RPVCCA_SR_2010_03_02_10_FY09-10_Mid_Year_Financial_ReportCITY OF
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
REVIEWED:
Project Manager:
HONORABLE MAYOR &CITY COUNCIL MEMi:S
DENNIS McLEAN,DIRECTOR OF FINANCE &
INFORMATION TECHNOLOGY
MARCH 2,2010
FY09·10 MIDYEAR FINANCIAL REPORT
CAROLYN LEHR,CITY MANAGER ~
Kathryn Downs,Deputy Director of Finance &Information
Technology
RECOMMENDATION
1)Receive and file the FY09-10 Midyear Financial Report; and
2)ADOPT RESOLUTION NO.2010-,A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF RANCHO PALOS VERDES,AMENDING RESOLUTION 2009-40,THE
BUDGET APPROPRIATION FOR FY09-10,TO ADJUST THE BUDGET IN VARIOUS
FUNDS OF THE CITY.
EXECUTIVE SUMMARY
The City of Rancho Palos Verdes continues to experience a very stable financial condition.
The City has established a prudent reserve level,while experiencing one of the lowest
expenditure levels per capita in the South Bay,as well as continued property tax revenue
increases during a time of decreasing property values across the country.In addition,the
City began receiving revenue from the Terranea Resort &Spa that was not included in the
FY09-10 budget.Even without T erranea transient occupancy tax (TOT)revenue,FY09-10
General Fund revenues are expected to exceed FY08-09 revenues by2.7%.However,the
state continues to face a cash and budget crisis,some revenue sources are decreasing
(Le.revenues restricted for streets),and interest earnings are at all time lows.
If City Council adopts Staff's recommendations,the revised FY09-1 0 General Fund budget
will be balanced and General Fund excess reserves could reach $3.4 million at June 30,
2010.
A summary of the FY09-10 General Fund budget follows.
10-1
FY09·10 Midyear Financial Report
March 2,2010
Page 2 of 12
Current Proposed
FY09·10 Budget Revised
..'(liitnoljj::,nH!!I,,:@!!1iS.:·.·:.·,:1:Q~~tQgl:@j:,@::.:.~:::g~~'I:Bi.'·
Revenues 19,635,046 21,229,547
Expenditures (18,020,846) (17,691,446)
Net Transfers (1,624,977) (1,715,977)
1~I:Mlt'9nl):lilijif:,Hf:~:~I~lil;I::::1:·I;aI••:
Reserve Policy 9,010,423 8,845,723
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A summary of revised estimated fund balances as of June 30,2010 has been prepared
(see Attachment A -"FY09-1 0 Combined Summary of Funds -Midyear Financial Report").
During the 2010 budget process,Staff will consider the impact of the state budget crisis,
declining revenues and the accompanying proposed FY09-10 budget adjustments,as well
as revenue trends and changes.
BACKGROUND
The Municipal Code of the City of Rancho Palos Verdes requires that a midyear review of
the annual budget be presented to the City Council.Based upon Staff's analysis of the
City's financial activities during the first half of FY09-1 0,there are a number of items for
which the operating budget should be adjusted,as described in this report.Like previous
years,this is a routine practice in conjunction with the Midyear Financial Report.If the
activity of a particular fund,department or program is not discussed,there is nothing
significant to report and revenues and expenditures are not expected to materially deviate
from the amounts budgeted.
The Summary Schedule of General Fund Revenue is presented below.It is important to
understand that these revenue estimates are based upon Staff's analysis using trend
comparisons with previous years,and reports provided by state,county and local agencies.
It should be noted that future economic activity,legislation and policy decisions,as well as
any other unforeseen circumstances could affect the City's revenue stream for the
remainder of FY09-1 O.
The midyear financial report also includes discussion and analysis of anticipated
expenditure variances and other relevant developments related to the FY09-10 budget.
Staff has included the "FY09-1 0 Combined Summary of Funds -Midyear Financial Report"
(Attachment A)to summarize the estimated FY09-10 activity and ending fund balances for
all funds within the City.The schedule includes revised revenue and expenditure
estimates based on the adjustments proposed in this report.
DISCUSSION
General Fund Revenue
Some revenue sources are difficult to estimate such as utility users'taxes and permit fees.
