m z NEWPORT BEACH c�<,FORN'P City Council Staff Report February 12, 2019 Agenda Item No. 6 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Dan Matusiewicz, Finance Director - 949-644-3123, dmatusiewicz@newportbeachca.gov PREPARED BY: Steve Montano, Deputy Finance Director, smontano(o)_newportbeachca.gov PHONE: 949-644-3240 TITLE: Resolution No. 2019-11: Approval of Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 ABSTRACT: The Finance Committee recently completed its review of the select City Council financial policies listed below and recommends changes as shown in the revised redline policies included as Attachment B. F-3 Budget Adoption and Administration F-4 Revenue Measures F-7 Income Property F-8 City Travel Policy Statement F-11 Custody and Disposal of Controlled Property F-13 Distribution of Public Information in Municipal Services Statements and Business License Renewals F-14 Authority to Contract F-15 External Financial and Compliance Reporting, Disclosure & Annual Audits F-25 Grant Administration F-28 Facilities and Harbor and Beaches Financial Planning Programs The City Manager has reviewed the recommended revisions to the policies suggested by the Finance Committee and recommends the City Council adopt the revised City Council policies to promote efficiencies and ensure smooth administrative operations. RECOMMENDATION: a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and 6-1 Resolution No. 2019-11: Approval of Revised City Council Policies F 3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 February 12, 2019 Page 2 b) Adopt Resolution No. 2019-11, A Resolution of the City Council of the City of Newport Beach, California, Adopting Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28. FUNDING REQUIREMENTS: None. DISCUSSION: The Finance Committee is charged with a variety of tasks including, but not limited to, reviewing and monitoring events and issues that may affect the financial status of the City and making recommendations to the City Council regarding amendments to financial and budgetary policies. The Finance Committee recently completed its review of select City Council financial policies and recommends changes as shown in the revised redline policies in Attachment B and described below. The City Manager has reviewed the recommended revisions to the policies suggested by the Finance Committee and recommends the City Council adopt the revised City Council policies to promote efficiencies and ensure smooth administrative operations. F-3 Budget Adoption and Administration The purpose of this policy is to establish guidelines for the preparation, adoption, and administration of the City's annual budget. Substantive changes include: 1. Makes explicit that Finance Committee will not make a recommendation on the CIP Budget because it is within the purview of the City Council alone to determine how best to spend the City's resources. 2. Requires a joint Finance Committee/City Council meeting no later than the second Council meeting in May to discuss the Budget Detail and requires the Finance Committee to provide a budget recommendation subsequent to that meeting. 3. Requires the Finance Department to prepare and present to the Finance Committee a Long -Range Financial Forecast annually prior to the adoption of the annual budget. 4. Requires City Council approval of grant or donation in excess of $10,000 that carries future obligation to maintain and/or insure any improvement. 5. Allows for appropriations in the Capital Improvement Budget for projects currently underway and remaining unexpended at June 30, as approved by the City Manager, to be appropriated to those projects in the following fiscal year CIP Budget. F-4 Revenue Measures The purpose of this policy is to establish guidelines for staff recommendations on revenue matters. Substantive change includes making clear that when presenting any new or revised revenue measures to the Finance Committee for review, the Finance Committee's role is to confirm that increases in existing fees or any new fees are intended to recoup costs being incurred by the City. The Finance Committee will also insure that revisions in proposed taxes or other charges are fairly charged prior to Council adoption. 6-2 Resolution No. 2019-11: Approval of Revised City Council Policies F 3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 February 12, 2019 Page 3 F-7 Income Property The purpose of this policy is to establish guidelines for recognizing City -owned property as a revenue generator and as a means to provide otherwise financially less feasible uses and facilities to benefit the community. Substantive changes include: 1. Explicit indication that in recreational, charitable or non-profit cases, the City may determine that non-financial benefits may justify not maximizing revenue from such properties. 2. When less than the open market or appraised value is received from a lessee that is not (a) a statewide or national nonprofit organization, or (b) a public entity or subdivision thereof, the City shall find that the By -Laws and charter documents of such lessee (i) establishes a procedure wherein the election of directors of such lessee is accomplished by an open, democratic and transparent process that allows members to vote, (ii) has a governance and operational structure that is consistent with best practices for non-profit public benefit corporations as determined by the City Council, and (iii) cannot be amended to affect subparts (i) or (ii) without the prior written consent of the City as lessor. 3. Sets forth multiple analysis requirements prior to the sale of properties not restricted from sale by their terms of grant, rules, regulations, or covenants. F-8 City Travel Policy Statement The purpose of this policy is to establish guidelines for official City travel for reimbursement of expenses incurred by City Council members, appointed officials, members of special boards, commissions, committees, and employees while traveling overnight on official City business. Substantive change includes the requirement that, in furtherance of California Government Code Section 53232, travel claims by members of legislative bodies be accompanied by receipts that document each expense. F-11 Custody and Disposal of Controlled Property The purpose of this policy is to establish guidelines for the custody and disposal of controlled property. There are only minor changes with no substantive changes to report. F-13 Distribution of Public Information in Municipal Services Statements and Business License Renewals The purpose of this Policy is to establish guidelines for the distribution of written materials with the Municipal Services Statement and Business License Tax Renewal forms. Substantive changes includes allowing the notification of any changes in procedure or process affecting business license holders. There is also now proposed language that disallows financial information that pertains to a ballot measure in an upcoming election unless otherwise determined by the City Council. F-14 Authority to Contract The purpose of this policy is to establish authority for City contracts, such as service contracts and purchase orders, which collectively encompass the majority of the City's procurement activities. It also provides clarity in areas where the state and federal statutes may be silent or ambiguous. Substantive changes include the following: 6-3 Resolution No. 2019-11: Approval of Revised City Council Policies F 3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 February 12, 2019 Page 4 1. Under General Authority to Enter Into Contracts, language was added to authorize the City Manager, after consultation with the City Attorney, Risk Manager and Department Directors, if necessary, to make exception to the City's standard contract terms. This allows the City Manager to weigh risks involved with modifying the City's standard contract terms against operational considerations. 2. Clarification was added to include the City Attorney and City Clerk under the authorization limits granted to Department Directors. The current policy does not specifically identify the City Attorney and City Clerk's authorization limit, even though in practice these two offices have the same authorization limit as Department Directors. 3. The policy was updated to enable the Human Resources Director to enter into contracts to resolve claims, litigation and other legal disputes. The authorization limit for these contracts is commensurate with the Department Director limit of $75,000. 4. Sections regarding contract amendments were condensed and certain terms were defined for clarity. The current version of F-14 authorizes the City Manager to amend contracts approved by the City Council, so long as the amendment does not increase the total contract amount by more than $120,000, or the amended contract is not more than 125% of the original contract amount. The amounts and percentages described herein remain the same in the proposed changes, but the language was amended to make this section more concise. 5. Staff recommends fee-based recreation instructor contracts carry a maximum term of five years. The current policy limits these contracts to two years and the recommendation for the term increase is to increase operational and contracting efficiency, and to put these contracts in line with the City's on-call contracts. The Recreation & Senior Services Department typically enters into 120 of these contracts on an annual basis. 6. Various contract types were added to the section entitled Types of Contracts and Method of Award. Purchase Orders were formerly addressed in a previous iteration of Council Policy F-5 (the City's purchasing policy for goods, equipment and materials). In 2016, the City Council incorporated F-5 into F-14 because of their similarities and the addition of Purchase Orders into F-14 serves to bind them to the same standards as other contract types. Additionally, on-call contracts and emergency contracts were separated from being described in one section because they have different applications. 7. Professional service contracts with former City Council members are recommended to be subject to the same requirements and receive the same consideration as contracts with former City employees. When not more than five years has passed since a former City Council member or City employee has left service with the City, the City Council shall review and approve contracts for services with these parties. Resolution No. 2019-11: Approval of Revised City Council Policies F 3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 February 12, 2019 Page 5 8. Upon consulting with other government agencies, it was discovered that a common practice is for services to be transacted via a Purchase Order instead of a service contract. It is staff's recommendation to adopt this practice and the proposed changes provide for clearly defined parameters based on expenditures per vendor, per fiscal year that shall be adhered to when procuring services using a Purchase Order. The objective of this practice is to enable departments to secure low -dollar services in a timely manner and to enable staff to conduct transactions with smaller businesses that may not have the capacity to review or process service contracts. F-15 External Financial and Compliance Reporting, Disclosure & Annual Audits The purpose of this policy is to establish guidelines regarding external financial reporting, financial disclosure filings and contracting for annual audit services by an external accounting firm. There are only minor changes with no substantive changes to report. F-25 Grant Administration The purpose of this policy is to establish guidelines for the application, acceptance, administration, and financial reporting of grants including, but not limited to federal, state, local, and restricted donations (also considered grants for the purpose of this policy). Substantive changes include a new provision that if the grant or gift terms require that the City spend money and seek reimbursement from the grant or gift, the City will need to appropriate the expenditure and then seek reimbursement or draw -downs in accordance with the terms of the grant or gift. F-28 Facilities and Harbor and Beaches Financial Planning Programs The purpose of this policy is to establish guidelines for the administration of the City of Newport Beach's ("City") Facilities and Harbor and Beaches Financial Planning Programs ("Programs"). Substantive changes include the addition of the Harbor and Beaches Financial Plan to this policy. Additional changes include the addition of the following provisions: 1. Adding the objective of spreading or matching the costs of facilities over the useful life of such facilities as a goal of all long-term capital project financings and avoiding debt financing that extends beyond the useful life of the assets. 2. Adding a procedure that if requested by the City Council, the Finance Committee will review the fiscal impacts associated with, and recommend the most advantageous methods to fund the high-priority projects in the Facilities Financial Planning Tool and the Harbor and Beaches Capital Financial Plan. The City Manager will consider these recommendations in the preparation and presentation of the City Manager's annual budget to the City Council. 6-5 Resolution No. 2019-11: Approval of Revised City Council Policies F 3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 February 12, 2019 Page 6 ENVIRONMENTAL REVIEW: Staff recommends the City Council find the adoption of this resolution is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). ATTACHMENTS: Attachment A — Resolution No. 2019-11, including City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F28 (Exhibit 1) Attachment B— Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F28 (Redlined) Attachment A Resolution of the City of Newport Beach, California Adopting Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F28 (Exhibit 1) 6-7 RESOLUTION NO. 2019-11 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, ADOPTING REVISED CITY COUNCIL POLICIES F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 WHEREAS, the City of Newport Beach ("City") is governed, in part, by its Charter, Municipal Code and adopted City Council Policies; WHEREAS, the Finance Committee is charged with a variety of tasks including, but not limited to, reviewing and monitoring events and issues that may affect the financial status of the City and making recommendations to the City Council regarding amendments to financial and budgetary policies; WHEREAS, the Finance Committee recently completed its review of select City Council financial policies and recommends changes as shown in the revised policies attached hereto as Exhibit 1; and WHEREAS, the City Manager has reviewed the recommended revisions to the policies suggested by the Finance Committee and recommends the City Council adopt the revised City Council policies to promote efficiencies, and ensure smooth administrative operations. NOW, THEREFORE, the City Council of the City of Newport Beach hereby resolves as follows: Section 1: The City Council hereby approves and adopts City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28, which are attached hereto as Exhibit 1 and incorporated herein by this reference. Section 2: All prior versions of City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 are hereby repealed. Section 3: The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. .: Resolution No. 2019 - Page 2 of 2 Section 4: If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 5: The City Council finds the adoption of this resolution is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Section 6: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 12th day of February, 2019. Diane B. Dixon Mayor ATTEST: Leilani I. Brown City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE A Aaron C. Harp City Attorney Attachments: Exhibit 1— Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 • Exhibit 1 Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F28 6-10 BUDGET ADOPTION AND ADMINISTRATION PURPOSE F-3 To establish the policy for the preparation, adoption, and administration of the City's Annual Budget. POLICY A. Budgeting Philosophy. The City shall prepare and adopt an annual budget by June 30, of each year, as required by Section 1104 of the City Charter. To the extent practicable, the budget shall be prepared to generate a surplus in most years by conservatively estimating projected revenues and liberally estimating projected expenses. Surpluses will be allocated by the City Council pursuant to Policy F-5 or as otherwise determined by the City Council. The City has a wide variety of obligations associated with its activities and shall establish appropriate reserves for such obligations based upon the best available information at the time each budget is prepared. The City Council shall direct and control the planned use of reserves through the budget appropriation process. Appropriations for operating expenditures shall generally be balanced with current revenue sources and absent compelling, unexpected circumstances, will generally not rely on one-time revenue sources or reserves. However, this constraint is not intended to limit the periodic use of financial resources that were accumulated over time for a specific purpose or use of reserves consistent with their intended purpose. The City Council shall maintain a contingency reserve that shall be a "safety net" to address exigent circumstances consistent with Council Policy F-2 section E. 1. This reserve will generally not be used for other purposes. The contingency reserve will be invested in short-term readily liquid assets so they can be utilized on short notice. The budget may be developed with one or more contingency plans to protect against volatility or unexpected events. When significant uncertainty exists concerning revenue volatility or threatened/ pending obligations, the City Council and City Manager reserve the right to impose any special fiscal control measures, including a personnel hiring freeze, and other spending controls, whenever 1 6-11 F-3 circumstances warrant. The City Council may authorize the use of contingency reserves for any purpose as set forth by Council Policy F-2. B. Organization of the Budget. The Budget shall consist of two volumes: the Budget Detail and the Capital Improvement Program (CIP). The Budget Detail is an Operating Budget, which shall also provide historical trends of summary level information and contains line -by-line detail regarding operating expenditures and revenue estimates for the prior year, current year and budget year. Operating expenditures are categorized into five classifications within the Operating Budget. These are Salaries and Benefits, Maintenance and Operations, Capital Outlay, Debt Services and Interfund Transfers. The CIP document provides a summary of current and future planned projects, basic descriptions of each project, the anticipated funding source and the scope of work to be performed. CIP improvements are generally major facility or infrastructure improvement projects managed by the Public Works Department. The Finance Committee generally will not make a recommendation on the CIP Budget because it is within the purview of the City Council alone to determine how best to spend the City's resources. However, to the extent needed capital improvements or repairs come to the attention of the Finance Committee and the failure to construct those improvements or make those repairs may expose the City to financial risk, the Finance Committee may make a recommendation that such improvements be installed in the coming fiscal year(s). Because of the nature and scope of the CIP improvements, in most instances, the construction of such improvements will take place over more than one fiscal year. The final and complete versions of both budget volumes will be published and available on the City's website by no later than September 30th. C. Budget Process. In November of each year, the Finance Department will prepare a budget calendar and issue budget instructions to each department for use in preparing the budget. During December of each year, the Finance Department will prepare updated revenue estimates and fund balance projections for the current year and prepare preliminary revenue projections for the next fiscal year. Included in these instructions will be budget guidelines and, if deemed necessary, appropriation 2 6-12 F-3 targets for each department. These guidelines will be developed by the Finance Director and approved by the City Manager. After further refinements of revenue estimates and the completion of Department proposed expenditure appropriation requests, the Finance Department will summarize department requests for review by the City Manager. After the City Manager has reviewed and amended the Department Directors requests, the Finance Department will prepare the City Manager's proposed budget for the next fiscal year and shall submit it to the City Council and to the Finance Committee. The Finance Committee should have the opportunity to question staff and discuss the Budget Detail on at least two occasions. The City Council shall hold as many budget study sessions as it deems necessary. The City Council and the Finance Committee should have a joint meeting (which may be in a Study Session) not later than