HomeMy WebLinkAboutFinance Committee - March 14, 2019CITY OF NEWPORT BEACH
FINANCE COMMITTEE AGENDA - Final
100 Civic Center Drive - Crystal Cove Conference Room, Bay 2D
Thursday, March 14, 2019 - 3:00 PM
Finance Committee Members:
Will O'Neill, Chair / Mayor Pro Tem
Diane Dixon, Mayor
Joy Brenner, Council Member
William Collopy, Committee Member
John Reed, Committee Member
Joe Stapleton, Committee Member
Larry Tucker, Committee Member
Staff Members:
Grace K. Leung, City Manager
Dan Matusiewicz, Finance Director / Treasurer
Steve Montano, Deputy Director, Finance
Marlene Burns, Administrative Specialist to the Finance Director
The Finance Committee meeting is subject to the Ralph M. Brown Act. Among other things, the Brown Act requires that
the Finance Committee agenda be posted at least seventy-two (72) hours in advance of each regular meeting and that
the public be allowed to comment on agenda items before the Committee and items not on the agenda but are within
the subject matter jurisdiction of the Finance Committee. The Chair may limit public comments to a reasonable amount
of time, generally three (3) minutes per person.
The City of Newport Beach’s goal is to comply with the Americans with Disabilities Act (ADA) in all respects. If, as an
attendee or a participant at this meeting, you will need special assistance beyond what is normally provided, we will
attempt to accommodate you in every reasonable manner. Please contact Dan Matusiewicz, Finance Director, at least
forty-eight (48) hours prior to the meeting to inform us of your particular needs and to determine if accommodation is
feasible at (949) 644-3123 or dmatusiewicz@newportbeachca.gov.
NOTICE REGARDING PRESENTATIONS REQUIRING USE OF CITY EQUIPMENT
Any presentation requiring the use of the City of Newport Beach’s equipment must be submitted to the Finance
Department 24 hours prior to the scheduled meeting.
I.CALL MEETING TO ORDER
II.ROLL CALL
III.PUBLIC COMMENTS
Public comments are invited on agenda and non-agenda items generally considered to be
within the subject matter jurisdiction of the Finance Committee. Speakers must limit comments
to three (3) minutes. Before speaking, we invite, but do not require, you to state your name for
the record. The Finance Committee has the discretion to extend or shorten the speakers’ time
limit on agenda or non-agenda items, provided the time limit adjustment is applied equally to all
speakers. As a courtesy, please turn cell phones off or set them in the silent mode.
IV.CONSENT CALENDAR
MINUTES OF FEBRUARY 14, 2018A.
Recommended Action:
Approve and file.
DRAFT MINUTES 021419
March 14, 2019
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Finance Committee Meeting
V.CURRENT BUSINESS
REVIEW OF OPERATING BUDGET (HARBOR DEPARTMENT)A.
Summary:
The goal of this presentation will be to familiarize members of the Finance
Committee with the elements of the FY 2018-19 Harbor Department budget, provide
opportunity for questions, and to gain clarity in the funding allocations for
departmental programs.
Recommended Action:
Receive and file.
APPOINTMENT OF FINANCE SUBCOMMITTEE TO REVIEW THE BEACON
BAY MARKET STUDIES
B.
Summary:
At the February 12, 2019, City Council Study Session, the City Council requested the
Finance Committee create a subcommittee of citizen members to review/reconcile
the Beacon Bay market studies prepared by the City’s consultant, Keyser Marston
Associates and the resident proponent study. The subcommittee will report back to
the full City Council with its recommendations.
Recommended Action:
Receive and file.
STAFF REPORT
REVIEW OF REVENUE ASSUMPTIONSC.
Summary:
Staff will provide of an overview for revenue assumptions for the FY 2019-20
Proposed Budget.
Recommended Action:
Receive and file.
WORK PLAN REVIEWD.
Summary:
Staff will review with the Committee the agenda topics scheduled for the remainder
of the calendar year.
Recommended Action:
Receive and file.
ATTACHMENT A
March 14, 2019
Page 3
Finance Committee Meeting
VI.FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS
WOULD LIKE PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR
REPORT (NON-DISCUSSION ITEM)
VII.ADJOURNMENT
Finance Committee Meeting Minutes
February 14, 2019
Page 1 of 9
CITY OF NEWPORT BEACH
FINANCE COMMITTEE
FEBRUARY 14, 2019 MEETING MINUTES
I. CALL MEETING TO ORDER
The meeting was called to order at 3:00 p.m. in the Crystal Cove Conference Room, Bay 2D, 100
Civic Center Drive, Newport Beach, California 92660.
II. ROLL CALL
PRESENT: Mayor Pro Tem/Chair Will O’Neill, Mayor Diane Dixon, Committee
Member William Collopy, Committee Member Joe Stapleton, Committee
Member Larry Tucker
ABSENT: Committee Member (VACANT POSITION), Council Member Joy Brenner
(EXCUSED)
STAFF PRESENT: Finance Director/Treasurer Dan Matusiewicz, Deputy Director/Finance
Steve Montano, Senior Accountant/Finance Theresa Schweitzer,
Administrative Manager/PW Finance Jamie Copeland, Budget
Manager/Finance Susan Giangrande, Accounting Manager/Finance
Rukshana Virany, Administrative Manager/Fire Angela Crespi, Fire
Assistant Chief Jeff Boyles, Fire Chief Chip Duncan, Public Works Director
Dave Webb, Administrative Manager/Public Works Chris Miller, and
Administrative Specialist to the Finance Director Marlene Burns
OTHER ENTITIES: None
MEMBERS OF THE
PUBLIC: Jim Mosher, Jennifer McDonald, and Allen Cashion
Prior to public comments, Chair O’Neill reported attendance at the Government Finance Officers
Association (GFOA) conference in Newport Beach where he spoke on financial policies. He further
reported all of the financial policies that have been formed by the Finance Committee were adopted
by the City Council.
III. PUBLIC COMMENTS
Chair O’Neill opened public comments.
Jim Mosher addressed the Committee regarding the update to the General Plan and noted the
requirement the City develop and maintain a Strategic Plan for Fiscal and Economic Sustainability.
He commented the Strategic Plan was originally adopted in 2007 and has not been updated since
although it is required to be updated annually. Mr. Mosher addressed the Committee regarding the
recently adopted financial policies, noted contracts with former employees must go to City Council
for approval, and reported he does not believe that process is being followed as it was intended.
Noting there were no other members of the public who elected to speak on this item, Chair O’Neill
closed public comments.
IV. CONSENT CALENDAR
A. MINUTES OF JANUARY 17, 2019
Recommended Action:
Finance Committee Meeting Minutes
February 14, 2019
Page 2 of 9
Approve and file.
MOTION: Committee Member Tucker moved, and Committee Member Collopy seconded, to
approve the minutes. The motion carried 5 ayes – 0 noes, 1 absence (Brenner) and 1
Committee Member position vacant.
V. CURRENT BUSINESS
A. HARBOR AND BEACHES MASTER PLAN UPDATE
Summary:
The Finance Committee is charged with a variety of tasks including, but not limited to, reviewing
with staff on an annual basis the timing, means of financing, and fiscal impacts associated with
funding the high-priority projects designated in the Facilities Financing Plan (FFP) and the
Harbor and Beaches Master Plan (HBMP). Staff welcomes input and recommends that the
Committee receive and file the attached HBMP update and provide staff any input regarding
its financial solvency.
Recommended Action:
Staff welcomes input and recommends that the Committee receive and file the attached HBMP
update and provide staff with any input regarding its financial solvency.