These types of revenues are predicated on conditions outside the City's control.As an
10-2
FY09·10 Midyear Financial Report
March 2,2010
Page 3 of 12
example,planning and building permit revenues will fluctuate with the economy,as well as
other conditions such as the weather.Additionally,several significant franchise tax
revenues are received annually after preparation of the midyear report.For these
revenues,Staff has either reported FY09-1 0 estimated revenues as the budgeted amount
or a conservative figure based on the amount of information currently available.
Summary Schedule Of General Fund Revenue:
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Property tax $5,855,100 $6,088,893 $5,925,000 $(163,893)
Property tax in lieu of vehicle license fees 3,388,494 3,388,500 3,433,202 44,702
Property tax in lieu of sales tax 301,454 301,500 296,348 (5,152)
Property transfer tax 178,813 159,100 207,000 47,900
Sales tax 1,060,220 1,102,767 1,211,000 108,233
Transient occupancy tax 85,245 26,100 1,818,000 1,791,900
Franchise taxes 1,709,009 1,675,715 1,725,000 49,285
Utility user taxes 2,267,431 2,401,800 2,450,000 48,200
Business license tax 531,982 515,600 530,000 14,400
Golf tax 278,343 333,000 325,000 (8,000)
Planning,building &safety,and other permits 1,754,687 2,007,100 1,980,000 (27,100)
Fines and forfeitures 213,900 246,500 217,000 (29,500)
Interest earnings 266,124 160,100 90,000 (70,100)
Other use of money and property (rents &leases)603,900 652,100 605,000 (47,100)
Charges for services 202,838 163,600 166,000 2,400
Intergovemmental(grants&vehiclelicensefees)152,701 320,471 298,000 (22,471)
Other revenue 65,919 92,200 34,800 (57,400)
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Overall,General Fund revenue is expected to exceed the current FY09-1 0 budget by about
$1.7 million,primarily attributable to the expected receipt of $1.8 million of TOT revenue
from Terranea that is not currently included in the budget and is described later in this
report.Discussion and analysis regarding General Fund revenues is presented below.
Staff does not recommend budget adjustments for immaterial anticipated variances.If a
particular revenue source is not discussed,there is nothing significant to report and
anticipated revenues are not expected to materially deviate from the FY09-10 budget.
Property Tax
The FY09-10 property tax revenue budget included about $143,000 for the expected
increase of property tax revenue from Terranea resulting from the completion of the
Resort.After the FY09-1 0 budget was adopted,Staff discovered that the County would not
reassess the improvements at Terranea and pass the proportionate increase of property
tax revenue to the City during 2009-10 taxing year.The County has advised that the City
can expect to receive the 2009-10 increase of property tax revenue from Terranea,as a
one-time retroactive payment,during FY10-11.
Other than the expected increase of property tax revenue from Terranea,Citywide FY09-
10 property tax revenue was based upon no growth compared with the budgeted FY08-09
10-3
FY09·10 Midyear Financial Report
March 2,2010
Page 4 of 12
revenue of $5,945,600.City-wide property value assessments exceeded expectations for
2009-10 and grew by 1.3%.When applying the growth rate to actual FY08-09 revenue,the
estimated FY09-10 property tax revenue is about $5,925,000 or about $21,000 less than
previously expected.
Staff recommends an adjustment to decrease the property tax revenue budget by
$164,000 for both the delayed property tax increase from Terranea,as well as the change
in the City-wide estimate.
Property Tax in lieu of Vehicle License Fees (VLF)
Similar to general property tax noted above,the FY09-1 0 budget for Property Tax in lieu of
VLF was based upon no growth from FY08-09.Staff recommends a revenue budget
increase of $40,000 to recognize the 1.3%expected growth in property assessments.
Property Transfer Tax
Property transfer tax is received when ownership of real property in the City transfers.This
revenue source is difficult to predict,but appears to be tracking ahead of budget for FY09-
10.Staff recommends an adjustment to increase property transfer tax revenue by
$48,000.
