HomeMy WebLinkAbout4.15 First Quarter Financial ReviewOF
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DATE:
TO:
STAFF REPORT
CITY COUNCIL
November 17, 2015
Honorable Mayor and City Councilmembers
FROM: Christopher L. Foss, City Manager J
SUBJECT: Fiscal Year 2015 -16 1 st Quarter Financial Review
Prepared by Colleen Tribby, Administrative Services Director
EXECUTIVE SUMMARY:
CITY CLERK
File #330 -50
The City Council will receive a financial report on the first quarter for Fiscal Year 2015 -16 and
consider amendments to the FY 2015 -16 Budget. The City Council will also receive a high level
update to the 10 -Year General Fund Forecast.
FINANCIAL IMPACT:
Approval of the FY 2015 -16 budget change will result in a net increase of $1,127,710 to the
General Fund revenue budget. Total General Fund reserves are projected at $92,072,070 as of
June 30, 2016.
While there are no significant changes expected in other funds this fiscal year, there is a minor
adjustment needing City Council approval in the Measure D Fund related to recycling activities,
and in the Information Technology Fund for software consultant costs. Neither adjustment will
result in a significant impact to those funds. The City Council will also confirm out -of -state travel
taken during FY 2015 -16, with no net budget impact.
RECOMMENDATION:
Staff recommends that the City Council receive the report, approve the Budget Change Form for
FY 2015 -16, and receive the updated 10 -Year General Fund Forecast.
Reviewed By
Assistant City Manager
DESCRIPTION:
This report focuses on the projected FY 2015 -16 fund balance in the General Fund, updated
with information collected through the first quarter. The projections include budget amendments
already approved by the City Council since July 1, carry -over budgets from FY 2014 -15, and an
adjustment to the property tax budget needing approval. There are no adjustments needed to
Page 1 of 5 ITEM NO. 4.15
General Fund expenditures at this time, however, Staff is requesting new appropriations in other
funds in the current fiscal year.
This report also includes a high level update to the 10 -Year General Fund Forecast,
incorporating the information from the FY 2015 -16 projections. A more comprehensive forecast
will be presented to the City Council with the next quarterly review.
FY 2015 -16 Quarterly Review
UPDATED PROJECTIONS
Property Tax: $1,127,710 higher than budget
The City was recently notified that the FY 2015 -16 tax roll includes a net taxable value increase
of 13.3 %, or roughly $1.5 billion, which was the highest increase of all cities in the County and
was significantly more than the increase experienced countywide at 7.6 %. Table 1 below shows
the changes to assessed value (AV) by category, listed by largest to smallest change over the
prior year.
Table 1: AV Changes by Category
Category
# Parcels
FY 2014/15
Net Taxable Value
% Total
FY 2015/16
# Parcels Net Taxable Value
$ Change
% Change
% of Total
Residential
16,268
$
8,344,901,838
75.1%
16,904
$ 9,602,057,413
$ 1,257,155,575
15.1%
84.8%
Vacant
965
$
787,526,476
7.1%
655
$ 920,616,839
$ 133,090,363
16.9%
9.00/0
Commercial
261
$
1,377,354,474
12.4%
268
$ 1,471,941,323
$ 94,586,849
6.9%
6.4%
Industrial
60
$
271,657,081
2.4%
61
$ 275,667,875
$ 4,010,794
1.5%
0.3%
Institutional
18
$
24,468,361
0.2%
20
$ 25,746,845
$ 1,278,484
5.2%
0.1%
Govt. Owned
2
$
33,201,528
0.3%
2
$ 33,865,466
$ 663,938
2.0%
0.00/0
Exempt
228
$
-
0.00/0
263
$ -
$ -
0.00/0
0.00/0
SBE Nonunitary
[1]
$
204,575
0.00/0
[1]
$ 204,575
$
0.00/0
0.00/0
Recreational
13
$
13,782,460
0.1%
13
$ 12,211,278
$ (1,571,182)
-11.4%
-0.1%
Dry Farm
13
$
31,851,740
0.3%
12
$ 28,963,072
$ (2,888,668)
-9.1%
-0.2%
Unsecured
[1546]
$
229,047,093
2.1%
[1538]
$ 225,961,460
$ (3,085,633)
-1.3%
-0.2%
TOTALS
17,828
$
11,113,995,626
100.0%
18,198
$ 12,597,236,146
$ 1,483,240,520
13.3%
100.0.0
Residential AV experienced the largest growth, with a net change of nearly $1.26 billion,
accounting for 84.8% of the total growth. Within this category, the annual Proposition 13 inflation
adjustment was 1.998% (of a maximum 2.0 %), accounting for an AV increase of $171.2 million.