the second Council meeting in May to discuss the Budget Detail. After the joint meeting, the Finance Committee shall make a recommendation to the City Council on the Budget Detail. Such recommendation need not include any recommendation on items on the Budget Checklist unless the Finance Committee is specifically asked to do so by the City Council. All proposed Council changes to the City Manager's proposed budget shall be itemized in a document referred to as the Budget Checklist of revisions. The City Council shall hold a budget hearing and adopt the proposed budget with any desired Budget Checklist revisions on or before June 30 by formal budget resolution. When adopted, the proposed budget as supplement by the finalized Budget Checklist shall become the final budget. D. Long -Range Financial Forecast (LRFF). Strategic planning begins with determining the City's fiscal capacity based upon long-term financial forecasts of recurring available revenues and future financial obligations. Prior to the adoption of the annual budget, the Finance Department will prepare and present to the Finance Committee a Long -Range Financial Forecast that evaluates known internal and external issues impacting the City's financial condition. The LRFF is intended to help the City achieve the following: 1. The City can attain and maintain financial sustainability; 2. The City has sufficient long-term information to guide financial decisions; 3 6-13 F-3 3. The City has sufficient resources to provide programs and services for the stakeholders; 4. Identify potential risks to on-going operations in the long-term financial planning process and communicate these risks on an annual basis; 5. Establish mechanisms to identify early warning indicators; and 6. Identify changes in expenditure or revenue structures needed to deliver services or to meet the goals adopted by the City Council. The LRFF will forecast revenues, expenditures, and the financial position of the General Fund Contingency Reserve at least five years into the future or longer where specific issues call for a longer time horizon. The LRFF will identify issues that may challenge the continued financial health of the City, and the plan will identify possible solutions to those challenges. Planning decisions shall be made primarily from a long-term perspective and structural balance is the goal of the planning process. E. Administration of the Annual Budget. During the budget year, Department Directors and their designated representatives may authorize only those expenditures that are based on appropriations previously approved by City Council action, and only from accounts under their organizational responsibility. Any unexpended appropriations, except valid encumbrances such as commitments already made, expire at fiscal year-end unless specifically reappropriated by the City Council for expenditure during the ensuing fiscal year. Department Directors shall not authorize expenditures above budget appropriations in any given expenditure Classification within their purview, without additional appropriation or transfer as specified below. Appropriations may be transferred, amended or reduced subject to the following limitations: 1. New Appropriations. During the Budget Year, the City Council may appropriate additional funds, as it deems appropriate, by a City Council Budget Amendment. The City Manager has authority to approve requests for budget increases not to exceed $10,000 in any Budget line item or activity or Capital Project. The ability of the City Manager to approve such requests must be specifically included in each year's Budget Resolution to remain valid. 4 6-14 F-3 2. Grants & Donations. The City Manager may accept grants or donations of up to $30,000 on behalf of the City, but shall refer any such grant or donation to the City Council for consideration if a condition of such grant or donation entails any duty of the City to contribute and/or expend a sum in excess of $10,000 not covered by such grant or donation, or that carries a future obligation to maintain and/or insure any improvement. The City Council will be formally notified of all grants or donations on a quarterly basis by way of a "receive and file' or other Council meeting agenda item. This ability of the City Manager to accept grants or donations must be specifically included in each year's Budget Resolution to remain valid. Additionally, grant related appropriations approved by City Council may be carried forward to the following fiscal year(s) as long as the grant terms remain valid, the expenditures are consistent with the previous Council authorization, and the funds would otherwise need to be returned to the granting or donor agency. Also, see Council Policy F-25 for specific grant acceptance and administration procedures. Grant agreements and restricted donations in excess of $30,000 must be specifically approved by the City Council. Occasionally, the terms and conditions of a grant are approved by City Council in a year prior to when the program activity will take place and therefore, the funds are not appropriated to carry out the grant at that time. In such cases, the City Manager may appropriate the funds when they are received, provided the expenditures clearly meet the amount, terms, nature and intent of the grant or donation previously approved by City Council. 3. Assessment District Appropriation. Assessment district projects are typically funded by property owner contributions and bond financing secured by property assessments. City staff will initially seek appropriation to advance City resources for the assessment engineering and the design work related to a proposed assessment district. Since the City's advance is at risk until a district is formed at a public hearing, the appropriation related to advanced resources shall be subject to the normal budget policies. However, once the district has been formed at a public hearing, the City Council will adopt a "project -length" budget for the assessment district and City staff will be allowed to roll the appropriations forward into future fiscal years without rebudgeting the project through the formal CIP process. 5 6-15 F-3 When assessment bonds are issued to finance the improvements, the bond issuance costs will be estimated at the maximum amount that would be required to complete the improvements because it is not known how many property owners will opt to pay the assessment in full during the cash collection period, thereby reducing the size of the bond. Finance staff will also have the authority to reduce Council appropriations (related to bond issuance costs) after bonds are resized and sold. Money advanced by the City will be included in the assessment amount and be reimbursed to the City when the assessment district is formed except to the extent otherwise agreed to by City Council resolution. 4. Transfers within Departments. During the fiscal year, actual expenditures may exceed budget appropriations for specific expenditure line items within departmental budgets. If a departmental budget within a specific Classification is not exceeded, the Finance Director has the authority to transfer funds elsewhere within that Classification and Department to make the most efficient use of those funds appropriated by the City Council. 5. Transfers between Departments. Further, funds may be realigned between one Department and another, within the same Classification, with City Manager approval. For example, if a Fire Department function and the employee who accomplishes it are replaced by a slightly different function assigned to the Police Department, the City Manager may authorize the transfer of appropriated funds to support this function. 6. Transfers between Expenditure Categories. Any reprogramming of funds (i.e. movement) of funds among the five Classifications within the General or other Fund(s) requires the City Manager's approval. Any budget revision that changes the total amount budgeted for any fund (other than the minor provisions contained in paragraphs E.1. and E.7.b.) must be approved by the City Council. 7. Transfers between Capital Improvement Projects (CUP. Budget Transfers between Capital Improvement Projects shall be subject to the following parameters: a. Excess Project Appropriations or savings should be closed out and returned to the project's fund balance. Funds may then be 6 6-16 F-3 reappropriated to a new or existing project with the approval of City Council. b. Excess Project Appropriations may also be transferred from one CIP project to another, if the projects utilize the same funding source and are for substantially the same project purpose and physical location. Project appropriation transfers of this nature shall require the approval of the City Manager. All proposed budget amendments and transfers will be submitted to the Finance Director for review and processing prior to City Manager or Council authorization. All unexpended and unencumbered appropriations for the operating budget will be canceled on June 30 of each fiscal year. All appropriations in the Capital Improvement Budget for projects currently underway and remaining unexpended at June 30th, as approved by the City Manager, will be appropriated to those projects in the following fiscal year CIP Budget. Incomplete projects may be reappropriated by the City Council during the Budget process or by separate Council action. F. Management Authorization and Responsibilities. Once the final Budget has been approved by the City Council, specific City Council approval to make expenditures consistent with the Budget will not be required except as provided by other Council Policies and Administrative Procedures. It is the responsibility of the City Manager and management to administer the City's budget within the framework of policy and appropriation as approved by the City Council. The Finance Director is responsible for checking purchase requests against availability of funds and authorization as per the approved Budget. 2. Unless otherwise directed, routine filling of vacancies in staff positions authorized within the Budget will not require further City Council approval. However, new position, not addressed by the adopted budget shall require City Council approval. 3. At fiscal year end, the Finance Director is authorized to record accruals and transfers between funds and accounts in order to close projects or the books of accounts of the City in accordance with generally accepted governmental accounting principles as established by the Government Accounting 7 6-17 F-3 Standards Board, Government Finance Officers Association, and other appropriate accounting pronouncements. Any net shortage within a Fund will be recorded as a decrease in Fund Balance. Any net excess will be recorded as an increase to one or more appropriate Reserve Accounts as recommended by the Finance Director and approved by the City Manager or as is otherwise dictated by Council Reserve Policy (F-2). The net change in fund balances will be reported to City Council through various documents including Quarterly Financial Reports, the Comprehensive Annual Financial Report (CAFR), Budget Documents and other financial presentations. Funds that exceeded appropriations during the year or ended the year with a deficit fund balance are reported annually in the CAFR notes to the financial statements. (Information regarding the policy parameters and administration of City Reserves is contained in City Council Policy F-2.) Adopted - January 24,1994 Amended - February 27,1995 Corrected - February 26,1996 Amended - May 13,1996 Amended - May 26,1998 Amended - August 8, 2000 Amended - May 8, 2001 Amended - April 23, 2002 Formerly F-10, F-11, F-12, and F-21 Amended - April 8, 2003 Amended - April 13, 2004 Amended - September 13, 2005 Amended - October 10, 2006 Amended - August 11, 2009 Amended - September 27, 2011 Amended - February 12, 2019 LV 6-18 REVENUE MEASURES PURPOSE F-4 In consideration of long-term fiscal sustainability and to establish a basis for staff recommendations on revenue matters, the following revenue policies are established. A. Revenue measure changes may be processed at any time during the fiscal year. B. Special services, which can be identified with the recipients, will be self -supported from service fees to the maximum extent practicable. Service fees shall be established by City Council resolution, and can be found in the Schedule of Rents, Fines and Fees in compliance with applicable State law, and shall be periodically reviewed and updated for compliance with applicable State law. C. Reasonable effort will be made to establish revenue measures which will cause transient and recreation visitors to Newport Beach to carry a fair portion of the expenses incurred by the City as a result of their use of public facilities. D. The City will establish appropriate cost -recovery targets for its fee structure and will periodically adjust its fee structure to ensure that the fees continue to meet cost recovery targets. When requested by the Finance Director, or his/her designee, each Department shall provide the Finance Department with a listing of the services and the respective fees imposed by Department. This listing shall identify the estimated costs to the City in providing the product or service associated with each fee as well as any recommended revision in the fee. The Finance Department may study, internally or using an outside consultant, the costs of providing such services and recommend fees to each Department. E. The Finance Department, with the assistance of the initiating Department, shall present any new or revised revenue measures to the Finance Committee for review. The purpose of the review of the Finance Committee shall will be to confirm that increases in existing fees or any new fees are intended to recoup costs being incurred by the City, or revisions in proposed taxes or other charges are fairly charged. Any revised fees or new revenue measures will be referred to the City Council for review and action. The Finance Department shall endeavor to consult with private individuals, business groups and individual business persons on the economic impact any recommended revenue measure changes may have on them. Their response, the estimated costs to the City in providing the product 1 6-19 F-4 or service and the recommended revision to the revenue measure shall be included in the information forwarded to the City Council. F. The City will proactively seek to protect and expand its tax base by encouraging a healthy underlying economy. G. The City will work to enhance and protect the property values of all Newport Beach residents and property owners. H. The City will encourage shopping, dining, and visiting at Newport Beach stores, restaurants and hotels. I. The City will oppose efforts of the State and County governments to divert revenues from the City or to increase unfunded service mandate of City taxpayers. J. The City will seek additional intergovernmental funding and grants, with a priority on funding one-time capital projects. Grant -funded projects that require multi-year financial support of the City will be reviewed by City Council, to the extent required by Council Policy F-3. Also, see Council Policy F-25 for specific grant acceptance and administration procedures. K. The City will not rely on one-time revenue sources to fund operations. One-time revenues sources, whenever possible, will be used to fund one-time projects, augment reserve balances or fund unfunded liabilities. Adopted - August 26,1968 Reaffirmed - November 12,1968 Reaffirmed - March 9,1970 Reaffirmed - February 14,1972 Reaffirmed - December 10, 1973 Reaffirmed - November 11, 1974 Amended - January 24,1994 Formerly F-13 Amended - February 27,1995 Corrected - February 26, 1996 Amended - May 26,1998 Amended - May 8, 2001 Amended - April 13, 2004 Amended - September 27, 2011 Amended - February 12, 2019 01 6-20 F-7 INCOME AND OTHER PROPERTY The City owns and manages an extensive and valuable assortment of property including streets, parks, beaches, public buildings and service facilities. The City also owns or ground leases and/or operates a yacht basin, resort hotel and apartment property, a luxury residential development and various other income-producing properties. Much of the income property is tidelands, filled tidelands or waterfront. Unencumbered fee value of income property is substantial. As owner/manager of property, the City is the steward of a public trust, and state law requires the City to maximize its returns on state -managed property or be subject to a charge of making a gift of public funds. Nevertheless, the City Council recognizes the importance of this property not only as a revenue generator, but also as a means to provide otherwise financially less feasible uses and facilities that benefit the community. In managing its property, the City will continually evaluate the potential of all City owned property to produce revenue. This may include leasing or licensing unused land, renting vacant space, and establishing concessions in recreation areas or other similar techniques. The City Council will evaluate the appropriateness of establishing new income generating opportunities on City controlled areas using sound business principles and after receiving input from neighbors, users and the public. The policy of the City Council is that income and other property be held and managed in accordance with the following: A. Whenever a lease, license, management contract, concession or similar action regarding income property is considered by the City, an analysis shall be conducted to determine the maximum or open market value of the property. This analysis shall be conducted using appraisals or other techniques to determine the highest and best use of the property and the highest income generating use of the property. B. All negotiations regarding the lease, license, management contract, concession, or similar action regarding income property shall include review of an appraisal or analysis of the use being considered for the property conducted by a reputable and independent professional appraiser, real estate consultant, or business consultant. C. The City shall seek, whenever practical and financially advantageous, both in the short and long term, to operate or manage all property and facilities directly with City staff or contractors, provided staff have the expertise needed to competently do so, or to oversee the work of contractors. 1 6-21 F-7 D. In most negotiations regarding the lease, license, management contract, concession, or similar action regarding an income or other property, the City shall seek revenue equivalent to the open market value of the highest and best use; and, whenever practicable the City shall conduct an open bid or proposal process to ensure the highest financial return. E. However, in some circumstances the City may determine that use of a property by the public for recreational, charitable or other nonprofit purpose is preferred and has considerable public support, in which case the City may determine that non- financial benefits justify not maximizing revenue from such property. In such circumstances, the City has a vested interest in ensuring that the lessee of such property operates the activities conducted on or from the property in the manner that has been represented to the City throughout the duration of any lease or contract with the City. F. Whenever less than the open market or appraised value is received or when an open bid process is not conducted, the City shall make specific findings setting forth the reasons thereof. Such findings may include but need not be limited to the following: 1. The City is prevented by tideland grants, Coastal Commission guidelines or other restrictions from converting the property to another use. 2. Redevelopment of the property would require excessive time, resources, expertise and costs, which would outweigh other financial benefits. 3. Converting the property to another use or changing the operator, manager, concessionaire, licensee, or lessee of the property would result in excessive vacancy, relocation or severance costs, real estate commissions, tenant improvement allowances, expenses or rent concessions which would outweigh other financial benefits. 4. Converting residential property to another use or opening residential leases to competitive bid would create recompensable liabilities and other inequities for long-term residents. 5. The property provides an essential or unique service to the community or a clearly preferred use that enjoys substantial support in the community that might not otherwise be provided were full market value of the property be required. 2 6-22 F-7 6. The property serves to promote other goals of the City such as affordable housing, preservation of open space, uses available to the public or marine related services. 