HomeMy WebLinkAboutFinance Committee Agenda Packet - October 10, 2024CITY OF NEWPORT BEACH
FINANCE COMMITTEE AGENDA - Final
Community Room - 100 Civic Center Drive, Newport Beach, CA 92660
Thursday, October 10, 2024 - 3:00 PM
Finance Committee Members:
Joe Stapleton, Mayor Pro Tem / Chair
Will O' Neill, Mayor
Noah Blom, Council Member
Allen Cashion, Committee Member
William Collopy, Committee Member
Keith Curry, Committee Member
Nancy Scarbrough, Committee Member
Staff Members:
Grace K. Leung, City Manager
Jason Al-Imam, Finance Director/Treasurer
Shelby Burguan, Deputy Finance Director
Marlene Burns, Buyer
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
Director/Treasurer 24 hours prior to the scheduled Finance Committee meeting.
NOTICE REGARDING PUBLIC PARTICIPATION
Questions and comments may also be submitted in writing for the Finance Committee’s consideration by sending them
to Jason Al-Imam, Finance Director/Treasurer, at jalimam@newportbeachca.gov. To give the Finance Committee
adequate time to review your questions and comments, please submit your written comments by no later than 5 p.m.
the day prior to the Finance Committee meeting. All correspondence will be made part of the record.
NOTICE TO THE PUBLIC
The Finance Committee meeting is subject to the Ralph M. Brown Act. Among other things, the Brown Act requires that
their agenda be posted at least twenty-four (24) hours in advance of each special 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.
It is the intention of the City of Newport Beach 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, the
City of Newport Beach will attempt to accommodate you in every reasonable manner. If requested, this agenda will be
made available in appropriate alternative formats to persons with a disability, as required by Section 202 of the
Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal rules and regulations adopted in
implementation thereof. Please contact the City Clerk’s Office 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) 644-3127 or
jalimam@newportbeachca.gov.
1
October 10, 2024
Page 2
Finance Committee Meeting
I.CALL MEETING TO ORDER
II.ROLL CALL
III.PLEDGE OF ALLEGIANCE
IV.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.
V.CONSENT CALENDAR
MINUTES OF SEPTEMBER 12, 2024A.
Recommended Action:
Approve and file.
DRAFT MINUTES OF SEPTEMBER 12, 2024
VI.CURRENT BUSINESS
OVERVIEW OF PUBLIC WORKS DEPARTMENT BUDGETA.
Summary:
Staff will provide the Committee with a presentation covering the budget for the
Public Works Department.
Recommended Action:
Receive and file.
STAFF PRESENTATION
YEAR END BUDGET RESULTS AND SURPLUS ALLOCATIONB.
Summary:
Staff will provide a presentation regarding the year-end budget results for Fiscal Year
2023-24 and recommendations for allocation of any year-end budget surplus.
Recommended Action:
Review and discuss this report and provide any recommendations for consideration
by the City Manager and City Council.
STAFF REPORT
STAFF PRESENTATION
2
October 10, 2024
Page 3
Finance Committee Meeting
BUDGET AMENDMENTS FOR QUARTER ENDING SEPTEMBER 30, 2024C.
Summary:
Staff will report on the budget amendments from the prior quarter.
Recommended Action:
Receive and file.
STAFF REPORT
ATTACHMENT A
WORK PLAN REVIEWD.
Summary:
Staff and Finance Committee to review the proposed work plan and identify matters
that members would like placed on a future Agenda for discussion, action, or report.
Recommended Action:
Receive and file.
WORK PLAN
VII.ADJOURNMENT
3
Finance Committee Regular Meeting Minutes September 12, 2024
Page 1 of 5
I. CALL MEETING TO ORDER The meeting was called to order at 3:00 p.m. by Mayor Pro Tem/Chair Stapleton. II. ROLL CALL
PRESENT: Joe Stapleton, Mayor Pro Tem/Chair Will O’Neill, Mayor Noah Blom, Councilmember Allen Cashion, Committee Member Keith Curry, Committee Member Nancy Scarbrough, Committee Member
ABSENT: William Collopy, Committee Member (excused) STAFF PRESENT: Grace K. Leung, City Manager
Jason Al-Imam, Finance Director/Treasurer Shelby Burguan, Deputy Finance Director
Brittany Cleberg, Assistant Management Analyst Abigail Marin, Budget Analyst Anthony Alannouf, Budget Analyst
MEMBERS OF THE Charles Klobe PUBLIC: Jim Mosher
Mile Patricola III. PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Committee Member Keith Curry. IV. PUBLIC COMMENTS A. ADDITIONAL MATERIALS RECEIVED
Mayor Pro Tem/Chair Stapleton opened public comments.
Jim Mosher, Newport Beach resident, spoke about the retention bonuses recently approved by the City Council and inquired whether the Police Chief was eligible for the bonus. He also commented
on the ordinance requiring brick-and-mortar businesses to accept cash. In addition, Mr. Mosher pointed out that the final budget was approved in June. However, he could not locate the adopted
budget on the city’s website.
Finance Director/Treasurer Jason Al-Imam noted that within a few days the adopted budget would be posted online.
Seeing no others, Mayor Pro Tem/Chair Stapleton closed public comments.
V. CONSENT CALENDAR A. MINUTES OF MAY 30, 2024 Recommended Action: Approve and file.
Mayor Pro Tem/Chair Stapleton requested the motion incorporate the amendments submitted by Jim Mosher.
4
Finance Committee Regular Meeting Minutes September 12, 2024
Page 2 of 5
MOTION: Committee Member Keith Curry moved to approve the minutes of May 30, 2024, as amended and incorporating Mr. Mosher’s changes, seconded by Councilmember Noah Blom. The motion carried as follows: AYES: Cashion, Scarbrough, Blom, Stapleton, O’Neill, Curry NOES: None
ABSENT: Collopy (excused) ABSTAIN: None VII. CURRENT BUSINESS A. ANNUAL REVIEW OF INVESTMENT POLICY Recommended Action: Review and discuss this report and recommend that the City Council formally approve the proposed changes by adopting a resolution. These changes are in furtherance of the City’s investment objectives.
Finance Director/Treasurer Al-Imam explained there was one minor change proposed in the Investment Policy that is listed in the Glossary section due to a change in the Government
Code. An investment’s term will be measured from the settlement date to final maturity rather than from the trade date to final maturity. Mayor Pro Tem/Chair Stapleton inquired about the change made in April. Finance
Director/Treasurer Al-Imam explained the exact same change was touched on a year ago, and additional changes were made in April to remove LA County as an authorized investment
vehicle. However, the changes that were made a year ago to the glossary section of the policy were overwritten when the updates were made to the policy in April.
Mayor Pro Tem/Chair Stapleton opened public comments.
Mr. Jim Mosher, Newport Beach resident, commented about the changes he submitted, and
he was unclear if the change being proposed to the glossary was part of the formal policy.
Finance Director/Treasurer Al-Imam responded that the change is part of the Investment Policy. He explained that, when it is taken before City Council for consideration, the Council
approves a resolution, which incorporates the Investment Policy as an exhibit to the resolution and includes the glossary.
Committee Member Cashion asked about achieving a certain benchmark rate of return and if
that is a stated number or does it fluctuate. Finance Director/Treasurer Al-Imam explained they use two benchmarks; the 1-5 Year index and a 1-3 Year index, which are tracked because they
have different weighted average maturities and over time either index may better align with the weighted average maturity of the City’s pooled investments.
Genny Lynkiewicz, CFA, Senior Portfolio Manager for Chandler Asset Management added that the performance page in the investment report shows the rate of return for the benchmark indexes and the City’s investment portfolio over the past ten years. Seeing no others, Mayor Pro Tem/Chair Stapleton closed public comments. MOTION: Councilmember Noah Blom moved to approve the recommendation that City Council
formally approve the proposed changes by adopting a resolution, seconded by Committee Member Nancy Scarbrough. The motion carried as follows:
AYES: Cashion, Scarbrough, Blom, Stapleton, O’Neill, Curry NOES: None ABSENT: Collopy (excused) ABSTAIN: None
5
Finance Committee Regular Meeting Minutes September 12, 2024
Page 3 of 5
B. ANNUAL REVIEW OF INVESTMENT PERFORMANCE Recommended Action: Receive and file. Genny Lynkiewicz, CFA, Senior Portfolio Manager for Chandler presented the City’s fiscal year-end (FYE) investment report and reported that recent economic data suggests positive
but slower growth this year fueled by consumer spending. While the consumer has been resilient, declining savings rates, growing credit card debt, higher delinquencies, and a moderating labor market pose potential headwinds to future economic growth. Inflationary trends are subsiding, but core levels remain above the Federal Reserve’s target. The labor market is showing signs of cooling. For example, the U.S. economy added 142,000 jobs in August, below expectations of 165,000. In July, the Consumer Price Index (CPI) rose 0.2%
month-over-month and 2.9% year-over-year, down from 3.0% in June and lower than expected. The Core CPI, which excludes volatile food and energy components, was up 0.2% month-over-month and 3.2% year-over-year in July, down from 3.3% in June. The Personal Consumption Expenditures (PCE) Index rose 0.2% from the previous month and 2.5% year-over year in July.