Sales Tax
Based on first quarter information for FY09-1 0,Staff estimates that customers of Terranea
will contribute about $250,000 of sales tax revenue to the City during the fiscal year.The
state is slow in providing sales tax information,and the results for the second quarter of
FY09-10 will not be available until March 2010.
Sales tax revenue for the remainder of the City is running about 15%less than the prior
year.In particular,business-to-business sales tax has suffered a 42%decrease.
According to the City's sales tax consultant,this decrease is consistent with other cities in
Los Angeles County.The sales tax consultant cites a reduction in consumer spending,
construction,and business investment in equipment.
When combining the anticipated sales tax generated by Terranea and the decrease from
other sales activity,Staff recommends a net revenue budget increase of $109,000.
Transient Occupancy Tax (TOT)
Through January 31 st,Terranea has generated about $1 million of TOT revenue for FY09-
10.The first half of the year includes July &August,which are traditionally the busiest
months of the year for resort hotels.Based on trends,and information previously received
from the developer,Staff expects that Terranea will generate FY09-10 TOT revenue of
about $1.8 million.Because the FY09-10 budget was prepared prior to the opening of
Terranea,this revenue was not included in light of the economic uncertainty at that time.
10-4
FY09·10 Midyear Financial Report
March 2,2010
Page 5 of 12
Franchise Tax &Utility Users Tax
The franchise tax budget was developed in advance of City Council approval of the FY09-
10 waste hauler fees from Waste Management.Based upon the fees established in the
agreement approved by the Council,Staff recommends a revenue budget increase of
$44,000.
Utility users'tax (UUT)from both Southern California Edison and Verizon Wireless are
contributing to an expected positive budget variance.Staff recommends a revenue budget
increase of $47,000.
Permit Revenue
Film permit activity is currently very strong.The revenue budget was set at $26,100 for
FY09-1 0,while actual revenue to date is $52,247.Staff expects that FY09-1 0 revenue will
reach at least $66,000,and recommends an adjustment to increase the revenue budget by
$40,000.Staff will request a corresponding expenditure adjustment for part-time wages to
provide staffing for the additional film events on City property.
Right of way permit activity has decreased substantially due to a dramatic decrease in the
number of private projects requiring access to the City's right of way.Staff recommends an
adjustment to decrease the revenue budget by $55,000.
Fines &Forfeitures
The City's court fine revenue is primarily derived from traffic tickets.The FY09-10 budget
is $233,400;revenue is expected to only reach the FY08-09 actual revenue of about
$205,000.Staff recommends an adjustment to decrease the revenue budget by $28,000.
Interest Earnings
Based on year to date interest earnings and interest rate trends,it appears that the
General Fund could earn an average yield of about 0.75%during FY09-10.The FY09-10
budget was based upon an expected earnings rate of 1.5%.Staff recommends an
adjustment to decrease interest earnings revenue by $70,000.
Other Use of Money and Property
Rental revenue has decreased for all City park buildings,and is expected to be about
$67,000 less than the budgeted revenue of $355,700 for FY09-10.Staff recommends a
reduction of the revenue budget.
Gift shop revenue at Point Vicente Interpretive Center is expected to reach about $97,000.
The FY09-1 0 budget amount is $72,400,and actual FY08-09 gift shop revenue was about
$80,000.Staff recommends an adjustment to increase the revenue budget by $25,000.
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FY09·10 Midyear Financial Report
March 2,2010
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Intergovernmental
Vehicle License Fee (VLF)revenue is expected to be about $23,000 less than the
$163,000 budgeted revenue amount.Actual FY08-09 VLF revenue was about $148,000.
Due to double-digit increases of state administrative fees that are deducted before VLF is
allocated to cities,this revenue source continues to shrink annually.Staff recommends an
adjustment to decrease the revenue budget by $23,000.
The City applied for a Highway Safety Improvements Program (HSIP)grant to replace all
stop signs in the City with high reflectivity signs.The FY09-10 project budget was
$113,400,to be funded with $94,499 from the grant and $18,901 from the City's General
Fund.The grant application was denied.Staff recommends an adjustment to decrease
the revenue budget by $94,499,along with a corresponding decrease to the expenditure
budget.'
