HomeMy WebLinkAbout17-13 CC Resolution RESOLUTION NO. 17-13
' A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF TEMECULA, AMENDING THE FISCAL YEAR 2016-17
ANNUAL OPERATING BUDGET, AND BUDGET AND
FISCAL POLICIES
THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE
AS FOLLOWS:
Section 1. The purpose of this review is to conduct an analysis of revenues
and expenditures to ensure that the City maintains a prudent and healthy fiscal position.
Section 2. That each year a mid-year review is conducted of City operating
budgets.
Section 3. That the mid-year review has been completed and the
recommended adjustments are reflected in the attached schedules for the City's
General Fund, Special Revenue, and Internal Services Funds.
Section 4. That the Fiscal Year 2016-17 General Fund Annual Operating
Budget is hereby amended in accordance with the attached Exhibit A, General Fund
Fiscal Year 2016-17 Mid-Year Budget.
Section 5. That the Fiscal Year 2016-17 Special Revenue Funds Annual
Operating Budgets are hereby amended in accordance with the attached Exhibit B —
Special Revenue Funds Fiscal Year 2016-17 Mid-Year Budget.
Section 6. That the Fiscal Year 2016-17 Internal Services Funds Annual
Operating Budgets are hereby amended in accordance with the attached Exhibit C,
Internal Services Funds Fiscal Year 2016-17 Mid-Year Budget.
Section 7. That the Fiscal Year 2016-17 Budget and Fiscal Policies is hereby
amended in accordance with the attached Exhibit D, Budget and Fiscal Policies.
Section 8. That Fund 002: Measure S Fund be established to account for
activities related to the Transactions and Use Tax passed by voters on November 8,
2016.
Section 9. The City Clerk shall certify adoption of the resolution.
Resos 17-13 1
PASSED, APPROVED, AND ADOPTED by the City Council of the City of
Temecula this 28th day of February, 2017.
Maryann Edwards, Mayor
ATTEST:
Randi Johl, Wderk
[SEAL]
Resos 17-13 2
STATE OF CALIFORNIA )
' COUNTY OF RIVERSIDE ) ss
CITY OF TEMECULA )
I, Randi Johl, City Clerk of the City of Temecula, do hereby certify that the
foregoing Resolution No. 17-13 was duly and regularly adopted by the City Council of the
City of Temecula at a meeting thereof held on the 28th day of February, 2017, by the
following vote:
AYES: 5 COUNCIL MEMBERS: Comerchero, Naggar, Rahn, Stewart,
Edwards
NOES: 0 COUNCIL MEMBERS: None
ABSTAIN: 0 COUNCIL MEMBERS: None
ABSENT: 0 COUNCIL MEMBERS: None
Randi Johl, City Clerk
Resos 17-13 3
Ink
City of Temecula
C(eZ '-r Fiscal Year 2016-17
Mid-Year Adjustments
EXHIBIT A
General Fund
FY2016-17 Mid-Year Budget
' Fiscal Year 2016-17 Mid-Year Budget Adjustments
City of Temecula
Fiscal Year 2016-17
Mid-Year Adjustments
' Fund: 001 GENERAL FUND
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Prior Year Contractual Obligations - - - 189,655 189,655 0.00%
Revenues by Category
Taxes and Franchises 52,286,879 51,555,338 22,179,190 1,135,452 52,690,790 2.20%
Licenses,Permits and Service Charges 4,731,274 4,227,424 2,109,256 120,768 4,348,192 2.86%