Chair O’Neill introduced this matter and reported the Harbor Commission thoroughly reviewed
the master plan update and has determined proper harbor upkeep and maintenance. The
Finance Committee’s role is to ensure proper funding sources and ask any questions about
maintenance, replacement, and installations.
Mayor Diane Dixon noted there is no external funding sources for harbor-related capital
expenses and inquired if it is possible to consider external funding sources when negotiating
development agreements.
Public Works Director Dave Webb responded that federal contributions are expected, and
those grants are typically “pay as you go.”
Finance Director/Treasurer Dan Matusiewicz explained that if there is a development
agreement that impacts the harbor, or has a recreational element, then a “park-in-lieu”
agreement is a possibility.
Mayor Dixon stated she would like the City to consider all external funding sources for resiliency
and noted there are federal funds available for preventative measures. She inquired whether
the City should pursue those funding sources.
Public Works Director Webb advised there are mitigation grants the City has applied for in the
past and the sea wall may qualify for some grant funding.
Committee Member Collopy noted that in 2026 there would be $40 million available at the end
of the year to be spent in future years. Finance Director/Treasurer Matusiewicz explained
those funds are the net of the project expenditures. He also noted there is no target minimum
balance set on this fund as it is a fairly new plan.
Finance Director/Treasurer Matusiewicz reported the General Fund loaned the Harbor Capital
Fund $15 million to complete the initial dredging. The loan will be repaid as a “zero-interest
loan” over 15 years.
Finance Director/Treasurer Matusiewicz explained the City has two tideland funds. He further
explained if revenue is allocated to the operating fund and there is more revenue than
expenditures, the money will need to be returned to the State Lands Commission. However,
Finance Committee Meeting Minutes
February 14, 2019
Page 3 of 9
the funding does not have to be returned on the Capital Fund, as it does not have the same
requirement to show expenses in excess of revenue.
Finance Director/Treasurer Matusiewicz clarified the 2019 $12.5 million General Fund one-time
transfer was from surplus funds earned in 2017, in response to Committee Member Collopy’s
inquiry. Deputy Finance Director Steve Montano clarified that $1.5 million was allocated to
seawalls.
Finance Director/Treasurer Matusiewicz reported 50% of surplus funds can be used to “pay
down” debt and fund one-time current needs in response to Committee Member Collopy’s
inquiry. Committee Member Tucker noted the expenditure would be taken out of the General
Fund.
Committee Member Collopy noted that he is struggling with the numbers in the plan, specifically
expenditures by chart by type and that the values are not adding up. Deputy Finance Director
Montano clarified that grant funding is not included in the pie chart.
Finance Director/Treasurer Matusiewicz reported project expenditures in 2020 are spread over
three years based on a formulated determination and there is a “lag” assumed. Committee
Member Collopy believes there will be a surplus if there are not much in the way of expenditures
happening in 2020.
Public Works Director Webb stated there are harbor projects of varying degrees and they tend
to come in big chunks. Committee Member Collopy expressed concern the plan is not exact as
a budget needs to be built around it. Deputy Finance Director Montano advised there is more
detail on the last page that shows project expenditures.
Finance Director/Treasurer Matusiewicz clarified it is at the City’s discretion as to what
revenues are applied to either fund and determinations are based on the City’s needs, as stated
by the City Attorney in response to Committee Member Tucker’s inquiry.
Finance Director/Treasurer Matusiewicz clarified that former Council Member Henn wanted to
give people some assurance that the 2010 dock and mooring rent increases benefitted the
harbor. The City adopted several resolutions which were then forwarded to the State Lands
Commission. He advised this can be further reviewed and staff can come up with a better
formula for funding.
Finance Director/Treasurer Matusiewicz advised that sea walls for Balboa Island were included
in the plan in response to Committee Member Stapleton’s inquiry. Public Works Director Webb
hoped to having funding to cover replacement for the sea walls in 25 years, but even at 15
years, the sea walls will need to be replaced.
Public Works Director Webb advised repair and maintenance have been completed on the
Balboa Island sea walls, in response to Mayor Dixon’s inquiry. He further advised that expected
grants would offset the cost of dredging of the lower harbor. The City has a high probability of
receiving the grant.
Finance Director/Treasurer Matusiewicz advised the amounts are “locked in” and are based on
when a developer chooses to enter into an agreement. Mayor Dixon expressed concern
regarding obtaining funding for sea wall replacement through a grant especially since they
cannot be applied for in ten years. She requested a footnote in the project showing which
grants are guaranteed. Public Works Director Webb advised grant funding not be programmed
too far in advance as there is no guarantee if the grant will be received.
Finance Committee Meeting Minutes
February 14, 2019
Page 4 of 9
Committee Member Collopy inquired about the viability of the 2030, 2031, 2032, 2022 and
2023 grants. Finance Director/Treasurer Matusiewicz advised none of the grants are
guaranteed except for the identified $800,000. Public Works Director Webb advised that
federal grants will not be funded at 100% and the City will be more successful in obtaining the
grants if they contribute matching funds. The funding model is showing the City pays 25% and
the federal grant will fund 75% of the project, with the hopes of moving the City liability closer
to 20%. He feels the County has a mechanism in place to fund that model and should have
the funding available in 2030 to pay for the dredging.
Committee Member Collopy noted it appears the City needs to have a plan for dredging which
would be 100% funded by the General Fund. If the City needs to use reserves, it should be
replenished with a grant. Chair O’Neill believes it is a question of how fast the Capital Fund
reserve can be built up and feels the dredging operation will need to be pushed back 3-5 years.
Committee Member Collopy noted in 2023, $10 million is needed to complete the dredging. A
decision needs to be made to determine if $10 million will be taken out of the General Fund
and if grant funds will be available to replenish the funding. Chair O’Neill noted General Fund
money is being put into the plan and City Council could still fund the dredging. Committee
Member Collopy stated the dredging plan is almost as complex as the dredging itself.
Finance Director/Treasurer Matusiewicz reported the Tidelands Capital Fund balance is $13.3
million as of June 30, 2018, in response to Mayor Dixon’s inquiry.
Chair O’Neill clarified that this item is a receive and file, however the discussion is important as
it factors into the City’s budget.
Chair O’Neill opened public comments. Noting there were no other members of the public who
elected to speak on this item, Chair O’Neill closed public comments.
There was no further action taken on this item.
B. FACILITIES FINANCIAL PLAN UPDATE
Summary:
The Finance Committee is charged with a variety of tasks including, but not limited to, reviewing
with staff on an annual basis the timing, means of financing, and fiscal impacts associated with
funding the high-priority projects designated in the Facilities Financing Plan (FFP). Staff
welcomes input and recommends that the Committee receive and file the attached FFP update
and provide staff any input regarding its financial solvency.
Recommended Action:
Staff welcomes input and recommends that the Committee receive and file the attached FFP
update and provide staff with any input regarding its financial solvency.
Chair O’Neill introduced this matter. Mayor Dixon inquired if the Newport Junior Guard Building
numbers should be entered even though the funding will be arranged. Chair O’Neill noted $3.5
million and $4 million should be entered and a 50/50 funding model should be noted for
planning purposes.
Mayor Dixon inquired as to why the Girls & Boys Club (East Bluff Park) is listed, as it is privately
funded. Public Works Director Web advised it has been historically on the list as the facility is
on City property and the City may assist with the parking lot project.
Mayor Dixon noted for the record that Development Agreement funding sources are
significantly diminishing moving forward.
