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HomeMy WebLinkAbout16 - Changes to the Fiscal Sustainability Plan and Finance Committee Administrative PracticesCTY OF F NEWPORT BEACH City Council Staff Report May 26, 2015 Agenda Item No. 16 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Dan Matusiewicz, Finance Director — (949) 644 -3123, dmatusiewicz @newportbeachca.gov PREPARED BY: Steve Montano, Deputy Finance Director PHONE: (949) 644 -3240 TITLE: Changes to the Fiscal Sustainability Plan and Finance Committee Administrative Practices ABSTRACT: The Finance Committee met on May 11, 2015, and recommended changes to the Fiscal Sustainability Plan to ensure that infrastructure funding is made an explicit priority. The Finance Committee also recommended minor changes to the Finance Committee Description to allow for meetings to be held as required by the business needs of the Finance Committee in such locations and at a time that is convenient for the Committee and the public in furtherance of public participation. RECOMMENDATION: a) Amend the Fiscal Sustainability Plan as described in Staff Report Attachment A; and b) Adopt Resolution No. 2015 -40, A Resolution of the City Council of the City of Newport Beach Amending the Administrative Practices of the Finance Committee (Staff Report Attachment B). FUNDING REQUIREMENTS: None. DISCUSSION: Fiscal Sustainability Plan The City of Newport Beach has remained a fiscally responsible municipality since its inception in 1906, carefully balancing its budget year -to -year despite changes in the regional and national economy. The Great Recession that began in December 2007 impacted the City's General Fund operations in a significant manner, causing reductions in sales tax and hotel bed tax revenue, among other sources of revenue. On January 12, 2010, the City Council adopted fifteen (15) elements of a Fiscal Sustainability Plan and directed that the Plan be the policy of the City Council going forward into 2010 and beyond. The Plan has not been significantly changed since it was adopted over five years ago. 16 -1 While the City and the region have returned to a period of economic growth, the City is cognizant of its responsibility to continuously improve the organization and its services to maximize efficiency and cost - effectiveness. The Finance Committee met on May 11, 2015, and recommended the augmentation of the Fiscal Sustainability Plan to ensure that infrastructure funding is made an explicit priority. Maintaining a high - quality natural and physical environment by creating aesthetically pleasing places to live, work, recreate, and visit shall remain a key goal of the City. It is recommended the City Council amend the Fiscal Sustainability Plan as described in Attachment A. Finance Committee Administrative Practices On December 12, 1994, the City Council adopted Resolution No. 94 -110 establishing the Finance Committee, whose duties and responsibilities have been amended throughout the years to further protect and safeguard the public's money. On January 13, 2015, the City Council adopted Resolution No. 2015 -5 to amend the Finance Committee to: (1) add citizen members; (2) describe the qualifications of the citizen members; (3) clarify the budget review role of the Finance Committee; (4) set a meeting schedule; (5) create an appointment process to the Finance Committee; and (6) generally maintain the duties assigned to the existing Finance Committee. After holding several meetings of the newly constituted committee it has become evident that a few minor revisions to the administrative practices of the Finance Committee will increase its flexibility and efficiency. The Finance Committee met on May 11, 2015, and recommended these changes to allow for meetings to be held as required by the business needs of the Finance Committee in such locations and at a time that is convenient for the Committee and the public in furtherance of public participation. It is recommended the City Council amend the Finance Committee Description as described in Attachment B. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: Noticed according to the Ralph M. Brown Act. ATTACHMENTS: Description Attachment A - Redlined Version of the Amended Fiscal Sustainability Plan Attachment B - Resolution Amending Admin Practices of the Finance Committee 16 -2 ATTACHMENT A Redlined Version of the Amended Fiscal Sustainability Plan 16 -3 Pormatted: Centered 15 POINT FISCAL SLISTAINABILITY PLAN for Newport Beach City Government 1. The City will proactively seek to protect and expand its tax base by encouraging a healthy underlying local economy. 2. The City will work to enhance and protect the property values of all Newport Beach residents and property owners. 