7. If the lessee is not (a) a statewide or national nonprofit organization, or (b) a public entity or subdivision thereof, then the City finds that the By -Laws and charter documents of such lessee (i) establishes a procedure wherein the election of directors of such lessee is accomplished by an open, democratic and transparent process that allows members to vote, (ii) has a governance and operational structure that is consistent with best practices for non-profit public benefit corporations as determined by the City Council, and (iii) cannot be amended to affect subparts (i) or (ii) without the prior written consent of the City as lessor. G. Generally, lengths of licenses, leases, management contracts, concessions, or similar agreements will be limited to the minimum necessary to meet market standards or encourage high quality improvements and will contain appropriate reappraisal and inflation protection provisions. Also, all agreements shall contain provisions to assure complete audits periodically through their terms. H. All negotiations regarding the license, lease, management contract, concession or similar action regarding income property shall be conducted by the City Manager or his/her designee under the direction of any appropriate City committees. I. To provide an accurate accounting of actual net revenues generated by the City's income property, all costs directly attributable or allocable to the management of a specific income property shall be charged against the gross revenues collected on that property in the fiscal year the costs are incurred. Costs so chargeable include, but are not limited to, property repairs and maintenance, property appraisals, and consultant fees, as authorized by the City Council, City Manager, or by this Income Property Policy. J. The City Manager or his/her designee is authorized to sign a license, lease, management contract, concession, or similar agreement or any amendment thereto, on behalf of the City. Notwithstanding the foregoing, the City Manager or his/her designee, or a City Council member, may refer any license, lease, management contract, concession or similar agreement or any amendment thereto, to the City Council for its consideration and/or action. K. The City's portfolio of quality income producing properties adds an element of diversification to a portfolio otherwise invested primarily in financial assets. Certain of those income properties are restricted from sale by their terms of grant, state agency regulations or rules, other federal and state guidelines, private 3 6-23 F-7 covenant or agreement or otherwise. For those properties not so restricted from sale, an analysis shall be prepared to determine the following prior to such income producing property being offered for sale: 1. The maximum open market value of the City's interest in the property in its as is condition. 2. If the property is in an important location, a determination of the possible future consequences of the City no longer controlling that property. 3. If the current rent is contractually low and significant rent increases are likely within a finite period. 4. The likelihood of significant increases in the ability of the property to generate income after the expiration of any current lease of the property. 5. The likelihood of a lease extension being requested by the tenant and the ability to substantially increase rents or require significant improvements to enhance the utility and the value of the property as consideration for granting such an extension. 6. The value of the revenue stream from (i) lease income over the life of an existing lease and/or (ii) likely lease revenue if an existing lease were to be renewed or the property re -let to a different tenant; and/or (iii) lease income from the property if it were to be converted to its highest and best use, compared with the financial benefits of the use of the proceeds of a sale and if, considering the totality of the circumstances, such use of the proceeds of a sale is preferable to retaining the property in question. Adopted - July 27,1992 Amended - January 24,1994 Amended - February 27,1995 Amended - February 24,1997 Amended - May 26,1998 Amended - August 11, 2009 Amended - May 14, 2013 Amended - February 12, 2019 Formerly F-24 4 6-24 CITY TRAVEL POLICY STATEMENT PURPOSE W. To set forth the policy for official City travel for reimbursement of expenses incurred by City Council members, appointed officials, members of special boards, commissions, committees, and employees while traveling overnight on official City business. This policy will not apply for commuter (local) training seminars and local City business expenses, nor is it intended to supersede Police Officer Standard Training reimbursable travel policies established by the State of California or the Newport Beach Police Department. The governing rule for all City travel expenses will be availability, economy, convenience, and propriety. TRAVEL POLICY A. The City will provide reimbursement for expenses directly related to attendance at approved conferences, seminars, meetings, and other official functions/ purposes. B. Official travel is planned, approved, and budgeted at the Department level. C. All official travel must be approved prior to the time of the travel by the Finance Director. D. The City Manager will adopt and enforce administrative procedures that assure that all City authorized travel is: 1. Paid directly by the City or reimbursed to the traveler based on actual, itemized expenses or should be covered by per diem payment. 2. The City's per diem rate for Meals and Incidental Expenses (M&IE) will be equal to the U.S. General Services Administrations (GSA) M&IE rates. (www.GSA.gov). PROCEDURE A. Each Department Director will include all planned trips in the Department's annual budget requests. The Travel Authorization Form will be used as a planning/cost estimation guide. For unbudgeted, unplanned travel, the same form will be prepared at the time travel is requested. 1 6-25 B. All requests for travel advances will include the original Travel Authorization Form signed by the Department Director. C. The Travel Expense Claim Form will be used to file the final travel claim with the Finance Director. A copy of the Travel Authorization Form must be attached. SPECIAL REIMBURSEMENT RULES RELATED TO CITY COUNCIL California Government Code Section 53232, et seq., provides restrictions on expense reimbursements paid to members of legislative bodies. Members of a legislative body may only be reimbursed for actual and necessary expenses incurred in the performance of official duties and their travel claims must be accompanied by the receipts documenting each expense. CONTINUITY OF CITY GOVERNMENT POLICY With the advent of different modes of rapid transportation, there is the possibility of accidents injuring or killing several people simultaneously. Since Council Members are required to attend conferences, conventions and meetings outside City Hall, it is desirous to require that whenever possible, no more than three members of the City Council use the same transportation at the same time. When it comes to the Council's attention that a conference, convention, or meeting in which transportation is required, Council Members shall make an effort to arrange their itinerary so that no more than three members of the City Council use the same transportation. The City Clerk will be utilized to provide alternate travel arrangements where necessary in order to comply with this policy. This policy will help insure that there will be a continuity of City government and that there is always a majority of Council members capable of fulfilling the responsibilities placed upon them by the City. In addition, the City Manager, Department Directors and other key personnel should use the same guidelines in traveling separately on official business whenever practicable. Adopted - June 8,1992 Amended - January 24,1994 Amended - February 26,1996 2 6-26 Amended - April 23, 2002 Amended - October 10, 2006 Amended - August 11, 2009 Amended - September 27, 2011 Amended - February 12, 2019 Formerly F-25 Mue 3 6-27 CUSTODY AND DISPOSAL OF CONTROLLED PROPERTY PURPOSE F-11 To set forth the City's policy concerning custody and disposal of controlled property. DEFINITION Controlled Property is generally defined as City -owned materials, equipment, tools and furniture subject to theft, loss or misuse. Conversely, major capital assets with no potential for theft, such as buildings, land and other infrastructure assets affixed to the earth are exempted from this policy. For further discussion of "Controlled Property" and property control procedures, see Administrative Procedures concerning Controlled Property. PROPERTY CONTROL RESPONSIBILITIES The Finance Director shall establish and maintain citywide property acquisition and disposal procedures. However, the ultimate accountability for Controlled Property, along with the responsibility for maintaining reasonable safeguards to secure Controlled Property, lies with the Director of the Department that acquired the property until such time the item has been formally transferred to another Department or has been formally approved by the Finance Department for sale/ disposal. Procedures for acquisition, transfer, sale/disposal of controlled property vary by property type and value and are addressed through Administrative Procedures. As property custodians, Departments Directors are also responsible for a periodic inventory of their Controlled Property in accordance with Administrative Procedures. At the discretion of the Finance Director, material losses or discrepancies in Controlled Property will be reported to the Finance Committee. Adopted - January 24,1994 Corrected - February 26,1996 Amended - August 12,1996 Amended - April 23, 2002 Amended - April 13, 2004 Amended - September 27, 2011 Amended - February 12, 2019 1 MM F-13 DISTRIBUTION OF PUBLIC INFORMATION IN MUNICIPAL SERVICES STATEMENTS AND BUSINESS LICENSE RENEWALS PURPOSE The purpose of this Policy is to establish guidelines for the distribution of written materials with the Municipal Services Statement and Business License Tax Renewal forms. Periodically, material is distributed to residents through the Municipal Services Statement and Business License Renewal form. This material shall be approved by the Finance Director using the guidelines below as criteria for approval. Material not completely consistent with the guidelines below will not be distributed with Municipal Services Statements or Business License Tax Renewal forms without specific Council authorization. All costs associated with the inclusion of such material must be paid by the Department submitting the request for inclusion. Mailing may include the following: A. Notification of schedules or procedures affecting City services. B. Notification of any changes in procedure or process affecting business license holders. B. Information on the availability and scope of City services and facilities. C. Information concerning the functions and responsibilities of City departments and financial aspects of City operations. D. Information on municipal projects or future programs where a reaction from the community, business, or a neighborhood is desired. E. Information on recommended courses of action to protect the public or property from fire, theft, damage, and related hazards. F. Other materials which are designed to keep the public informed on the activities of its government. Mailings shall not contain information: of a commercial nature; from a commercial entity; or that promotes political candidates or causes. Mailings may include factual financial information except if the topic of such financial information pertains to a ballot measure in an upcoming election unless otherwise determined by the City Council. With the approval of the City Manager, information from community based, non- commercial organizations may be included in the Municipal Services Statement and Business License Renewal. The primary purpose of any such material should be to 1 6-29 F-13 provide information of a public service nature. The material must not contain direct solicitation for contributions or promotions of events whose primary purpose is fund raising (such as $200 per plate dinners). However, announcements of other events are generally appropriate, even if a nominal fee or "bake sale" type activity is an incidental part of the function. All costs associated with the inclusion of such material must be paid by the non-commercial organization. The Municipal Services Statement subscribers list shall not be made available for any private or organizational use. The City Manager may authorize exceptions to this restriction. Adopted - December 9,1968 Amended - October 25,1977 Amended - May 13,1991 Amended - January 24,1994 Amended - February 27,1995 Corrected - February 26, 1996 Amended - April 13, 2004 Amended - September 27, 2011 Amended - February 12, 2019 Formerly G-2 2 6-30 AUTHORITY TO CONTRACT Purpose and Limitation F-14 The purpose of this policy is to set out the City's policy establishing authority for City contracts. This policy applies to all contracts, whether entered into through standard, emergency, or other procedures, including, but not limited to, professional services, purchase requisitions, acquisition of goods, supplies, equipment, and materials, settlements, right of entry agreements, cost sharing agreements, joint defense agreements, cooperative agreements, reimbursement agreements, grant agreements, audit services, legal and investigative services, independent instructional and recreation services, former employee services, on-call and emergency services, temporary labor services, training services, public works projects, and public property maintenance, installation, custodial, and repair services. General Authority to Enter Into Contracts Provisions of the Charter govern the methods through which the City may be bound by contracts. The Charter states that the City shall not be bound by any contract or amendment thereto, unless the same shall be made in writing, approved by the City Council and signed on behalf of the City by the Mayor and City Clerk or by such other officer or officers as shall be designated by the City Council (Charter § 421). The City Attorney shall approve the form of all contracts made by or amendment thereto and all bonds given to the City, endorsing his or her approval thereon in writing (Charter § 602(e)). The City Manager has final authority to approve any contract within the City Manager's approval limit and may make exceptions to the City's standard contract terms, including but not limited to, insurance and indemnification requirements, based on operational considerations and weighing the particular risks involved. When deciding whether to modify standard contract terms, the City Manager shall consult with the City Attorney, Risk Manager, and Department Directors, as necessary. This authority shall not be delegated below the Assistant City Manager level. Contracts may not be written to circumvent any of the authority limits described herein. Delegation of Authority to Enter Into and Amend Contracts The City Council hereby delegates its authority to contract to the City Manager and through him or her to the Assistant City Manager, Department Directors, and to the City Attorney as set out below. All formalities required under the provisions of the Charter 1 6-31 F-14 shall be applied to these contracts. As such, the City Attorney shall review, approve and sign all such contract documents prior to contract award and execution and the City Clerk shall sign all such contracts attesting to their being entered into by the City. Additionally, the City Manager shall adopt and enforce administrative procedures that assure all contracts are: (1) entered into at a reasonable, fair and competitive price to the City; (2) all necessary formalities are followed and the requirements of federal, state, and local laws, including Council policies, are met; (3) best accounting practices are followed; and (4) the contracting process of the City is open and transparent, and provides accountability. A. Authority to Enter into Contracts The authority to enter into original contracts is delegated as set out below. 1. The City Manager. The City Manager is authorized to award and sign all contracts and agreements for services or purchase requisitions for the acquisition of goods, materials or equipment, without prior Council approval, in an amount not in excess of $120,000, provided funding for the contract was approved by the City Council as part of the annual approved budget. With the exception of grants and donations, which are covered in City Council Policies F-3, F-25 and B-17, the City Manager is authorized to sign all contracts without prior Council approval where the City is receiving or expending an amount not in excess of $120,000. This authority shall not be delegated below the Assistant City Manager level. 2. Department Directors. Department Directors, including the City Attorney and City Clerk, are authorized to award and sign contracts and agreements for services or purchase requisitions for the acquisition of goods, materials or equipment, without prior City Manager or Council approval, in an amount not in excess of $75,000, provided that the services and funds were approved by the City Council or City Manager as part of the annual approved budget. This authority may not be delegated below the Assistant or Deputy Director level. The City Manager has authority to approve requests for budget increases without City Council approval at the level set forth in Policy F- 3, Section E-1 ("Budget Adoption and Administration'). 6-32 F-14 3. City Attorney. The City Attorney is authorized to award and sign contracts for all services for outside counsel, investigators, and experts related directly to and necessary for prosecution and defense of pending litigation as defined in the Brown Act, and for services for outside counsel, investigators, and experts necessary to address other pending or potential legal claims or legal issues so long as funds for outside counsel, investigators, experts and related legal services were approved by the City Council as part of the approved annual budget. The City Attorney shall keep Council informed regarding any such expense that exceeds $120,000 on not less than a quarterly basis and shall seek budget updates, if needed, within a timely fashion. 4. Human Resources Director. The Human Resources Director shall have authority to enter into contracts to resolve claims, litigation and other legal disputes where the City is receiving or expending an amount not in excess of $75,000. This authority may not be delegated below the Department Deputy Director or Risk Manager level. B. Authority to Amend Contracts If circumstances arise that were are not reasonably foreseeable by the parties at the time of contracting which make extra work or material necessary for the proper completion of the service originally contracted for, a contract amendment and corresponding increase in total contract amount may be necessary. Under those circumstances, the City Manager, Department Directors, City Clerk and City Attorney are authorized to amend contracts as set out below. For purposes of this policy, "total contract amount" shall be defined as the total consideration paid over the term of the agreement, including any previous amendments to the contract. "Original contract amount" shall be defined as either the amount of compensation agreed upon when the contract was first entered into or the amount of compensation most recently approved by the City Council by amendment, whichever is greater. 1. C jy Manager. Contracts zvithin the Cihj Manager's Contracting Authorihj The City Manager may sign and award any contract amendment, including but not limited to, amendments to extend the term of a contract, Q 6-33 F-14 so long as the total contract amount as amended does not exceed $120,000. Contracts approved by City Council The City Manager may sign and award any contract amendment, including but not limited to, amendments to extend the term of a contract, so long as the total contract amount does not exceed 125% of the original contract amount or the original contract amount plus an additional $120,000, whichever amount is less. 2. Department Directors. Contracts within the Contracting Authority of the Department Director The Department Director, including the, City Clerk, or City Attorney, who entered into the contract, or whose department is designated as the contract administrator in the contract, may sign and award any contract amendment, including but not limited to, amendments to extend the term of a contract, so long as the total contract amount as amended does not exceed $75,000. 3. Amendments in Cases of Possible Work Stoppage or Undesirable Delay. In certain situations, a contract amendment may be needed that will cause the total contract amount to exceed the City Manager's amendment signature authority, and the timing is such that a work stoppage or other undesirable consequence will result if approval of the change is delayed until the next City Council meeting. In these situations, the City Manager may approve an amendment that increases the total contract amount up to 150% of the original contract amount. Within twenty-four (24) hours, the City Manager shall notify the City Council Members of any such amendment. 4. Amendments Necessary to Address Emergency Situations. In event of emergency work that requires an amendment to an existing contract, the emergency contracting policy outlined below may be followed. Types of Contracts and Method of Award It is recognized that by their nature, service contracts cannot always be awarded as a result of a competitive bid process. However, competitive proposals should be obtained whenever possible before resorting to negotiated awards. 