Second quarter GDP increased at an annualized rate of 3.0%, revised up from the advanced estimate of 2.8%. The update reflects an upward revision to consumer spending. It was
explained that bond yields have a direct impact on the City’s investment portfolio and investment returns. Ms. Lynkiewicz continued by discussing the City’s investment performance over the past year and went through the investment portfolio presentation and noted that a statement of compliance is also included in the report, which shows the City is in compliance
with the Investment Policy and the Government Code.
Committee Member Keith Curry inquired what the plans are for the T-bills as they roll off. Ms. Lynkiewicz answered they are directed by City staff as to what is most prudent from a liquidity
standpoint, and that there has been some desire for diversification in longer termed investments. They must constantly revisit the City’s cashflow needs to see if there are any
assets that can be invested longer term or if it will be needed for current and upcoming projects.
Finance Director/Treasurer Al-Imam added that, when the T-bills were purchased during the lower rate environment a few years ago, the portfolio became overextended with longer-term
investments. Since 2022, staff has worked to ensure that the portfolio is structured to provide sufficient liquidity.
Mayor Pro Tem/Chair Stapleton inquired about credit risks and safety and if there was any way
to push duration more long term on investments now while the rates are high if they suspect the rates will be lower in the future. Finance Director/Treasurer Al-Imam answered that Ms.
Lynkiewicz reaches out regularly if she sees an opportunity for an investment that makes sense to yield it more long-term.
Mayor Pro Tem/Chair Stapleton commented it is a great aggregator tool to put it all together
but suggested it might make sense to see what the City’s returns would look like to pull out what the City was managing on their own and not include the hundred million liquidity portion
of the portfolio with the portion that is actively invested.
Councilmember Blom inquired what the largest source of revenue is. Finance Director/Treasurer Al-Imam replied that property tax is the largest source of revenue. The City receives property tax installments periodically throughout the year with a majority of its property tax revenue received in April, November and December. Therefore, the City’s investment
portfolio generally has negative cashflows from May through November until the City’s receives the property tax installment payments in November and December.
Mayor Pro Tem/Chair Stapleton opened the item to public comments.
6
Finance Committee Regular Meeting Minutes September 12, 2024
Page 4 of 5
Seeing none, Mayor Pro Tem/Chair Stapleton closed public comments and received and filed the report. C. BUDGET AMENDMENTS FOR QUARTER ENDING JUNE 30, 2024 Recommended Action: Receive and file.
Finance Director/Treasurer Al-Imam stated the budget amendments are routine in nature. Committee Member Scarbrough inquired about the real property general fund and what were Ruby’s Balboa Pier Concession and the high school. Deputy Finance Director Shelby Burguan stated it was the outsourcing of the auditorium and that the amount related to Ruby’s was associated with refuse collection.
Mayor Pro Tem/Chair Stapleton opened public comments. Seeing none, Mayor Pro Tem/Chair Stapleton closed public comments and received and filed
the report. D. DEPARTMENTAL OVERVIEWS Recommended Action: Based on an examination of the departments that have been reviewed over the past five years, it is recommended that the Utilities Department be reviewed at the Finance Committee meeting in January 2025.
Finance Director/Treasurer Al-Imam stated in October they will be presenting on the Public
Works Department. Approximately seventy-five percent of all funds are expended on public works, fire, police, and utilities. Over the last five years all departments have been reviewed.
However, the Utilities Department has not been reviewed since 2021. Therefore, staff recommends that the Utilities Department be reviewed by the Finance Committee in January.
The Committee agreed with staff’s recommendation.
Mayor Pro Tem/Chair Stapleton opened public comments.
Mr. Mosher commented that there were two slices of the pie that were too small to be labeled
and mentioned the City Attorney’s Department had never been reviewed or discussed and their impact on the City’s finances is probably considerable. He indicated that a review might be
useful.
Seeing no others, Mayor Pro Tem/Chair Stapleton closed public comments. E. WORK PLAN REVIEW Recommended Action: Receive and file.
A deep dive into the Public Works Department will take place at the next regularly scheduled
meeting.
There was a question about the size of the surplus for Fiscal Year 2023-2024. Finance Director/Treasurer Al-Imam stated that the year-end results for Fiscal Year 2023-2024 are currently under review and that staff is hoping to have that information available at the next regularly scheduled meeting.
Committee Member Scarbrough inquired about the pension liability and recent investment
returns for CalPERS. Finance Director/Treasurer Al-Imam indicated that CalPERS reported a preliminary investment return of just over 9% for Fiscal Year 2023-2024. Although CalPERS actuarial valuation reports are a year behind, City staff can model the impact of the 9% return which is expected to result in a $40 million reduction to the pension liability.
7
Finance Committee Regular Meeting Minutes September 12, 2024
Page 5 of 5
VII. ADJOURNMENT The Finance Committee meeting adjourned at meeting at 3:38 p.m. Attest: ___________________________________ _____________________ Joe Stapleton, Mayor Pro Tem/Chair Date Finance Committee
8
ATTACHMENT A
OVERVIEW OF PUBLIC WORKS DEPARTMENT BUDGET
9
PUBLIC WORKS DEPARTMENTFY 2024-25 OPERATIONS AND BUDGET OVERVIEW
Finance Committee
October 10, 2024
Item No. 6A1Overview of Public Works Department BudgetStaff Presentation
10/10/2024
10
PUBLIC WORKS DEPARTMENT97 FULL TIME EMPLOYEES & 12.5 PART TIME (FTE)(FTE –FULL TIME EQUIVALENT)2 11
PUBLIC WORKS DEPARTMENT OVERVIEW
3
Engineering Services
Capital Projects
Project/Permit
Inspection
Right-of-Way Permits
Transportation
Water Quality and
Environmental Services
Municipal Operations
Beaches
Facilities
Fleet & Equipment
Parks
Refuse
Streets
Trees
Administration
Budget
Contracts
Customer Service
Payment Processing
Procurement
Records Management
12
Public Works RoleInfrastructure Planning, Design, Construction, Management, Operation and Maintenance
4
•Develop and Maintain City Infrastructure Master Plans
•Identify Needs and Complete Assigned Tasks/Projects
•Design, Inspect, Construct, Operate, Maintain and Repair City Infrastructure with In-House or Consultant/Contractor Staff
•Public Right-of-Way Management, Permitting, Constriction
•Develop and Oversee Assigned Budgets & Funding
•Select and Manage Consultants & Contractors
13
5
•Manage Construction
•Control Costs and Pay Invoices
•Administer Contracts & Grants
•Manage, Service and Maintain City Beaches, Facilities, Fleet & Equipment, Parks, Streets & Trees
•Safeguard, Control & Regulate Permitted Use of City Right-of-Way
•Coordinate/Manage Outside Agency & Utility Work
Public Works RoleInfrastructure Planning, Design, Construction, Management, Operation and Maintenance
14
INFRASTRUCTURE STATISTICS
6
•City Buildings & Structures = 106
(936,157 sq. ft.)
•Fire Stations = 8
•City Parks = 67 (667 acres)
•Public Marinas = 2
•Libraries = 4
•Public Trees = 36,380
•Vehicle & Equipment Units = 373
•Aquatic Center (NAC) = 1
•Traffic Signals = 123 (City owned)
•Streets = 398 miles
•Public Sidewalks = 500 miles
•Alleys = 33 miles
•Painted Curbs = 234,405 lin. ft.