Fines and Forfeitures 730,228 750,095 328,134 (13,606) 736,489 -1.81%
Use of Money and Property 183,673 136,471 (163,453) (252,000) (115,529) -184.65%
Intergovernmental Revenues 7,128,079 7,391,297 3,763,624 87,093 7,478,390 1.18%
Reimbursements 2,167,112 2,855,780 1,077,958 - 2,855,780 0.00%
Operating Transfers In 2,859,156 2,341,365 1,135,950 1,194,798 3,536,163 51.03%
Miscellaneous Revenue 144,907 151,770 78,175 (12,260) 139,510 -8.08%
Total Operating Revenues 70,231,308 69,409,540 30,508,834 2,449,900 71,859,440 3.53%
Expenditures by Department
City Council 415,306 453,142 180,779 - 453,142 0.00%
Community Support 76,750 89,108 5,200 - 89,108 0.00%
City Manager 1,270,705 1,434,625 671,949 (29,000) 1,405,625 -2.02%
Economic Development 904,643 989,783 552,927 18,870 1,008,653 1.91%
Emergency Management 110,745 137,842 63,111 (850) 136,992 -0.62%
City Clerk 969,865 1,215,270 490,051 - 1,215,270 0.00%
City Attorney 588,978 735,726 263,067 - 735,726 0.00%
Finance 2,094,179 2,326,700 1,100,241 51000 2,331,700 0.21%
' Human Resources 609,855 719,804 328,956 57,610 777,414 8.00%
Planning 1,818,232 2,117,464 902,043 (4,375) 2,113,089 -0.21%
Building&Safety 2,273,797 2,416,190 1,088,206 78,567 2,494,757 3.25%
Land Development 1,360,541 1,535,873 695,174 25,000 1,560,873 1.63%
Public Works 4,803,434 5,596,581 2,180,943 176,000 5,772,581 3.14%
CIP Admin 2,038,927 2,166,508 919,400 275,000 2,441,508 12.69%
Parks Maintenance 3,465,519 3,636,634 1,674,105 - 3,636,634 0.00%
Police 24,925,210 27,795,363 10,806,938 1,034,551 28,829,914 3.72%
Fire 5,322,448 6,039,675 2,615,901 48,650 6,088,325 0.81%
Animal Control 473,394 459,128 313,721 4,144 463,272 0.90%
Non Departmental:
Property Tax Admin 66,004 79,024 78,293 (731) 78,293 -0.93%
Recreation Funding 5,636,876 4,848,307 2,424,154 (575,000) 4,273,307 -11.86%
Service Level B Funding - 381,396 271,989 (50,000) 331,396 -13.11%
Library Funding - 649,542 324,771 (1001000) 549,542 -15.40%
Retiree Medical Contribution 512,617 762,617 287,629 791,766 1,554,383 103.82%
PERs Replacement Benefit 90,257 72,067 - 8,603 80,670 11.94%
Separation CAL Payout - - - 230,000 230,000 0.00%
Classification Plan Transition - - - - - 0.00%
Classification Plan Stipend(Non-GF) - 250,000 250,000 - 250,000 0.00%
Sales Tax Sharing Agmt - 308,755 - 144,773 453,528 46.89%
2011 Financing Lease-2001&2008 COPS 2,136,901 2,140,222 1,069,706 - 2,140,222 0.00%
Pavement Management Program - 0.00%
Total Operating Expenditures 61,965,184 69,357,345 29,559,254 2,138,578 71,495,923 3.08%
Excess of Revenues Over(Under)Expenditures 8,266,124 52,195 949,580 311,322 363,517 596.46%
Fund Description
The General Fund is the main operating fund for the City of Temecula. It is used to account for all financial resources for the City that are not
restricted to a special purpose and otherwise required to be accounted for in another fund. The General fund provides the resources necessary
to sustain the day-today activities and pays for all administrative and operating expenditures.