Finance Committee Meeting Minutes
February 14, 2019
Page 5 of 9
Committee Member Stapleton inquired regarding the $30 million in 2030 from Uptown Newport.
Finance Director/Treasurer Matusiewicz advised the building slated for phase 2 is presently
being leased so the costs have not been projected.
Public Works Director Webb reported on the Balboa Yacht Basin which consists of three wood
buildings containing three apartments, 34 garages, office space, and a restaurant. He
recommends the Finance Committee complete a financial analysis on the property which
includes the best use for this building and determine if it needs to be added to the plan.
Finance Director/Treasurer Matusiewicz advised this asset is a single revenue stream shared
between tidelands and uplands revenue.
Harbor Resources Manager Chris Miller believes the marina has been there since 1986-1987
and should be replaced in less than 10 years. Mayor Dixon stated this is a general plan
opportunity and recommends a working group with City Council should be held for discussion.
Committee Member Tucker noted if this is tied to the general plan update there is no guarantee
the update will be adopted. Chair O’Neill stated this is not a Financial Committee decision and
will require a decision by the City Council.
Chair O’Neill opened public comments. Noting there were no other members of the public who
elected to speak on this item, Chair O’Neill closed public comments.
There was no further action taken on this item.
C. LONG-RANGE FINANCIAL FORECAST (LRFF)
Summary:
Staff will provide an update to the latest version of the LRFF.
Recommended Action:
Receive and file.
Deputy Finance Director Montano introduced the discussion of the City’s long range financial
forecast for the General Fund. He reported the City is using Whitebirch, a “Software as a
Service” (SaaS) based financial modeling platform which allows multi-user simultaneous
access and is more stable than Excel. The annual subscription fee is $12,500 which would be
paid out of the IT Internal service fund.
Deputy Finance Director Montano explained the baseline scenario is established upon on the
FY19 original budget, stripped of any “one-time” line items. The second step is to add the
projected revenue and expenditure impacts. The final step consists of “marrying” the selected
baseline assumptions with any combination of impacts to create scenarios.
Deputy Finance Director Montano discussed the historical and future projected growth rates of
the major General Fund revenue and expenditure categories.
Deputy Finance Director Montano provided an average historical 14-year growth for property
tax and the selected future projected baseline growth for each revenue and expenditure
category. He noted a one-time $5.4 million payment resulting from the dissolution of the
redevelopment agency in 2013.
Deputy Finance Director Montano reported sales tax revenue increased $3.9 million, or 12
percent, from the prior year and there is a current lull in automobile sales.
Deputy Finance Director Montano reported on the Transient Occupancy Tax (TOT) and stated
“Visit Newport Beach” (VNB) reported visitor spending in Newport Beach is keeping pace with
that of the State, but trailing Orange County overall. He reported the total TOT tax rate is 13%
Finance Committee Meeting Minutes
February 14, 2019
Page 6 of 9
compared to 15% for the City of Anaheim. Chair O’Neill reminded the Committee an increase
in the TOT requires a public vote.
Deputy Finance Director Montano reported on Salaries and Benefits and projects future growth
to be 3.8%, which includes overtime pay and health benefits. Chair O’Neill inquired if this
number is based on historical trends of City Council and their negotiations with public
associations. Deputy Finance Director Montano advised the projection included employees
receiving step increases, plus cost of living. Finance Director/Treasurer Matusiewicz advised
salaries are 40% of this category and it includes overtime pay and health benefits.
Deputy Finance Director Montano reported on the pension expenditure and noted the “fresh
start” in 2014 and the accelerated pension payments distort the historical growth average. He
advised moving forward, if the City implements pension Option 3A, there will be a “steady-
state” growth and the City would be able to pay off the unfunded pension liability.
Committee Member Tucker assumes the future return is equal to the discount rate. Finance
Director/Treasurer Matusiewicz confirmed this assumes all actuarial functions are paid down
in this scenario. Mayor Dixon questioned why pension costs remain at $10 million when the
unfunded liability is paid off and Finance Director/Treasurer Matusiewicz clarified this amount
represents the normal ongoing pension costs.
Chair O’Neill reaffirmed the Finance Committee made the recommended on Option 3A, but it
has not been adopted by the City Council.
Deputy Finance Director Montano discussed the maintenance and operations category and
stated the future annual projected growth is 5.3%. Abrupt historical changes in the chart are
due to outsourcing and changes to the cost allocation plan back in 2011. Finance
Director/Treasurer Matusiewicz advised the City has cut back 100 employees with those costs
shifting to maintenance and operations (M&O). He also advised a concerted effort was
underway to reduce the General Fund costs which were being allocated to the Tideland funds
which, fortunately, included reducing public safety costs.
Deputy Finance Director Montano presented four forecast scenarios. Scenario 1 includes
pension UAL contribution Option 3A which is set at a level $35 million dollar payment plan over
15 years. Scenario 2 is the same as Scenario 1, except assuming higher annual salary growth
than Scenario 1. Scenario 3 shows CalPERS assets underperforming by 1% (6% return) for
10 years. Scenario 4 shows CalPERS’ change in actuarial assumption, reducing the discount
rate permanently to a 6% return for the entire forecast period (20 years) and beyond.
Deputy Finance Director Montano advised Scenario 2 included a salary growth rate of 4%, in
response to Chair O’Neill’s and Committee Member Collopy’s inquiries. Chair O’Neill explained
the City Council has spent the last year negotiating with every bargaining association in the
City and they have not seen numbers like those presented in the model.
Deputy Finance Director Montano stated all projections are based on the FY19 original budget
and this model assumes 100% of revenues and expenditures are realized as forecasted each
year. He noted the model assumes the General Fund maintains its commitment to important
program such as FFP, CIP, Facilities Maintenance, 800 MHz Radio, Tidelands and the
Contingency Reserve.
Deputy Finance Director Montano presented Scenario 1 with a high-level aggregated view on
the twenty year projection. The model is doing what it should, which is to indicate the impact
of certain revenue and expenditure assumptions that may ultimately vary from actual results.
While deficits are apparent, they are not of a magnitude that is indicative of a structural
imbalance that would require a shift in the City’s service delivery model. Finally, management
would not present an “out of balance” budget for consideration. Finance Director/Treasurer
Finance Committee Meeting Minutes
February 14, 2019
Page 7 of 9
Matusiewicz noted these numbers are based on revenue and expenses’ compound annual
growth rate (CAGRs), in response to Mayor Dixon’s inquiry.
Committee Member Collopy noted the near term is interesting information, but the “out years”
are very important in determining if a structural change is necessary. He stated he is not
criticizing the model because the team has done a fantastic job developing it. Deputy Finance
Director Montano stated he has a slide that will show how this is corrected.
Finance Director/Treasurer Matusiewicz presented Scenario 2, which assumes a 4% salary
growth as opposed to 3%. It shows a bleaker scenario and he presented a new amortization
basis which solved some of the losses from 2015 and 2016. He advised since 2010, the City
has increased its contribution to mitigate the risk. He also noted there is a risk mitigation policy
in place with CalPERS that may further reduce the discount rate down to 6% over a period of
time. He advised CalPERS’ current plan whereby in the years where they beat the expected
return of 7%, there will be minor reductions in the discount rate over a period time.
Finance Director/Treasurer Matusiewicz reported on Scenario 3, noting changing the discount
rate over a period of time is fundamentally different than incurring losses over a ten-year period.
He explained the amortization schedule. If the City only incurred the ten year losses, it would
pay more with the principal going up. This would show up on a payment stream as an additional
cost. The expectation by professional advisors and others is that CalPERS will earn 6.2%, on
average.