Other Revenue
The City collects miscellaneous revenue from a variety of sources.Prior to FY09-10,
administrative fees were charged on trust deposit activity.For FY09-10,administrative
fees as a percentage of activity are no longer charged.As part of the 2009 cost based fee
study,a fee structure was established to charge a base processing fee and the fully
burdened direct labor for actual staff time spent on specific types of planning and building
projects.Major projects that are currently in process were submitted under the previous
permit fee structure,and no new major projects have been submitted under the current
permit fee structure.Therefore,no direct labor has been charged to date during FY09-1 O.
Staff recommends an adjustment to decrease the revenue budget by $57,000.
Revenue Adjustment Summary
Excluding $1.8 million of TOT revenue expected to be collected from Terranea that was not
included in the FY09-10 budget,Staff's recommended revenue adjustments would
decrease the current $19.6 million General Fund revenue budget by $205,499.Excluding
Terranea TOT,FY09-10 General Fund revenue is still expected to be about 2.7%more
than actual FY08-09 revenue of $18.9 million.
General Fund Expenditures &Transfers
Per the City's Municipal Code (section 3.32.080),budgetary compliance is determined by
program.There are 30 expenditure programs in the General Fund budget.As there are a
number of programs with expenditures that fluctuate with unforeseen circumstances (e.g.
weather,claims and litigation),there has been a long-standing practice to prepare
conservative expenditure budgets and minimize the burden of numerous immaterial budget
adjustments to ensure budgetary compliance.
For the last 10 fiscal years,the City has experienced total General Fund favorable
expenditure variances ranging from about $420,000 to $1,049,000.When spread across
30 expenditure programs,favorable variances have averaged from about $14,000 to
$35,000 per program or about 0.2%of the total General Fund expenditure budget.10-6
FY09·10 Midyear Financial Report
March 2,2010
Page 7 of 12
It is Finance Staff's opinion that conservative budget practices are prudent and in the best
interest of the City,especially when the economic outlook is poor.Staff has analyzed
FY09-10 General Fund expenditures to date,and has determined that a number
expenditure budgets warrant adjustment.A discussion of proposed adjustments follows.
Salaries &Personnel
The Human Resources Manager is actively recruiting to fill several vacant positions in the
City in the near future.Staff expects that total FY09-10 salary savings from vacancies will
approximate $320,000,and recommends adjustments to decrease the expenditure budget.
As noted in the General Fund Revenue section of this report,film permit activity has
increased.The City utilizes part-time Recreation employees to staff filming events at City
locations.Staff recommends an adjustment to increase the expenditure budget by
$28,000 to pay for the additional part-time staffing.
The City Clerk's office will be utilizing the services of a temporary Deputy City Clerk for
special projects,including public records and litigation discovery requests.Staff
recommends an adjustment to increase the expenditure budget by $15,000.
The City's Personnel program utilizes professional services to assist with employee issues,
personnel hearings,physical exams,etc.Year to date expenditures are higher than
previously anticipated,and are expected to exceed the $20,000 budget for this activity.
Staff recommends an adjustment to increase the expenditure budget by $5,000.
Windport Canyon Real Property Purchase
The FY09-10 budget included $110,300 to purchase the Windport Canyon parcel.This
parcel is the southern half of a canyon located south of Hesse Park,and is expected to be
added to the City's open space preserve.The final actual cost ofthe acquisition was about
$151,000.Staff recommends an adjustment to increase the expenditure budget by
$41,000.
Parks Water Utility Service
Water usage at the City's parks (primarily for irrigation)has decreased due to improvement
and repairs of the irrigation systems and weather conditions.Staff expects that only
$115,000 of the $125,000 budget will be needed for FY09-10,and recommends an
adjustment to decrease the expenditure budget by $10,000.
Traffic Management
As discussed in the General Fund revenue section of this report,the City's application fora
Highway Safety Improvements Program (HSIP)grant was denied.Staff recommends an
adjustment to decrease the expenditure budget by $113,400,the total estimated cost of the
project.
Staff has determined that a small traffic safety improvement is needed to improve access10-7
FY09·10 Midyear Financial Report
March 2,2010
Page 8 of 12
at the Golden Cove shopping center in conjunction with the opening of Trader Joe's and
the Hawthorne median improvements,and requests an adjustment to increase the
expenditure budget by $10,000.