City of Temecula
�� -1 Fiscal Year 2016-17
eorik --- ---_. Mid-Year Adjustments
' Fund:001 GENERAL FUND
2016-17 Year to Date Proposed 2016-17
201516 Current Actuate Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Excess of Revenues Over(Under)Expenditures 8,266,124 52,195 949,580 311,322 363,517 596.46%
Operating Transfers Out/One Time Payments
Pavement Management Program - (250,000) (250,000) (250,000) 0.00%
City and Parks Facility Rehabilitation (420,000) (295,000) (295,000) (295,000) 0.00%
Workers'Compensation (250,000) - - - 0.00%
Capital Improvement Fund (1,248,326) (1,380,973) (1,050,973) - (1,380,973) 0.00%
Intern Fellowship Program Fund (19,645) - - - 0.00%
Business Incubator Fund (187,127) (295,045) (147,523) (295,045) 0.00%
Total Transfers Out/One Time Payments (2,125,098) (2,221,018) (1,743,496) (2,221,018) 0.00%
Fund Balance,Beginning of Year 26,060,895 32,201,920 32,201,920 32,201,920 0.00%
Fund Balance,End of Year 32,201,920 30,033,097 31,408,005 311,322 30,344,419 1.04%
Detail of Fund Balance
Nonspendable:
Inventory 3,058 3,058 3,058 - 3,058 0.00%
Prepaid Costs - - - - - -100.00%
Deposits 1,325 1,325 1,325 - 1,325 0.00%
Committed To: 0.00%
Contractual Obligations 207,885 312,120 2,212,322 312,120 0.00%
Economic Uncertainty Reserve(20%) 12,393,037 13,871,469 13,871,469 427,716 14,299,185 3.08%
Secondary Reserve(5%) 3,098,259 3,467,867 3,467,867 106,929 3,574,796 3.08%
Assigned To: 0.00%
Capital Projects 1,198,236 427,000 427,000 - 427,000 0.00%
Pavement Management - - - 0.00%
City and Park Facilities Improvements 470,000 - - - - 0.00%
Unassigned: 14,830,120 11,950,258 11,424,964 (223,323) 11,726,935 -1.87%
32,201,920 30,033,097 31,408,005 311,322 30,344,419 1.04%
1
City of Temecula
� Fiscal Year 2016-17
Mld-Year Adjustments
' FUND: 002 MEASURES FUND
2016-17 Year to Date Proposed 1016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Taxes and Franchises
Sales Tax 5,810,000 5,810,000 0.0%
Use of Money and Property
Investment Interest 1,114 1,114 0.0%
Total Revenues and Other Sources 5,811,114 SA11,114 0.0%
Expenditures by Category
Operating Transfers Out General Fund 1,236,114 1,236,114 0.0%
Operating Transfers Out-Information Technology 200,000 200,000 0.0%
Operating Transfers Out-IT Equipment Replacement 25,000 25,000 0.0%
Operating Transfers Out-CIP 4,350,000 4,350,000 0.0%
Total Expenditures and Other Flna inf;Uses - 5,811,114 5,811,114 0.0%
Excess of Revenues Over(Under)Expenditures - - - - - 0.0%
Fund Balance,Beginning of Year - 0.0%
Fund Balance,End of year - - - 0.0%
' Fund Description
Measure S,approved by the voters on November 8,2016,established aone-cent Transactions and Use lax for the City. The tax is effective April
1, 2017 until such time as voters elect to sunset this additional revenue source. The measure was approved based on the commitment to
maintain 911 emergency response times, prevent cuts to local paramedic, police, fire protection, school safety patrols, youth/after-school,
senior,disabled services,improve freeway interchanges,reduce traffic and provide for other general services.
1 City of Temecula
A Fiscal Year 2016-17
Mid-Year Adjustments
EXHIBIT B
Special Revenue Funds
FY2016-17 Mid-Year Budget
' Fiscal Year 2016-17 Mid-Year Budget Adjustments
aY f Temecula
�O
Fiscal Year 2016-17
Mid-Year Adjustments
FUND: 1O0 GAS TAX FUND
2016-17 Year to Date Proposed 2016-17
201516 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Taxes and Franchises
Gas Tax 2,238,185 2,128,703 1,059,688 (94,835) 2,133,868 -4.3%
Use of Money and Property
Investment Interest 2,355 2,000 551 2,000 0.0%
Total Revenues and Other Sources 1,240,540 2,230,703 1,060,239 (94,835) 2,135,666 -4.3%
Expenditures by Category
Computer Software - 63,000 - (63,000) - -100.0%
Equipment - - - 63,000 63,000 0.0%
Operating Transfers Out-General Fund 2,664,318 2,167,703 1,060,239 (94,835) 2,072,868 -4.4%
Total Expenditures and Other Financing Uses 2,664,316 2,230,703 1,060,139 (94,935) 2,135,666 -4.3%
Excess of Revenues Over(Under)Expenditures @23,778) - - - 0.0%
Fund Balance,Beginning of Year 423,778 0.0%
Fund Balance,End of Year 0.0%
Fund
This fund and was was es estahlished to account for the tax per gallon on the purchase of motor vehicle fuel imposed by the State of California.A portion is
allocated to the City of Temecula as specified in the California Streets and Highways Code(SHC)(Sections 2013, 2105,2107 and 2107.5).Gas Tax
monies are restricted to the repair,maintenance and upkeep of City streets and roads,and the purchase of equipment used to maintain roads.