Finance Director/Treasurer Matusiewicz reported on Scenario 4, which models CalPERS going
down to a discounted rate of 6% which will create an unfunded liability of an additional $129
million. This would increase the normal costs going forward.
Committee Member Tucker noted if CalPERS changed its rate from 7.5% to 7%, the change
in the unfunded liability would go from $7 million to $58 million. He is not surprised to see the
$129 million number in the worst case scenario.
Finance Director/Treasurer Matusiewicz noted going forward, the City could consider setting
money aside to mitigate the problem should it happen. He reported he asked the CIO of
CalPERS what her “gut feeling” is on the risk mitigation policy, and if he thought the Board
would continue to lower to 6% and she felt it was very possible.
Deputy Finance Director Montano presented fiscal strategies to show how the City might align
its budget should there be an economic downfall. He advised the average length of recession
over a 50-year period for Newport Beach was 4 and 1/3 quarters. He noted during the Great
Recession from March 2008 to January 2010, the moving average of City revenues declined
14.7%, which is not likely to be seen again. He also reported during the “Dot-Bomb” Recession
from February 2001 to May 2002, the moving average for revenues only declined 4.4%.
Deputy Finance Director Montano reported on fiscal strategies to address economic or other
short-term financial impacts. He reported the City can temporarily cut about 2-3% of its budget
in order to absorb unexpected financial impacts in a given year. The cut could be accomplished
by deferring maintenance of existing city assets, deferring purchases of new assets, cutting
back on some operating transfers out of the General Fund, and smaller cuts in the City’s
operating expenditures. This equates to approximately $7 million dollars.
Deputy Finance Director Montano reported the City could also use part of its Contingency
Reserve to be used in lieu, or in concert with, spending cuts in the event of an extreme event.
He also noted much of the City’s expenditure budget is contractually committed and cannot be
cut unilaterally. Last, he presented an example of what a 3% reduction in General Fund
expenditure would look like during 2020.
Finance Committee Meeting Minutes
February 14, 2019
Page 8 of 9
Deputy Finance Director Montano concluded the General Fund is projected to be in a financially
sound position over the next 20-year period. He noted any projected deficit in the model is not
reflective of likely and typical budget performance. He asserted short-term deficits can be
absorbed without long-term reliance on the Contingency Reserve if the City needed to go that
route.
Chair O’Neill opened public comments.
Alan Cashion inquired why the City was projecting 7% if the experts predicted 6.2%. Finance
Director/Treasurer Matusiewicz responded the reason they use 7% is they have a very long
investment horizon and the City’s plan in the short term is to expect 6.2% in earnings, however,
in the years beyond ten, they are expecting to earn 8%.
Noting there were no other members of the public who elected to speak on this item, Chair
O’Neill closed public comments.
There was no further action taken on this item.
D. WORK PLAN REVIEW
Summary:
Staff will review with the Committee the agenda topics scheduled for the remainder of the
calendar year.
Recommended Action:
Receive and file.
Chair O’Neill reported that the Harbor Department will be the next department scheduled for
the work plan review.
There was no further action taken on this item.
VI. FINANCE COMMITTEE ANNOUNCEMENTS ON MATTERS WHICH MEMBERS WOULD LIKE
PLACED ON A FUTURE AGENDA FOR DISCUSSION, ACTION OR REPORT (NON-
DISCUSSION ITEM)
Chair O’Neill reported the City Council would be the appropriate body to form a subcommittee to
analyze the Beacon Bay revenue model and its potential appraisal. Also, the annual meeting with
the auditors need to be scheduled.
Committee Member Tucker suggested a meeting be held on May 30, 2019, as the Finance
Committee needs to formally make a recommendation to City Council.
VII. AJOURNMENT
The Finance Committee adjourned at 4:55 p.m. to the next regular meeting of the Finance
Committee.
Filed with these minutes are copies of all materials distributed at the meeting.
The agenda for the Regular Meeting was posted on February 8, 2019, at 2:10 p.m., in the binder
and on the City Hall Electronic Board located in the entrance of the Council Chambers at 100 Civic
Center Drive.
Attest:
Finance Committee Meeting Minutes
February 14, 2019
Page 9 of 9
___________________________________ _____________________
Will O’Neill, Chair Date
Finance Committee
March 14, 2019, Finance Committee Agenda Comments
These comments on an item on the Newport Beach City Council Finance Committee agenda are
submitted by: Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660
(949-548-6229)
Item IV.A. MINUTES OF FEBRUARY 14, 2018
Changes to the draft minutes passages shown in italics are suggested in strikeout underline format.
Page 1, Item II, last paragraph: “Prior to public comments, Chair Will O’Neill reported
attendance at the Government Finance Officers Association (GFOA) conference in Newport
Beach where he spoke on financial policies.”
Page 2, Item A, paragraph 2 of text: “Mayor Diane Dixon noted there is are no external funding
sources for harbor-related capital expenses …”
Page 2, paragraph 3 from end: “Committee Member Collopy noted that in 2026 there would be
$40 million available at the end of the year to be spent in future years. Finance
Director/Treasurer Matusiewicz explained those funds are the net of the project expenditures.”
Page 3, first full paragraph: “In response to Committee Member Collopy’s inquiry, Finance
Director/Treasurer Matusiewicz clarified the 2019 $12.5 million General Fund one-time transfer
was from surplus funds earned in 2017, in response to Committee Member Collopy’s
inquiry.”
Page 3, paragraph 2: “Finance Director/Treasurer Matusiewicz reported 50% of surplus funds
can be used to “pay down” debt and fund one-time current needs in response to Committee
Member Collopy’s inquiry.” [Delete phrase or move to start of sentence, as in previous
correction]
Page 3, paragraph 4, last sentence: “Committee Member Collopy believes there will be a
surplus if there are is not much in the way of expenditures happening in 2020.”
Page 3, paragraph 6: “In response to Committee Member Tucker’s inquiry, Finance
Director/Treasurer Matusiewicz clarified it is at the City’s discretion as to what revenues are
applied to either fund and determinations are based on the City’s needs, as stated by the City
Attorney in response to Committee Member Tucker’s inquiry.” [“as stated by the City
Attorney” also appears misplaced, but I don’t know where it was intended to go. According to
the roll call at the start of the minutes, the City Attorney was not present and hence could not
have made a statement in response to an inquiry from Committee Member Tucker.]
Page 3, paragraph 8: “In response to Committee Member Stapleton’s inquiry, Finance
Director/Treasurer Matusiewicz advised that sea walls for Balboa Island were included in the
plan in response to Committee Member Stapleton’s inquiry. Public Works Director Webb
hoped to having have funding to cover replacement for the sea walls in 25 years, but even at
15 years, the sea walls will need to be replaced.”
March 14, 2019, Finance Committee Item IV.A comments - Jim Mosher Page 2 of 3
Page 3, paragraph 9: “In response to Mayor Dixon’s inquiry, Public Works Director Webb
advised repair and maintenance have been completed on the Balboa Island sea walls, in
response to Mayor Dixon’s inquiry.”
Page 4, paragraph 1, last sentence: “He feels the County has a mechanism in place to fund
that model and should have the funding available in 2030 to pay for the dredging.” [County ??]
Page 4, paragraph 3, sentence 3: “Chair O’Neill noted General Fund money is being put into the
plan and the City Council could still fund the dredging.”
Page 4, paragraph 4: “In response to Mayor Dixon’s inquiry, Finance Director/Treasurer
Matusiewicz reported the Tidelands Capital Fund balance is $13.3 million as of June 30, 2018,
in response to Mayor Dixon’s inquiry.”