4 6-34 F-14 A. Professional Services Contracts Professional consultant services differ from other services in that they are of a professional nature, and due to the ethical codes of some of the professions involved, as well as the nature of the services provided, do not readily fall within the competitive bidding process. Professional consultants should be individually selected through a qualifications -based selection process for a specific project or service based on demonstrated competence and qualifications for the types of services to be performed and with the objective of selecting the most qualified consultant at a fair, reasonable and verifiably appropriate cost. The procedures for achieving this goal shall be adopted and applied by the City Manager in the Administrative Procedures Manual. This section shall include, but not be limited to, procurements for services in the following fields: Engineering (civil, mechanical, electrical, structural, traffic, geotechnical, etc.); Building plan review and grading plan review and/or inspection services; Architecture; Landscape Architecture; Construction Project Management Firms; Environmental; Planning; Economic Analysis; Property Appraisals; Land Surveying; Financial Services; Data Processing Services; Legal Services not otherwise authorized in the section titled Authority to Enter into Contracts, A (3), of this policy; and Training and Temporary Labor Services. B. Services Contracts (Non -Professional) Non -Professional Services Contracts that are not public works under Charter Section 1110, are used where services are not strictly professional in nature but where such services are needed by the City. Examples include, but are not limited to janitorial services, printing services, closed circuit television services, steam cleaning, window washing and refuse collection. The City shall select services contractors though a Request for Proposal or a Request for Bid process, whichever serves the City's best interest. Contracts through a Request for Bid process shall be awarded based solely on pricing and minimum qualifications to determine the most responsive and responsible bidder. Contracts through a Request for Proposal process shall be awarded based on both qualifications and pricing to determine the best value to the City. C. Maintenance and Repair Contracts Maintenance and Repair Contracts are used where services are not strictly professional in nature but where such maintenance and repair services extend the life of City assets, facilities and/or infrastructure. Examples include, but are not limited to: pavement patching, plumbing and facilities maintenance services. 5 6-35 F-14 If a contract for these types of services is under $120,000 the City shall select services contractors though a Request for Proposal or a Request for Bid process, whichever serves the City's best interest based on the service to be provided. Contracts through a Request for Bid process shall be awarded based solely on pricing and minimum qualifications to determine the most responsive and responsible bidder. Contracts through a Request for Proposal process shall be awarded based on both qualifications and pricing to determine the best value to the City. Service contracts for maintenance or repair over $120,000 are considered a Public Work and thus need to be requisitioned as a Public Works Contract. D. Public Works Contracts Contracts for Public Works where the total expenditures for the project exceed $120,000, shall be awarded consistent with the provisions of Charter Section 1110 and Chapter 15.75 of the Newport Beach Municipal Code and relevant provisions of the California Public Contract Code. Public Works contracts are used for the construction or improvement of public buildings, works, streets, drains, sewers, utilities, parks or playgrounds, and every purchase of supplies or materials for any such project, as well as all projects for the maintenance or repair of such facilities intended to extend their useful life. E. Procurements and Contracts Involving Federal or Pass -Through Funding Procurements expending funds from federal grants or awards received directly by the City or from a pass-through agency such as the State of California, must comply with the provisions of Title 2 of the Code of Federal Regulations ("CFR") §200.318 through §200.326. To ensure the City's adherence to the Federal guidelines related to these procurements and contracts, the City Manager has adopted procurement procedures for such projects in the Administrative Procedures Manual. F. Independent Instructional and Recreation Contractors Department Directors are authorized to award and sign contracts with independent contractors for instructional, educational, cultural, or recreational purposes where the fees paid by the City are based upon either a percentage of fees collected by City for a program or on a flat rate basis for tasks performed by the contractor. Contracts with such independent contractors may be up to five (5) years in duration but must include a termination clause granting the City the right, at its sole discretion and with or without cause, to terminate the contract at R 6-36 F-14 any time by giving seven (7) calendar days' prior written notice to the Contractor. Should fees paid to any contractor exceed $75,000 during the term of the contract, the Department Director shall provide written notice to the City Manager identifying the program and independent contractor. The City Manager shall give written notice to the City Council should fees paid exceed $120,000. G. On -Call Contracts for Services The City Manager and Department Directors are authorized to enter into on-call agreements for obtaining services on an as needed basis, including, but not limited to, professional services, repair and maintenance services and emergencies, that are needed from time to time where the size of the job does not warrant the expense of entering into individual agreements for each service. On-call agreements must be within the authority of the individual entering into the agreement on behalf of the City and the initial term cannot exceed five (5) years. The City Manager is authorized to extend the term of an on-call agreement for up to six (6) months if work has been authorized or encumbered during the initial term but not completed. On -Call agreements must include a termination clause granting the City the right, at its sole discretion and with or without cause, to terminate the contract at any time by giving seven (7) calendar days' prior written notice to the Contractor. Procedures for entering into on-call agreements shall be prescribed by the City Manager in the Administrative Procedure Manual. H. Emergency Contracts If a contract for services is necessary under the provisions of Newport Beach Municipal Code Section 2.20.020, the City Emergency Procedures shall be followed.If the contract amount exceeds the signing authority of the City Manager or Department Director as authorized in this policy, then that contract shall be brought to the City Council at its next regularly scheduled meeting for review or authorization, if the contract constitutes a Public Works, in accordance with Charter Section 1110. Whenever possible, the City shall enter Emergency Contracts with contractors or consultants who can be relied upon to assist the City in advance of any actual emergency. Emergency Contracts, that are entered into prior to an emergency, shall be submitted to Council for approval after being reviewed and approved by the Office of the City Attorney. After the Emergency Contract is approved, services provided on an emergency basis under an Emergency Contract may be retained by oral commitment of the City Manager (or, in the case of an emergency described by Municipal Code Section 2.20.020, the Director or Assistant Director 7 6-37 F-14 of Emergency Services), to be memorialized in a Letter Agreement between the parties as soon as possible thereafter. When a written contract has been entered into in order to address an emergency, a copy of the written contract shall be provided to the City Clerk as soon as possible. I. Contracts with Former Council Members and City Employees When not more than five (5) years has passed since a person who is a former Council Member or City employee has left service with the City: 1. All professional services contracts with former Council Member or City employees shall require approval of the City Council; and 2. City Council approval shall also be required for professional services contracts with a corporation or other business entity owned or operated by a former Council Member or City employee or that employs a former Council Member or City employee. J. Purchase Orders for Goods, Materials or Equipment Departments shall submit requests for the purchase of goods, materials or equipment through a Purchase Requisition that is approved by the proper approval authority described in this policy, based on the purchase amount. The Finance Department shall conduct the necessary and proper bidding or proposal process for each purchase request and issue Purchase Orders to procure goods, materials or equipment. K. Purchase Orders for Services While typically used for the procurement of goods, materials or equipment, Purchase Orders may be used for services, subject to the following conditions: 1. Purchase Orders for services may be issued to a vendor not in excess of $7,500 per Purchase Order and $15,000 per vendor, per fiscal year. 2. The $7,500 per Purchase Order and $15,000 per vendor, per fiscal year limit shall apply to each Department separately. L. Commodities and Unique Services Certain commodities and service types are not subject to traditional procurement and bidding procedures. The City Manager shall prescribe in the Administrative E 6-38 F-14 Procedures Manual procedures to ensure that pricing involved in these transactions is competitive. General Procedures A. Contract Retention The City Clerk shall retain all original executed contracts in accordance with the City's current adopted Records Retention Schedule. Contracts shall be posted into the City's electronic document database in order to maintain transparency in contracting. B. Insurance All contracts shall be accompanied by proof of the appropriate level of insurance at the time of execution. The insurance level required shall be in accordance with the City's published Contract Templates (or as otherwise approved by the City Manager or Risk Manager). C. Reporting At least once annually, the City Manager shall report to the Council the summary of all contracts entered into by the City Manager and Department Directors. The summary shall include the vendor, the department responsible that will oversee the contract, the purpose of the contract, and the contract amount. Future Amendments to Policy Any future changes in the provisions of this policy shall be made by resolution of the City Council. History Adopted F-14 - 09-22-1969 (Purchase Authority for Goods & Materials) Reaffirmed F-14 - 03-09-1970 Reaffirmed F-14 - 02-14-1972 Amended F-14 -11-11-1974 Amended F-14 -11-24-1975 Amended F-14 -12-08-1975 Amended F-14 -11-24-1986 Amended F-14 - 05-26-1987 Adopted F-14 - 01-24-1994 (new F-14) (Authority for Contracts) Amended F-14 - 01-24-1994 (old F-14) (changed to F-5) 9 6-39 Amended F-5 - 02-26-1996 Amended J-1 -11-10-1997 (Contracts with Former Employees) Amended J-1 - 03-09-1998 Amended J-1 - 03-22-1999 (changed to F-20) Amended F-5 - 03-14-2000 Amended F-20 - 04-08-2003 Amended F-14 - 04-13-2004 Amended F-5 -11-22-2005 Amended F-14 - 05-09-2006 Amended F-14 & F-5 - 01-25-2011 Amended F-14 - 05-12-2015 Amended F-14 - 02-23-2016 (incorporating F-5 & F-20 and renaming "Authority to Contract") Amended F-14 - 06-26-2018 Amended F-14 - 02-12-2019 F-14 10 6-40 F-15 EXTERNAL FINANCIAL AND COMPLIANCE REPORTING, DISCLOSURE & ANNUAL AUDITS PURPOSE To establish City policy regarding external financial reporting, financial disclosure filings and contracting for annual audit services by an external accounting firm. POLICY Accounting standards boards and regulatory agencies set the minimum standards and disclosure requirements for annual financial reports and continuing disclosure requirements associated with municipal securities. The City places a high value on transparency and full disclosure in all matters concerning the City's financial position and results of operations. To this end, the City endeavors to make superior disclosure in the City's Comprehensive Annual Financial Report and Continuing Disclosure filings by going above and beyond the minimum reporting requirements including certificate of achievement programs and voluntary event disclosure filings. The City prepares its financial statements in conformance with Generally Accepted Accounting Principles (GAAP). Responsibility for the accuracy and completeness of the financial statements rests with the City. However, the City retains the services of an external accounting firm to audit the financial statements on an annual basis. The primary point of contact for the auditor is the Finance Director, but the auditors will have direct access to the City Manager, City Attorney, Finance Committee or City Council on any matters they deem appropriate. The financial statement audit and compliance audits will be conducted in accordance with the United States Generally Accepted Auditing Standards (GAAS), standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller of the United States, and standards set by regulatory agencies if applicable. After soliciting and receiving written proposals from qualified independent accounting firms, the Finance Director shall submit a recommendation to the Finance Committee and City Council. Under the premise that multiyear audit agreements are more cost efficient, allow for greater continuity and reduce audit disruption, the City may engage auditors in multi-year contracts, but the term of each contract shall not exceed five years. Generally, the City will request proposals for audit services every five years. However, the Finance Committee may make an exception to the competitive proposal 1 6-41 F-15 requirement if extraordinary circumstances exist and a change in auditors may not be prudent. If the City Council is satisfied with the performance of the auditors, the independent accountant firm may submit additional proposals through a competitive selection process, but it is the City's policy to require mandatory audit firm rotation after ten years of consecutive service. After audit results have been communicated to the City, the Finance Department is then responsible for responding to all findings within six months to the Finance Committee and appropriate regulatory agencies, if applicable. Adopted - January 24,1994 Amended - February 27,1995 Corrected - February 26,1996 Amended - September 13, 2005 Amended - September 27, 2011 Amended - February 12, 2019 Formerly A-14 2 6-42 GRANT ADMINISTRATION PURPOSE F-25 To establish guidelines for the application, acceptance, administration, and financial reporting of grants including, but not limited to federal, state, local, and restricted donations (also considered grants for the purpose of this policy). POLICY A. Grant Application and Responsibility Individual departments are encouraged to investigate sources of funding relevant to their respective departmental activities. The individual Department applying for a grant or receiving a restricted donation will generally be considered the Program Administrator of the grant. The Financial Planning Division in the Finance Department may assist in the financial administration and reporting of the grant, but the Program Administrator is ultimately responsible for meeting all terms and conditions of the grant, ensuring that only allowable costs are charged to the grant program and is responsible for adhering to City budgeting and fiscal procedures. Individual Departments and Program Administrators are not authorized to execute grant contracts. Grant contracts shall be reviewed by the City Attorney's office and executed by the City Manager and/or the Mayor on behalf of the City Council. B. Grant Acceptance & Appropriation by City Council Even though the funding source for an activity may be provided by a grantor/donor, only City Council can appropriate funds for official City activities except as authorized by Council Policy F-3 (Budget Adoption and Administration). Therefore, prior to the acceptance of a grant, the City Manager or City Council, as provided for in Council Policy F-3, will: 1. Approve the terms and conditions of the proposed grant including the specific City obligations that may be created by the grant contract in terms of required City matching expenditures or staff activities, even if the expenditures were previously appropriated through the budget adoption process. 1 6-43 F-25 2. Approve budget appropriations for the grant expenditures and City matching expenditures unless previously appropriated through the budget adoption process. 3. Approve and execute the Grant Contract(s). City Council review and approval of items 1 and 3 are not required if the grant is under $30,000, however, Council expenditure appropriation is required for all new appropriations in excess of $10,000 or as otherwise specified by Council Policy F-3. If the grant or gift terms require that the City spend money and seek reimbursement from the grant or gift, the City will need to appropriate the expenditure and then seek reimbursement or draw -downs in accordance with the terms of the grant or gift. Any budget amendments requested by the Program Administrator or operating Department will be reviewed by the Financial Planning Division of the Finance Department and submitted as a staff report to the Council for its review and approval. The Financial Planning Division of the Finance Department along with the Program Administrator will determine the proper amount of the appropriation request during the current and future fiscal year(s). C. Timely Reimbursement The Program Administrator is responsible and should pursue and/or request grant reimbursements or draw -downs on a timely basis. If requested, the Financial Planning Division of the Finance Department will assist with grant reimbursements or draw -downs. All checks will be made payable to the City of Newport Beach. Grant checks must be forwarded to the Revenue Division of the Finance Department for immediate deposit and include supporting documentation. The Program Administrator will keep the Financial Planning Division of the Finance Department apprised of the annual estimated grant revenues and expenditures and a tentative schedule of cash -flows for the grant program. Whenever practicable, the Program Administrator shall seek to receive the grant or gift funds prior to the expenditure of any sums by the City. MM F-25 D. Financial and Grant Reporting Grant reporting requirements vary widely by grant and sometimes include monthly, quarterly, and or annual reporting. Subsequent to the approval of a grant application, and during the project period, any required reports will be the responsibility of the Program Administrator, or if requested by the Program Administrator, the Financial Planning Division of the Finance Department. Program Administrators submitting their own reports will forward a copy of each report to the Financial Planning Division of the Finance Department. E. Grants Containing Direct Federal Assistance and/or Federal "Pass -Through" Funds Program Administrators acknowledge that Federal Funds or Federal Funds that "pass-through" state and local programs are required to be reported on the City's Schedule of Expenditures of Federal Awards and included in the City's annual Single Audit (compliance audit of all Federal Funds). Program Administrators will identify and keep the Financial Planning Division of the Finance Department apprised of those grant programs that contain direct Federal Funding or Federal pass-through funds identifying the Catalog of Federal Domestic Assistance (CFDA) number when at all possible. F. Record Keeping & Retention Requirements For the purpose of Grantor inquiries and grant specific compliance audits, Program Administrators are responsible for maintaining adequate records as evidence that program activities and expenditures met the terms and conditions of the grant and that all grant reporting requirements were met timely. Record retention requirements vary by grant, but it is recommended that original grant records should be maintained in a manner and duration consistent with the City's Records Retention Policy, unless otherwise specified by the grant contract. G. Documents to be forwarded to the Finance Department: Information received from a granting or donor agency or private party or entity that is pertinent to the terms, conditions, approval, extension, denial, revocation, and administration of a grant will be forwarded to the Financial Planning Division of the Finance Department including but not limited to: Q 6-45 Grant Award Notification Expenditure Authorization Date (if applicable) Grant Contracts Grant Extension Letters Grant Termination Letter Program and or Financial Reports Notices of Questioned Costs or instances of non-compliance Any Document setting or modifying terms and conditions of the grant Adopted - September 13, 2005 Amended - September 27, 2011 Amended - February 12, 2019 F-25 ii . -. F-28 FACILITIES AND HARBOR AND BEACHES FINANCIAL PLANNING PROGRAMS PURPOSE To establish the policy for the administration of the City of Newport Beach's ("City") Facilities and Harbor and Beaches Financial Planning Programs ("Programs"). DISCUSSION In addition to the annual Capital Improvement Program ("CIP"), the City has established a long-term plan for major renovation or replacement of aging facilities and installation of new infrastructure. The emphasis is on structures and adjacent grounds, rather than transportation, environmental, or other projects funded either in whole or in part by the General Fund. OBJECTIVES A. To insure that long-term programs addressing large, non-recurring projects for replacement of facilities is part of the budget process each year. B. To insure that development fees and proceeds derived from redevelopment or redeployment of existing land and capital assets owned by the City, and other non- recurring revenues are dedicated to the replacement of infrastructure facilities, rather than ongoing operating expenses. C. To provide a consistent, level funding plan to the extent practicable so as to minimize the peaks' and valleys' in General Fund support levels for elements of the Programs. D. To insure that projects are properly prioritized and scheduled, taking into consideration the relative age, condition, and functional viability of current facilities; pairing of projects implementation where prudent; and cost implications of immediate projects for the overall long-term Programs. E. Spreading or matching the costs of facilities over the useful life of such facilities should be a goal of all long-term capital project financings. Debt financing that extends beyond the useful life of the assets the debt was borrowed to finance should be avoided. 