•Parking Lots = 33
•Storm Drain Lines = 95 miles
•Storm Drain Catch Basins = 3,281
•Tide Valves = 89
15
INFRASTRUCTURE STATISTICS
7
•Lower & Upper Harbor = 2.5 Sq. Miles
•Approximate # of Boats = 4,700
•Ocean Piers = 2
•Public Piers in Harbor = 15
•Public Seawalls & Bulkheads = 15,322
ft.
•Water Lines = 302 Miles
•Fire Hydrants = 2,648 (City Maintained)
•Ocean Beaches = 9.3 Miles
•Harbor Beaches = 21.6 Miles (City
Maintained = 3 Miles)
•Sewer Lines = 203 miles
•Sewer Lift Stations = 21
•City Streetlights = 6,020
•City Owned Bridges = 16
16
PUBLIC WORKS PERSONNEL
8
•FY25 +1 Engineering Technician (Traffic)
•FY24 +1 Equipment Mechanic; +1 Office Assistant (from PT)
•FY23 +1 Civil Engineer – Associate; +1 Inspector (replaced contract inspector)
•FY21 -1 Auto Parts Buyer (to Finance)
•FY25 +0.7 Maintenance Aide; -1.5 Code Enforcement Officer I (to CDD)
•FY24 -0.75 Office Assistant (to FT)
•FY23 +0.6 Civil Engineer – Associate; +2.02 Maintenance Aide
•FY22 +0.3 Civil Engineer – Associate; -0.45 Intern; +4.03 Maintenance Aide
•FY21 +1.5 Code Enforcement Trainees; -0.3 Civil Engineer - Associate
FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25
Full-Time 93 92 92 94 96 97
FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25
Part-Time (FTE)6.35 7.55 11.43 14.05 13.3 12.5
17
PUBLIC WORKS REVISED OPERATING BUDGET & STAFFING
9
FY19-20 FY20-21 FY21-22 FY22-23 FY23-24 FY24-25
Revised Budget $47,199,649 $50,285,101 $51,609,167 $55,373,036 $58,295,769 $61,223,625
Full-Time 93 92 92 94 96 97
90
92
94
96
98
100
102
104
106
108
110
$40,000,000
$45,000,000
$50,000,000
$55,000,000
$60,000,000
$65,000,000
Revised Budget Full-Time
18
FY 2024-25 BUDGET OVERVIEW – ALL FUNDS*$554,881,278
10
Public Works Manages 41% of City’s Budget: $228,173,771
CITY COUNCIL
0.2%
CITY CLERK
0.2%
HARBOR
DEPARTMENT
0.6%
CITY ATTORNEY
0.5%
HUMAN RESOURCES
0.7%FINANCE
2.1%LIBRARY
2.1%
FINANCING ACTIVITIES
2.0%RECREATION &
SENIOR SERVICES
3.0%
COMMUNITY DEVELOPMENT
3.2%CITY MANAGER
2.9%UTILITIES
8.1%
PUBLIC
WORKS
11.0%
CIP
25.8%
ASSESSMENT
DISTRICT
4.2%
FIRE
12.4%POLICE
14.9%
MISCELLANEOUS NON OPERATING
0.6%INTERNAL SERVICES
5.4%
* Does not include Interfund Transfers 19
FY 2024-25 BUDGET OVERVIEW – PUBLIC WORKS OPERATING BUDGET$61,223,625
11
Salaries & Benefits,
$20,252,066 , 33%
Contract Services,
$13,526,746 , 22%Utilities,
$2,133,973 , 4%
Supplies & Materials,
$1,517,258 , 2%
Maintenance & Repair,
$13,779,351 , 23%
Other Operating,
$143,592 , 0%
Internal Service Funds,
$4,454,157 , 7%
Capital Outlay,
$5,416,482 , 9%
20
CONTRACTED SERVICES (81* SERIES) – 22% OF OPERATING BUDGET
12
•Architecture Services
•Asphalt & Concrete Repair Services
•Civil Engineering
•Dock & Pier Maintenance
•Facilities Maintenance
•Geotechnical Services
•Harbor Maintenance
•Inspection Services
•Janitorial Services
•Marine Engineering Services
•Median, Park & Roadside Landscape
Maintenance
•Sidewalk Grinding
•Steam Cleaning
•Street Striping and Sign Installation
•Surveying Services
•Temporary Labor Services
•Traffic & Transportation Engineering
•Traffic Control Engineering
•Traffic Signal Maintenance
•Tree Maintenance
•Uniform Services
•Vehicle Outfitting
•Weed Abatement
21
MAINTENANCE & REPAIR (85* SERIES) – 23% OF OPERATING BUDGET
13
•Commercial Refuse Collection
•Fire System
•Fuel
•General Building Repair
•HVAC
•Landscape Repair
•Materials (Crown, Furguson,
Ganahl, Grainger, Home Depot,
etc.)
•Painting
•Plumbing
•Residential Refuse Collection
•Roof Repair
•Sign Repair
•Traffic Signals
•Turf Renovation
•Vehicle Repair – outside labor
22
FY 2024-25 BUDGET OVERVIEWENGINEERING SERVICES DIVISION
14
•Assessment District Management & Coordination
•Capital Improvement Program (CIP)
•Infrastructure Master Plans
•Public Works Construction Management & Inspections
•Right-of-Way Plan Check and Development Permits
•Traffic Management & Operations
•Transportation Planning
•Tidelands Constructing & Permitting Management
•Water Quality & Environmental Programs
Section (FTE)Salaries &
Benefits
Maintenance
& Operations
Capital
Outlay Total
Engineering (20.75)$4,776,856 $1,020,666 $2,500 $5,800,023
Tidelands Management -$601,801 $5,000 $606,801
Transportation & Development (14)$2,916,018 $1,411,266 $4,000 $4,331,284
Water Quality (3)$798,378 $550,594 -$1,348,971
Total $8,491,252 $3,584,327 $11,500 $12,087,079
37.75 Budgeted FTE
23
ENGINEERING SERVICES DIVISIONSIGNIFICANT TASKS AND ACCOMPLISHMENTS
15
•Manages 65+ Capital Improvement Projects Annually
•Completed a total of 31 CIP Projects ~$46M in FY24 - 79% started within 60 days of planned base schedule
•Managed an additional 19 projects valued at $81M in progress
•Completed 5 CIP Projects, ~ $7.4M to date in FY25
•Processed 75 Encroachment Agreements, 592 Encroachment Permits, and 1,937 Street Closure Permits issued
•Provide monitoring and compliance of Water Quality Enhancements, which have improved the Ocean, Harbor and Back Bay ecosystems
•Managed the Maintenance & Operation of 123 City Traffic Signals
•Provided traffic signal and operational support for major City events
24
CIP REVISED BUDGETSTAFFING - ENGINEERING
16
30
32
34
36
38
40
42
44
46
48
50
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$160,000,000
$180,000,000
20
0
4
20
0
5
20
0
6
20
0
7
20
0
8
20
0
9
20
1
0
20
1
1
20
1
2
20
1
3
20
1
4
20
1
5
20
1
6
20
1
7
20
1
8
20
1
9
20
2
0
20
2
1
20
2
2
20
2
3
20
2
4
20
2
5
Adjusted Budget FTE
25
FY 2024-25 BUDGET OVERVIEWMUNICIPAL OPERATIONS DIVISION
17
•Beach & Bay Maintenance
•City Facilities Maintenance
•Citywide Refuse Collection Services & Regulatory Compliance
•Fleet/Equipment Maintenance & Management
•Parks, Trees & Landscape Maintenance
•Street, Sidewalk & Sign Maintenance
60.75 Budgeted FTE (includes Deputy PW Director not assigned to Section above)
Section (FTE) Salaries &
Benefits
Maintenance
& Operations
Capital
Outlay Total
Equipment Maintenance - ISF (8.5)$1,434,626 $1,249,132 $55,500 $2,739,258
Equipment Replacement - ISF --$4,792,820 $4,792,820
Facilities Maintenance (7.5)$1,209,688 $3,608,893 -$4,818,581
Parks (8.8)$1,474,894 $8,822,017 $542,063 $10,838,974
Refuse (1)$258,615 $11,602,369 -$11,860,984
Streets & Beaches (31.95)$4,410,656 $3,678,695 $8,000 $8,097,351
Trees (2)$354,959 $2,467,604 -$2,822,563
Total $9,143,438 $31,428,710 $5,398,383 $45,970,531
26
MUNICIPAL OPERATIONS DIVISIONSIGNIFICANT TASKS AND ACCOMPLISHMENTS
18
•1,684 Tons of Debris & Refuse
Removed from Ocean Beaches
•16,069 Sq. Ft. of Public Sidewalk
Repaired
•289,759 Lin. Ft. of Street Striping
Repaired
•64,378 Lin. Ft. of Curb Painted
•930 Vehicle and Equipment Service
Orders Completed
•373 Vehicles/Equipment Maintained
•26 Units Replaced
•8,864 Facility Site Inspections
•1,426 Facilities Service Requests
Completed
•26,333 Tons of Total Residential
Refuse Collected
•3,413 Tons of Residential
Recyclables Collected
•3,942 Tons of Residential Organics
Collected
•22,442 Trees Trimmed
•358 Trees Planted
•30,897 Plants Planted
Maintained critical community assets, facilities, and equipment:
27
EQUIPMENT MAINTENANCE – STAFFING / UNITS
19
280
290
300
310
320
330
340