Page 4, paragraph 6: “Chair O’Neill opened public comments. Noting there were no other
members of the public who elected to speak on this item, Chair O’Neill closed public
comments.”
Page 4, paragraph 2 from end: “Mayor Dixon inquired as to why the Girls & Boys Club (East
Bluff Eastbluff Park) is listed, as it is privately funded.” [I’m not sure what was said, but I think
it’s the “Boys & Girls Club.”]
Page 5, paragraph 2: “Public Works Director Webb reported on the Balboa Yacht Basin which
consists of three wood buildings containing three apartments, 34 garages, office space, and a
restaurant.” [The handout about this provided at the meeting is not currently in the archived
meeting materials.]
Page 5, paragraph 5, sentence 2: “Chair O’Neill stated this is not a Financial Finance
Committee decision and will require a decision by the City Council.”
Page 5, paragraph 6: “Chair O’Neill opened public comments. Noting there were no other
members of the public who elected to speak on this item, Chair O’Neill closed public
comments.”
Page 5, paragraph 5 from end: “Deputy Finance Director Montano explained the baseline
scenario is established upon based on the FY19 original budget, stripped of any “one-time” line
items.”
Page 6, paragraph 4: “Chair O’Neill reaffirmed the Finance Committee made the
recommended on Option 3A, but it has not been adopted by the City Council.”
Page 6, paragraph 3 from end: “In response to Chair O’Neill’s and Committee Member
Collopy’s inquiries, Deputy Finance Director Montano advised Scenario 2 included a salary
growth rate of 4%, in response to Chair O’Neill’s and Committee Member Collopy’s
inquiries.”
March 14, 2019, Finance Committee Item IV.A comments - Jim Mosher Page 3 of 3
Page 6, last sentence (continuing on page 7): “In response to Mayor Dixon’s inquiry, Finance
Director/Treasurer Matusiewicz noted these numbers are based on revenue and expenses’
compound annual growth rate (CAGRs), in response to Mayor Dixon’s inquiry.”
Page 7, paragraph 2, last sentence: “He advised CalPERS’ current plan whereby in the years
where they beat the expected return of 7%, there will be minor reductions in the discount rate
over a period time.” [?? I assume the last part should say “period of time”, but the sentence as
a whole still doesn’t make sense to me.]
Page 7, paragraph 6, last sentence: “He reported he asked the CIO of CalPERS what her “gut
feeling” is on the risk mitigation policy, and if he she thought the Board would continue to lower
to 6% and she felt it was very possible.”
Page 8, paragraph 3: “Alan Allen Cashion inquired why the City was projecting 7% if the
experts predicted 6.2%.”
3/14/2019
1
Harbor Department
2019‐20 Operational Plan
Finance Committee Presentation
March 14, 2019
Kurt Borsting, Harbormaster
Harbor Department –City of Newport Beach
Background
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•July 2017 ‐the City assumed responsibility of
the City’s moorings from the OC Sheriff’s Dept.
•At that time, Harbor Operations Division was
assigned to the Public Works Dept.
•Jan. 2018 ‐the Harbor Operations Division was
transferred to the City Managers Office.
•July 2018 ‐the City Council created a stand‐
alone Harbor Dept.
3/14/2019
2
Background
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•Customer‐focused service approach, with team
acting as “Harbor Ambassadors”.
•Increase engagement with Harbor users
•Address issues such as noise, nuisance
abatement, and supervision of Harbor activities
through education and code enforcement.
•Environmental improvements including trash
removal, containment of spills, and vessel
holding tank practices.
Organizational Chart
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
City Council
Harbor
Commission City Manager
Harbor Director
Department
Assistant (PT)CE Supervisor (FT)Lead Harbor
Services Workers (4 – 35/hour PT)
13 HSWs (PT)
Public Works
Director
Harbor Capital
Projects (FT)
Dock & Pier
Permitting
3/14/2019
3
Harbor Department Goals
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•Improve Public Information
•Effective Education and Enforcement of Harbor Codes
•Provide After Hours Customer Service
•Review Title 17 of the Newport Beach Municipal Code
•Marine Activities Permits ‐Improvement Opportunities
•Update Service Fee Schedules
•Verify Mooring Holder and Live Aboard Information
Goal #1 –Improve Public Information
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•Convey Important Information
•Promote Governmental Transparency
•Build Sense of Community and Engagement
•Create Brand Awareness
•Market Department Programs and Services
3/14/2019
4
Public Information / Stakeholder Outreach
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Harbormaster’s attendance and participation
in various stakeholder meetings (Newport
Mooring Association, local yacht club flag
officers, neighborhood associations, non‐
profit groups, business associations, etc.).
Measure: Arrange and host individual
introductory meetings with key groups.
* Logos shown here are intended as a representative sample of local stakeholder groups, not an all inclusive list.
Public Information / Stakeholder Outreach
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•Use of City’s social media
platform to promote safe use
of Harbor’s waterways,
Departmental programs,
recreational opportunities,
etc.
3/14/2019
5
Signage, Navigational Aids & Markers
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Convey information about the Harbor
Department rules, promote effective
wayfinding, and safety messaging on land
and within the harbor.
Measure: Conduct assessment of systems
now in field. Consulting with other
departments and agencies. Develop report
and recommendations based on findings.
Goal #2 –Effective Harbor Code Enforcement
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•Encourage Safe Use of Waterways
•Promote Fairness
•Protect Environment and Marine Life
•Safeguard City, State and Private Property (and Other Assets)
•Reinforce Community Standards (Improves Quality of Life)
3/14/2019
6
Summary data of activities since July 2017
Cases opened = 840
Cases closed = 596
Verbal Warnings = 195
Written Warning Notices = 618
Administrative Citations = 119
Permit Revocations = 3
Issuance of Marine Activities Permits = 15
Effective Harbor Code Enforcement
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Code Enforcement staffer,
Matt Cosylion performing
follow up inspection of
moored vessel
Effective Harbor Code Enforcement
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Code Enforcement staffer,
Matt Cosylion performing
follow up inspection of
moored vessel
Activities summary of December 2018
•158 new cases were opened
•Staff efforts focused on addressing expired
mooring overhauls and permittees with expired
insurance and/or registration on‐file.
•Seven meetings with area businesses took
place to review their operations, followed by
issuing updated Marine Activities Permits.
3/14/2019
7
Goal #3 –After Hours Customer Service
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•Respond to a Community Need
•Improve Departmental Effectiveness
•Promote Efficiency
•Maximize Resource Utilization
Expand Seasonal Operating Hours
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•Develop seasonal hours of operation
•Increase staffed service hours in Spring and Summer
months (traditionally the prime boating season).
After Hours Customer Service
Develop Trial After‐Hours Arrival Program
•Experiment with model similar to what is found RV
park and camp site operator.
•Provide pre‐screened guests required materials
through secured outdoor accessible equipment.
3/14/2019
8
Expand Use of City On‐Line Services
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Fully use existing City technologies, including City’s
website, “Quest” web‐based service platform,
“MyNB” mobile app and email notification system to
provide improved customer service 24 hours a day /
7 days a week.
Measure: Assess Harbor Department’s existing
presence on these platform, developing additional
content and functionality to assist Harbor
Department customers.
Goal #4 ‐Review Title 17 ‐Muni Code
•During the 2019‐2020, review of the Title 17 sections of the Newport Beach Municipal
Code will continue.
•Feedback and recommendations from various stakeholder groups and Harbor Commission
will be actively solicited as part of this process.