0 6-47 F-28 SOURCES AND USES OF FUNDS Funding for the Programs comes from development fees and proceeds derived from redevelopment or redeployment of existing land and capital assets owned by the City contributions from individuals and organizations within the community, annual budget allocations from the General Fund, incremental rent or fees originating from harbor activity received by the City, net proceeds of Certificates of Participation or other financing instruments, and investment earnings on temporarily idle funds. Funds for both Programs are used for actual site acquisition, design, construction, and directly related costs; as well as debt service expenses. POLICY AND PROCEDURE A. In advance of the budget process, staff shall prepare an update of the Facilities Financial Planning Tool and the Harbor and Beaches Capital Financial Plan for review, modification, and approval by the City Council. B. If requested by the City Council, the Finance Committee will review the fiscal impacts associated with, and recommend the most advantageous methods to fund the high-priority projects in, the Facilities Financial Planning Tool and the Harbor and Beaches Capital Financial Plan. The City Manager will consider these recommendations in the preparation and presentation of the City Manager's annual budget to the City Council. C. Unless otherwise specified in individual development agreements, other governing documents, or as otherwise specifically directed by the City Council, all development fees received by the City will be credited to the Facilities Financial Planning Reserve fund. D. Prudent assumptions regarding revenue and expenditure growth, inflation, and all relevant factors will be included in each year's update of the Facilities Financial Planning Tool and the Harbor and Beaches Capital Financial Plan E. General Fund contributions to the Facilities Financial Plan shall generally not be less than three percent (3%) of the total General Fund Revenue Budget. However, if there is a shortfall in General Fund revenue due to a decline in economic activity or other unexpected circumstances and it is necessary to reduce expenditures, 2 RM F-28 General Fund contributions to the Facilities Financial Planning Program and the Harbor and Beaches Capital Financial Plan can be temporarily reduced to under the three percent (3%) threshold. F. The financing duration for any borrowed funds shall not exceed thirty (30) years or the projected life of the new facility, whichever is less. G. The Facilities Financial Planning Tool and Harbor and Beaches Capital Financial Plan may be amended by City Council action in the event of a natural disaster or financial crisis. Adopted - August 11, 2009 Amended - May 14, 2013 Amended - June 9, 2015 Amended - February 12, 2019 3 Attachment B Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F28 (Redlined) 6-50 BUDGET ADOPTION AND ADMINISTRATION PURPOSE F-3 To establish the policy for the preparation, adoption, and administration of the City's Annual Budget. POLICY A. Budgeting PhilosophyDevelopment The City shall prepare and adopt an annual budget by June 30, of each year, as required by Section 1104 of the City Charter. To the extent practicable, the budget shall be prepared to generate a surplus in most years by conservatively estimating projected revenues and liberally estimating projected expenses. Surpluses will be allocated by the City Council pursuant to to the 14ar- ern and rr,,.,ehes Master- , the Fadlities Finaneing Plan, long term obligati f the -C= y, SHEh --v,f,,nde aeErated liabilities under- the ---d _pension obligations and other- --=-= --- =-=----- with C,,, nei Policy F-5 or as otherwise determined by , Utilization or- as the City Council results based budgeti—b that allo vs the public and the City Coune prioritize Qty . ` es str-ategkally aligned with core eommunity values. The City has a wide variety of obligations associated with its activities and shall establish appropriate reserves for such obligations based upon the best available information at the time each budget is prepared. The City Council shall directs and controls the planned use of reserves through the budget appropriation process. Appropriations for operating expenditures shalleg nerally be balanced with„ relation 4e current revenue sources and absent compelling, unexpected circumstances, will generally not ever rely on one-time revenue sources or reserves. However, Tthis constraint is not intended to limit the periodic use of financial resources that were accumulated over time for a specific prejecter purpose or use of reserves consistent with their intended purpose. contingency reserve that shall be a "safety net" to address for the v=gpoti� addressine exigent circumstances consistent with Council Policy F-2 section E. 1. This reserve will generally not be used for other purposes. The unassigne continL,encv reserve will be invested in short --term readilv liquid assets so thev can be utilized on short notice. 6-51 F-3 The budget may be developed with one or more contingency plans to protect against volatilfte or unexpected events. When significant uncertainty exists concerning revenue volatility or threatenedi-ng/pending obligations, the City Council and City Manager reserve the right to impose any special fiscal control measures, including a personnel hiring freeze, and other spending controls, whenever circumstances warrant. The City Council may authorize the use of contingency reserves only _, __ ___ __ _a _m erg __ _ _y _ _ _ ____ __ _ _ : or any purpose as set forth by Council Policy F-32. B. Organization of the Budget. The Annual Budget shall eneempass and an Ove -rating Budget and Qffl2M impfevement Plan (CIP). The Qverafin�.- Budget shall be developed to authorize the expenditofe address the overating authorize the expenditur-e-ef funds and address the annual appropriation ef funds annual op�grafion shall address the annual opefating needs the Citv 4ffough the developmepA and authorization of an shall consist of three two volumes;: the PeFfeVmance the Budget Detail and the Capital Improvement Program (CIP). The Budget Detail is an Operating Budget, which shall also provides historical trends of summary level information and contains line -by-line detail regarding operating expenditures and revenue estimates for the prior year, current year and budget year. Operating expenditures are categorized into four -five classifications within the Operating Budget. These are Salaries and Benefits, Maintenance and Operations, Capital Outlay, Debt Services -and Other- Fina eing r sesInterfund Transfers. The CIP document provides a summary of current and future planned projects, basic descriptions of each project, the anticipated funding source and the scope of work to be performed. CIPS improvements are generally major facility or infrastructure improvement projects managed by the Public Works Department. The Finance Committee generally will not make a recommendation on the CIP K 6-52 F-3 Budget because it is within the purview of the City Council alone to determine how best to spend the City's resources. However, to the extent needed capital improvements or repairs come to the attention of the Finance Committee and the failure to construct those improvements or make those repairs may expose the City to financial risk, the Finance Committee may make a recommendation that such improvements be installed in the coming fiscal year(s). Because of the nature and scope of the CIP improvements, in most instances, the construction of such improvements will take place over more than one fiscal year. The final and complete versions of both budget volumes will be published and available on the City's website by no later than September 30th. C. Budget Process. In November of each year, the Finance Department will prepare a budget calendar and issue budget instructions to each department for use in preparing the budget. During December of each year, the Finance Department shal�will prepare updated revenue estimates and fund balance projections for the current year and prepare preliminary revenue projections for the next fiscal year. , the Finance—Dc tent shall r get eat „r a and issue bud -et instructions to eaeh department for use in prion of the next year's Ci+.Y budget. Included in these instructions will be budget guidelines and, if deemed necessary, appropriation targets for each department. These guidelines will be developed by the Finance Director and approved by the City Manager. After further refinements of revenue estimates and the completion of Department proposed expenditure appropriation requests, the Finance Departments will summarize department requests for review by the City Manager. After the City Manager has reviewed and amended the Department Head Directors requests, the Finance Department shallwill prepare the City Manager's proposed budget for the next fiscal year and shall submit it to the City Council and to the Finance Committee. The Finance Committee should have the opportunity to question staff and discuss the Budget Detail on at least two occasions. The City Council shall hold as many budget study sessions as it deems necessary. The City Council and the Finance Committee should have a joint meeting (which may be in a Study Session) not later than the second Council meetingin n May to discuss the Budget Detail. After the joint meeting, the Finance Committee shall make a recommendation to the City Council on the Budget Detail. Such recommendation need not include any recommendation on items on the Budget 3 6-53 F-3 Checklist unless the Finance Committee is specifically asked to do so by the City Council. All proposed Council changes to the City Manager's proposed budget shall be itemized in a document referred to as theen-a bBudget eChecklist of revisions. The City Council shall hold a budget hearing and adopt the proposed budget with any desired Budget eChecklist revisions on or before June 30 by formal budget resolution. When adopted, the proposed budget as supplement byalong with the finalized Budget eChecklist; shall become the final budget. D. Long -Range Financial Forecast (LRFFL Strategic planning begins with determining the City's fiscal capacity based upon long-term financial forecasts of recurring available revenues and future financial obligations. Prior to the adoption of the annual budget, the Finance Department will prepare and present to the Finance Committee a Long Range Financial Forecast that evaluates known internal and external issues impacting the Cites financial condition. The LRFF is intended to help the City achieve the following_ 1. The Citv can attain and maintain financial sustainabili 2. The City has sufficient long-term information to guide financial decisions; 3. The City has sufficient resources to provide programs and services for the stakeholders; 4. Identify potential risks to on-going operations in the long-term financial planning process and communicate these risks on an annual basis; 5. Establish mechanisms to identify warning indicators; and 6. Identify changes in expenditure or revenue structures needed to deliver services or to meet the goals adopted by the City Council. The LRFF will forecast revenues, expenditures, and the financial position of the General Fund Contingency Reserve at least five years into the future or longer where specific issues call for a longer time horizon. The LRFF will identify issues that may challenge the continued financial health of the City, and the plan will identify possible solutions to those challenges. Planning decisions shall be made primarily from a lona-term nersnective and structural balance is the Loal of the lanning process. ED. Administration of the Annual Budget. 6-54 F-3 During the budget year, Department Heads Directors and their designated representatives may authorize only those expenditures that are based on appropriations previously approved by City Council action, and only from accounts under their organizational responsibility. —Any unexpended appropriations, except valid encumbrances such as commitments already made, expire at fiscal year—end unless specifically reappropriated by the City Council for expenditure during the ensuingnew fiscal year. Department Directors shallHeads pensi le fe not authorizes tg expenditures above budget appropriations in --fir -- ----- --- - any given expenditure eClassification within their purview, without additional appropriation or transfer as specified below. Appropriations may be transferred, amended or reduced subject to the following limitations: 1. New Appropriations. During the Budget Year, the City Council may appropriate additional funds, as it deems appropriatefoM sp^„_.,i purposes by a City Council Budget Amendment. The City Manager has authority to approve requests for budget increases not to exceed $10,000 in any Budget line item or aActivity-or Capital Project. (The ability of the City Manager to approve such requestsThis must be specifically included in each year's Budget Resolution to remain valid.) 2. Grants & Donations. The City Manager may accept grants or donations of up to $30,000 on behalf of the City. HePever-, if —a nes itiar�a� Manager's authority to create new appr-opr4ations is limited to $10,000 as stated .boy but shall refer any such grant or donation to the City Council for consideration if a condition of such grant or donation entails any duty of the City to contribute and/or expend a sum in excess of $10,000 not covered by such grant or donation, or that carries a future obligation to maintain and/or insure any improvement. The City Council will be formally notified of suehrall grants or donationsaefiens on a quarterly basis by way of a "receive and file" or other Council meeting agenda item. {This . . ability of the City Manager to accept grants or donations must be specifically included in each year's Budget Resolution to remain valid.) Additionally, grant related appropriations approved by City Council may be carried forward to the following fiscal year(s) as long as the grant terms remain valid, the expenditures are consistent with the previous Council authorization, and the funds would otherwise need to be returned to the granting or donor agency. Also, see Council Policy F-25 for specific grant acceptance and administration procedures. 5 6-55 F-3 Grant agreements and restricted donations in excess of $30,000 must be specifically approved by the City Council. Occasionally, the terms and conditions of a grant are approved by City Council in a year prior to when the program activity will take place and therefore, the funds are not appropriated to carry out the grant at that time. In such cases, the City Manager may appropriate the funds when they are received, provided the expenditures clearly meet the amount, terms, nature and intent of the grant or donation previously approved by City Council. 3. Assessment District Appropriation. Assessment district projects are typically funded by property owner contributions and bond financing secured by property assessments. City staff will initially seek appropriation to advance City resources for the assessment engineering and the design work related to a proposed assessment district. Since the City's advance is at risk until a district is formed at a public hearing, the appropriation related to advanced resources shall be subject to the normal budget policies. However, once the district has been formed at a public hearing, the City Council will adopt a "project -length" budget for the assessment district and City staff will be allowed to roll the appropriations forward into future fiscal years without rebudgeting the project through the formal CIP process. When assessment bonds are issued to finance the improvements, the bond issuance costs will beare estimated at the maximum amount that would be required to complete the improvements because it is not known how many property owners will opt to pay the assessment in full during the cash collection period, thereby reducing the size of the bond. Finance staff will also have the authority to reduce Council appropriations (related to bond issuance costs) after bonds are resized and sold. Money advanced by the City will be included in the assessment amount and be reimbursed to the City when the assessment district is formed except to the extent otherwise agreed to by City Council resolution. 4. Transfers within Departments. During the fiscal year, actual expenditures may exceed budget appropriations for specific expenditure line items within departmental budgets. If a total departmental budget; within a specific Classification, is not exceeded, the Finance Director has the authority to transfer funds elsewhere within that Classification and Department; to make the most efficient use of those funds appropriated by 6 6-56 F-3 the City Council. (Salaries and Benefits, Maintenance and Opera Capital Outlay and Other Financing Uses are the City's four Classifications within the operating budget). 5. Transfers between Departments. Further, funds may be realigned between one Department and another, within the same Classification, with City Manager approval. For example, if a Fire Department function and the employee who accomplishes it are replaced by a slightly different function assigned to the Police Department, the City Manager may authorize the transfer of appropriated funds to support this function. 6. Transfers between Expenditure Categories. Any reprogramming of funds (i.e. movement) of funds among the fe•t�eefive Classifications(Salar-ies and Benefits, Maintenanee and Opefatiens, and Capital Outlay and Other - Finan inn Sources) within the General or other Fund(s) _ sure Iunder-standbetween 'Ju r ds requires the City Manager's approval. Any budget revision that changes the total amount budgeted for any fund (other than the minor provisions contained in paragraphs C -E.1. and EE.7.b.) must be approved by the City Council. 7. Transfers between Capital Improvement Projects (CIP). Budget Transfers between Capital Improvement Projects shall be subject to the following parameters: a. Excess Project Appropriations or savings may be tFansfer-r-ed to -a " should be closed out and returned to the project's fund balance. Funds may then be reappropriated to a new or existing project with the approval of City Council. b. Excess Project Appropriations may also be transferred from one CIP project to another, provided t if the projects utilize the same funding source and are for substantially the same project purpose and physical location. Project appropriation transfers of this nature shall require the approval of the City Manager. All proposed budget amendments and transfers will be submitted to the Finance Director for review and processing prior to City Manager or Council authorization. 7 6-57 F-3 All unexpended and unencumbered appropriations for the operating budget will be canceled on June 30 of each fiscal year. All appropriations in the Capital Improvement Budget for projects currently underway and remaining unexpended at Tune 30th, as approved by the City Manager, will be appropriated to those projects in the following fiscal year CIP Budget. Incomplete projects may be reappropriated by the City Council during the bBudget process or by separate Council action. FR. Management Authorization and& Responsibilities.: Once the final Budget has been approved by the City Council, specific City Council approval to make expenditures consistent with the Budget will not be required except as provided by other Council Policies and Administrative Procedures. It is the responsibility of the City Manager and management to administer the City's budget within the framework of policy and appropriation as approved by the City Council. 