350
360
370
380
6
8
10
12
14
16
18
20
22
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
FTE # Vehicles/Equip Including SurplusIncluding Contract Staff
28
FACILITY MAINTENANCE
20
•7.5 FTE
•65 Buildings & Structures Maintained (488,000 square feet)
•Recent Additions
•Animal Shelter
•Fire Station #2 Restroom
•Junior Lifeguard Building
•Restroom Autolocking
•Future Additions
•Lecture Hall
•Newport Bay Trash Wheel
29
FY 2024-25 BUDGET OVERVIEWADMINISTRATION AND FINANCE DIVISION
21
•Bidding, Contracts, Grants & Legal Administration
•Budget Development and Administration
•CIP Financial Management
•Customer Service & Communications
•Implement City Council/Management Directives & Policies
•Public Information
•Records Management
•Strategic & Financial Planning
•Volunteer Cleanups
11 Budgeted FTE (Includes PW Director)
Salaries &
Benefits
Maintenance &
Operations
Capital
Outlay Total
PW Administration $2,617,376 $542,041 $6,600 $3,166,017
Total $2,617,376 $542,041 $6,600 $3,166,017
30
ADMINISTRATION AND FINANCE DIVISIONSIGNIFICANT TASKS AND ACCOMPLISHMENTS
22
Administers Roughly 41% of the City’s Total All Funds Budget including $53.7M
Operating, $7.5M ISF, $143.4M CIP and $23.5M Assessment District Funds
•218 Active Contracts
•54 PlanetBids Procurements (35 Bid, 17 Proposals, 2 Qualifications) (50% of
all PlanetBids Procurements for the City)
•214 Purchase Requisitions (+74 Equipment Maintenance)
•6,763 Invoices
•245 Record Requests
•99 City Council Items (32% of all City Council Items)
31
PUBLIC WORKS DEPARTMENT - OVERTIME
23
FY24 Sections Overtime Budget
•Engineering and Inspections ($138,896)
•Streets and Beaches ($81,678)
•Equipment Maintenance ($9,175)
•Traffic ($9,127)
•Facility Maintenance ($6,619)
FY25 EST based on prior two FYs first 3 pay periods
221,253 244,446 305,663 305,663
356,099 356,099 355,941
287,363 327,394 361,956 418,376 474,015
600,616 618,387
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
2019 2020 2021 2022 2023 2024 2025
Original Budget Actual
EST
32
FY 2024-25 BUDGET OVERVIEW – REVENUE
24
•Recycling Service Fees $2.4M
•Permit and Inspection Fees - $1.1M
•Transfer Station Rental Fees - $504,900
•Tidelands - $179,300
Account Type
2019
Actual
2020
Actual
2021
Actual
2022
Actual
2023
Actual
2024
Actual
2025
Budgeted
DONATIONS & CONTRIBU $22,093 - $13,018 $12,948 $10,208 $34,266 $20,000
FINES & PENALTIES $8,178 $10,361 $22,720 $69,442 $34,624 $28,129 $32,700
INTERGOVTAL REVENUES $704,482 $428,199 $60,824 $429,204 $310,325 $299,201 $311,725
LICENSES PERMITS $346,764 $276,396 $240,967 $463,397 $454,087 $250,129 $372,500
MISC REVENUES $66,262 $43,778 $73,034 $44,552 $106,288 $43,176 $34,000
PROPERTY INCOME $589,770 $581,510 $591,562 $594,941 $604,513 $780,322 $623,800
SERVICE FEES & CHARG $1,953,593 $1,982,696 $2,227,165 $3,515,508 $3,566,773 $3,668,184 $3,376,485
Grand Total $3,691,142 $3,322,940 $3,229,290 $5,129,992 $5,086,818 $5,103,407 $4,771,210
33
CAPITAL IMPROVEMENT PROGRAM – BY FUND
25
*Other: Air Quality Management District(AQMD), Building Excise Tax, Environmental Liability, Grants – Measure M & Oceanfront Encroachment
General Fund, 16,795,100 , 19%
Tide and Submerged Land, 12,714,000 , 14%
Gas Tax,
2,306,900 , 2%
Measure M, 3,740,000 , 4%
SB1 - Road Maintenance and Rehabilitation Act (RMRA), 2,188,000 , 2%
Grants -
Contributions, 4,462,600 , 5%
Major Facilities Financing Plan,
16,892,700 , 19%
Neighborhood Enhancement, 9,618,000 , 11%
Parks Maintenance Master Plan, 2,350,000 , 3%
Facilities Maintenance, 4,100,000 , 5%
Water Fund, 8,546,000 , 10%Wastewater Fund,
2,550,500 , 3%Other*, 2,611,700 , 3%
34
FY 2024-25 APPROVED BUDGET ENHANCEMENTS
26
•+1 FT Engineering Technician (Traffic)
–Backup support for operation and maintenance of traffic signals
–Low-level engineering reviews
–Reduced overtime
•Reclass 1 Senior Civil Engineer to Principal Engineer
–Employee retention
•+$50k for Streets and Beaches Contract Services
–Asphalt Repair
–Striping
–Fencing
•+$40k for Contract Maintenance of New City Facilities
–Junior Lifeguard Building
–Animal Shelter
35
FY 2024-25 PERFORMANCE METRICS
27
Performance Measure Actual
FY 23-24
Projected
FY 24-25 Target
Percentage of CIP projects completed
within 60 days of the Master Schedule 56%80%80%
Percentage of CIP projects completed
within 10% contingency 79%80%80%
Percentage of street closure permits
issued within 24 hours 90%80%80%
Percentage of PW related Quest (work
order) tickets completed within 48 hours N/A 80%80%
Percentage of refuse collected that is
diverted (recycled or composted)44%45%50%
Percentage of fleet preventative
maintenance completed on schedule 75%80%80%
36
FUTURE BUDGET RELATED CONSIDERATIONS
28
•Citywide Facilities Maintenance
–New Buildings, Emerging Technology, Higher Demand
•Fleet Electrification Mandates
•Transportation Management
–Current and Expanding Trolley Program
o Administrative Staff, Mechanics
•Infrastructure and Operation Impacts from New Housing Development
•Refuse/Sustainability Mandates
•Homeless Response
–Beaches, Parks, Public Areas
•Corresponding Growth in Administration Functions
37
FUTURE BUDGET RELATED CONSIDERATIONS (CONTINUED)
29
•Insurance requirements increasing
–Increases costs to City
–Smaller businesses unable to compete
•Contract Language, Bonding Requirements, Risk Management
•State and Federal Oversight/Regulations (ex. Prevailing Wage)
•Material Cost and Availability
•Staff Retention and Recruitment
38
DISCUSSION / QUESTIONS
Your Public Works Department
Protecting and Providing Quality
Public Improvements and Services
39
CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 6B October 10, 2024
TO: HONORABLE CHAIRMAN AND MEMBERS OF THE COMMITTEE
FROM: Finance Department Jason Al-Imam, Finance Director / Treasurer 949-644-3123, jalimam@newportbeachca.gov
SUBJECT: YEAR-END BUDGET RESULTS AND SURPLUS ALLOCATION
SUMMARY:
The Finance Department prepares quarterly financial reports to review the status of revenues and expenditures for the City’s General Fund and to monitor budgetary trends in other City funds. This report contains information on revenues, expenditures, and estimated fund balance for the fourth quarter of Fiscal Year 2023-24, which provides an analysis of the City’s financial activity from July 2023 through June 2024. In May 2024,
an unrestricted General Fund operating surplus of $8.9 million was projected for Fiscal Year 2023-24 based on revenues and expenditures through the third quarter. Based on information available at the end of the fourth quarter, an unrestricted General Fund operating surplus of $10.8 million is projected for FY 2023-24, which is $1.9 million higher than previously projected. Council Policy F-5 requires 50% be used to address long-term
obligations and 50% be used to address infrastructure or neighborhood capital improvement. However, since the City pre-funded surplus funds at the beginning of the fiscal year towards paying down the pension liability, it is recommended that the entire unrestricted surplus be allocated towards infrastructure or neighborhood capital improvements.