•Review and input should be solicited from the City Attorney's Office, as well as the
endorsement of a final set of recommendations by the Harbor Commission.
•Recommendations would be advanced to the City Council for their consideration.
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
3/14/2019
9
Goal #5 ‐Marine Activities Permits and
Requirements for Charter Boat Operators
•Through the Marine Activities Permitting process Department will
be placing greater emphasis soliciting information from operators
regarding their approach to staff training, equipment
maintenance, risk management, patron safety programs, and
emergency response protocols.
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Goal #6 ‐Updated Service Fee Schedule
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Council recently adopted updated Harbor fees and
rents following reviews and recommendations of a
third party appraiser (who assisted in determining
current market rates for Harbor service offerings).
During 2019‐20 Harbor Department will need to
actively market its services (such as Marina Park Guest
Slips) to provide the community benefit and revenue
targets associated with these offerings.
Continued assessment of fee schedule and actual cost
centers will also continue during this fiscal year.
Marina Park Guest Slips /
Harbor Department Office
3/14/2019
10
Goal #7 ‐Mooring Holder & Live Aboard Info.
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•Shore Moorings = 435
•Off Shore Moorings = 578
•Live Aboard Permittees = 51
•Records maintained include DMV registration, current
insurance certificate, mooring service dates
•In the case of live aboard permittees – annually verify
operability and seaworthiness, confirm working head
and secure holding tanks, with dye tab deposited in
tanks.
Harbor Department
staffer, Ned Lyon
poses for a
snapshot with one
of the Harbor’s live
aboard permittee’s
following their
annual vessel
inspection.
Equipping Dept. with Patrol & Work Boats
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•Harbor Department patrol activities are currently conducted
aboard three vessels, one 19’ Boston Whaler (City owned) and
two 21’ pontoon boats (used by the department through a rental
agreement).
•$150,000 budget allocation exists to upgrade these vessels and
eliminate the on‐going vessel rental expense (currently at
$12,000 annual).
•Staff recommendation is to utilize these funds to first purchase a
patrol boat (potentially two if existing budget supports this
scope). This “round one” approach supports current staff work
activities as well as reducing or eliminate the annual rental cost
center associated with the pontoon boats.
3/14/2019
11
Equipping Dept. with Patrol & Work Boats
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
•As a “round two” approach, during 2019‐20 fiscal year the
department would look to develop a bid specification to buy a
work boat. This vessel type would be used for non‐patrol
activities, including: removal of navigational hazards; sand line
maintenance; adjustments to buoys and other navigational aides;
short range towing of impounds; spill response; dewatering
distressed vessels; mooring ball services (not to included
overhauls), etc.
•As a longer term “round three” strategy, the department would
research and pursue development of a state‐of‐the‐art patrol
vessel, utilizing local community expertise in boat design, as well
as pursuing public‐private funding and development
opportunities for such an effort.
Harbor Department Budget
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Function 2018‐19
Original
Budget
Expenditures
2018‐19
Revised
Budget
Expenditures
2019‐20
Proposed
Expenditures
Harbor
Department $ 1,131,415 $ 1,231,906 $ 1,255,734
Function 2018‐19
Original
Personnel
FTE
2018‐19
Revised
Personnel
FTE
2019‐20
Proposed
Personnel
FTE
Harbor
Department
1 (F/T)
8.30 (P/T)
1 (F/T)
8.30 (P/T)
1(F/T)
8.30 (P/T)
19,531 hours 19,531 hours 19,531 hours
3/14/2019
12
Harbor Department Budget
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Two program enhancements are requested as part of the 2019‐
20 budget. They include:
•$82,500 for property management fees, associated with
Balboa Yacht Basin Marina. Current baseline budget funding
only supports six months of this service. If approved, these
additional monies would represent an on‐going expense to
the Harbor Department.
•$100,000 for acquisition of the previously referenced work‐
boat. This is a one‐time funding request.
Harbor Department Budget
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
Saleries / Wages
Benefits
Contracted Services
Utilities
Supplies and Materials
Maintenance and Repair
Travel and Training
General Expenses
Internal Services
Insurance Reserve
Capital Expenditures
$575,737
$123,165
$198,772
$50,000
$12,000
$171,500
$6,500
$39,250 $69,530
$4,280
$5,000
2019‐20 Proposed Expenditures
3/14/2019
13
Harbor Department Budget
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
$575,737
$123,165
$198,772
$50,000
$12,000
$171,500
$6,500
$39,250 $69,530
$4,280
$5,000
2019‐20 Proposed Expenditures Salaries / Wages
Full Time Salaries
Part Time Wages
= $ 575,737
$ 146,993
$ 428,774
Benefits = $ 123,165
Harbor Department Budget
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
$575,737
$123,165
$198,772
$50,000
$12,000
$171,500
$6,500
$39,250 $69,530
$4,280 $5,000
2019‐20 Proposed Expenditures
* Does not include program enhancement request for
an additional $82,500 for property management
services.
Contracted Services
Property Management
Equipment Rental
Professional Services
Other
= $198,772
$82,500
$12,000
$89,272
$15,000
*
3/14/2019
14
Harbor Department Budget
City of Newport Beach ‐Harbor Department
2019‐20 Operational Plan
$575,737
$123,165
$198,772
$50,000
$12,000
$171,500
$6,500
$39,250 $69,530
$4,280
$5,000
2019‐20 Proposed Expenditures
Maintenance & Repairs
Auto Svc.
Maintenance & Repairs
MP Maintenance
Marina Maintenance
= $171,500
$41,500
$100,000
$5,000
$25,000
Harbor Department
2019‐20 Operational Plan
Finance Committee Presentation
March 14, 2019
Kurt Borsting, Harbormaster
Harbor Department –City of Newport Beach
CITY OF NEWPORT BEACH
FINANCE COMMITTEE
STAFF REPORT
Agenda Item No. 5B
March 14, 2019
TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE
FROM: Dan Matusiewicz, Finance Director and City Treasurer
949-644-3126, danm@newportbeachca.gov
SUBJECT: APPOINTMENT OF SUBCOMMITTEE TO REVIEW BEACON BAY
MARKET STUDIES
SUMMARY:
At the February 12, 2019, City Council Study Session, the City Council requested the
Finance Committee create a subcommittee of citizen members to review/reconcile the
Beacon Bay market studies prepared by the City’s consultant, Keyser Marston Associates
and the resident proponent study.
Furthermore, if the home owners association wishes to pay for a “new appraisal” as
requested in the State Lands Commission’s 9/5/2018 letter to the City included in the City
Council packet, the City Council requested that the subcommittee also evaluate the
appraisal.
The subcommittee will report back to the full City Council, rather than the Finance
Committee, with its recommendations. Finance Committee Chair Will O’Neill
recommended that this subcommittee be comprised of Committee Members Tucker,
Collopy, and Reed.
RECOMMENDED ACTION:
Appoint subcommittee to evaluate the Beacon Bay market studies and make
recommendations to the City Council.