1. The Finance Director is responsible for checking purchase requests against availability of funds and authorization as per the approved Budget. 2. Unless otherwise directed, routine filling of vacancies in staff positions authorized within the Budget; will not require further City Council approval. However, new positions, not addressed by the adopted budget; shallde require City Council approval. 3. At fiscal year end, the Finance Director is authorized to record accruals and transfers between funds and accounts in order to close projects or the books of accounts of the City of Newport Beae in accordance with generally accepted governmental accounting principles as established by the Government Accounting Standards Board, Government Finance Officers Association, and other appropriate accounting pronouncements. Any net shortage within a Fund will be recorded as a decrease in Fund Balance. Any net excess will be recorded as an increase to one or more appropriate Reserve Accounts as recommended by the Finance Director and approved by the City Manager or as is otherwise dictated by Council Reserve Policy (F-2). The net change in fund balances will be reported to City Council through various documents including Quarterly Financial Reports, the Comprehensive Annual Financial Report (CAFR), Budget Documents and other financial presentations. Funds that exceeded appropriations during the year or ended the year with a deficit fund balance are reported annually in the CAFR notes to the financial statements. (Information regarding the 1.1 6-58 F-3 policy parameters and administration of City Reserves is contained in City Council Policy F-2.) Adopted - January 24,1994 Amended - February 27,1995 Corrected - February 26, 1996 Amended - May 13,1996 Amended - May 26,1998 Amended - August 8, 2000 Amended - May 8, 2001 Formerly F-10, F-11, F-12, and F-21 Amended - April 23, 2002 Amended - April 8, 2003 Amended - April 13, 2004 Amended - September 13, 2005 Amended - October 10, 2006 Amended - August 11, 2009 Amended - September 27, 2011 Amended - February 12, 2019 M 6-59 REVENUE MEASURES I IN) t4IL0330 F-4 In consideration of long-term fiscal sustainability and to establish a basis for staff recommendations on revenue matters, the following revenue policies are established. A. Revenue measure changes may be processed at any time during theme fiscal year. B. Special services, which can be identified with the recipients, will be self -supported from service fees to the maximum extent practicablepessible. Service fees shall be established by City Council resolution, and can be found in the Schedule of Rents, Fines and FeesMaster- Fee SEhe „'„ in compliance with applicable State lawU and shall be periodically reviewed and updated for compliance with applicable State law. C. yReasonable effort will be made to establish revenue measures which will cause the -transients and recreation visitors to Newport Beach to carry a fair portion of the expenses incurred by the City as a result of their use of public facilities. D. The City will establish appropriate cost -recovery targets for its fee structure and will periodically adjust its fee structure to ensure that the fees continue to meet cost recovery targets. When requested by the Finance Director, or his/her designee, each dDepartment shall provide the Finance Department with a listing of the services and the respective fees imposed by dDepartment. This listing shall identify the estimated costs to the City in providing the product or service associated with each fee as well as any recommended revision in the fee. The Finance Department may study, internally or using an outside consultant, the costs of providing such services and recommend fees to each dDepartment. E. The Finance Department, with the assistance of the initiating dDepartment, shall present any new or revised revenue measures to the Finance Committee CRY Council for review. The purpose of the review of the Finance Committee shall will be to confirm that increases in existing fees or any new fees are intended to recoup costs being incurred by the City, or revisions in proposed taxes or other charges are faircharged. Any revised fees or new revenue measures will Abe referred to the City Council for review and action. The Finance Department shall endeavor to consult with private individuals, business groups and individual business persons on the economic impact any recommended revenue measure changes may 1 ..f F-4 have on them. Their response, the estimated costs to the City in providing the product or service and the recommended revision to the revenue measure shall be included in the information forwarded to the City Council. F. The City will proactively seek to protect and expand its tax base by encouraging a healthy underlying economy. G. The City will work to enhance and protect the property values of all Newport Beach residents and property owners. H. The City will encourage shopping, dining, and visiting at Newport Beach stores, restaurants and hotels. The City will oppose efforts of the State and County governments to divert revenues from the City or to increase unfunded service mandate of City taxpayers. The City will seek additional intergovernmental funding and grants, with a priority on funding one-time capital projects. Grant -funded projects that require multi-year financial support of the City will be reviewed by City Council:, to the extend required by Council Policy F-3. Also, see Council Policy F-25 for specific grant acceptance and administrative procedures. K. The City will not rely on one-time revenue sources to fund operations. One-time revenues sources, whenever possible, will be used to fund one-time projects, augment reserve balances or fund unfunded liabilities. Adopted - August 26,1968 Reaffirmed - November 12,1968 Reaffirmed - March 9,1970 Reaffirmed - February 14,1972 Reaffirmed - December 10, 1973 Reaffirmed - November 111, 1974 Amended - January 24,1994 Formerly F-13 Amended - February 27,1995 Corrected - February 26, 1996 Amended - May 26,1998 Amended - May 8, 2001 Amended - April 13, 2004 Amended - September 27, 2011 Amended - February 12, 2019 2 6-61 F-7 INCOME AND OTHER PROPERTY The City owns and manages an extensive and valuable assortment of property including streets, parks, beaches, public buildings and service facilities. The City also owns or ground leases and/or operates a yacht basin, resort hotel and apartment propertya a luxury residential development and various other income -- producing -properties. MuchMest of the income property is tidelands, filled tidelands or waterfront. Unencumbered fee value of income property is substantial. estimated at upwards of one four hundred million dollars, and income typieally contributes t per -cent of all City revenues. As owner/manager of property, the City is the steward of a public trust, and state law requires the City to maximize its returns on state -managed property or be subject to a charge of making a gift of public funds. Nevertheless, the City Council recognizes the importance of this property not only as a revenue generator, but also as a means to provide otherwise financially less tinfeasible uses and facilities thatto benefit the community. In managing its property, the City will continually evaluate the potential of all City owned property to produce revenue. This may include leasing or licensing unused land, renting vacant space, and establishing concessions in recreation areas or other similar techniques. The City Council will evaluate the appropriateness of establishing new income generating opportunities on City controlled areaspEeper ies using sound business principles and after receiving input from neighbors -and users and the public. The policy of the City Council is that income and other property be held and managed in accordance with the following: A. Whenever a lease, license, management contract, concessionale or similar action regarding income property is considered by the City, an analysis shall be conducted to determine the maximum or open market value of the property. This analysis shall be conducted using appraisals or other techniques to determine the highest and best use of the property and the highest income generating usevalue of the property. B. All negotiations regarding the lease, license, management contract, concession, sale or similar action regarding income property shall include review of an appraisal or analysis of the use being considered for the property conducted by a reputable and independent professional appraiser, real estate consultant, or business consultant. C. The City shall seek, whenever practical and financially advantageous, both in the short and long term, to operate or manage all property and facilities directly with 1 6-62 F-7 City staff or contractors, provided staff have the expertise needed to competently do so, or to oversee the work of contractors. D. In mosta44 negotiations regarding the lease, license, management contract, concession, sale -or similar action regarding an no„ residential income or other property, the City shall seek revenue equivalent to the open market value of the highest and best use; and, whenever practicablepessible the City shall conduct an open bid or proposal process to ensuree the highest financial return. D -.E. However, in some circumstances the City may determine that use of a property by the public for recreational, charitable or other nonprofit purpose is preferred and has considerable public support, in which case the City may determine that non-financial benefits justify not maximizing revenue from such property. In such circumstances, the City has a vested interest in ensuring that the lessee of such property operates the activities conducted on or from the property in the manner that has been represented to the City throughout the duration of any lease or contract with the City, F. Whenever less than the open market or appraised value is received or when an open bid process is not conducted, the City shall make specific findings setting forth the reasons thereof. Such findings may include but need not be limited to the following: 1. The City is prevented by tideland grants, Coastal Commission guidelines or other restrictions from selling the property converting the propertyito another use. 2. Redevelopment of the property would require excessive time, resources, expertise and costs, which would outweigh other financial benefits. 3. Converting the property to another use or changing the operator, manager, concessionaire, licensee, or lessee of the property would result in excessive vacancy, relocation or severance costs, real estate commissions, tenant improvement allowances, expenses or rent concessions which would outweigh other financial benefits. 4. Converting residential property to another use or opening residential leases to competitive bid would create recompensable liabilities and other inequities for long-term residents. 5. The property provides an essential or unique service to the community or a clearly preferred use that enjoys substantial support in the community that 2 6-63 F-7 might not otherwise be provided were full market value of the property be required. 6. The property serves to promote other goals of the City such as affordable housing, preservation of open space, uses available to the public or marine related services. 6 7.If the lessee is not (a) a statewide or national nonprofit organization, or (bLa public entity or subdivision thereof, then the City finds that the By -Laws and charter documents of such lessee (i) establishes a procedure wherein the election of directors of such lessee is accomplished by an open, democratic and transparent process that allows members to vote, (ii) has a governance and operational structure that is consistent with best practices for non-profit public benefit corporations as determined by the City Council, and (iii) cannot be amended to affect subparts U or(ii) without the prior written consent of the City as lessor. F G. Generally, lengths of licenses, leases, management contracts, concessions, or similar agreements will be limited to the minimum necessary to meet market standards or encourage high quality improvements and will contain appropriate reappraisal and inflation protection provisions. Also, all agreements shall contain provisions to assure complete audits periodically through their terms. GH. All negotiations regarding the license, lease, management contract, concession ale or similar action regarding income property shall be conducted by the City Manager or his/her designee under the direction of any appropriate City committees. ISI. To provide an accurate accounting of actual net revenues generated by the City's income property, all costs and „har-g directly attributable or allocable to the management of a specific income property shall be cha�debited against the gross revenues collected on that property in the fiscal year the costs are incurred. Costs soa-Rd chargeables include, but are not limited to, property repairs and maintenance, property appraisals, and consultant fees, as authorized by the City Council, City Manager, or by this Income Property Policy. LThe City Manager or his/her designee is authorized to sign a license, lease, management contract, concession, or similar agreement or any amendment thereto, on behalf of the City. Notwithstanding the foregoing, the City Manager or his/her designee, or a City Council member, may refer any license, lease, management contract, concession or similar agreement or any amendment thereto, to the City Council for its consideration and/or action. 3 0=0 F-7 K. The City's portfolio of duality income producing properties adds an element of diversification to a portfolio otherwise invested primarily in financial assets. Certain of those income properties are restricted from sale by their terms of grant, state agency regulations or rules, other federal and state guidelines, private covenant or agreement or otherwise. For those properties not so restricted from sale, an analysis shall be prepared to determine the following prior to such income producing property being offered for sale: The maximum wen market value of the Citv's interest in the property in its as is condition. 2. If the property is in an important location, a determination of the possible future consequences of the City no longer controlling that property. 3. If the current rent is contractually low and significant rent increases are likely within a finite period. 4. The likelihood of significant increases in the ability of the property to generate income after the expiration of any current lease of the property. 5. The likelihood of a lease extension being requested by the tenant and the ability to substantially increase rents or require significant improvements to enhance the utility and the value of the property as consideration forrg anting such an extension. 6. The value of the revenue stream from (i) lease income over the life of an existing lease and/or(ii) likely lease revenue if an existing lease were to be renewed or the property re -let to a different tenant; and/or (iii) lease income from the property if it were to be converted to its highest and best use, compared with the financial benefits of the use of the proceeds of a sale and if, considering the totality of the circumstances, such use of the proceeds of a sale is preferable to retaining the properiy in question. Adopted - July 27,1992 Amended - January 24,1994 Amended - February 27,1995 Amended - February 24,1997 Amended - May 26,1998 Amended - August 11, 2009 Amended - May 14, 2013 Amended - February 12, 2019 Formerly F-24 6-65 CITY TRAVEL POLICY STATEMENT PURPOSE To set forth the policy for official City travel for reimbursement of expenses incurred by City Council members, appointed officials, members of special boards, commissions, committees, and employees while traveling overnight on official City business. This policy sh-a1l-will not apply for commuter (local) training seminars and local City business expenses, nor is it intended to supersede Police Officer Standard Training reimbursable travel policies established by the State of California or the Newport Beach Police Department. The governing rule for all City travel expenses twill be availability, economy, convenience, and propriety. TRAVEL POLICY A. The City twill provide reimbursement for expenses directly related to attendance at approved conferences, seminars, meetings, and other official functions/ purposes. B. Official travel is planned, approved, and budgeted, and eentr-olled at the Department level, c. __„r _ pt in _ "r"c_„_„ eases des„_�.�ea bel., „t A tel eestwill exeeed the budget estimate, the apple a of the Finanee r i fe --rr--T� must�tained. All official travel must be approved prior toa-t the time of the travel by the Finance Director. &D. The City Manager sha1l-will adopt and enforce administrative procedures that assure that all City authorized travel is: 1. Paid directly by the City or reimbursed to the traveler based on actual, itemized expenses or should be covered by per diem payment. 1 ON Me 2. The City's per diem rate for Meals and Incidental Expenses (M&IE) shall will be equal to the U.S. General Services Administration's (GSA) M&IE rates. (www.GSA.gov). PROCEDURE A. Each Department Director shall -will include all planned trips in the Department's annual budget requests. The Travel Authorization Form shall -will be used as a planning/cost estimation guide. For unbudgeted, unplanned travel, the same form shall -will be prepared at the time travel is requested. B. All requests for travel advances twill include the original Travel Authorization Form signed by the Department DirectorHead. C. The Travel Expense Claim Form shall -will be used to file the final travel claim with the Finance Director. A copy of the Travel Authorization Form must be attached. SPECIAL REIMBURSEMENT RULES RELATED TO CITY COUNCIL T -he -California Government Code Section 53232, et seq., provides restrictions on expense reimbursements paid to members of legislative bodies. Members of a legislative body may only be reimbursed for actual and necessary expenses incurred in the performance of official duties and their travel claims must be accompanied by the receipts documenting each expense. CONTINUITY OF CITY GOVERNMENT POLICY With the advent of different modes of rapid transportation, there is the possibility of accidents injuring or killing several people simultaneously. Since Council Members are required to attend conferences, conventions and meetings outside City Hall, it is desirous to require that whenever possible, no more than three members of the City Council use the same transportation at the same time. When it comes to the Council's attention that a conference, convention, or meeting in which transportation is required, Council Members shall make an effort to arrange their itinerary so that no more than three members of the City Council use the same 2 6-67 transportation. The City Clerk twill be utilized to provide alternate travel arrangements where necessary in order to comply with this policy. This policy will help insure that there will be a continuity of City government and that there is always a majority of Council members capable of fulfilling the responsibilities placed upon them by the City. In addition, the City Manager, Department DirectorsHeads and other key personnel should use the same guidelines in traveling separately on official business whenever practicable. Adopted - June 8,1992 Amended - January 24,1994 Amended - February 26,1996 Amended - April 23, 2002 Amended - October 10, 2006 Amended - August 11, 2009 Amended - September 27, 2011 Amended - February 12, 2019 Formerly F-25 3 ..: CUSTODY AND DISPOSAL OF CONTROLLED PROPERTY PURPOSE F-11 To set forth the City's policy concerning custody and disposal of controlled property. DEFINITION Controlled Property is generally defined as City -owned perta materials, equipment, tools and furniture subject to theft, loss or misuse. Conversely, major capital assets with no potential for theft, such as buildings, land and other infrastructure assets affixed to the earth are exempted from this policy. For further discussion of "Controlled Property" and property control procedures, see Administrative Procedures concerning Controlled Property. PROPERTY CONTROL RESPONSIBILITIES The Finance Director shall establish and maintain citywide property acquisition and disposal procedures. However, the ultimate accountability for Controlled Property, along with the responsibility for maintaining reasonable safeguards to secure --Controlled Property, lies with the Director of the Departments that acquired the property until such time the item has been formally transferred to another Department Head or has been formally approved by the Finance Department for sale/disposal. Procedures for acquisition, transfer, sale/ disposal of controlled property vary by property type and value and are addressed through Administrative Procedures. As property custodians, Departments Heads Directors are also responsible for a periodic inventory of their Controlled Property in accordance with Administrative Procedures. At the discretion of the Finance Director, material losses or discrepancies in Controlled Property will be reported to the Finance Committee. Adopted - January 24,1994 Corrected - February 26, 1996 Amended - August 12,1996 Amended - April 23, 2002 Amended - April 13, 2004 Amended - September 27, 2011 Amended - February 12, 2019 11 ..