RECOMMENDED ACTION:
Review and discuss this report and provide any recommendations for consideration by the City Manager and City Council. DISCUSSION: Economic Overview The unemployment rate in California has steadily increased; in August 2024, unemployment reached 5.3%, marking a 0.5 percentage-point increase year-over-year,
and a 0.1 percentage-point increase from the previous month. Additionally, home sales
40
Year-End Budget Results and Surplus Allocation October 10, 2024 Page 2
have been down since 2022 amid higher mortgage rates, which has resulted in a lower inventory. The median price of a single-family residence in Newport Beach was $3,845,000 in 2023, which is the highest in Orange County. California’s sales tax receipts
have also continued to decline from prior quarters due to a shift in consumer spending
from taxable goods to nontaxable items. Sales from autos and transportation (the city’s largest source of sales tax revenue) are lower due to higher interest rates and tighter credit conditions. Luxury vehicle sales in particular are significantly lower, which is due, in part, to the temporary closure of a luxury automobile dealership while it is currently
undergoing a construction renovation project. Although the City is experiencing a decline
in sales tax revenue, the economic outlook for Newport Beach remains bright, which is primarily due to consistent and vigorous demand for real estate in Newport Beach that drives assessed property values higher despite a slowdown in home sales. For example, the City has never seen a decline in assessed values over the last twenty years – even
during the Great Recession, which is a significant contributor to the City’s fiscal stability.
General Fund Revenues
Overall General Fund revenue growth has outpaced projections that were incorporated into the adopted Fiscal Year 2023-24 budget, as well as projections provided at the end of the third quarter. The following table summarizes the changes to projected General Fund revenues versus the amounts previously projected for the third quarter. Details
follow highlighting the reasons for the material variances.
FY 2023-24 Unaudited General Fund Revenues
*Gross TOT revenues amount to approximately $38.7 million. Visit Newport Beach (VNB) receives 18% (or approximately $6.9 million) of TOT on a gross basis, which brings projected TOT revenues to $31.7 million, net of amounts remitted to VNB.
A B C = B-A D = C/A
Revenues by Category
PY Actual Q3 Projected
Actual
Unaudited
Actual
Variance from
Q3 Projection %
Variance
Property Taxes 138,358,730 143,556,945 146,136,871 2,579,926 1.8%
Sales Tax 46,552,459 43,030,586 43,444,542 413,956 1.0%
Transient Occupancy Tax*30,201,648 31,300,000 31,736,960 436,960 1.4%
Other Taxes 10,079,710 9,932,047 10,252,075 320,028 3.2%
Service Fees & Charges 25,187,124 23,876,096 24,751,378 875,282 3.7%
Parking Revenue 7,420,314 7,670,705 8,432,034 761,329 9.9%
Licenses and Permits 5,676,619 5,439,452 5,567,848 128,396 2.4%
Property Income 7,530,393 9,526,183 9,713,641 187,458 2.0%
Fines & Penalties 3,838,752 3,813,111 4,145,354 332,243 8.7%
Intergovernmental 4,379,680 4,611,356 5,340,956 729,600 15.8%
Investment Earnings 1,690,399 2,700,000 4,853,052 2,153,052 79.7%
Misc Revenues 3,394,938 856,000 1,249,669 393,669 46.0%
Operating Transfers In 18,428,263 19,020,967 19,333,407 312,440 1.6%
Total Revenues 302,739,030 305,333,448 314,957,787 9,624,340 3.2%
41
Year-End Budget Results and Surplus Allocation October 10, 2024 Page 3
Property Tax - Property taxes are the City’s single largest General Fund revenue and represent approximately 50% of all General Fund revenues. These revenues are primarily
dependent on the assessed valuation established in January of 2023. Therefore, there is
typically very little variance seen from the original budget as the year progresses. The strong growth in this category is a result of the CPI factor reaching the maximum 2.0% allowed, as well as property sales and price appreciation. The City’s total assessed valuation for Fiscal Year 2023-24 is now projected to grow from $71.2 billion to $75.9
billion. Unaudited actuals in this category exceeded prior quarter estimates by $2.6
million, or 1.8%, which is primarily due to higher than anticipated revenues from Supplemental Taxes, Property Tax Transfers, RDA Residual Taxes, and Prior Year Penalties and Interest.
Sales Tax - The second largest funding source for the General Fund is sales tax revenue,
making up approximately 15% of General Fund revenues. The City’s sales tax base is largely generated from four industry groups — autos and transportation; general consumer goods; restaurants/hotels and the State & County Pools. In May 2024, it was reported in the Third Quarter Budget Update that sales tax revenue was projected at
$43.0 million, which anticipated a 7.6% decrease in revenue over the prior fiscal year.
However, sales tax revenue ended the fiscal year at $43.4 million reflecting a 6.7% decrease in revenue over the prior fiscal year. Therefore, sales tax revenue came in $0.4 million better than projected, which is largely due to better-than-expected sales from business and industry and general consumer goods, which was partially offset by weaker
than expected sales from autos and transportation. Consistent with results across the
State of California, sales from all industry groups were down during the fiscal year, except for sales from restaurants and hotels, which were up 6.1% during the fiscal year. Transient Occupancy Tax – The third largest funding source for the General Fund is
TOT, making up more than 10% of General Fund revenues. Approximately three-fourths
of TOT revenue is derived from hotels, with the balance coming from short-term lodging. While TOT receipts from short-term lodging more than doubled over the four-year period from Fiscal Year 2018-19 through Fiscal Year 2022-23, short-term lodging revenue came in 5.4% lower over the prior year, as was noted in the third quarter report. However, TOT
revenue from hotels is 8.7% higher, due to robust demand and due to the opening of the
Pendry in September 2023. TOT revenue in total from both hotels and short-term lodging came in $0.3 million, or 1% higher than previously reported in the third quarter update. All Other Revenue – This category includes all other revenue sources other than the top
three (property tax, sales tax and TOT). All other revenue is made up of other taxes,
service fees and charges, parking revenue, licenses and permits, property income, fines and penalties, intergovernmental revenues, investment earnings, and miscellaneous revenues. Material changes in projected amounts were made to service fees and charges, parking revenue, fines and penalties, intergovernmental revenues, investment
earnings, and miscellaneous revenues.
42
Year-End Budget Results and Surplus Allocation October 10, 2024 Page 4
• Service Fees and Charges consists of plan check fees, recreation classes, emergency medical services fees and numerous other cost-of-service fees.
Services fees and charges came in $0.9 million higher than the third quarter
estimates, which is primarily due to higher than anticipated recycling fees, water quality inspection fees, and paramedic inspection fees.
• Parking Revenue is derived from General Fund related metered parking fees that
are assessed throughout the various parking zones of the City. Parking revenue
outperformed third quarter projections by $761,000, primarily due to the reopening of certain parking lots that were closed for a portion of the prior fiscal year.
• Intergovernmental Revenues consists of federal, state, and local grant revenues, which includes, but is not limited to, the City’s portion of the ½ cent sales tax
revenue paid to the County for public safety, state mandate reimbursements, reimbursement for strike teams sent to assist with fires, and revenue sharing with the County of Orange under the Waste Disposal Agreement (WDA). Intergovernmental revenues exceeded previous projections due to a payment from the County of Orange for the WDA that related to FY 2022-23 but was not received
until FY 2023-24, which resulted in two years of revenue in FY 2023-24. Additionally, revenue from the County of Orange associated with the Covid-19 FEMA claim was received, which was not anticipated in prior reports.
• Investment Earnings are projected to exceed previous projections by
approximately $2 million due to elevated interest rates.
• Miscellaneous Revenues include restricted revenue, damage to City property, bad debt, donations and contributions, non-operating revenues such as proceeds from
the sale of materials and equipment, and other miscellaneous revenues. This
category exceeded third quarter estimates by $393,000 due largely to lower-than-expected bad debt, which is a contra revenue account used to write off revenues that the City no longer expects to receive. $528,000 was budgeted for bad debt, but only $130,000 was written off, increasing this revenue category by $398,000.