3. The City will work to enhance and protect the City's quality of life through strategic and sustained investment in quality capital infrastructure improvements that are both long lasting and fiscally responsible. 64. The City will encourage shopping, dining, and visiting at Newport Beach stores, restaurants, and hotels. 45. The City will establish and maintain appropriate cash reserves. 66. The City will manage its Facilities FiRRRse Financial Plan to not exceed the 5% of General Fund eXpeaditaresrevenue threshold. 67. City revenue performance will be reviewed no less than quarterly and appropriate budget adjustments will be made in advance of the end of a budget year if revenue performance is not meeting projections. 7--8. The City will initiate a "results -based budgeting" approach that allows the public and the City Council to prioritize City expenditures strategically rather than simply adjusting legacy expenditures to reflect inflation. 69. The City will implement a Performance Measurement/Management Strategy as part of an ongoing effort to ensure high - quality and efficient performance. 9-10. The City will consider competitive contracting of services and equipment when appropriate and where clear, cost - effective alternatives exist. 49-11. The City will make it a priority to be energy efficient in its provision of public services. 4412. The City will establish appropriate cost - recovery targets for its fee structure and will annually adjust its fee structure to ensure that the fees continue to meet cost recovery targets. 4-13. The City will oppose efforts of the State and County governments to divert revenues from the City or to increase the unfunded service mandate of City taxpayers. 45-14. The City will work in partnership with its employees to ensure fair compensation and that costs related to pension and other benefits are appropriately allocated between employer and employees. 4415. The City will vigorously defend itself and its taxpayers against frivolous lawsuits. 45-16. The City will seek additional intergovernmental funding and grants, with a priority on funding one -time capital projects. Grant - funded projects that require multi -year support will be reviewed by the Finance Committee. 16 -4 ATTACHMENT B RESOLUTION NO. 2015- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA, AMENDING THE ADMINISTRATIVE PRACTICES OF THE FINANCE COMMITTEE WHEREAS, the City Council of the City of Newport Beach ( "City ") has a long and established history of being good guardians and stewards of the public's money; WHEREAS, appropriations, expenditures and other budgetary matters are a primary concern of the City Council; WHEREAS, the City Council has adopted various policies regarding financial matters; WHEREAS, the City Council has adopted policies regarding income property and annexations, which may have an impact on the City's finances; WHEREAS, on December 12, 1994, the City Council adopted Resolution No. 94- 110 establishing the Finance Committee, whose duties and responsibilities have been amended throughout the years to further protect and safeguard the public's money; WHEREAS, on January 13, 2015, the City Council adopted Resolution No. 2015- 5 to amend the Finance Committee to: (1) add citizen members; (2) describe the qualifications of the citizen members; (3) clarify the budget review role of the Finance Committee; (4) set a meeting schedule; (5) create an appointment process to the Finance Committee; and (6) generally maintain the duties assigned to the existing Finance Committee; and WHEREAS, after holding several meetings of the newly constituted committee it has become evident that a few minor revisions to the administrative practices of the Finance Committee will increase its flexibility and efficiency. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The City Council hereby amends the Finance Committee as described in Attachment 'A" which is incorporated herein by reference. Section 2: The City Council hereby repeals all resolutions related to the Finance Committee that are in conflict with this resolution. Section 3: If any section, subsection, sentence, clause or phrase of this resolution is for any reason held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution and each section, 16 -5 subsection, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses and phrases be declared unconstitutional. Section 4: The recitals provided in this resolution are true and correct and are incorporated into the substantive portion of this resolution. Section 5: The City Council finds the adoption of this resolution and the amendment of the Finance Committee is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Section 6: This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting this resolution. ADOPTED this day of 2015. Edward D. Selich, Mayor ATTEST: Leilani I. Brown, City Clerk Attachment: Amended Finance Committee Description 16 -6 FINANCE COMMITTEE AUTHORIZATION: Established by Resolution No. 94 -110 adopted on December 12, 1994. Modified by Resolution No. 96 -100 adopted on December 9, 1996. Disbanded by Resolution No. 98 -32 adopted on May 11, 1998. Re- established by Resolution No. 2000 -103 adopted on December 12, 2000. Duties and membership amended by Resolution No. 2007 -21 adopted on April 10, 2007. Purpose and responsibilities amended by Resolution No. 2013 -32 adopted on April 9, 2013. Membership, qualifications and term of members, and purpose and responsibilities amended by Resolution No. 2015 -5 adopted on January 13, 2015. Administrative practices amended by Resolution No. 2015- adopted on . 2015. MEMBERSHIP: Seven (7) total. Three (3) Council Members appointed by the Mayor subject to full City Council approval. Four (4) Citizen Advisors appointed by the Council Members not on the Committee subject to approval of the full City Council. Citizen Advisors have equal voting status. The Mayor shall appoint the chairperson subject to confirmation of the full City Council. Staff support shall be provided primarily by the City Manager and the Finance Director and by other staff as necessary. Meetings shall be held as required by the business needs of the Finance Committee in the City Council Chambers or such other locations as allowed by the Ralph M. Brown Act, as required, on weeknights or weekdays (M -Th) even xs at a time that is convenient for the Finance Committee and the public 4qF ,..._r,._ fl-a-- A-P" P44 to encourage public participation. TERM OF COUNCIL MEMBERS: Indefinite pending City Council action. TERM OF APPOINTED MEMBERS Appointed Annually QUALIFICATIONS OF 16 -7 APPOINTED MEMBERS: 1. Must be a resident of the city of Newport Beach 2. Must be a registered voter in Newport Beach 3. Must be appointed by a City Council Member 4. Recommended, but not required, that the appointee be a CPA, CFA or Business/ Finance major or other such designation as may be appropriate. PURPOSE & RESPONSIBILITIES: A. Review and monitor events and issues which may affect the financial status of the City; B. Make recommendations to the City Council regarding amendments to financial and budgetary policies; C. In accordance with Sections 504 & 1101 of the City Charter, review the City Manager's proposed budget and give recommendations to the City Manager in advance of the budget's presentation to the City Council. The Committee's recommendations shall be provided in writing to the City Council along with the City Manager's presented budget. D. Recommend for Council approval, and manage an on -going process for measuring and setting goals designed to maximize the City's revenues consistent with existing taxation structures and inter- governmental funding opportunities, fee generation consistent with market rate charges for City provided services and market rate fees for utilization of City owned assets. Recommend to Council major initiatives to accomplish identified goals; E. Recommend for Council approval, and manage an on -going process for measuring and setting goals designed to minimize the City's cost to provide core services and required activities, consistent with the desired service level for residents and other internal and external customers. Recommend to Council major initiatives to accomplish identified goals; F. Review with staff on an annual basis the timing, means of financing, and fiscal impacts associated with funding the high - priority projects designated in the iL�:l Facilities Financing Plan. After approval by the City Council, identify, review and annually recommend to Council the most advantageous methods to fund the City Council's approved Facilities Financing Plan; G. Identify, review and annually recommend to Council the most advantageous methods to fund the City's long term compensation and benefit program liabilities; H. Review and recommend to Council policies related to the setting of funding goals for reserves, and review on -going progress related thereto; I. Review the structure and documentation of any proposed debt financing to assess the risk associated with debt usage; J. Conduct audit conference meeting(s) with the auditors to provide independent review and oversight of the City of Newport Beach's financial reporting processes, framework of internal control, and to provide a forum in which auditors can candidly discuss concerns in the absence of staff; and K. Recommend for Council approval and monitor and review activities related to Investment Guidelines for City Reserve and investment funds. 16 -9