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Home My WebLink About18 - Civic Center Financing ReportCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. is September 27, 2005 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Dennis Danner, Administrative Services Director, 949 - 644 -3123, ddanner@city.newport-beach.ca.us SUBJECT: Civic Center Financing Report ISSUE: If the City Council decides to move forward with the building of a new Civic Center using Certificates of Participation as a financing tool, how would the City pay the annual lease obligation (debt service) on those Certificates? RECOMMENDATION: Listen to the presentation and provide direction to staff regarding preparation for the sale of Certificates of Participation (COPs) for the financing of a new Civic Center, including a new city hall, parking structure, and fire station. DISCUSSION: Background: In 2001 the City Council authorized a space needs analysis be done on the current City Hall in order to ascertain the space needed to provide the public and staff with adequate space to conduct business and perform needed work tasks. That report was finalized and accepted by the City Council in 2002. In May 2005, the City Council authorized Griffin & Associates to move forward with preliminary concepts and working drawings to allow for a firm cost estimate for a civic complex consisting of a replacement fire station, a 350 vehicle parking structure, and a city hall. In August 2005, after two meetings to review the designed structures, the City Council directed Griffin & Associates to include all the options specifically reviewed in preparing for the cost estimates. Civic Center Financing Report September 27, 2005 Page 2 At the Council Meeting of September 13, 2005, the City Council heard an overview of the financing options for constructing the new civic center project and directed staff to analyze the City's ability to pay for the project as well as to look at any increases in operating costs of the new facilities. This presentation is intended to provide background information as to the City's ability to finance a new civic center project and increased operating costs should the City Council decide to commit to the project. At the end of the presentation it is requested that the City Council provide further direction to staff to proceed with their preparations for financing the project. Environmental Review: Not Applicable. Prepared and Submitted by: Dennis Danner Administrative Services Director City of Newport Beach Financial Projections /Analysis Regarding Proposed Civic Center Complex (City Hall, Fire Station, Parking Structure) 11-V WP(), E~ n v � � September 27, 2005 TOPICS • Overview of City Finances • Projected Operating Cost Changes Attributable to Civic Center Proposal • Projected Revenue Changes • Projected Expenditure Changes • Summary of Projected Net Cash Flow Changes • Other Factors — Fiscal Condition of City — Non- Quantifiables 1 General Fund Revenues By Type Use of Money and Property, T% Licenses, Permits, Franchises, and Service Charges, 17% Transient Property Taxes, 46% Other, T% Sales Taxes, 16% General Fund Expenditures By Category General Fund Capital Outlay CIP' 2% 8% -Total City CIP Budget fill Ponds) Averages between $25- 35MIIIIOnPerYear. mineral Pond Averages §4 -8 Million. Maintenance & Operations 24% Salaries & Benefits 66% Trend in General Fund Revenues 60,000,000 — Property Taxes 50,000,000. —Sales Taxes P Omer Transient Occupancy Taxes 40,000,000 Licenses, Famine. Franchises, and Service CnaMes Use of Money and P.Perly 30,000,000 20,000,000 10,000,000 0. 199645 1995.96 199647 1997.90 1996 -99 1999.00 200041 2001 -2 200243 200344 2006.05' 2005. 