• Operating Transfers In includes the transfer from the Tidelands Fund for the reimbursement of tidelands related expenditures. Based on a year-end review of tideland related expenditures, it was found that tidelands related expenditures were higher than originally anticipated, resulting in an increase in the transfer to the General Fund from the Tidelands Fund in the amount of approximately $0.3
million. General Fund Expenditures The FY 2023-24 General Fund expenditure budget totals $310 million. Spending trends in FY 2023-24 are generally consistent with prior years and do not indicate any cause for
concern. Total expenditure savings of $9.6 million are projected at this time due largely to savings from vacancies as well as savings in contract services. The unaudited actuals include the encumbrances carried forward into FY 2024-25, which draw from the FY 2023-24 budget.
43
Year-End Budget Results and Surplus Allocation October 10, 2024 Page 5
The following table summarizes the expenditure savings by budget category. Details highlighting the reasons for the material variances follow.
FY 2023-24 Projected General Fund Expenditures
Significant expenditure budget variances are as follows:
• The revised salary and benefits budget totals $179 million. Salary and benefit expenses for the fiscal year totaled $171 million, or a savings of $8 million. These savings are from vacancies as well as health benefits.
• The contract services budget shows a savings of $6.4 million, however a large portion of the savings in this category were encumbered contracts that were carried into FY 2025-26. These encumbrances have been incorporated into this table showing the true savings of $2.9 million.
• The supplies and materials category includes an overage in the public works department parks division. Notable expenses in the over budget account include irrigation materials, concrete tables and benches, waste containers and drinking fountains. These overages are offset by other budget savings within the Public
Works department budget and therefore no budget adjustment is requested.
• The maintenance and repair category exceeded prior quarter projections and the revised budget due primarily to increased maintenance needs at various city facilities as well as fire stations. These overages are offset by other budget savings
within the Public Works and Fire department budgets and therefore no budget
adjustment is requested.
• The general expenses category is slightly over prior quarter estimates due primarily to larger than budgeted investment advisory services. This overage is
offset by other budget savings and therefore no budget adjustment is requested.
• The capital expenditures category shows a budget savings of $1.1 million, however the majority of the savings in this category are associated with projects that will be
A B C = A-B D = C/A
Expenditures by Category
Revised
Budget
Q3 Projected
Actual
Unaudited
Actual
Savings
(Overage) % Variance
Salary & Benefits 178,989,633 172,249,929 171,022,200 7,967,433 4.5%
Contract Services 34,053,292 32,580,855 31,062,587 2,990,704 8.8%
Grant Operating 1,471,683 1,655,027 1,320,500 151,183 10.3%
Utilities 4,365,888 4,256,444 4,334,154 31,734 0.7%
Supplies & Materials 4,958,209 4,762,312 5,130,895 (172,685) -3.5%
Maintenance & Repair 15,202,186 15,485,792 17,026,446 (1,824,260) -12.0%
Travel & Training 864,271 832,058 796,379 67,891 7.9%
General Expenses 3,958,972 3,957,685 3,986,791 (27,820) -0.7%
Internal Svc Charge 29,422,570 29,422,570 29,422,570 - 0.0%
Capital Expenditures 2,279,300 2,054,300 1,847,288 432,012 19.0%
Operating Transfers Out 34,489,271 34,496,983 34,489,271 - 0.0%
Total Expenditures 310,055,275 301,753,956 300,439,082 9,616,193 3.1%
44
Year-End Budget Results and Surplus Allocation October 10, 2024 Page 6
carried forward into FY 2024-25. These encumbrances have been incorporated into this table showing the true savings of $400,000.
General Fund Sources, Uses, and Projected Surplus
The City continues to be in excellent financial health. Conservative budgeting and sound
financial policies have resulted in a trend of General Fund operating surpluses and strong reserve levels for several years. The City is well positioned to continue delivering high levels of services to the community while targeting surplus resources to key priorities each year.
The following table illustrates the prior year sources and uses of funds, current year activity and the projected year-end results. FY 2023-24 Projected General Fund Sources, Uses, and Budget Surplus
A $15.8 million operating surplus for the General Fund is projected for Fiscal Year 2023-24, which is net of non-operating activity that includes one-time transfers out of the
General Fund as well as the addition to the Contingency Reserve (pursuant to City Council Policy F-2). City Council has approved three budget amendments in Fiscal Year
A B C=B-A D=C/A
Category
Q3
Projection
Unaudited
Actual Variance % Variance
Beginning Fund Balance Reserves 15,254,999 15,254,999 - 0.0%
Operating Resources:
Operating Revenues 286,312,480 295,624,380 9,311,900 3.3%
Prior Year Resources Carried Forward 5,465,426 5,465,426 - 0.0%
Transfers In from Other Funds 19,020,967 19,333,407 312,440 1.6%
Repayment of Advances 1,250,000 1,250,000 - 0.0%
Total Operating Resources 312,048,873 321,673,213 9,624,340 3.1%
Operating Uses:
Operating Expenditures 267,256,973 259,181,278 (8,075,695) -3.0%
Transfers Out 34,496,983 34,489,271 (7,712) 0.0%
Resources Carried to Next Fiscal Year - 6,786,845 6,786,845 -
Addition to 25% Contingency Reserve - 3,400,304 3,400,304 -
Total Operating Uses 301,753,956 303,857,698 2,103,742 0.7%
Net Operating Surplus 10,294,917 17,815,515 7,520,598 73.1%
Non-Operating Resources & Uses
Transfers Out (24,270,393) (24,911,074) (640,681) 3%
Transfers In 7,592,835 7,592,834 (1) 0%
Total Non-Operating Resources & Uses (16,677,558) (17,318,240) (640,682) 3.8%
Net Change in Fund Balance (6,382,641) 497,276 6,879,917 -107.8%
Ending Fund Balance Reserves 8,872,358 15,752,275 6,879,917 77.5%
45
Year-End Budget Results and Surplus Allocation October 10, 2024 Page 7
2024-25 that allocate a portion of the Fiscal Year 2023-24 year-end surplus. BA 25-012 and BA 25-018 designated $2.1 million for an extension of a temporary reduction in the employee retirement contributions for applicable bargaining units, to temporarily increase
contributions to health coverage for safety bargaining groups, and for a bonus for safety
bargaining units and eligible K&M positions. Additionally, BA 2025-013 appropriated $2.8 million of the year-end surplus for the purchase of real property at 301 E Balboa Blvd. These uses of the General Fund surplus reduce the available unrestricted surplus to $10.8 million, as shown in the table below. Per Council Policy F-5, “roughly fifty percent
(50%) of the Budget Surplus Funds shall be used to address long-term obligations such
as pension liabilities, other post-employment benefits, bonded debt, lease obligations and other long-term needs” and “roughly fifty percent (50%) of the Budget Surplus Funds shall be used to address infrastructure or neighborhood capital improvements.” However, since the City pre-funded surplus funds at the beginning of the fiscal year towards paying down
the pension liability, it is recommended that the entire unrestricted surplus be allocated
towards infrastructure or neighborhood capital improvements.
Fiscal Year 2023-24 Year-End Surplus $15,752,275 Purchase of Real Property at 301 E. Balboa Blvd. (2,823,500) Side Letters with Bargaining Groups (2,109,515) Unrestricted Surplus $10,819,260 Other Funds Staff have evaluated the fiscal condition of the City’s other major operating funds
(Tidelands, Water & Wastewater). An analysis of the budget performance for these funds indicates that no budget adjustments are necessary and variances between budgeted and actual amounts are within reason. Preliminary Unaudited Amounts
The City’s financial records are undergoing a customary audit review. Therefore, the financial information presented in this report is preliminary in nature and subject to adjustments as the year-end close process continues through December. Any such adjustments are not anticipated to have a material impact on the financial information
presented in this report. If any material adjustments related to Fiscal Year 2023-24 are
subsequently recorded, any such adjustments will be reported to the Finance Committee. Conclusion Staff recommends that the Finance Committee review and discuss this report and provide
any recommendations for city manager and City Council consideration.