Other drivers of that increase included new residential inventory, increased median sales price,
and the restoration in AV of properties formerly reduced through the Proposition 8
reassessments.
According to the City's property tax consultants, roughly 72% of properties in the City of Dublin
awaiting recapture in FY 2012 -13 have been fully restored in value, leaving $143 million of
Proposition 8 potential recapture remaining.
The net effect of the AV change on the City's FY 2015 -16 property tax revenue budget is an
increase of $1.12 million. While this is an increase to revenues in the current year and creates a
new baseline to use in the long -term outlook, Staff does not expect to see increases like this on
an ongoing basis, particularly as development continues to slow down, median home price
growth begin to stabilize, and Proposition 8 restorations become fully recaptured.
Page 2 of 5
With the increased property tax revenue, the ending fund balance in the General Fund in FY
2015 -16 is projected at $92,072,070 a decrease of $5,634,425 from FY 2014 -15. The decrease
accounts for the planned spending of reserves on Capital Improvement Program projects, as
illustrated in Attachment 1.
ITEMS NEEDING CITY COUNCIL APPROVAL (Budget Change Form Attached)
Following is a summary of actions requiring City Council approval. It should be noted that item
#1 was described above and item #2 and 3 are further explained below:
1. Budget adjustments, General Fund
a. Increase Property Tax Revenue: $1,127,710
2. Budget adjustments, Non - General Fund
a. Appropriate $57,801 in the Measure D Fund (2302) to spend CalRecycle Can and
Bottle Recycling grant funds collected between FY 2009 -10 and FY 2013 -14. Staff
plans to use the funds to purchase recycling /organics /trash container sets for City
facilities, and to purchase recycled content products for park facilities, including
recycling containers and park furniture (benches, chairs, tables). Per CalRecycle, the
funds must be used either to promote can and bottle recycling, or to purchase
products that are made from recycled can /bottle materials.
b. Appropriate $35,000 in the Information Technology Fund (6605) for a contract with
Clientfirst Technology Consulting to cover the consultant's work in vendor selection
and contract negotiation for a new recreation software system.
3. Other Items (No Budget Impact):
a. Out -of -State Travel Confirmation:
• Mayor Haubert to China for a regional delegation trip not directly paid for or
sponsored by the City (incidental expenses only).
• Dublin Police Chief Houghtelling to Chicago to attend the International
Association of Chiefs of Police Conference
10 -YEAR FORECAST: UPDATED NOVEMBER 2015
SUMMARY
The most current 10 -year projection shows the City's General Fund operating expenditures
outpacing revenue starting in FY 2021 -22, with a deficit of $1.4 million that year (see Table 2).
Table 2: General Fund 10 -Year Summary
Page 3 of 5
Revenue
70.7 M
74.3 M
75.2 M
75.1 M
76.1 M
76.9 M
78.3 M
79.9 M
81.9 M 83.4 M
Expenditures
63.4 M
67.8 M
70.4 M
72.3 M
74.2 M
76.8 M
79.7 M
82.7 M
85.8 M 88.8 M
Impact
$7.3 M
$6.5 M
$4.8 M
$2.8 M
$1.9 M
$0.1 M
$(1.4 M)
$(2.9 M)
$(4.0 M) $(5.5 M)
Page 3 of 5
The updated forecast incorporates the most recent economic trends in the City's three largest
revenue categories, and reasonable assumptions about annual increases in expenditures. The
following is a discussion of the assumptions.
MAJOR REVENUES
PROPERTY TAX:
The City has benefited from the continued rise in home prices in the Bay Area, as Dublin saw
double digit median home price increases in each of the past three years. The increased home
values have also led to the City recapturing a majority of the Proposition 8 value that lowered
homes assessed values during the great recession. Accelerated development activity is also
resulting in spikes in AV as the new properties are added to the tax roll sooner than anticipated.
The FY 2016 -17 property tax projection assumes a 1.98% Proposition 13 growth rate factor on
an updated AV base of $12.6 billion. Future fiscal years incorporate a 1.0% Proposition 13
growth rate factor per year. A reasonable estimate of the Proposition 8 recapture is then
applied, which will eventually be phased out as all properties are restored to their value
allowable under Proposition 13. Additionally, all developments currently underway have been
factored in with estimated completion dates and estimated future property values. These
estimates have the cumulative effect of increasing the City's FY 2016 -17 and FY 2017 -18 AV by
$579.0 million. Finally, all other property tax categories (e.g., transfer of property, tenant
improvements) are projected using historical averages, factoring out large one -time variances.