aY of Temecula
G
Fiscal Year 2016-17
Mid-Year Adjustments
FUND: 125 PUBLIC, EDUCATION &GOVERNMENT(PEG)FEES
2016.17 Year to Date Proposed 2016-17
2015.16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Taxes and Franchises
PEG Fees 121,826 308,368 25,621 308,368 0.0%
Investment Interest 304 400 410 400 0.0%
Use of Money and property
Investment Interest 0.0%
Total Revenues and Other Sources 122,229 309,768 26,031 308,768 0.0%
Expenditures by Category
Operations and Maintenance 4,687 268.400 63,261 268,400 0.0%
Total Expenditures and Other Financing Uses 4,687 268,400 63,261 268,400 0.0%
Excess of Revenues Over(Under)Expenditures 117,442 40,368 (37,230) - 40,368 0.0%
Fund Balance,Beginning of Year 117,442 117,442 117,442 0.0%
Fund Balance,End of Year 117,442 157,810 80,212 157,810 0.0%
Fund Description
This fund was established to account for Public Education and Government(PEG)fees.Fees received from local cable operators for the sole purpose of
supporting the access facilities and activities within the City.
= City of Temecula
1 Fiscal Year 2016-17
Mid-Year Adjustments
FUND:135 BUSINESS INCUBATOR RESOURCE FUND
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Use of Money and Property
Investment Interest 161 200 185 - 200 0.0%
Reimbursement 9,240 5,000 3,642 - 5,000 0.0%
Rental Income 37,219 35,700 13,459 (10,955) 24,745 -30.7%
Operating Transfers In
General Fund 187,127 295,045 147,523 295,045 0.0%
Total Revenues and Other Sounces 233,747 335,945 164,808 (10,955) 324,990 -3.3%
Expenditures by Category
Personnel 103,443 93,412 45,176 - 93,412 0.0%
Operations and Maintenance 22,488 50,770 16,091 - 50,770 0.0%
Facilities 69,227 202,352 61,994 202,352 0.0%
Total Expenditures and Other Financing Uses 195,157 346,534 123,262 346,534 0.0%
Excess of Revenues Over(Under)Expenditures 38,590 (10,589) 41,547 (10,955) (21,544) 103.5%
Fund Balance,Beginning of Year 6,008 44,598 44,598 44,598 0.0%
Fund Balance,End of Year 44,598 34,009 86,144 (10,955) 23,054 -32.2%
' Fund Description
This fund was established to account for all activity at the City of Temecula Entrepreneur's Exchange Business Incubator(TVE'). The Business
Incubator offers affordable,Flexible and scalable space for startup businesses to network,collaborate and grow their business.