Planning &View Restoration
Staff anticipates that about $10,000 will be needed to pay consultants to review various
studies related to the Zone 2 Environmental Impact Report (EIR).This expenditure was
not included in the FY09-10 budget.Staff recommends an adjustment to increase the
,expenditure budget by $10,000.Planning Staff has received proposals for preparation of
the Zone 2 EIR ranging from $92,000 to $187,000,and will make a separate
recommendation to City Council on an upcoming agenda.
Tree trimming costs in the View Restoration budget are expected to exceed the budgeted
amount of $39,000.Staff recommends an adjustment to increase the expenditure budget
by $5,000.
General Fund Transfers to Other Funds
As discussed below,Highway User Tax (HUTA)revenue is decreasing.As HUTA and
other restricted revenue sources are not sufficient for the City's street maintenance
activities,the General Fund must annually subsidize this program.Due to the decreasing
HUTA,Staff recommends a $22,000 adjustment to budgeted transfers to move money
from the General Fund to the Street Maintenance Fund for this subsidy.
During FY08-09,the cost of RPV TV operations and equipment exceeded estimates by
about $13,000 resulting in a deficit fund balance.Staff recommends a $15,000 adjustment
to transfer money from the General Fund to the RPV TV Fund and restore the deficit fund
balance.
In FY04-05,the City received a $54,000 settlement from Southern California Edison for a
brush fire in the City's open space.At that time,the $54,000 was deposited into the City's
General Fund.Because the claim filed with Edison asserted that the reimbursement would
be used to restore habitat,Staff recommends a $54,000 adjustment to transfer the
settlement from the General Fund to the Habitat Restoration Fund.
Summary of Proposed General Fund Adjustments
Proposed revenue adjustments,excluding Terranea TOT $(205,499)
Proposed expenditure/transfer adjustments 238,400
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Proposed Terranea TOT budget 1,800,000
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OTHER FUNDS OF THE CITY
This section discusses other revenues and expenditures ofthe City.Each ofthe following
recommended adjustments has been incorporated in the FY09-1 0 Combined Summary of
10-8
FY09-10 Midyear Financial Report
March 2,2010
Page 9 of 12
Funds -Midyear Financial Report (see Attachment A),which includes the revised fund
balance estimates for June 30,2010.Again,if the activity of a particular fund is not
discussed,there is nothing significant to report and actual activity is expected to
approximate the FY09-10 budget.
The March 2,2010 City Council agenda also includes an update of the Five-Year Capital
Improvement Plan.Project status will be discussed in that report,and not repeated here.
Street Restricted Revenues
The City's street restricted revenue sources come from cent-per-gallon taxes on gasoline,
which are not directly affected by gasoline prices.Gasoline consumption has decreased
during FY09-1 0;therefore,the City's street restricted revenue has suffered.
Michael Coleman,Fiscal Policy Advisor to the League of California Cities,has published
revised FY09-10 estimates for both Proposition 42 and Highway Users Tax (HUTA).The
Proposition 42 revenue budget is $406,388,yet actual revenue is only expected to reach
$391,900.The HUTA revenue budget is $766,900,yet actual revenue is only expected to
reach $687,158.Staff recommends adjustments to decrease these revenue budgets by
.$14,500 and $80,000,respectively.
The Chief Financial Services Officer from the Los Angeles County Metropolitan
Transportation Authority (Metro)has advised the City that it expects Proposition C and
Proposition·A revenues will be about 88%of FY08-09 amounts.Staff recommends
adjustments to decrease these revenue budgets by $113,000 and $152,000,respectively.
Due to prior year project savings and accumulated fund balances,Staff has determined
that current year expenditures funded with these revenue sources do not need to be
adjusted at this time.However,during the 2010 budget process,Staff will carefully analyze
the impact these decreasing revenues may have on the FY1 0-11 budget and future street
maintenance.
Street Expenditures
Due to recent extraordinary land movement in the landslide area of the City,additional
maintenance of Palos Verdes Drive South (PVDS)has been necessary during FY09-10.
