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Home My WebLink AboutIII - Update on Fiscal Issues - PowerPointJanuary 29, 2018 Council Planning Session CouncIl PlannIng Se3slon FInanclal Update January 29, 2018 =FOR% FY 2016. 17 General Fund Results Non -Spendable $15.2 $14.4 -$0.8 Restricted $3.1 $3.8 $0.7 Committed $2.7 $10.6 $7.8 Assigned $4.2 $0.6 -$3.6 Contingency $45.8 $47.5 $1.8 "Surplus" $10.9 $12.5 $1.6 TOTAL $81.8 $89.4 $7.5 Property Tax Value changes along with infill development in Newport Beach result in continued appreciation and strong growth in the foreseeable future Historical growth recent years ranging between 6% to 8% Positive AV growth during each of the last 20 years — average 6.9% annually Average home sale price — $3.3 million, Median sales price — $2.5 million Q4 2017 Southern California sale prices have climbed back to the 2007 peak $106.0 $104.0 $102,0 $100.0 $ 98.0 $96.0 $94,0 592,.0 590,.0 $88.0 $94A 2017 Property Tax $100.1 2018 Projected $104.4 2019 Sales Tax Modest sales tax growth anticipated $34.8 Cyclical forces are slowing $34. auto sales $34.4 $34.2 Internet shopping is $34.0 shifting sales tax away $33.8 $33.7 from brick -and -mortar $33.6 stores $33.4 $33.2 2017 Sales Tax $34.5 2018 Projected $ 34.7 2019 Transient Occupancy Tax Revenue decline anticipated in FY 2018 due to simultaneous renovations of large hotels Higher TOT revenue anticipated in 2019. (Commercial hoteliers optimistic, opening of Lido House hotel and Residential TOT growing especially with continued enforcement of online listing platforms) $23.0 $22.5 $22.a $21.5 $2:1.0 $20.5 $20.0 $ 22.3 2017 Transient occupancy Tax 2018 Projected �01�i General Fund Revenue Trend Historical IF- _ Projected Revenue Category 2017 201 % ; over PY 2018 2018 % �► over PY 2019 2018 % over PY Property Tax 9413501181 6.2% 10011461449 6.1% 10413661653 4.2% Sales Tax 3317021895 -8.4% 3414981007 2.4% 3416781282 0.5% Transient Occupancy Tax 2213031303 5.8% 2111321676 -5.2% 2216731484 7.3% Other Revenue 5410171965 3.1% 53/3831585 -1.2% 5314131941 0.1% Total General Fund Revenue $204,374,343 2.6% $209,160,716 2.3% $2151.132,360 2.9% $6 million estimated increase to fund ongoing operational increases , Still have fundlng challenges ahead... Short Term • Addressing homelessness • Additional airport expenditures Short and long Term • Public safety needs • Pensions • Ensuring we'll be able to make ADPs • Claims & Judgments • Ongoing Funding Increase Recommended $4.2 million • Unfunded Liability Shortfall $9.3 million • Harbor Capital Plan and Seawall Funding • Scheduled Funding Increase from $1.0 to $2.5 million Unfunded Pension Liability Actuarial Liability 887,481,877 Market Value of Assets 566,016,065 Unfunded Liability as of June 30, 2016 Impact of 7.25% Rate (1/8% Change) Impact of Excess Investment Earnings 2017 (11.2%) Estimated Unfunded Liability as of June 30, 2017 Impact of 7.0% Rate (1/4% Change) Impact of Excess Investment Earnings 2018 (12%?) Impact of Additional Discretionary Payments 3211465,812 20,523,197 (24,845,130) 3171143,879 30,805,734 (31,470,493) (91000,000) Estimated Unfunded Liability as of June 30, 2018 307,479,120 Unfunded Pension Liability Trend $1,200 -y- - - --___ Projected $1,000 rowth Rate of Accrued Viability $307 j $800 _u_ 6.6% Annualised $317 C $600 - — -- $400 $200-' $(200) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Accrued Pension Liability $501 $553 $617 $652 $693 $727 $755 $820 $848 $887 $947 $1,012 Market Value of Assets $499 $472 $354 $395 $467 $452 $497 $567 $573 $566 $629 $705 Unfunded Liability at Market Value $2 $82 $263 $257 $226 $275 $258 $253 $276 $321 $317 $307 CAPERS Rate of Investment Return 18.8% -2.9% 1-23.6% 11.1% 20.7% 1.0% 12.5% 18.4% 2.4% 0.6% 11.2% 12.0% Unfunded Pension Liability Level Dollar Payment Strategy) $60,000,000 ---- $50,000,000 -- $50,000,000 $40,000, $30,000, $20,000,000 $10,000,000 $0- N N N N N N N N N N O O O O O O O O O O Oo (D O N N W U'i Q1 -Default UL Payment Including Known Losses Phased In Additional Cost Compared to Default N N N N N N N ON O O O O O �Q OD lD -Alt - Level $ Payment at 7% ® Additional Savings Compared to Default Accelerated Payment History Normal Cost Amortized Cost of Unfunded Liability Additional Discretionary Payment Total Annual PERS Cost Employee Contributions Net Employer Cost Total Annual PERS Cost <Z.M::> Fresh Start E4 Additional Discretionary Payments 587,826 739,617 (113,102) 1,214,314 241,35 972,98 1,214,34 mime .. 14,627,830 14 899 906 151424,068 16,178,468 16,766,294 12,783,847 !,!�,;156 21,265,608 24,958 98,507 8,914,595 8,801,493 27,411,677 36,424,275 36,689,676 50,05 6,294 71429,842 8,401,598 9,447,341 10,083,183 10,324,540 19,981,835 28,022,677 27,242,335 39,968,770 40,778,144 27,411,677 36,424,275 36,689,676 50,051,953 51,266,294 <Z.M::> Fresh Start E4 Additional Discretionary Payments 587,826 739,617 (113,102) 1,214,314 241,35 972,98 1,214,34 Claims & Judgments Actuarial Valuation Performed every two years Higher Claims Experience in Workers Compensation —Safety Industrial Disability (Automatic Job Related Presumption ) Higher Claims Experience —Flores vs. City of San Gabriel Certain costs not specifically associated with claims were not previously allocated to departments (Admin and Insurance) Recommendations: Annual Actuarial Valuations Increase Department Charges Cash infusion A Possible Allocation ($ MlIllons) Beg Bal $12.50 $6.00 $18.50 Harbor Capital Plan (4.00) (4.00) Pensions (3.00) (1.00) (4.00) Operations (1.80) (1.80) Neighborhood Projects (1.00) (1.00) General Liability (3.00) (2.20) (5.20) Workers Compensation (1.00) (1.00) Contingency (1.50) (1.50) End Bal $0.00 $0.00 $0.00 o V vvva ,��) l c) c3 January 2018 finds the City in good shape. • Revenues are strong with a strong reserve position • Good progress on pension issues • 2nd year coming up on ADP • UAL may actually be going down... • We should be able to maintain our $5M in General Fund CIP —the "nuts and bolts" • Base operations funded Challenges Remain • How long will good economic times last? • Changes in purchasing habits Council PlannIng Sesslon FInanclal 1.1,ndate January 29, 2018 ,U, 7,1o�% Questions?