i City of Temecula
Fiscal,r cal Year
Mid-Year Adjustments
FUND:140 COMMUNITY DEVELOPMENT BLOCK GRANT(CDBG)FUND
2016-17 Yearto Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Intergovernmental Revenues
Community Development Block Grant 413,783 1,239,010 97,741 29,880 1,268,890 2.4%
Total Revenues and Other Sources 413,783 1,239,010 97,741 29,880 1,268,890 2.4%
Expenditures by Category
Personnel 108,042 135,903 33,795 - 135,903 0.0%
Operations and Maintenance 110,974 118,730 29,349 29,880 148,610 25.2%
Operating Transfers Out-CIP 194,767 984,376 34,597 984,376 0.0%
Total Expenditures and Other Financing Uses 413,783 1,239,010 97,741 29,880 1,268,890 2.4%
Excess of Revenues Over(Under)Expenditures - - - - - 0.0%
Fund Balance,Beginning of Year 0.0%
Fund Balance,End of Year 0.0%
Fund Description
This fund was established to account for grants received from the U.S.Department of Housing and Urban Development(HUD).The grants are used for
the redevelopment of a viable community by providing decent housing,a suitable living environment,and for expanding opportunities,principally for
persons of low and moderate income.
,- City of Temecula
Fiscal Year 2016-17
Mid-Year Adjustments
FUND:145 TEMECULA ENERGY EFFICIENCY ASSET MANAGEMENT(TEEM)FUND
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised Y Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Use of Money and Property
Investment Interest 1,592 1,300 810 - 1,300 0.0%
Reimbursements
Energy Efficiency Rebates 33,785 151 0.0%
Total Revenues and Other Sources 35,376 1,300 961 1,300 0.0%
Expenditures by Category
Operations and Maintenance - 0.0%
Total Expenditures and Other Financing Uses 0.0%
Excess of Revenues Over(Under)Expenditures 35,376 1,300 961 - 1,300 0.0%
Fund Balance,Beginning of Year 196,039 231,415 231,415 231,415 0.0%
Fund Balance,End of Year 231,415 232,715 232,377 232,715 0.0%
Fund Description
This fund was established to capture energy efficiency rebates and reimbursements as well as expenditure savings resulting from energy efficiency
projects completed at various City facilities. Revenue collected in this fund will be utilized on future energy efficiency projects.
s' City of Temecula
-Year Adjustments
Mid-Year Adjustments
FUND:150 AB 2766 MOTOR VEHICLE SUBVENTION FUND
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Intergovernmental Revenues
AB2766 Motor Vehicle Subvention Revenues 136,553 135,719 36,067 - 135,719 0.0%
Use of Money and Property
Investment Interest 4,343 3,000 1,016 3,000 0.0%
Total Revenues and Other Sources 140,096 138,719 37,003 138,719 0.0%
Expenditures by Category
Operations and Maintenance 27,049 40,390 17,782 40,390 0.0%
Operating Transfers Out-CIP 423,581 232,112 232,112 232,112 0.0%
Total Expenditures and Other Financing Uses 450,630 272,502 249,894 272,502 0.0%
Excess of Revenues Over(Under)Expenditures (309,734) (133,783) (212,811) - (133,783( 010%
Fund Balance,Beginning of year 566,902 257,168 257,168 257,168 0.0%
Fund Balance,End of Year 257,168 123,385 44,357 123,385 0.0%
Fund Description
This fund was established to account for State funds that are used to implement programs and projects that reduce air pollution from motor vehicles.
This fund is used for Capital projects and to account for operational costs such as the natural gas operated Harveston Trolley,which provides free
transportation within the Temecula business district.
1
,- City of Temecula
Fiscal Year 2016-17
�(i1A,PiGt� Mid-Year Adjustments
FUND:160 SUPPLEMENTAL LAW ENFORCEMENT SERVICES(SLESF)FUND
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Intergovemmemal Revenues
SLIEST Grant Revenue 194,790 171,000 74,924 46,888 217,888 27.4%
Use of Money and Property
Investment Interest 48 125 0.0%
Total Revenues and Other Sources 194,938 171,000 75,049 46,888 217,BBB 27.4%
Expenditures by Category
Operating Transfers Out-General Fund 194,838 173,000 75,049 44,888 217,888 25.9%
Total Expenditures and Other Financing Uses 194,838 173,000 75,049 44,888 217,888 25.9%
Excess of Revenues Over(Under)Expenditures - (2,000) - 2,000 - -100.0%
Fund Balance,Beginning of Year 0.0%
Fund Balance,End of year (2,000) 2,000 -100.0%
Fund Description
This fund was established to account for the Supplemental Law Enforcement Services grant monies from the State of California which are provided to
assist Cities in delivering front line law enforcement services. These monies supplement existing services and may not be used to supplant any existing
funding for law enforcement services provided by the City.