SALES TAX:
The FY 2015 -16 budget includes a one -time $1.2 million payment from the State due to the end
of the "Triple Flip," therefore the projected FY 2016 -17 sales tax revenue is lower than in FY
2015 -16. When factoring out the one -time payment, the FY 2016 -17 projection actually
represents growth of 3.9 %, excluding sales tax sharing agreements. Staff has also built in a
slight loss to account for business competition in neighboring cities. Future year projections are
based on 3% and 2% growth for a two- and three -year period, respectively, and 2.0% growth for
the remaining years of the forecast.
Table 4 illustrates how these factors translate to City revenue. Specific business names have
been blacked out to protect proprietary information.
DEVELOPMENT REVENUE
Development revenue (via permits and development services charges) is based on the most
current schedule of existing projects, which has accelerated (compared to preliminary
estimates) in the last two fiscal years. This acceleration will result in increased building permit
revenue in FY 2016 -17, with subsequent double -digit annual decreases thereafter. As with
permit revenue, other types of development revenue are projected to be received in the next two
fiscal years, with steep double digit declines starting in FY 2018 -19 through FY 2022 -23, and
flattening as the City approaches build -out.
OTHER REVENUE
All other revenue sources are projected to either remain flat or increase at approximately 1%
annually.
Page 4 of 5
EXPENDITURES
PERSONNEL
Salary projections include a maximum 3% merit pay and 3% Cost of Living Adjustment for the
10 -year period. Benefits are projected to increase at a relatively low rate of 2.72% over the next
10 years, due to the proactive measures taken by the City Council to contain future pension and
retiree health costs.
CONTRACTED SERVICES
Contracted Services are projected to increase 2.6% annually over the next 10 years, due to the
net effect of the following:
• A 3% annual increase in the maintenance contract;
• An approximate 3% annual increase in the Fire Services contract as provided by
Alameda County Fire;
• A 5.5% annual increase in contracted Police Services costs, based on historical
increases over the past four years;
• Proportionate decreases in development contract costs as the City approaches build -out;
• A 2% annual increase in all other contracted services.
CONCLUSION
It is important to note that while the current forecast does make some assumptions about the
operation and maintenance of future City facilities (e.g., the Emerald Glen Recreation and
Aquatics Complex, and the Dublin Crossings Community Park), it does not yet take into account
some other potentially significant impacts anticipated over the next several years. For example,
Staff will be preparing a citywide Preventative Maintenance Plan which will provide an
assessment of the true cost of owning and maintaining all City assets. Until the impact of such a
plan is known, Staff has incorporated a very conservative estimate of the related annual cost in
the forecast, but that estimate will be revised as the project gets underway.
Staff will continue to update the City Council on the on the long -term financial health of the City,
with the next update to be provided with the mid -year financial review. At that time Staff will
have more accurate Sales Tax estimates for FY 2015 -16 and may have adjustments to General
Fund expenditures.
NOTICING REQUIREMENTS /PUBLIC OUTREACH:
None.
ATTACHMENTS: 1. General Fund Summary, FY 2015 -16 1St Quarter Projection
2. Budget Change
Page 5 of 5
GENERAL FUND SUMMARY, FY 2015 -16 1st QUARTER PROJECTION
Actual
Adopted
Amended
J
Projected vs
14 -15
15 -16
15 -16
Amended
Revenues
Property Taxes
29,437,951
31,786,036
31,786,036
32,913,746
1,127,710
Sales Tax
18,571,057
20,236,439
20,236,439
20,236,439
Other Taxes
6,159,654
4,908,000
4,908,000
4,908,000
Development Permits
5,860,052
2,938,433
2,938,433
2,938,433
Development Services
4,781,506