Staff expects that an additional $200,000 will be needed for Portuguese Bend road
maintenance;and,therefore,recommends an adjustment to increase the Street
Maintenance expenditure budget.Staff has determined that FY09-1 0 budgeted amounts
for arterial and residential pavement projects are more than adequate,and adjustments
can be made to reduce those budgets by $200,000 to offset the additional necessary
maintenance.
Funding For Projects Continued From FY08-09
With City Council approval,a number of FY08-09 projects were carried forward to FY09-
10.Many of these projects are to be funded with restricted monies.Staff recommends the
following adjustments to the FY09-10 revenue and transfer budget to reflect the sources10-9
FY09·10 Midyear Financial Report
March 2,2010
Page 10 of 12
associated with each project.
~Increase revenue for the American Recovery and Reinvestment Act (ARRA)
allocation of $1,262,000 to be deposited into the Capital Improvement Projects
(CIP)Fund and used for the Palos Verdes Drive West/South arterial rehabilitation
project.
~Increase revenue for a state grant of $212,400 to be deposited into the CIP Fund
and used for the Crestridge/Crenshaw traffic signal project;
~Increase revenue for a state grant of $252,000 to be deposited into the CIP Fund
and used for the early action traffic safety improvements on Palos Verdes Drive
East;and
~Increase revenue forthe Affordable Housing In-Lieu developer fee of$931 ,910 paid
by Terranea and deposited into the City's Affordable Housing Fund to be used for
the City's contribution to the Mirandela Senior Apartment Housing project.
~Adjust transfers by $292,000 to move planned funding from the Beautification Fund
to the CIP Fund for the Palos Verdes Drive West/Hawthorne median project.
~Adjust transfers by $704,051 to move planned funding from the Proposition C Fund
to the CIP and Street Maintenance Funds for the Palos Verdes Drive West/South
arterial rehabilitation project and Portuguese Bend road maintenance.
~Adjust transfers by $67,000 to move planned funding from the Proposition A Fund
to the CIP Fund for the Palos Verdes Drive West/South arterial rehabilitation
project.
Grant Funded Projects
Since adoption of the FY09-1 0 budget,additional grant funding has become available for 3
projects.Staff recommends adjustments to the FY09-10 revenue and expenditure budgets
to reflect the following grant revenues and related project expenditures.These projects are
fully funded with additional grant income,and adjustments will have no net affect on the
related fund balances.
The City has received a $50,000 Mobile Source Air Pollution grant from the Air Quality
Management District (AQMD)to contribute to the Palos VerdesTransit Authority purchase
of new buses.The revenue and corresponding contribution expenditure will be recorded in
the City's AQMD Fund.
The City's FY09-10 budget included an Americans with Disabilities (ADA)compliance
project to install new doors with push button actuators in various City-owned buildings.The
project budget of $107,079 is funded with Community Development Block Grant (CDBG)
money.The bids received indicate that the project budget will need to be increased by
$35,000.Additional CDBG money is available to the City for this project,and will be
recorded in the City's CDBG Fund along with the expenditure increase.
The City has received an ARRA allocation through the Local Government Energy
Efficiency and Conservation block grant program in the amount of $162,900 for energy
efficient building improvements.The projects covered under this grant include window
retrofits and upgraded lighting and heating systems at City Hall.The revenue and
corresponding improvements expenditure will be recorded in the City's Building10-10
FY09-10 Midyear Financial Report
March 2,2010
Page 11 of 12
Improvements Fund.
Other Adjustments
Revenues
The City receives revenue from the Department of Conservation for recycling activities.
Based on current levels of recycling,Staff expects that actual revenue from this source will
be about $10,000 less than budgeted and recommends an adjustment to decrease the
revenue budget accordingly.This revenue is deposited into the Waste Reduction Fund
and is used for ongoing promotion of the City's recycling programs.The Waste Reduction
fund balance is adequate to absorb this decrease in revenue.
Expenditures
The Planning Commission issued a resolution that restricts the height of vegetation along
Palos Verdes Drive West to 12 inches.The vegetation is adjacent to the Oceanfront
Estates tract.A consultant arborist has advised City staff that it will be more cost effective
to replant some of the vegetation vs.future trimming costs.Staff recommends an
adjustment to increase the Subregion One expenditure budget by $10,000 for replanting.