City of Temecula
Fiscal Year s
>P/ih.PiGt Mid-Year Adjustments
FUND: 161 TEMECULA MAJOR CRIMES REWARD FUND
2016-17 Yearto Date proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12131/2016 (Decrease) Budget (Decrease)
Revenues by Source
Use of Money and property
Investment Interest 181 100 89 100 0.0%
Total Revenues and Other Sources 187 100 89 100 0.0%
Expenditures by Category
Operations and Maintenance - 0.0%
Taal Expenditures and Other Financing Uses 0.0%
Excess of Revenues Over(Under)Expenditures 187 100 89 - 100 0.0%
Fund Balance,Beginning of Year 25,276 25,463 25,463 25,463 0.0%
Fund Balance,End of Year 25,463 25,563 25,552 25,563 0.0%
Fund Description
This fund was established to account for a reward for information that leads to the capture and conviction of the person(s)responsible for the murder
of Larry Robinson and Justin Triplett. The General Fund contributed$25,000 and the public can also contribute to this fund.The fund was established
in accordance with Resolution Nos.13-25 and 15-37.
S CRY Temecula
Fiscal Year 2016.17
Mid-Year Adjustments
FUND:165 AFFORDABLE HOUSING FUND
2016-17 Year to Date proposed 201617
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Licenses,permits and Service Charges
Monitoring Fees 2,782 - - - - 0.0%
Use of Money and property
Residual Receipt Distribution 48,411 39,352 - - 39,352 0.0%
Investment Interest 2,697 400 2,173 - 400 0.0%
Loan Interest 4,598 4,405 1,612 (1,874) 2,531 -42.5%
Reimbursements 11060 - 162 - 0.0%
Rental Income 115,440 190,000 - - 190,000 0.0%
Forgivable Loan Repayment 50,437 - 37,438 37,438 37,438 0.0%
Intergovernmental Revenues
Agency Trust Contributions 250,000 250,000 - - 250,000 0.0%
Reimbursements
Miscellaneous Non Taxable 76 75 0.0%
Total Revenues and Other Sources 475,501 404,157 41,460 35,364 519,721 7.3%
Expenditures by Category
Personnel 100,641 165,877 81,357 - 165,877 0.0%
Operations and Maintenance 55,789 186,528 26.921 (15,933) 170,595 -8.5%
Insurance 11,189 5.660 2,570 - 5,660 0.0%
Information Technology 15,407 24.440 9.808 - 24.440 0.0%
support Services 837 1,516 195 1,516 0.0%
Facilities 12,459 9,200 5,186 9,200 0.0%
Total Expenditures and Other Financing Uses 206,322 393,221 126,037 (1S,933) 377,288 -4.1%
Excess of Revenues Over(Under)Expenditures 269.179 90,936 (84,577) 51,497 142,433 56.6%
Fund Balance,Beginning of Year 10,372,826 10,642,005 10,642,005 10,642,005 0.0%
Fund Balance,End of Year 10,642,005 10,732,941 10,557,429 51,497 10,784,438 0.5%
Fund Description
The Affordable Housing fund contains the assets as well as loan and rental income which have been transferred to the City of Temecula from the
former Redevelopment Agency.