• DISTRIBUTION OF PUBLIC INFORMATION IN MUNICIPAL SERVICES BILLING STATEMENTS AND BUSINESS LICENSE RENEWALS PURPOSE F-13 The purpose of this Policy is to establish guidelines for the distribution of written materials with the Municipal Services Statement and Business License Tax Renewal forms. Periodically, material is distributed to residents through the Municipal Services Statement and Business License Renewal form. This material shall be approved by the Finance Director using the guidelines below as criteria for approval. Material not completely consistent with the guidelines below will not be distributed with Municipal Services Statements or Business License Tax Renewal forms without specific Council authorization. All costs associated with the inclusion of such material must be paid by the Ddepartment submitting the request for inclusion. Mailing may include the following: A.Notification of schedules or procedures affecting City services. A-. B. Notification of any changes in procedure or process affecting business license holders. B. Information on the availability and scope of City services and facilities. C. Information concerning the functions and responsibilities of City departments and financial aspects of City operations. D. Information on municipal projects or future programs where a reaction from the community, business, or a neighborhood is desired. E. Information on recommended courses of action to protect the public or property from fire, theft, damage, and related hazards. F. Other materials which are designed to keep the public informed on the activities of its government. Mailings shall not contain information: of a_ _ elifiea er commercial naturei�_from a commercial entity; or that promotes political candidates or causes. Mailings may include factual financial information except if the topic of such financial information pertains to a ballot measure in an upcoming election unless otherwise determined by the Citv Council. With the approval of the City Manager, information from community based, non- commercial organizations may be included in the Municipal Services Statement and 1 6-70 F-13 Business License Renewal. The primary purpose of any such material should be to provide information of a public service nature. The material must not contain direct solicitation for contributions or promotions of events whose primary purpose is fund raising (such as $200 per plate dinners). However, announcements of other events are generally appropriate, even if a nominal fee or "bake sale" type activity is an incidental part of the function. All costs associated with the inclusion of such material must be paid by the non-commercial organization. The Municipal Services Statement subscribers list shall not be made available for any private or organizational use. The City Manager may authorize exceptions to this restriction. Adopted - December 9,1968 Amended - October 25,1977 Amended - May 13,1991 Amended - January 24,1994 Amended - February 27,1995 Corrected - February 26, 1996 Amended - April 13, 2004 Amended - September 27, 2011 Amended - February 12, 2019 Formerly G-2 2 6-71 F-14 AUTHORITY TO CONTRACT Purpose and Limitation The purpose of this policy is to set out the City's policy establishing authority for City contracts. This policy applies to all contracts, whether entered into through standard, emergency, or other procedures, including, but not limited to, professional services, purchase requisitions, acquisition of goods, supplies, equipment, and materials, settlements, right of entry agreements, cost sharing agreements, joint defense agreements, cooperative agreements, reimbursement agreements, grant agreements, audit services, legal and investigative services, independent instructional and recreation services, former employee services, on-call and emergency services, temporary labor services, training services, public works projects, and public property maintenance, installation, custodial, and repair services. General Authority to Enter Into Contracts Provisions of the Charter govern the methods through which the City may be bound by contracts. , with the exeeption of ser-viees Fender -ed by a pei:son in the employ of the City t afegular-salary, rest Nvith the City Ceil. The Charter states that the City shall not be bound by any contract or amendment thereto, unless the same shall be made in writing, approved by the City Council and signed on behalf of the City by the Mayor and City Clerk or by such other officer or officers as shall be designated by the City Council (Charter § 421). The City Attorney shall approve the form of all contracts made by or amendment thereto and all bonds given to the City, endorsing his or her approval thereon in writing (Charter § 602(e)). The City Couneil may, h,,,.,,,ye i,s. ,.fdin neeor- ,-ese utio -, .,,,theri-z , of equipment, materials, supplies, laber-, ser-viees er- other- items ineluded within -the budget appr-oved bv the City Couneil, and may � _ The City Manager has final authority to approve any contract within the City Manager's approval limit and may make exceptions to the City's standard contract terms, including but not limited to, insurance and indemnification requirements, based on operational considerations and weighing the particular risks involved. When deciding whether to modify standard contract terms, the City Manager shall consult with the City Attorney, Risk Manager, and Department Directors, as necessary. This authority shall not be delegated below the Assistant City Manager level. Contracts may not be written to circumvent any of the authority limits described herein. 6-72 F-14 Delegation of Authority to Enter Into and Amend Contracts The City Council hereby delegates its authority to contract to the City Manager and through him or her to the Assistant City Manager, Department Directors, and to the City Attorney as set out below. All formalities required under the provisions of the Charter shall be applied to these contracts. As such, the City Attorney shall review, approve and sign all such contract documents prior to contract award and execution and the City Clerk shall sign all such contracts attesting to their being entered into by the City. Additionally, the City Manager shall adopt and enforce administrative procedures that assure all contracts are: (1) entered into at a reasonable, fair and competitive price to the City; (2) all necessary formalities are followed and the requirements of federal, state, and local laws, including Council policies, are met; (3) best accounting practices are followed; and (4) the contracting process of the City is open and transparent, and provides accountability. A. Authority to Enter into Contracts The authority to enter into original contracts is delegated as set out below. 1. The City Manager. The City Manager is authorized to award and sign all contracts and agreements for services or purchase requisitions for the acquisition of goods, materials or equipment, without prior Council approval, in an amount not in excess of $120,000, provided funding for the contract was approved by the City Council as part of the annual approved Pepartment budget_, authorized budget amendment, available in an appliEant deposit aeEount. With the exception of grants and donations, which are covered in City Council Policies F-3, F-25 and B-17, the City Manager is authorized to sign all contracts without prior Council approval where the City is receiving or expending an amount not in excess of $120,000. This authority shall not be delegated below the Assistant City Manager level. 2. Department Directors. Department Directors, including the City Attorney and City Clerk, are authorized to award and sign contracts and agreements for services or purchase requisitions for the acquisition of goods, materials or equipment, without prior City Manager or Council approval, in an amount not in 6-73 F-14 excess of $75,000, provided that the services and funds were approved by the City Council or City Manager as part of the annual approved budget, authorized budget amendment, This authority may not be delegated below the Pe artment Assistant or Deputy Director level. The City Manager has authority to approve requests for budget increases without City Council approval at the level set forth in Policy F-3, Section E-1 ("Budget Adoption and Administration"� .. ■ WAI---ized to award and sign contracts or- iisitions for - X . ition of goods and materials, with prior City Manager or Coun approval, in an amount not in exeess of 000 provided that the fun wer-e approved by the City Couneil as part of the annual ■. Attorney.budget, authorized budget amendment, City Qmmeil �;;�etiop available in a deposit aeeetint-. 43. City The City Attorney is authorized to award and sign contracts for all services for outside counsel, investigators, and experts related directly to and necessary for prosecution and defense of pending litigation as defined in the Brown Act, and for services for outside counsel, investigators, and experts necessary to address other pending or potential legal claims or legal issues so long as funds for outside counsel, investigators, experts and related legal services were approved by the City Council as part of the approved annual budget. The City Attorney shall keep Council informed regarding any such expense that exceeds $120,000 on not less than a quarterly basis and shall seek budget updates, if needed, within a timely fashion. 4. Human Resources Director. The Human Resources Director shall have authoritv to enter into contracts to resolve claims, litigation and other legal disputes where the City is receiving or expending an amount not in excess of $75,000. This authority may not be delegated below the Det)artment Deputy Director or Risk Manager level. B. Authority to Amend Contracts If circumstances arise that were are not reasonably foreseeable by the parties at the time of contracting which make extra work or material necessary for the 6-74 F-14 proper completion of the service originally contracted for, a contract amendment and corresponding increase in total contract amount may be necessary. Under those circumstances, the City Manager -ted Department Directors, City Clerk and City Attorney are authorized to amend a -contracts as set out below. For purposes of this policy, "total contract amount" shall be defined as the total consideration paid over the term of the agreement, including any previous amendments to the contract. "Original contract amount" shall be defined as either the amount of compensation agreed upon when the contract was first entered into or the amount of compensation last -most recently approved to by the City Council by amendment, whichever -is greater. 1. Cijy Manager. Contracts within the City Manager's Contracting Authority The City Manager may sign and award any contract amendment, including but not limited to, amendments to extend the term of a contract, so long as the total contract amount as amended does not exceed $120,000. Contracts approved by City Council The City Manager may sign and award a contract amendment on a EE)HtFaEt approved by the Council if the total eost Nvill not eXEeed 0 the original eontr-aet amount, or- increase the OfigiRal EE)Htr-aEt by MOr-e than $420,000, whieheve amount is lessOthe,� the City Manager ger amountgn and award a eontfaet amendment, ineluding but not limited to, amendments to extend the ter -m of a eorATaet, se long as the total eontT-ae as amended does not exceed $120,000. The City Manager may sign and award any contract amendment, including but not limited to, amendments to extend the term of a contract, so long as the total contract amount does not exceed 125% of the original contract amount or the original contract amount >,lus an additional $120,000, whichever amount is less. 2. Department Directors. Contracts within the Contracting Authority of the Department Director The Pepaftment Pireetor over -seeing the eontFaet may sign the eofATae iment if that amendment will not eause the total eontraet amoun to eyeeed $75,000. The Department Director, including the, City Clerk, or City AttorneOe entered into the contract, or whose department is designated as the contract administrator in the contract, may sign and award any contract amendment, including but not limited to, amendments to extend the term 6-75 F-14 of a contract, so long as the total contract amount as amended does not exceed $75,000. 13. Amendments in Cases of Possible Work Stoppage or Undesirable Delay. In certain situations, the City Manager and the r,,,pa ftm e t Difeet^r ___ ^har-ge of the ee tract may detei:mi e that a a contract amendment may beis needed that will cause the total contract amount to exceed the City Manager's amendment signaturesigning authority, and that -the timing is such that a work stoppage or other undesirable consequence will result if approval of the change is delayed until the next City Council meeting. In these these situations, the City Manager may approve an amendment that increases the total contract amount up to 150% of the original contract amount. HeivevefWithin twenty-four (24)hours, the City Manager shall notify a44the —City Council Members of any such amendment. individually if this situation develops, and if any individual Council Member objects to the increase, - special meeting of the City Council t ,_iy be eallea to address the issue -4. Amendments Necessary to Address Emergency Situations In event of emergency work that requires an amendment to an existing contract, the emergency contracting policy outlined below may be followed. Types of Services Contracts and €how Method Award It is recognized that by their nature, service contracts cannot always be awarded as a result of a competitive bid process. However, competitive proposals should be obtained whenever possible before resorting to negotiated awards. A. Professional Services Contracts Professional consultant services differ from other services in that they are of a professional nature, and due to the ethical codes of some of the professions involved, as well as the nature of the services provided, do not readily fall within the competitive bidding process. Professional consultants should be individually selected through a qualifications -based selection process for a specific project or service on the basi ^rbased on demonstrated competence and qualifications for the types of services to be performed and with the objective of selecting the most qualified consultant at a fair, reasonable and verifiably appropriate cost. The procedures for achieving this goal shall be adopted and applied by the City Manager in the Administrative Procedures Manual. 6-76 F-14 This section shall include, but not be limited to, Procurements for services in the following fields: Engineering (civil, mechanical, electrical, structural, traffic, geotechnical, etc.); Building plan review and grading plan review and/or inspection services; Architecture; Landscape Architecture; Construction Project Management Firms; Environmental; Planning; Economic Analysis; Property Appraisals; Land Surveying; Financial Services; Data Processing Services; Legal Services not otherwise authorized in the section titled Authority to Enter into Contracts, A (3), of this policy; and Training and Temporary Labor Services. fields.This pohey shall include, but not be limited t I . . the following B. l Services Contracts (Non -Professional) Non -Professional Services Contracts that are not public works under Charter Section 1110, are used where services are not strictlyprofessionalin nature but where such services are needed by the City. Examples include, but are not limited to janitorial services, printing services, closed circuit television services, 6-77 F-14 steam cleaning, window washing and refuse collection. The Citv shall select services contractors though a Reauest for Proposal or a Request for Bid process, whichever serves the City's best interest. Contracts through a Request for Bid process shall be awarded based solely on pricing and minimum qualifications to determine the most responsive and responsible bidder. Contracts through a Request for Proposal process shall be awarded based on both qualifications and pricing to determine the best value to the City. General Services Contracts are not strictly professional in nature, but arise Nvhere operations, repair, installation, and maintenance services, or- other- serviees of a non professio.n.-al. RI are provided to the City. Contracts that typieally fall into this and ai =na -= of City faisilifies, and --- =- -- h non professional ==- C. Maintenance and Repair Contracts Maintenance and Repair Contracts are used where services are not strictly professional in nature but where such maintenance and repair services extend the life of City assets, facilities and/or infrastructure. Examples include, but are not limited to: pavement patching, plumbing and facilities maintenance services. If a contract for these types of services is under $120,000 the Citv shall select services contractors though a Request for Proposal or a Request for Bid process, whichever serves the City's best interest based on the service to be provided. Contracts through a Request for Bid process shall be awarded based solely on pricing and minimum qualifications to determine the most responsive and responsible bidder. Contracts through a Request for Proposal process shall be awarded based on both aualifications and nricine to determine the best value to the City. Service contracts for maintenance or repair over $120,000 are considered a Public Work and thus need to be requisitioned as a Public Works Contract. 6-78 11 01% :' r. r. r. r. .F a.. lion a.- 111MIN" jj C. Maintenance and Repair Contracts Maintenance and Repair Contracts are used where services are not strictly professional in nature but where such maintenance and repair services extend the life of City assets, facilities and/or infrastructure. Examples include, but are not limited to: pavement patching, plumbing and facilities maintenance services. If a contract for these types of services is under $120,000 the Citv shall select services contractors though a Request for Proposal or a Request for Bid process, whichever serves the City's best interest based on the service to be provided. Contracts through a Request for Bid process shall be awarded based solely on pricing and minimum qualifications to determine the most responsive and responsible bidder. Contracts through a Request for Proposal process shall be awarded based on both aualifications and nricine to determine the best value to the City. Service contracts for maintenance or repair over $120,000 are considered a Public Work and thus need to be requisitioned as a Public Works Contract. 