06^ Fiscal Year Trend in General Fund Expenditures 100,000,000 - 90,000, 80,000, 70,000, 60,000, 50,000, 40,000, 30,000, 20,000, 10,000, 0 1990.05 1995.96 1996.97 1997 -90 1998 -99 1999.00 200041 2091-2 200203 200394 2000.05 200 &N Fiscal Year 000 t5alanes 8 Benefits 000 - �- MaiMenance80perations 000 -t Capital Outlay 000 -.. Capital 3 Projects 000 000 000 — 000 000 3 General Fund Revenues, Expenditures, & Fund Balance 120,000,000 T M Revenues & Net Transfers 100,000,000 ® Expenditures � Fund Balance 80,000,000 60,000,000 40,000,000 20,000,000 01 199445 199546 199647 1997 -98 199899 1999 -00 2000 -01 2001 -02 2002 -03 2003 -04 2004 -05 Fiscal Year 4 Salaries and Benefits by Function 35,000,000 0 Police 30,000,000 i Fire and Marine ■ Public Works and Ge neral Services ❑ Library and Recreation 25,000,000 EGeneml Government ❑ Building and Planning 20,000,000 15,000,000 10,000,000 5,000,000 0 1994.95 1995 -96 1996 -97 1997 -98 1998.99 199940 2000 -01 2001 -02 2002 -03 2003 -04 2004 -05 2005 -06 Fiscal Year General Fund Revenues, Expenditures, & Fund Balance 120,000,000 T M Revenues & Net Transfers 100,000,000 ® Expenditures � Fund Balance 80,000,000 60,000,000 40,000,000 20,000,000 01 199445 199546 199647 1997 -98 199899 1999 -00 2000 -01 2001 -02 2002 -03 2003 -04 2004 -05 Fiscal Year 4 Proposed Civic Center Proiected Operating Cost Changes City Hall, Parking Structure, & Fire Station #2 Annual Operating Costs 2005-06 2006 -07 2007 -08 2008-09 Janitorial Services 53,000 60,950 60,950 90,477 Wind. Cleaning 5,612 4,655 4,655 9,310 Heating& AC Maint/Repalr 52,105. - 19,158 Plumbing 25,000 - 6,000 Electrical Mainl & Repair 19,000 - 4,000 Utilities (Elect, Gas, Water) 114,436 90,000 90,000 157,567 landscape Maintenance 12,000 - 12,000. Termite Maintenance 2,000 - 3,300 Insurance(FirelEarthquakerFlood) 13,200 75,000 75,000 125,000 Insurance (All Risk) 5,800 - - 43,600 Insurance (Business Interruption) - - - 6,400 Insurance (Rental) - 15,000 15,000 - Insurance (Course ofConstruction) 60,000 6'000 Building Lease Expense - 1,250.00 1,250,000 - Fire Station k2Temporary - 6,000. 66,000 - Allowance for Unknovr, 100.000 100,000 100,000 Operating Costs 302,153 1,721,605 1,721,605 584,812 Annual Revenue Changes Net Revenue - Parking - - - 221,000 2 Trailers Salvage Value 10,000 Total Revenues 10,000 - 221,000 DaUService - 3,200,000 3,200,000 3,200,000 Net Annual Cash Outflow 302,153 4,911,605 4,921,605 3,563,812 Variance from Current Year N/A (4,619,452) (3;261,659) Projected Increases in Property Tax Revenue City of Newport Beach Projection of Property Tax Revenue Fiscal Years 2006 -07 to 2009 -10 Projected Property Tax Allocation 2006 -07 2007 -08 2008 -09 2009 -10 (ERAF Reduction not included) Secured Property Tax Rev 47,401,235 49,771,296 52,259,861 54,872,854 Homeowners Exemptions 536.562 536.562 536.562 536562 Total Secured 47,937,797 50,307,858 52,796,423 55,409,416 Supplemental Rev (Projected Levy) 1,697,280 1,731,226 1,765,850 1,801,167 Unsecured 1,978,649 2,018,222 2,058,586 2,099,758 Prior Yr. Redem and Pen 520.000 520.000 520.000 520.000 TOTAL Before Shifts 52,133,726 54,577,306 57,140,860 59,830,342 ERAF SHIFT 111 - - - - Property Tax ln-LleuofVLF 4,911,794 4,677,899 4,677,899 4,677,899 Property Tax In -Lieu of Sales Tax 5.943.228 5.660.217 5.660217 5.660 217 Total 82988.]4] 80.915.422 8].4]8.978 20.168.458 Change from Prior Year (200S06= $60,142,563) 2.846.184 1.926.675 2,563,654 2.689.482 Summary of Projected Revenue Changes City of Newport Beach — 2006 -07 to 2009 -10 2006 -07 2007 -08 2008 -09 2009 -10 Expected Expected Expected Expected Acct. Description Change Change Change Change Property Tax $2,846,184 $1,926,675 $2,563,554 $2,689,482 ERAF Reduction $2,264,302 $0 $0 $0 Sales and Use Tax - Normal Growth $789,479 $821,057 $853,899 $888,055 Sales and Use Tax -Laxus $532,509 $207,500 $222,500 $237,500 UTOT - Hotels - Normal Growth $328,000 $341,120 $354,765 $368,955 UTOT - Hotels - Pelican Hills $0 $1,696,292 $655,900 $94,088 UTOT - Hotels - Upgrades $0 $100,000 $100,000 $100,000 Interest Income $250,006 $125,000 $125,000 $125,000 All other Revenues (2.5%) $867,608 $889,298 $911,MO $934,31 9 Total $7 878 