Prepared and Submitted by:
/s/ Shelby Burguan ____________________________
Shelby Burguan Deputy Finance Director
46
FISCAL YEAR 2023-24
FOURTH QUARTER FINANCIAL REPORT
October 10, 2024
Finance Committee
Item No. 6B1Year End Budget Results and Surplus AllocationStaff Presentation
10/10/2024
47
ACTUAL GENERAL FUND REVENUES
2
Third Quarter Projection $ 305.3 million
Year-End Actuals $ 315.0 million
•Actual General Fund revenues were 3.2%,
or $9.6 million, higher compared to the third
quarter primarily due to increases in property
taxes, investment earnings, service fees &
charges, parking revenues, and
intergovernmental revenues.
$0
$50
$100
$150
$200
$250
$300
$350
Q3 Projected Year-End Actuals
Mi
l
l
i
o
n
s
Property Tax Sales Tax TOT Other Operating Transfers In
48
110.7
115.6
123.2
128.5
138.4
146.1
$100
$105
$110
$115
$120
$125
$130
$135
$140
$145
$150
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Actual
2023-24
Actual
Mi
l
l
i
o
n
s
PROPERTY TAX REVENUE
3
•Property tax revenue is the City’s largest source of revenue and is projected to
increase by $7.8 million (5.6%) over last fiscal year. The year-end actual is $2.6
million higher than projected at Q3 largely due to Supplemental Taxes, Property
Tax Transfers, RDA Residual Taxes, and Prior Year Penalties and Interest.
+4.5%
+6.6%
+4.3%
+7.7%
+5.6%
49
SALES TAX REVENUE
4
•Sales tax revenue is the City’s second largest source of revenue and came in $0.4
million (1%) higher than the amount projected in the third quarter budget update.
Year-end actuals reflect a decrease of $3.1 million from the prior year.
38.5
36.2
39.0
46.2 46.6
43.4
$30
$32
$34
$36
$38
$40
$42
$44
$46
$48
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Actual
2023-24
Actual
Mi
l
l
i
o
n
s
-5.9% +7.5%
+18.5%
+0.8%-6.7%
50
SALES TAX REVENUE BY MAJOR INDUSTRY GROUPS
5
State & County
Pools
General Consumer
Goods
Restaurants
& Hotels
Autos &
Transportation
22/23 23/24 22/23 23/24 22/23 23/24 22/23 23/24
FY 2022/23 & FY 2023/24$14.1
$9.3 $8.9
$7.5
$11.5
$10.0
$8.6
$6.7
$0
$2
$4
$6
$8
$10
$12
$14
Mi
l
l
i
o
n
s
51
TRANSIENT OCCUPANCY TAX REVENUE
6
•Transient occupancy tax (TOT) revenue is the City’s third largest source of revenue and
increased by $1.5 million (5.1%) over the prior year, which is $0.4 million higher than
previously forecasted.
•Gross TOT revenues are $38.7 million. VNB receives 18% (or approximately $6.9 million),
which brings TOT revenues to $31.7 million, net of amounts remitted to VNB.
24.7
20.8
16.9
26.7
30.2 31.7
$10
$15
$20
$25
$30
$35
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Actual
2022-23
Actual
2023-24
Actual
Mi
l
l
i
o
n
s
-19.0%
+58.0%
+13.2%
+5.1%
-15.6%
52
14%
22%
31%
23%
-5%
-22%
-29%
72%
10%9%
-40%
-20%
0%
20%
40%
60%
80%
TRANSIENT OCCUPANCY TAX REVENUE GROWTH RATES
7
19/20 20/21 21/22 22/23 23/24
53
OTHER GENERAL FUND REVENUES
8
Other general fund revenues exceeded budget by $6.7 million or 10%, and exceeded
Q3 projections by $5.8 million, or 7%:
•Investment earnings exceeded projected amounts by $2.2 million
•Service Fees and Charges exceeded projected amounts by $0.9 million
•Recycling Fees, Water Quality Inspection Fees, Paramedic Inspection Fees
•Parking revenue exceeded prior estimates by $0.8 million
•Reopening of parking lots previously closed
•Intergovernmental revenue exceeded prior estimates by $0.7 million
•County of Orange Waste Disposal Agreement (WDA) payments
•Miscellaneous revenues exceeded prior estimates by $0.4 million
•Lower than expected Bad Debt
54
GENERAL FUND EXPENDITURES
9
Budget $ 310.1 million
Projected Actual $ 301.8 million
Year-end Actual $ 300.4 million
•$8 million savings in salaries and benefits due to vacancies and lower than
budgeted costs for employee benefits
•$6.7 million in ongoing projects or encumbrances were carried forward to
FY2024-25.
55
FISCAL YEAR 2023-24 YEAR-END RESULTS
10
• Year-End Results for Fiscal Year 2023-24 reflect an
unrestricted General Fund operating surplus of $10.8
million, which is $1.9 million higher than previously
projected and is largely due to:
• $9.6 million of better-than-projected General Fund
Revenues
• Expenditure savings of $1.3 million
• Less $5.6 million for Council-approved uses of the
surplus and the contingency reserve set-aside
($3.4M)
$0
$50
$100
$150
$200
$250
$300
Quarter 3
Projected
Year-End
Actuals
Mi
l
l
i
o
n
s
Other
Transfers
TOT
Sales Tax
Property Tax
$68.4m $74.3m
$19.0m $19.3m
$31.3m $31.7m
$43.0m $43.4m
$143.6m $146.2m
$305.3m $314.9m
56
GENERAL FUND SOURCES & USES
11
•An unrestricted operating surplus of $10.8 million is available at the end of Fiscal
Year 2023-24, which is net of Council appropriated uses for the purchase of property
at 301 E Balboa Boulevard and to fund employee costs related to new side letters
with bargaining groups.
•Since the City pre-funded surplus funds at the beginning of the fiscal year towards
paying down the pension liability, it is recommended that the entire unrestricted
surplus be allocated towards infrastructure or neighborhood capital improvements.
Fiscal Year 2023-24 Year-End Surplus 15,752,275
Purchase of Real Property at 301 E Balboa (2,823,500)
Side Letters with Bargaining Groups (2,109,515)
Unrestricted Surplus 10,819,260
57
RECOMMENDED ACTION
12
•Review and discuss this report
•Provide any recommendations for consideration by the City Manager and the
City Council. Staff recommendation:
a)Waive Council Policy F-5
b)Allocate the full $10.8 toward future capital projects by transferring it to
the FFP
58
13
Questions?
59
CITY OF NEWPORT BEACH FINANCE COMMITTEE STAFF REPORT
Agenda Item No. 6C
October 10, 2024 TO: HONORABLE CHAIR AND MEMBERS OF THE COMMITTEE
FROM: Finance Department
Jason Al-Imam, Finance Director/Treasurer 949-644-3123 or jalimam@newportbeachca.gov SUBJECT: BUDGET AMENDMENTS FOR QUARTER ENDING SEPTEMBER 30, 2024
EXECUTIVE SUMMARY
The purpose of this memorandum is to report on the budget amendments for the first quarter of Fiscal Year 2024-25. All budget amendments are in compliance with City Council Policy F-3, Budget Adoption and Administration.
DISCUSSION
City Council Policy F-3, Budget Adoption and Administration, identifies how appropriations can be transferred, increased or reduced. The Finance Committee reviews a quarterly report of City Council and City Manager budget amendments including
their effect on fund balance. Please find the list of budget amendments included as
Attachment A. Prepared by: Submitted by:
/s/ Anthony Alannouf
/s/ Jason Al-Imam
Anthony Alannouf Jason Al-Imam
Budget Analyst Finance Director/Treasurer
Attachment: A. Budget Amendments Fiscal Year 2024-25 Quarter Ending
September 30, 2024
60
ATTACHMENT A
BUDGET AMENDMENTS FISCAL YEAR 2024-25 QUARTER ENDING SEPTEMBER 30, 2024
61
Reporting Quarter:Q1
BA #Date
Amendment
Type Fund Number Fund(s)Revenues Expenditures
Net Effect on Fund Balance
Increase/(Decrease)Department Explanation
001 07/01/2024 City Council 010 GENERAL FUND -$ 5,000,000.00$ (5,000,000.00)$ Finance To appropriate structural surplus to increase expenditure appropriations. Funds will be allocated to CalPERS UAL Additional payment for FY 24-25.
002 07/23/2024 City Council 010 GENERAL FUND 40,000.00$ 40,000.00$ -$ Library
To recognize revenues from a donation from the Newport Beach
Public Library Foundation and increase expenditures for Library Materials, Office Furniture and Fixtures, and Hardware for the Newport Beach Public Library.