Appointment of Subcommitee to Review Beacon Bay Market Studies
March 14, 2019
Page 2
Prepared and Submitted by:
/s/ Dan Matusiewicz
_____________________________
Dan Matusiewicz
Finance Director and City Treasurer
FY20 Revenue Outlook
Finance Committee Presentation
March 14, 2019
Presentation Overview
•General Fund
•Tidelands and Tidelands Capital Funds
•Water and Water Capital Funds
•Wastewater and Wastewater Capital Funds
General Fund Revenues (Fund 010)
$113,601,474
$35,697,090
$24,433,131
$20,637,251
$11,597,886
$11,139,797
$4,918,412
$3,475,428 $1,842,767
$590,953 FY20 Projection
$227,934,189
Property Taxes 49.8%Sales Tax 15.7%TOT 10.7%
Charges for Services 9%Other Taxes 5.1%Use of Money and Property 4.9%
Licenses and Permits 2.2%Fines, Forfeitures & Penalties 1.5%Intergovernmental 0.8%
Other Revenues 0.3%
General Fund Revenues (Fund 010)
General Fund Revenues FY18 Actual FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Property Taxes $101,593,290 $108,118,614 6.42%$113,601,474 5.07%
Sales Tax $35,038,846 $36,997,648 5.59%$35,697,090 -3.52%
TOT $22,833,614 $23,396,103 2.46%$24,433,131 4.43%
Other Taxes $11,865,168 $11,454,101 -3.46%$11,597,886 1.26%
Licenses and Permits $4,888,630 $4,868,483 -0.41%$4,918,412 1.03%
Intergovernmental $3,680,743 $3,352,179 -8.93%$1,842,767 -45.03%
Charges for Services $20,622,382 $20,305,669 -1.54%$20,637,251 1.63%
Fines, Forfeitures & Penalties $3,325,931 $3,531,888 6.19%$3,475,428 -1.60%
Use of Money and Property $10,527,764 $10,708,220 1.71%$11,139,797 4.03%
Other Revenues $2,140,097 $1,204,563 -43.71%$590,953 -50.94%
Total General Fund Revenue $216,516,465 $223,937,468 $227,934,189
Year over Year (YOY) Change $7,421,003 $3,996,721
YOY % Change 3.43%1.78%
Property Taxes
•City gets about 17.15% of the 1%
•For every $1 property tax collected, Newport
Beach gets $0.1715
•49.8% of General Fund revenues (FY20)
•Includes different categories such as
secured, unsecured, supplemental
•Secured makes up 85% of total revenues
within property tax
•FY20 projecting a 5% increase over FY19
Property Taxes
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Property Taxes $88,851,313 $94,350,181 6.19%$101,593,290 7.68%$108,118,614 6.42%$113,601,474 5.07%
Year over Year (YOY) Change $5,498,868 $7,243,109 $6,525,324 $5,482,860
Sales Tax
•City receives 1% of 7.75% sales tax
•15.7% of General Fund revenues
(FY20)
•30% of sales tax revenues come
from Autos & Transportation
•FY19 mid-year estimate & FY20
projection provided by City’s sales
tax consultant, HdL
Sales Tax Rate Breakdown
Sales Tax by Major Industry Group
Sales Tax
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change
FY18 Actual YOY %
Change
FY19 Estimate YOY %
Change
FY20 Projection YOY %
Change
Sales Tax $36,808,460 $33,702,895 -8.44%$35,038,846 3.96%$36,997,648 5.59%$35,697,090 -3.52%
Year over Year (YOY) Change -$3,105,565 $1,335,951 $1,958,802 -$1,300,558
•FY20 Spending is slowing –Economic uncertainty
•Rising interest rates, higher fuel prices, growing cost of general goods
•Auto sales are expected to level off/decline in future quarters
•FY19 & FY18 California Department of Tax and Fee Administration (CDTFA) implemented
new software –caused timing issues
•FY18 One time audit correction of almost $1 million
•FY16 One time extra payment from end of Triple Flip
•FY15 Actuals $32,878,836
Transient Occupancy Tax (TOT)
•10% of rent
•10.7% of General Fund revenues
(FY20)
•Includes hotel and residential, less
payments to Visit Newport Beach Inc.
•FY20 projecting a 4.43% increase over
FY19
TOT
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
TOT $21,083,199 $22,303,303 5.79%$22,833,614 2.38%$23,396,103 2.46%$24,433,131 4.43%
Year over Year (YOY) Change $1,220,104 $530,311 $562,489 $1,037,028
Other Taxes
•5.1% of General Fund revenues (FY20)
•Includes utility, cable, and solid waste franchise taxes, business license,
marine charter, and property tax transfers
•Property Transfer Tax is down, sales slowing
Other Taxes
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change
FY20 Projection YOY %
Change
Other Taxes $11,018,194 $11,205,467 1.70%$11,865,168 5.89%$11,454,101 -3.46%$11,597,886 1.26%
Year over Year (YOY) Change $187,273 $659,701 -$411,067 $143,785
Licenses and Permits
•2.2% of General Fund revenues (FY20)
•Includes dog licenses, street closure permits, building related permits
•Building Permit revenue is about 62% of Licenses and Permits total
•Predicting Building Permit revenue in FY20 to be flat
Licenses and Permits
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Licenses and Permits $4,226,104 $5,272,400 24.76%$4,888,630 -7.28%$4,868,483 -0.41%$4,918,412 1.03%
Year over Year (YOY) Change $1,046,297 -$383,770 -$20,147 $49,929
Intergovernmental
•0.8% of General Fund revenues (FY20)
•Includes revenue from public safety ½ cent sales tax, reimbursement from the state for Fire strike teams, GEMT and Medi-cal IGT reimbursements (emergency medical services)
•Revenue isn’t budgeted until awarded or known, FY20 will likely be higher
Intergovernmental
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Intergovernmental $2,355,267 $2,284,775 -2.99%$3,680,743 61.10%$3,352,179 -8.93%$1,842,767 -45.03%
Year over Year (YOY) Change -$70,492 $1,395,968 -$328,564 -$1,509,412
Charges for Services
•9% of General Fund revenues (FY20)
•Cost of service fees
•FY20 projected to be up 1.6% over
FY19 mid-year estimate
Charges for Services
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Charges for Services $19,501,129 $19,881,314 1.95%$20,622,382 3.73%$20,305,669 -1.54%$20,637,251 1.63%
Year over Year (YOY) Change $380,185 $741,068 -$316,713 $331,582
Fines, Forfeitures & Penalties
•1.5% of General Fund revenues
(FY20)
•Includes Police and Fire false alarms,
library, parking, and administrative
fines; delinquency penalties
•FY20 Projecting a 1.6% decrease in
revenue over FY19 mid-year estimate
Fines, Forfeitures & Penalties
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Fines, Forfeitures & Penalties $3,809,362 $3,712,296 -2.55%$3,325,931 -10.41%$3,531,888 6.19%$3,475,428 -1.60%
Year over Year (YOY) Change -$97,066 -$386,365 $205,957 -$56,460
Use of Money and Property
•4.9% of General Fund revenues (FY20)
•Includes parking lot and rental
property revenues and investment
income
•Projecting 4% increase in FY20
revenues over FY19 mid-year estimate
Use of Money and Property
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Use of Money and Property $9,539,844 $9,743,290 2.13%$10,527,764 8.05%$10,708,220 1.71%$11,139,797 4.03%
Year over Year (YOY) Change $203,445 $784,474 $180,456 $431,577
Other Revenues
•0.3% of General Fund revenues (FY20)