4,032,006
4,032,006
4,032,006
Other Licenses & Permits
195,203
185,259
185,259
185,259
Fines & Penalties
124,529
109,932
109,932
109,932
Interest
550,264
466,191
466,191
466,191
Rentals & Leases
1,001,581
943,073
943,073
943,073
Intergovernmental
483,300
198,620
198,620
198,620
Charges for Services
5,527,476
3,867,803
3,867,803
3,867,803
Other Revenue
441,791
359,917
359,917
359,917
Community Benefit Payment
2,964,899
675,678
675,678
675,678
Subtotal Revenues
76,099,262
70,707,387
70,707,387
71,835,097
1,127,710
Carryover Prior Year Operating Revenues
866,562
866,562
Total Revenues
76,099,262
70,707,387
71,573,949
72,701,659
1,127,710
Expenditures
Salaries & Wages
9,465,819
10,535,746
10,520,746
10,520,746
Benefits
4,395,043
5,074,484
5,074,484
5,074,484
Services & Supplies
1,584,944
2,641,339
2,642,839
2,642,839
Internal Service Fund Charges
1,763,226
2,584,258
2,584,258
2,584,258
Utilities
1,724,116
2,100,310
2,100,310
2,100,310
Contracted Services
37,400,528
39,397,142
39,244,563
39,244,563
Capital Outlay
174,314
329,250
355,005
355,005
Contingency & Contributions
69,264
717,756
692,001
692,001
Future Projects
-
-
-
-
Subtotal Expenditures
56,577,252
63,380,285
63,214,206
63,214,206
Carryover Prior Year Operating Expenditures
866,562
866,562
Total Expenditures
56,577,252
63,380,285
64,080,768
64,080,768
SURPLUS /(DEFICIT)
19,522,010
7,327,102
7,493,181
8,620,891
1,127,710
CIP / One -Time Expenditures
Maintenance Yard *
(883,578)
(250,023)
Public Safety Complex *
(7,022)
PD Wing Renovation *
(31,857)
(1,968,143)
Emerald Glen Aquatics Complex *
(2,897,650)
(3,000,000)
Civic Center Modifications *
(122,339)
(33,118)
Cemetery Expansion *
(6,928)
(998,151)
(1,808,183)
Contribution to ISF *
(2,000,000)
Amador Plaza Rd Bicycle & Pad Impr *
(9,605)
(459,647)
Shannon Center Parking Lot *
(275,000)
Fallon Sports Park - Phase 1 *
(1,800,000)
(1,800,000)
Storm Drain Trash Capture *
-
(400,000)
(400,000)
San Ramon Rd Landscape
(405)
(238,660)
Sidewalk Safety
(67,784)
(104,925)
(244,252)
Electronic Agenda
(27,902)
(216,103)
Network Syst Upgrade
(89,789)
(30,000)
(254,004)
Tennis Court Resurfacing
(133,090)
GIS Upgrades
(19,000)
(106,656)
ADA Transition
(22,400)
(23,833)
(45,010)
Storm Drain Condition
(184)
(83,128)
(289,954)
TOTAL CIP /ONE -TIME EXPENDITURES
(1,393,277)
(8,366,292)
(13,388,754)
(13,388,754)
USE OF RESERVES *
1,051,723
6,105,406
11,994,115
11,994,115
NET IMPACT ON RESERVES
18,128,733
(1,039,190)
(6,762,135)
(5,634,425)
1,127,710
TOTAL RESERVES
97,706,494
90,944,360
92,072,070
1,127,710
From Un- Appropriated Reserves
From Designated Reserves
CITY OF DUBLIN
FISCAL YEAR 2015 -16
BUDGET CHANGE FORM
X
Budget Change Reference #:
Budget Transfer Between Funds
Other
Account Amount Account Amount
1. Account for increased property taxes due to higher Assessed Value
Appropriate CalRecycle Can and Bottle Recycling grant funds collected between FY 2009 -10 and FY 2013 -14
Appropriate funds for consultant costs in vendor selection and contract negotiation for new recreation software
As Presented at the City Council Meeting 11/17/2015
G: \Quarterly Reports \FY 14 -15 \Q3 14- 15 \14 -15 Q4 Budget Adjustments 14 -15 Q4 Budget Adjustments
General Fund Property Tax (1)
1001.0000.41101 $1,127,710
Measure D Fund - Recycling Activities (2)
2302.5201.61104 $57,801
Information Technology Fund - Contracted Services (3)
6605.1602.64001 $35,000
1. Account for increased property taxes due to higher Assessed Value
Appropriate CalRecycle Can and Bottle Recycling grant funds collected between FY 2009 -10 and FY 2013 -14
Appropriate funds for consultant costs in vendor selection and contract negotiation for new recreation software
As Presented at the City Council Meeting 11/17/2015
G: \Quarterly Reports \FY 14 -15 \Q3 14- 15 \14 -15 Q4 Budget Adjustments 14 -15 Q4 Budget Adjustments
Posted By:
FISCAL YEAR 2015 -16
BUDGET CHANGE FORM
Date:
Budget Change Reference #:
G: \Quarterly Reports \FY 14 -15 \Q3 14- 15 \14 -15 Q4 Budget Adjustments 14 -15 Q4 Budget Adjustments