071 $6 106.942 $5 787 148 $5 437 399 Cumulative Change from 200506 $Z $2&Q7 513.985 013 19.772.161 A2s?no san Actual and Projected PERS City of Newport Beach Cost Changes $18.000.000 sts,0oo,000 ■Actual Cost ■ Normal Cost $1MOOA00 - - -- - -- - - - -- $+2.000,000 - $+0,000,000 56,000,000 52,000,000 - — so 2000 I 2001 -02 2002L3 2003-04 2006(5 2005-08 2006W 2007 -08 2008 2009 -10 EA E9. E4. Fiscal Year 51 Projected Changes in Expenditures (by Category of General Fund Expenditures —Year to Year Change) 2006 -07 2007 -08 2008 -09 2009 -10 Salary & Benefits $2,026,014 $2,582,589 $2,660,067 $2,739,869 PERS Rate Net Annual Change in Fund Balance 796.384 3.983.528 8.032.966 9;95_5 273 Reduction - $670,000 $815,000 $738,000 - $173,000 Maintenance & Operations $838,857 $864,022 $894,263 $930,034 Capital Outlay $27,365 $28,186 $29,172 $30,339 Capital Projects $250,000 $250,000 $250,000 $250,000 Total $2.472.235 $2.909.798 $3.095.503 $3.777.242 Cumulative Change from 2005 -06 52.472.235 85.382.033 S8 477.536 512.254.778 Summary of Projected Net Cash Flow Changes City of Newport Beach – 2006 -07 to 2009 -10 2006 -07 2007 -08 2008 -09 2009 -10 Year to Year Change in Revenues 7,878,071 6,106,942 5,787,148 5,437,399 Cumulative Total 7,878,071 13,985,013 19,772,161 25,209,560 Year to Year Change in Non -Cimc Center Expenditures - 2,472,235 - 2,909,798 - 3,095,503 - 3,777,242 Cumulative Total - 2,472,235 - 5,382,033 3,477,536 - 12,254,778 Ongoing Change Operating Cost of New Civic Center from 2005 -06 4,609,452 - 4,619.452 -3,261,659 -3,359,509 Net Annual Change in Fund Balance 796.384 3.983.528 8.032.966 9;95_5 273 7 Potential Future Expenses for CIPs Other General Fund Projects Planned or Being Considered (Next 5 -10 Years) Fire Station 7 Santa Ana Heights V 2,000,000 Police Station Facility TBD CDM Hardscaping Lifeguard Facility * 3,300,000 Park Projects: TBD Marine Science Center V 500,000 Sunset Ridge TBD Morning Canyon " 900,000 Mariners Park TBD Fire Station 1 Peninsula TBD Oasis Sr. Center TBD Fire Station 6 Mariners TBD Rhine Channel TBD Fire Station 5 CDM TBD Marinapark TBD Lifeguard Headquarters TBD Already planned and budgeted - -Funds notshown as available in Fund Balance projections # Estimate Summary of Fiscal Condition Four Main Indicators 1. Cash Flow Projection Indicates That Cost of Project Can Be Absorbed in Operating Budget - -No Service Reduction or Cuts in Other CIP Projects - -No Tax Increase Needed 2. General Fund Debt Now $7.8 million total outstanding $1.06 million annual debt service —.92% of Operating Budget If Civic Center Financing is Added $63 million (projected) total outstanding $4.45 million annual debt service -3.8% of Oneratin2 Budget (Is' year; will decline thereafter) 3. Tentative Uninsured Bond Rating (as projected by Financial Adviser) AA- (among the highest California Cities) 8 Summary of Fiscal Condition (continued) 4. Established Record of Fiscal Discipline by City Council & Staff 30-Jun-95 30-Jun-05 General Fund Reserves Reserve for Cap Projs (Infrastructure) $0 $14,300,000 Reserve for PERS Rate Changes $0 $5,000,000 Other Designated Reserves /Accounting Reserve $5,744,428 $18,179,004 as a % of the Operating Budget 9.3% 16.6% Contingency Reserve $2,333,765 $15,424,293 asa% of the Operating Budget 3.8% 14.1% General Fund Balance $8 ,484,247 $52,903,297 as a % of the Operating Budget 13.8% 48.4% Equipment Fund: Reserve for Vehicle Replacement $990,707 $8,973,237 asa% of Accumulated Depreciation 40.3% 67.3% Insurance Reserve Fund: LiabilityMork Comp. Rsn $660,883 $8,002,087 asa %of Claims /Judgement Liability 6.8% 57.2% Other Factors Non- Ouantifiables Balance Between Infrastructure Needs and Operating Needs City Hall is a Busy Place; How to place a relative value on -- Parking — "One Stop Shop" -- Seismic Safe Firefighter Facility -- Meeting Spaces and Community Facilities -- Improved Emergency Preparedness - -Staff Efficiency 9 4 W po�� O 9L jFpg�1 10