•Includes sale of maps & publications, damage to city property, donations & contributions, bad debt
•Projecting decrease for FY20
Other Revenues
General Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Other Revenues $1,936,235 $2,381,215 22.98%$2,140,097 -10.13%$1,204,563 -43.71%$590,953 -50.94%
Year over Year (YOY) Change $444,980 -$241,118 -$935,534 -$613,610
Tidelands Fund Revenues (Fund 100)
Tidelands Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Use of Money and Property $10,794,105 $11,220,233 3.95%$11,899,226 6.05%$12,073,179 1.46%$12,014,532 -0.49%
Licenses and Permits $40,673 $105,387 159.11%$57,303 -45.63%$61,896 8.02%$64,025 3.44%
Fines, Forfeitures & Penalties $5,620 $3,549 -36.85%$16,896 376.08%$30,179 78.62%$19,032 -36.94%
Charges for Services $10,798 $5,856 -45.77%$11,772 101.02%$15,856 34.69%$14,000 -11.71%
Other Revenues -$2,513 $28,933 -1251.19%$5,800 -79.96%$3,461 -40.32%-$590 -117.05%
Transfers In General Fund $5,971,756 $6,762,805 13.25%$8,229,388 21.69%TBD N/A TBD N/A
Totals $16,820,437 $18,126,763 $20,220,385 $12,184,571 $12,110,999
Year over Year (YOY) Change $1,306,325 $2,093,622 $193,574 -$73,572
YOY % Change 7.77%11.55%1.61%-0.60%
Tidelands Capital Fund Revenues (Fund 101)
Tidelands Capital Fund Revenue FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Use of Money and Property $2,460,030 $2,346,097 -4.63%$2,729,380 16.34%$3,080,160 12.85%$3,596,874 16.78%
Transfers In General Fund $0 $0 N/A $6,000,000 N/A $4,000,000 -33.33%$3,500,000 -12.50%
Other Revenues $0 $350,000 N/A $0 -100.00%$0 N/A $0 N/A
Totals $2,460,030 $2,696,097 $8,729,380 $7,080,160 $7,096,874
Year over Year (YOY) Change $236,066 $6,033,283 -$1,649,220 $16,714
YOY % Change 9.60%223.78%-18.89%0.24%
Water Fund Revenues (Fund 701)
Water Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Charges for Services $24,368,646 $25,223,228 3.51%$26,665,731 5.72%$27,618,001 3.57%$27,897,399 1.01%
Use of Money and Property $292,390 $47,308 -83.82%$110,484 133.54%$193,196 74.86%$193,196 0.00%
Intergovernmental $0 $59,521 N/A $225,432 278.74%$100,000 -55.64%$100,000 0.00%
Fines, Forfeitures & Penalties $0 $16,355 N/A $117,247 616.89%$98,811 -15.72%$98,653 -0.16%
Other Revenues $2,506,306 $72,203 -97.12%-$77,218 -206.95%$72,495 -193.88%$64,000 -11.72%
Totals $27,167,342 $25,418,614 $27,041,677 $28,082,503 $28,353,248
Year over Year (YOY) Change -$1,748,728 $1,623,062 $1,040,826 $270,745
YOY % Change -6.44%6.39%3.85%0.96%
Water Capital Fund Revenues (Fund 702)
Water Capital Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Use of Money and Property $42,372 $22,599 -46.66%$55,772 146.79%$60,173 7.89%$60,173 0.00%
Transfers In $4,324,911 $4,452,977 2.96%$4,608,832 3.50%$4,770,141 3.50%TBD N/A
Totals $4,367,283 $4,475,576 $4,664,604 $4,830,314 $60,173
Year over Year (YOY) Change $108,294 $189,028 $165,710 $0
YOY % Change 2.48%4.22%3.55%0.00%
Wastewater Fund Revenues (Fund 711)
Wastewater Fund Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Charges for Services $3,041,421 $3,163,091 4.00%$3,439,278 8.73%$3,660,000 6.42%$4,010,000 9.56%
Fines, Forfeitures & Penalties $0 $0 N/A $16,847 N/A $14,310 -15.06%$14,000 -2.17%
Other Revenues $24,341 -$1,977 -108.12%$10,352 -623.75%$21,880 111.36%$13,000 -40.59%
Use of Money and Property $13,697 $9,414 -31.27%$12,916 37.20%$5,098 -60.53%$7,500 47.12%
Transfers In General Fund $0 $3,500,000 N/A $0 -100.00%$0 N/A $0 N/A
Totals $3,079,459 $6,670,528 $3,479,393 $3,701,288 $4,044,500
Year over Year (YOY) Change $3,591,069 -$3,191,135 $221,895 $343,212
YOY % Change 116.61%-47.84%6.38%9.27%
Wastewater Capital Fund Revenues (Fund 712)
Wastewater Capital Fund
Revenues FY16 Actual FY17 Actual YOY %
Change FY18 Actual YOY %
Change FY19 Estimate YOY %
Change FY20 Projection YOY %
Change
Use of Money and Property $16,644 -$1,569 -109.43%$5,733 -465.40%$1,556 -72.86%$1,556 0.00%
Transfers In Sewer Enterprise Fund $573,762 $750,000 30.72%$500,000 -33.33%$1,033,000 106.60%TBD N/A
Totals $590,405 $748,431 $505,733 $1,034,556 $1,556
Year over Year (YOY) Change $158,026 -$242,698 $528,823 $0
YOY % Change 26.77%-32.43%104.57%0.00%
Questions?
Finance Committee Presentation
March 14, 2019
City TOT % Additional Information
Anaheim 15%
Beverly Hills 14%
Costa Mesa 8%
Huntington Beach 10% + 4% Huntington Beach Hotel/Motel Business Improvement District
Irvine 8% + 2% Irvine Hotel Improvement District Assessment
Laguna Beach 12% + 2% Business Improvement Assessment
Los Angeles 14%
Santa Barbara 12% 10% Unrestricted + 2% Restricted Creeks Restoration and Water Quality Improvement
Santa Monica 14%
Transient Occupancy Tax (TOT) Rates
3/7/19
Scheduled Date Agenda Title Agenda Description
Harbor and Beaches Master Plan Update Review Harbor and Beaches Master Plan for financial solvency based on
known Council priorities.
Facilities Financial Plan Update Review Facilities Financial Plan for financial solvency based on known Council
priorities.
Long-Range Financial Forecast (LRFF)Staff will provide an update to the latest version of the LRFF.
Work Plan Review Staff will review with the Committee the agenda topics scheduled for the
remainder of the calendar year.
Review of Operating Budget (Harbor
Department)
The goal of this presentation will be to familiarize members of the Finance
Committee with the elements of the FY 2018-19 Harbor Department budget,
provide opportunity for questions, and to gain clarity in the funding allocations
for departmental programs.
Appointment of Finance Subcommittee to
Review Beacon Bay Market Studies
At the February 12, 2019, City Council Study Session, the City Council
requested the Finance Committee create a subcommittee of citizen members
to review/reconcile the Beacon Bay market studies prepared by the City’s
consultant, Keyser Marston Associates and the resident proponent study. The
subcommittee will report back to the full City Council with its recommendations.
Review of Revenue Assumptions Staff will provide of an overview for revenue assumptions for the FY 2019-20
Proposed Budget.
Work Plan Review Staff will review with the Committee the agenda topics scheduled for the
remainder of the calendar year.
Thursday, April 25, 2019 Proposed FY 2019-20 Budget Overview Staff will provide an overview of the Proposed FY 2019-20 Operating Budget
and or CIP.
Thursday, May 16, 2019 Proposed FY 2019-20 Budget Overview Staff will provide an overview of the Proposed FY 2019-20 Operating Budget
and or CIP.
Tuesday, May 28, 2019 JOINT CITY COUNCIL/FINANCE COMMITTEE
MEETING
Thursday, June 27, 2019 TBD
June
May
City of Newport Beach Finance Committee Work Plan 2018-19
February
March
April
Thursday, March 14, 2019
Thursday, February 14, 2019
I:\Users\FIN\Shared\Admin\Finance Committee\WORKPLAN\2019\2019 FC Workplan 1