6-78 F-14 ED. Capital improvement Progra Public Works Contracts Contracts for Public Works where the total expenditures for the project exceed $120,000, shall be awarded consistent with the provisions of Charter Section 1110 and Chapter 15.75 of the Newport Beach Municipal Code and relevant provisions of the California Public Contract Code. Public Works contracts are used for the construction or improvement of public buildings, works, streets, drains, sewers, utilities, parks or playgrounds, and every purchase of supplies or materials for any such project, as well as all projects for the maintenance or repair of such facilities intended to extend their useful life. Eentfaets be -signed by the Mayef, the City Manager- the n� 'ei:kj Di et r �E. Procurements and Contracts Involving Federal or Pass -Through Funding Procurements expending funds from federal grants or awards received directly by the City or from a pass-through agency such as the State of California, must comply with the provisions of Title 2 of the Code of Federal Regulations ("CFR") §200.318 through §200.326. To ensure the City's adherence to the Federal guidelines related -to these procurements and contracts, the City Manager has adopted procurement procedures for such projects in the Administrative Procedures Manual. EF. Independent Instructional and Recreation Contractors Where contractors are paid for services from fees colleeted for the servi provided, Department Directors are authorized to award and sign contracts with independent contractors for instructional, educational, cultural, or recreational purposes where the fees paid by the City are based upon either a percentage of fees collected by City for a program or on a flat rate basis for tasks performed by the contractor. Contracts with such independent contractors may be up to #tee five (52) years in duration but must include a termination clause granting the City the right, at its sole discretion and with or without cause, to terminate the contract at any time by giving seven (7) calendar days' prior written notice to the Contractor. Should fees paid to any contractor exceed $75,000 during the term of the 6-79 F-14 contract, the Department Director shall provide written notice to the City Manager identifying the program and- independent contractor and anticipated total fees to be paid. The City Manager shall give written notice to the City Council should fees paid exceed $120,000. R.G. On -Call Contracts for Services The City Manager and Department Directors are authorized to enter into on --call agreements for obtaining services on an as needed basis, including, but not limited to, professional services -a4 -repair and maintenance services and emergencies, that are needed from time to time where the size of the job does not warrant the expense of entering into individual agreements for each service. On-call agreements must be within the authority of the individual entering into the agreement on behalf of the City and the initial term cannot exceed twee -five (53) years. The City Manager is authorized to extend the term of an on-call agreement for up to six (6) months if work has been authorized or encumbered during the initial term but not completed. On -Call agreements must include a termination clause grantin the he City the right, at its sole discretion and with or without cause, to terminate the contract at any time by givingseven even (7) calendar days' prior written notice to the Contractor. Selection of eensuTt-ai#s and pr-oeed # the type of eontfaFt being awar-ded-as set out awe -Procedures for entering into on-call agreements shall be prescribed by the City Manager in the Administrative Procedure Manual. H. Emergency Contracts If a contract for services is necessary under the provisions of Newport Beach Municipal Code Section 2.20.020, the City Emergency Procedures shall be followed. if a rt,,aet for- ser-viees is entered into i times of urgent necessity under tt, , authority ewpoft Beaeh City Charter-eetlon110--an&If the contract amount exceeds the signing authority of the City Manager motor Department Director or City Manager as authorized in this PPolicy, then that contract shall be brought to the City Council at its next regularly scheduled meeting for review or authorization, if the contract constitutes a Public Works, in accordance with Charter Section 1110. .:A F-14 Whenever possible, the City shall enter Emergency On Call Agreement-sContracts with contractors or consultants who can be relied upon to assist the City in advance of any actual emergency. Emergency On Call Agree ientsContracts, that are entered into prior to an emergency, shall be submitted to Council for approval after being reviewed and approved by the Office of the City Attorney. After the Emergency On Call Agr-eement.Contract is approved, services provided on an emergency basis under an Emergency On Call "gree „'Contract may be retained by oral commitment of the City Manager (or, in the case of an emergency described by Municipal Code Section 2.20.020, the Director or Assistant Director of Emergency Services), to be memorialized in a Letter Agreement between the parties as soon as possible thereafter. When a written contract has been entered into in order to address an emergency, a copy of the written contract shall be provided to the City Clerk as soon as possible. GI. Contracts with Former Council Members and City Employees When not more than five (5) years has passed since a person who is a former Council Member or City employee has left service with the City: 1. All professional services contracts with former Council Member or Cityemployees +,,,-,.,,-.,.,.afy „- ,. ley-m,e-R f „-rf,,. p4:g t .;I: ,.,,f;,-ing car former- City empleyees shall require approval of the City Council; and 2. City Council approval shall also be required for professional services contracts with a corporation or other business entity owned or operated by a former Council Member or City employee or that employs a former Council Member or City employee. J. Purchase Orders for Goods, Materials or Equipment Departments shall submit requests for the purchase of goods, materials or equipment through a Purchase Requisition that is approved by the proper approval authority described in this policy, based on the purchase amount. The Finance Department shall conduct the necessary and proper bidding or proposal process for each purchase request and issue Purchase Orders to procure goods, materials or equipment. K. Purchase Orders for Services 6-81 F-14 While typically used for the procurement of goods, materials or equipment, Purchase Orders may be used for services, subject to the following conditions: 1. Purchase Orders for -services; may be issued to a vendor not in excess of $7,500 per Purchase Order and $15,000 per vendor, per fiscal year. 2. The $7,500 per Purchase Order and $15,000 per vendor, per fiscal year limit shall apply to each Department separately. L. Commodities and Unique Services Certain commodities and service types are not subject to traditional procurement and bidding procedures. The City Manager shall prescribe in the Administrative Procedures Manual procedures to ensure that pricing involved in these transactions is competitive. General Procedures A. Contract Retention The City Clerk shall retain all original executed contracts in accordance with the City's current adopted Records Retention Schedule. Contracts shall be posted into the City's electronic document databasedata base in order to maintain transparency in contracting. 6-82 F-14 B. Insurance All contracts shall be accompanied by proof of the appropriate level of insurance at the time of execution. The insurance level required shall be in accordance with the City's published Contract Templates (or as otherwise approved by the City Manager or City's Risk Management Divi Risk Manager). C. Reporting At least once annually, the City Manager shall report to the Council the summary of all contracts entered into by the City Manager and Department Directors. The summary shall include the vendor, the department responsible that will oversee the contract, the purpose of the contract, and the contract amount. Future Amendments to Policy Any future changes in the provisions of this pPolicy shall be made by resolution of the City Council. History Adopted F-14 - 09-22-1969 (Purchase Authority for Goods & Materials) Reaffirmed F-14 - 03-09-1970 Reaffirmed F-14 - 02-14-1972 Amended F-14 -11-11-1974 Amended F-14 -11-24-1975 Amended F-14 -12-08-1975 Amended F-14 -11-24-1986 Amended F-14 - 05-26-1987 Adopted F-14 - 01-24-1994 (new F-14) (Authority for Contracts) Amended F-14 - 01-24-1994 (old F-14) (changed to F-5) Amended F-5 - 02-26-1996 Amended J-1 -11-10-1997 (Contracts with Former Employees) Amended J-1 - 03-09-1998 Amended J-1 - 03-22-1999 (changed to F-20) Amended F-5 - 03-14-2000 Amended F-20 - 04-08-2003 Amended F-14 - 04-13-2004 Amended F-5 -11-22-2005 Amended F-14 - 05-09-2006 Amended F-14 & F-5 - 01-25-2011 Amended F-14 - 05-12-2015 Amended F-14 - 02-23-2016 (-incorporating F-5 & F-20 and renaming "Authority to Contract") Amended F-14 - 06-26-2018 Amended F-14 - 02-12-�-2019 6-83 F-15 EXTERNAL FINANCIAL AND COMPLIAAJNCE REPORTING, DISCLOSURE & ANNUAL AUDITS PURPOSE To establish City policy regarding external financial reporting, financial disclosure filings and contracting for annual audit services by an external accounting firm. POLICY Accounting standards boards and regulatory agencies set the minimum standards and disclosure requirements for annual financial reports and continuing disclosure requirements associated with municipal securities. The City places a high value on transparency and full disclosure in all matters concerning the City's financial position and results of operations. To this end, the City endeavors to make superior disclosure in the City's Comprehensive Annual Financial Report and Continuing Disclosure filings by going above and beyond the minimum reporting requirements including certificate of achievement programs and voluntary event disclosure filings. The City prepares its financial statements in conformance with Generally Accepted Accounting Principles (GAAP). Responsibility for the accuracy and completeness of the financial statements rests with the City. However, the City retains the services of an external accounting firm to audit the financial statements on an annual basis. The primary point of contact for the auditor is the Finance Director, but the auditors will have direct access to the City Manager, City Attorney, Finance Committee or City Council on any matters they deem appropriate. The financial statement audit and compliance audits will be conducted in accordance with the United States Generally Accepted Auditing Standards (GAAS), standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller of the United States, and standards set by regulatory agencies if applicable. After soliciting and receiving written proposals from qualified independent accounting firms, the Finance Director shall submit a recommendation to the Finance Committee and City Council. Under the premise that multiyear audit agreements are more cost efficient, allow for greater continuity and reduce audit disruption, the City may engage auditors in multi-year contracts, but the term of each contract shall not exceed five years. Generally, the City will request proposals for audit services every five years. However, the Finance Committee may make an exception to the competitive proposal 1 .:- F-15 requirement if extraordinary circumstances exist and a change in auditors may not be prudent. If the City Council is satisfied with the performance of the auditors, the independent accountants firm may submit additional proposals through a competitive selection process, but it is the City's policy to require mandatory audit firm rotation after ten years of consecutive service. After audit results have been communicated to the City, the Finance Department is then responsible for responding to all findings within six months to the Finance Committee and appropriate regulatory agencies, if applicable. Adopted - January 24, 1994 Amended - February 27,1995 Corrected - February 26, 1996 Amended - September 13, 2005 Amended - September 27, 2011 Amended - February 12, 2019 Formerly A-14 2 6-85 GRANT ADMINISTRATION PURPOSE F-25 To establish guidelines for the application, acceptance, administration, and financial reporting of grants including, but not limited to federal, state, local, and restricted donations (also considered grants for the purpose of this policy). POLICY A. Grant Application and Responsibility Individual departments are encouraged to investigate sources of funding relevant to their respective departmental activities. The individual 4Department applying for a grant or receiving a restricted donation shallwill generally be considered the Program Administrator of the grant. The Offiee of Management and Budget (OMB`Financial Planning Division in the Finance Department may assist in the financial administration and reporting of the grant, but the Program Administrator is ultimately responsible for meeting all terms and conditions of the grant, einsuring that only allowable costs are charged to the grant program and is responsible for adhering to City budgeting and fiscal procedures. Individual Departments and Program Administrators are not authorized to execute grant contracts. Grant contracts shall be reviewed by the City Attorney's office and executed by the City Manager and/ -or the Mayor on behalf of the City Council. B. Grant Acceptance & Appropriation by City Council Even though the funding source for an activity may be provided by a grantor/ donor, only City Council can appropriate funds for official City activities except as authorized by Council Policy F-3 (Budget Adoption and Administration). Therefore, prior to the acceptance of a grant, the City Manager orand City Council, as provided for in Council Policy F-3, Twill: 1. Approve the terms and conditions of the proposed grant including the specific City obligations that may be created by the grant contract in terms of required City matching expenditures or staff activities, even if the expenditures were previously appropriated through the budget adoption process. 1 .:. F-25 2. Approve budget appropriations for the grant expenditures and City matching expenditures unless previously appropriated through the budget adoption process. 3. Approve and execute the Grant Contract(s). Note! The -City Council review and approval of items 1 and 3 are not required if the grant is under $30,000, however, Council expenditure appropriation is required for all new appropriations in excess of $10,000 or as otherwise specified by Council Policy F-3. If the grant or gift terms require that the Cie spend money and seek reimbursement from the grant or gift, the City will need to appropriate the expenditure and then seek reimbursement or draw -downs in accordance with the terms of the grant or gift. Any budget amendments requested by the Program Administrator or operating flDepartment shall -will be reviewed by the OMBFinancialPlanning Division of the Finance Department and submitted as a staff report to the Council for itsthe4 review and approval. The OMB -Financial Planning Division of the Finance Department along with the Program Administrator twill determine the proper amount of the appropriation request during the current and future fiscal year(s). C. Timely Reimbursement The Program Administrator is responsible and should pursue and/or request grant reimbursements or draw -downs on a timely basis. If requested, the ON413 Financial Planning Division of the Finance Department will assist with grant reimbursements or draw -downs. All checks sh-al-1--will be made payable to the City of Newport Beach and remitted to n,.,,,.,..,,,, n a,,.,inistfate Grant checks must be forwarded to the Revenue Division of the Finance Department sho �'�for immediate deposited immediately with the CR -Y Treasurer- and include supporting documentation. r-eEei e by 4h„ Rrogi:afn Administrator-. Copies should also be fefwarded to the ONO e The Program Administrator will keep the OMB -Financial Planning Division- of the Finance Department apprised of the annual estimated grant revenues and expenditures and a tentative schedule of cash -flows for the grant program. 2 6-87 F-25 Whenever practicable, the Program Administrator shall seek to receive the grant or gift funds prior to the expenditure of any sums by the City. D. Financial and Grant Reporting Grant reporting requirements vary widely by grant and sometimes include monthly, quarterly, and or annual reporting. Subsequent to the approval of a grant application, and during the project period, any required reports swill be the responsibility of the Program Administrator, or if requested by the Program Administrator, the OMB Financial Planning Division of the Finance Department. Program Administrators submitting their own reports swill forward a copy of each report to the QN49 Financial Planning Division of the Finance Department. E. Grants Containing Direct Federal Assistance 4 -and or Federal "Pass -Through" Funds Program Administrators acknowledge that Federal Funds or Federal Funds that "pass-through" state and local programs are required to be reported on the City's Schedule of Expenditures -of Federal Awards Finaneial ^ ssist. nee and included in the City's annual Single Audit (compliance audit of all Federal Funds). Program Administrators will identify and keep the OMB -Financial Planning Division of the Finance Department apprised of those grant programs that contain direct Federal Funding or Federal pass-through funds identifying the Catalog of Federal Domestic Assistance (CFDA) number when at all possible. F. Record Keeping & Retention Requirements For the purpose of Grantor inquiries and grant specific compliance audits, Program Administrators are responsible for maintaining adequate records aste evidence that program activities and expenditures met the terms and conditions of the grant and that all grant reporting requirements were met timely. Record retention requirements vary by grant, but it is recommended that original grant records should be maintained in a manner and duration consistent with the City's Records Retention Policy, unless otherwise for a minimum of the life of the grant plus tiff, T ___ unless ether -wise -specified specified by the grant contract. 3 F-25 G. Documents to be forwarded to Accountingthe Finance Department: Information received from a granting or donor agency or private party or entity that is pertinent to the terms, conditions, approval, extension, denial, revocation, and administration of a grant sh-a44--will be forwarded to the OMB -Financial Planning Division of the Finance Department including but not limited to: Grant Award Notification Expenditure Authorization Date (if applicable) Grant Contracts Grant Extension Letters Grant Termination Letter Program and or Financial Reports Notices of Questioned Costs or instances of non-compliance Any Document setting or modifying terms and conditions of the grant Adopted - September 13, 2005 Amended - September 27, 2011 Amended - February 12, 2019 al O F-28 FACILITIES AND HARBOR AND BEACHES FINANCIAL PLANNING PROGRAMS PURPOSE To establish the policy for the administration of the City of Newport Beach's ("City") Facilities and Harbor and Beaches Financial Planning Programs ("Programs"). DISCUSSION In addition to the annual Capital Improvement Program ("CIP"), the City has established a long_ term plan for major renovation or replacement of aging General Fund suppe facilities and installation of new infrastructure. The ,..,,;,,.,ar-v f, eus of the Fr -e ,,..,,- s is the f-aeilitfes is also a goal ef th The emphasis is on structures and adjacent grounds, rather than transportation, environmental, or other projects funded either in whole or in part by the General Fund. OBJECTIVES A. To insure that a -long-term programs addressing large, non-recurring projects for replacement of facilities is addressed part of the budget process each year. B. To insure that development fees and, proceeds derived from redevelopment or redeployment of existing land and capital assets owned by the City, and other non- recurring revenues are dedicated to the replacement of infrastructure facilities, rather than ongoing operating expenses. C. To provide a consistent, level funding plan to the extent practicable so as tothat will minimize the peaks' and valleys' in General Fund support levels for elements of the Programs. D. To insure that projects are properly prioritized and scheduled, taking into consideration the relative age, condition, and functional viability of current facilities; pairing of projects implementation where prudent; and cost implications of immediate projects for the overall long-term Programs. 1 ARM F-28 E. Spreading or matching the costs of facilities over the useful life of such facilities should be a goal of all long-term capital project financings. Debt financing that extends beyond the useful life of the assets the debt was borrowed to finance should be avoided. SOURCES AND USES OF FUNDS Funding for the Programs comes from development fees and proceeds derived from redevelopment or redeployment of existing land and capital assets owned by the City contributions from individuals and organizations within the community, annual budget allocations from the General Fund, incremental rent or fees originating from harbor activity received by the City, net proceeds of Certificates of Participation or other financing instruments, and investment earnings on temporarily idle funds. Program Funds for both Programs are used for actual site acquisition, design, construction, and directly related costs; as well as debt service expenses. POLICY AND PROCEDURE A. In advance par+of the budget process, staff shall prepare an update of the Facilities Financial Planning Tool and the Harbor and Beaches Capital Financial Plan for review, modification, and approval by the City Council. B. If requested by the City Council, Tthe Finance Committee will subse_}uef review the fiscal impacts associated with, and recommend the most advantageous methods to fund the high-priority projects in, the Facilities Financial Planning Tool and the Harbor and Beaches Capital Financial Plan. The City Manager will consider these recommendations in the preparation and presentation of the City Manager's annual budget to the City Council. 2 6-91 F-28 B C. Unless otherwise specified in individual development agreements, other governing documents, or as otherwise specifically directed by the City Council, all development fees received by the City will be credited to dedieated to the Facilities Financial Planning Reserve fund. CL.D. Prudent assumptions regarding revenue and expenditure growth, inflation, and all relevant factors will be included in each year's update of the Facilities Financial Planning Tool and the Harbor and Beaches Capital Financial Plan- D.E. General Fund contributions to the Facilities Financial Plan PTog shall generally not be less than three percent (3%) of the total General Fund Revenue Budget. However, fif there is a shortfall in General Fund revenue due to a decline in economic activity or other unexpected circumstances and it is necessary to reduce expenditures, General Fund contributions to the Facilities Financial Planning Program and the Harbor and Beaches Capital Financial Plan can be temporarily reduced tomedified to maintain contributions under the three percent (3%) threshold. E—F. The financing duration for any borrowed funds shall not exceed thirty (30) years or the projected life of the new facility, whichever is less. F G. The Facilities Financial Planning Tool and Harbor and Beaches Capital Financial Plan may be amended by City Council action in the event of a natural disaster or financial crisis. Adopted - August 11, 2009 Amended - May 14, 2013 Amended - June 9, 2015 Amended - February 12, 2019 3 6-92