003 07/01/2024 City Manager 010 GENERAL FUND -$ 15,000.00$ -$ Police/PW To transfer budget from Police Traffic Services Professional to Public Works Facility Maintenance - Maintenance and Repair Building for the ongoing animal shelter maintenance.
004 07/04/2024 City Manager 712 WASTEWATER CAPITAL FUND -$ 1,000,000.00$ -$ Public Works
PW is not planning another Sewer Lift Station project in FY2024-25, so PW requests to appropriate funds from the Sewer Lift Station Improvement project (23S04) to the Sewer Main Lining Repairs project (25S03). These funds will be used for the sewer force mains crossing the harbor from Little Balboa Island to CDM. Wastewater Funds had not yet been set aside for these crossings in the Bay Crossing CIP
project, which will occur in 24-25. Originally, PW thought this project would occur in FY2025-26 and cost double what they are now estimating. The project will incorporate a new lining technology which
will replace the previous full replacement of the lines. According to F-3 7b, the City Manager can approve project appropriations if the project utilize the same funding source and are for substantially the same
project purpose and physical location.
005 07/23/2024 City Council 513 & 562 FACILITIES FINANCING PLAN & PARKS & COMMUNITY CENTERS -$ 805,874.00$ (805,874.00)$ Public Works To appropriate funds from the 513 FFP Fund to the 562 Parks and Community Center Fund for the Lower Sunset View Park project (15T09).
006 07/23/2024 City Council 160 ENVIRONMENTAL LIABILITY FUND -$ 49,681.00$ (49,681.00)$ Public Works
To appropriate funds from the Environmental Liability unappropriated
fund balance due to increased expenditures as requested by contractor Burns & McDonnell Amendment No. 5 for the Newport Bay Water Wheel project.
007 08/27/2024 City Council 010 GENERAL FUND 200,000.00$ 200,000.00$ -$ Library To recognize revenues from a donation from the Friends of Newport Beach Library and increase expenditures for Library Materials and Programming for the Newport Beach Public Library.
008 07/18/2024 City Manager 010 & 017 GENERAL FUND & SPECIAL PURPOSE DEPOSIT FUND 4,000.00$ 4,000.00$ -$ Library To increase revenue estimates and expenditure appropriations from
the Literacy Services Special Deposit Account. Funds will be allocated to the org-objects as highlighted below.
009 08/27/2024 City Council 010 GENERAL FUND 56,860.00$ 56,860.00$ -$ Police
To increase revenue estimates and expenditure appropriations from the approval and acceptance of the California Department of Alcoholic Beverage Control (ABC) 2024-25 Alcohol Policing Partnership Program (APP) Grant.
010 08/07/2024 City Manager 180 RESTRICTED PROGRAM FUND -$ 9,906.32$ (9,906.32)$ Library To increase expenditures in the Newport Beach Arts Foundation
Programming account from donations for the City Arts Commission Marina Park Concert.
011 09/10/2024 City Council 010 GENERAL FUND 125,000.00$ 125,000.00$ -$ Police
Accept Department of Homeland Security Operation Stonegarden Grant Funds - Grant supports enhanced cooperation and coordination among Customs and Border Protection, United States Border Patrol, and local law enforcement.
012 08/27/2024 City Council
010100701
711752764
GENERAL FUNDTIDE & SUBMERGED LANDS FUNDWATER ENTERPRISE FUNDWASTEWATER ENTERPRISE FUNDEQUIPMENT FUNDIT ISF
13,778.09$ 1,931,800.00$ (1,918,021.91)$ Human
Resources
To reflect the additional city pickup of CalPERS contribution rates through June 2025 for applicable bargaining units, increase contributions to health coverage through June 2025 for safety bargaining groups, and to apply an agreed upon bonus that will be paid quarterly throughout FY25 for safety bargaining units and eligible K&M positions. Funds are appropriated from the fiscal year end FY 24 surplus ending balance.
013 08/27/2024 City Council 010 & 012 GENERAL FUNDGENERAL FUND CAPITAL PROJECTS 8,500.00$ 2,832,000.00$ (2,823,500.00)$ CDD
To increase budget for the purchase of real property at 301 E Balboa Blvd. Estimated costs include the purchase, title/escrow closing costs, due diligence, and relocation costs. Additional revenue based on reported lease rates for three months are estimated.
Fiscal Year 2024-25 Budget AmendmentsCity of Newport Beach
Quarter Ending September 30, 2024
62
Reporting Quarter:Q1
BA #Date
Amendment
Type Fund Number Fund(s)Revenues Expenditures
Net Effect on Fund Balance
Increase/(Decrease)Department Explanation
Fiscal Year 2024-25 Budget AmendmentsCity of Newport Beach
Quarter Ending September 30, 2024
014 09/10/2024 City Council 010 GENERAL FUND 1,110,112.00$ 441,584.00$ 668,528.00$ Fire Accept Medi-Cal IGT Program revenue and appropriate expenditure account.
015 09/09/2024 City Manager 010 & 017 GENERAL FUND
SPECIAL PURPOSE DEPOSIT FUND 300.00$ 300.00$ -$ Library
To increase revenue estimates and expenditure appropriations from the Literacy Services Special Deposit Account. Funds will be allocated
to the org-objects as highlighted below. The money will be used to pay for the International Literacy Day celebration.
017 09/24/2024 City Council 101 TIDELANDS HARBOR CAP FUND -$ 430,893.00$ (430,893.00)$ Public Works To appropriate expenditures from the unappropriated Tidelands Capital Fund balance for the Citywide Public Dock Rehabilitation Project.
018 09/24/2024 City Council
010100701711752764
GENERAL FUNDTIDE & SUBMERGED LANDS FUND
WATER ENTERPRISE FUNDWASTEWATER ENTERPRISE FUNDEQUIPMENT FUND
IT ISF
20,668.00$ 241,418.00$ (220,750.00)$ Human Resources
To reflect the additional city pickup of CalPERS contribution rates through June 2025 for applicable bargaining units. Funds are appropriated from the fiscal year end FY 24 surplus ending balance.
019 09/25/2024 City Manager 010 GENERAL FUND -$ 1,127.00$ -$ Library To transfer budget from the Library Foundation New PC Purchases to Software License Renewal for the annual renewal of the Wayfinding
Kiosk software.
020 09/25/2024 City Manager 010 GENERAL FUND 4,399.12$ 4,399.12$ -$ Library To recognize revenues in the Library Admin SLS Grant Fund OC Library account and increase expenditures in the Library Materials
account.
63
10/10/24
Scheduled Date Agenda Title Report Type Agenda Description
Thursday, November 14, 2024
First Quarter Budget Update Presentation Staff will provide a presentation regarding the year-to-date and projected Fiscal Year 2024-25 budget performance.
OPEB Actuarial Valuation Report Update Presentation Staff will provide the Committee with an overview of the Fiscal Year 2023-24 actuarial valuation report prepared by the City's actuary.
CalPERS Update Presentation Staff will provide the Committee with an overview of the data from the latest actuarial reports from CalPERS as well as their impact on prior projections of the paydown of the City's unfunded pension liability.
Internal Audit Program Update Presentation Presentation of internal audit reports, findings, and recommendations from the
Fiscal Year 2023-24 audit program.
Work Plan Review Receive and File Staff and Finance Committee to review the proposed work plan and identifymattersthatmemberswouldlikeplacedonafutureagendafordiscussion,action, or report.
Thursday, January 9, 2025
Financial Statement Audit Results and Related Communication Presentation The City’s external auditors will meet with the Finance Committee to discuss the
results of their audit for the fiscal year ending June 30, 2024.
Long Range Financial Forecast (LRFF) Update Presentation Staff will brief the Committee regarding the results of the updated LRFF
analysis.
Budget Amendments for Quarter Ending December 31, 2024 Receive and File Staff will report on the budget amendments from the prior quarter.
Overview of the Utilities Department Budget Presentation Staff will provide the Committee with a presentation covering the budget for the Utilities Department.
Work Plan Review Receive and File Staff and Finance Committee to review the proposed work plan and identifymattersthatmemberswouldlikeplacedonafutureagendafordiscussion,
action, or report.
Newport Beach Finance Committee Work Plan
January 2025
November 2024
December 2024
Committee Recess
1
64