The Subregion One fund balance can adequately absorb the adjustment.
In FY07-08,the Dr.Allen and Charlotte Ginsburg donated $500,000 to the City to be used
for the future construction of a building at Upper Point Vicente for purposes of dance or
other cultural activities,or for the purchase of open space within the City.In November
2009,the Dr.Ginsburg instructed the City to transfer $300,000 ofthis donation to the Palos
Verdes Peninsula Land Conservancy (PVPLC)for contribution to an open space purchase.
Staff recommends an adjustment to reflect the $300,000 expenditure within the Ginsburg
Cultural Arts Building Fund.
The Employee Benefits Fund experienced FY08-09 expenditure savings resulting in an
excess fund balance at June 30,2009.The City's pension contribution rate decreases
each time the pension side-fund liability is paid down.After the FY08-09 principal payment
of $702,250,the City's side-fund liability balance is about $1.7 million.Staff recommends
an expense adjustment to use the FY08-09 Employee Benefits savings and make a FY09-
10 side-fund principal payment of $180,000.
The FY09-1 0 Environmental Excise Tax (EET)expenditure budget includes $51,000 forthe
PVIC and Hesse Park emergency generators.The total project cost is estimated to be
$215,000;therefore,Staff requests an increase of $164,000 for this expenditure.The EET
fund balance can adequately absorb the adjustment.
Unexpected repairs of the gas line and water line serving the Ladera Linda Community
Center have become necessary during FY09-10.Staff recommends an adjustment to
increase the Building Improvements expenditure budget by $90,000 for these repairs.The
Building Improvements Fund Balance can adequately absorb the adjustment.
10-11
FY09-10 Midyear Financial Report
March 2,2010
Page 12 of 12
RESERVE POLICIES
The City Council has adopted reserve policies for a number of funds.A summary of
reserve levels follows.
195277,195277,000StreetMaintenance
General Fund 50%of budgeted expenditures 8,845,723 12,262,380 3,416,657
One year of Portugu ese Ben d
road main tena nce (1)
Habitat Restoration
Habitat Restoration
Su bregion On e
Emergency projects
Future maintenance
Developer endowment
50,000
54,144
750,000
50,000
151,189
756,636
97,045
6,636
Capital Improvement
Projects Emergency projects (2)3,000,000 2,584,791 (415,209)
Capital Improvement FEMA reserve for FY04-05
Projects winte r storms 274,430 274,430
Eq uipm ent Esti rna ted rep lace m ent cost of
Replacement assets held 1.557,456 1,882,757 325,301
(1)The Street Maintenance reserve level does not include the additional extraordinary
additional maintenance of $200,000 requested in this report.
(2)On September 15,2009,the City Council approved use of the emergency project
reserve in the amount of $419,087 for the Upper Filiorum open space purchase.
During the 2010 budget process,Staff will make a recommendation to the City Council for
the revision and replenishment of the Street Maintenance and Capital Improvement
Projects reserves ..
FISCAL IMPACT
Except as discussed above,all other estimated revenues and expenditures are expected to
approximate the budget in all funds of the City for FY09-10.The estimated fund balances
presented in the FY09-10 Combined Summary of Funds -Midyear Financial Report
(attachment A)includes the effects of the budget adjustments recommended within this
report.
Attachments:
A -FY09-10 Combined Summary of Funds -Midyear Financial Report
B -FY09-10 Statement of Estimated General Fund Reserves
10-12
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Ilrll!!!II!:!:II:!!!!_r~itGi~1JiI_
Unrestricted
Restricted by Council Action
BEAUTIFICATION 1,367,251 162,900 107,530 1,048,000 374,621
RPVTV (4,714)1,160 90,000 84,750 ,1,696
CIP 7,207,180 8,819,320 5,772,284 18,939,563 2,859,221
UTILITY UNDERGROUNDING 273,770 4,100 277,870
ROADWAY BEAUTIFICATION 101,553 1,500 103,053
EQUIP REPLACEMENT 2,968,157 108,600 1,194,000 1,882,757
BLDG REPLACEMENT 1,326,051 178,700 673,900 830,851
EMPLOYEE BENEFITS 204,841 2,126,742 94,125 2,425,704 4
ly~ii::::!:::::::::::I::::::::::::::::::::::::::-:::::::::::::;::\::::::::::::II::::::::l~(,m~Wj:::::1:~1i~~Q~I :::::::::§;.li9l:::::::::::::::~i1~~~M1::::::::::::::::t~~I~~~:::··iJ.i~gi9t~.
2,108,364 1,239,897 2,926,007 422,254
f:~l~~:~~i':::::1;~11itm1:::::::::::::::1gi~1~.f:::::iflI1:$~~~~:::::·'~~~~J.i~~
Restricted by Law or External Agencies
STREET MAINTENANCE
1972 ACT
El PRADO LIGHTING
CDBG
1911 ACT
WASTE REDUCTION
AIR QUALITY MANAGEMENT
PROPOSITION C
PROPOSITION A
PUBLIC SAFETY GRANTS
HABITAT RESTORATION
SUBREGION 1 MAINT
MEASURE A MAINT
AB COVE SEWER DISTRICT
GINSBURG CULTURAL ARTS BLDG
DONOR RESTRICTED CONTRIB
QUIMBY
AFFORD HOUSING IN~L1EU
EET
MEASURE A CAPITAL
BIKEWAYS
WATER QUALITY/FLOOD PROTECT
424,481
58,659
11,138
(6)
1,632,607
174,105
52,776
2,564,999
197,694
34,540
225,180
767,336
26,488
93,594
500,503
2,082
25,170
838,333
839,293
7,440
1,091,388
258,459
2,030
336,826
504,800
286,390
100,600
703,551
547,923
100,000
1,800
11,300
151,000
46,220
7,600
600,000
1,300,000
948,510
107,100
10,913
25,000
1,033,000
169,000
55,000
10,700
2,271,674 277,195
69,100 200,000 48,018
11,000 2,168
309,978 26,848 (6)
493,400 84,000 1,560,007
284,708 52,000 123,787
100,000 53,376
2,963,771 304,779
670,900 69,800 4,917
33,635 100,000 905
194,791 201,189
77,000 756,636
151,000 26,488
94,038 56,476
300,000 208,103
600,000 2,082
1,325,170
1,778,868 7,975
606,000 332,600 7,793
10,913 7,440
25,000
10-13
FY09·10 Statement of Estimated General Fund Reserves Attachment B
Beginning
Reserves
Ending
Net Transfers Reserves
Adjustments:
Evaluate Citywide Sewer Fee 11/17/2009 (55,000)
Retirement Health Savings Retroactive
Contribution
Lower Hesse Park and Grandview Park
Conceptual Design
11/17/2009
11/17/2009
94,125)
(50,000)
Geotechnical Review of Monks Plaintiffs'
Landslide Moratorium Exception Applications
FY08-09 Results
12/15/2009
1/19/2010 1,265,382
(24,000)
(91,000)329,400(205,499)
1,800,000
3/2/2010
3/2/2010
Column Headin Definitions
Terranea Transient Occupancy Tax
Be innin Reserves are the budgeted 7/1/09 General fund reserves at the time of budget adoption.
Midyear Adjustments -Other
Action Date is the date City Council ado ted the budget or a roved an adjustment to the bud et.
Revenues include the originally adopted revenue budget and sUbsequent adjustments.When staff becomes aware that revenues are expected to significantly
deviate from the ado ted budget,an adjustment is resented to the City Council for approval.
Expenditures include the originally adopted expenditure budget and subsequent adjustments.When staff becomes aware that expenditures of a program are
expected to si nificantly deviate from the adopted bud et,an adjustment is presented to the City Council for approval.
Net Transfers include both operating transfers from and to the General fund.Originally budgeted Net Transfers are adjusted when staff becomes aware that
an additional 0 erating transfer is needed to satisfy an unanticipated shortfall within another fund;and that shortfall must be funded with General fund monies.
Ending Reserves are the estimated 6/30/10 General fund reserves at the time of budget adoption.Adjusted Ending Reserves is a calculation based on
subse uent ad'ustments to Be innin Reserves,Revenues,Ex enditures and Net Transfers.
10-14