City of Temecula
Fiscal Year 2016-17
Mid-Year Adjustments
FUND: 170 MEASURE FUND
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budge 12/3112016 (Decrease) Budget (Decrease)
Revenues by Source
Use of Money and Property
Investment Interest 33,629 30,000 18,577 - 30,000 0.0%
Reimbursements
Miscellaneous (35,483) - - - - 0.0%
Intergovernmental Revenues
Measure A Revenue 2,735,934 2,853,427 1,173,799 13,849 2,867,276 0.5%
Total Revenues and Other Sources 2,734,080 2,883,427 1,192,376 13,849 2,897,276 0.5%
Expenditures by Category
Operations and Maintenance 502,117 1,820,240 141,844 - 1,820,240 0.0%
Operating Transfers Out-CIP 921,903 5,876,539 910,000 5,876,539 0.0%
Total Expenditures and Other Financing Uses 1,424,021 7,696,779 1,051,844 7,696,779 0.0%
Excess of Revenues Over(Under)Expenditures 1,310,060 (4,813,352) 140,532 13,849 (4,799,503) -0.3%
Fund Balance,Beginning of Year 3,817,647 5,127,707 5,127,707 5,127,707 0.0%
Fund Balance,End of Year 5,127,707 314,355 5,268,239 13,849 328,204 4.4%
Fund Description
This fund was established to account for the City's allocation of the County of Riverside's additional one-half percent sales tax for transportation.
These monies are restricted for use on local streets.In 2002,Measure A was extended by Riverside County voters. Measure A will continue to fund
transportation improvements through 2039.
1
-- City of Temecula
----� t Fiscal Year 2016-17
� Mid-Year Adjustments
FUND:395 2011 FINANCING LEASE
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Operating Transfers In
General Fund 2,136,901 2,140,222 1,069,706 2,140,222 O.D%
Total Revenues and Other sources 2,136,901 2,140,222 1,069,706 2,140,222 0.0%
Expenditures by Category
Debt Service Interest 845,901 797,222 404,706 - 797,222 0.0%
Debt Service Principal 1,291,000 1,343,000 665,000 1,343,000 0.0%
Total Expenditures and Other Financing Uses 2,136,901 2,140,222 1,069,706 2,140,222 0.0%
Excess of Revenues Over(Under)Expenditures - - - - 0.0%
Fund Balance,Beginning of Year - - 0.0%
Fund Balance,End of Year 0.0%
Fund Description
This fund was established to account for the payment of interest and principal of the refunding of the 2001 and 2008 Certificates of Participation
(COPs).The 2001 COPS were originally issued to finance the construction of the Community Recreation Center and the 2006 COPS were originally
issued to finance the construction of the Civic Center.
1 City of Temecula
Fiscal Year 2016-17
Mid-Year Adjustments
EXHIBIT C
Internal Service Funds
FY2016-17 Mid-Year Budget
' Fiscal Year 2016-17 Mid-Year Budget Adjustments
City of Temecula
�-% Fiscal Year 2016-17
Mid-Year.A-djustments
FUND:300 INSURANCE FUND
201617 Year to Date Proposed 2016-17
2015-16 Current Aauals Increase Revised %Increase
Description Aeuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Licernes,Permits and Service Charges
Charges For Services 982,190 886,714 374,822 - 886,714 0.0%
Use of Money and Property
Investment Interest 1,828 2,300 975 2,300 0.0%
Total Revenues and Other Sources 984,018 889,014 375,797 8891014 0.0%
Expenses by Category
Personnel 107,812 136,574 S1,892 - 136,574 0.0%
Operations and Maintenance 853,014 752,440 324,011 - 752,440 0.0%
Total Experues and Other Finandng Uses 960,827 889,014 375,903 889,014 0.0%
Excess of Revenues Over(Under)Expenses 23,191 - (107) - - 0.0%
Net Position,Beginning of Year 280,359 303,550 303,550 303,550 0.0%
Net Position,End of Year 303,550 303,550 303,443 - 303,550 0.0%
Fwd DaK hill as
The Insurance Fund was established to account for the City's liability and property insurance costs. Fund Balance is a combination of both
spendable and non spendable assets. These costs are allocated to each department based on the total number of Full Time Equivalent
positions assigned to those departments. The City has a Self-Insured Retention(SIR)of$150,000 per incident,and strives to maintain a fund
balance equal to two times the SIR.
Li? City Of Temecula
1 Fiscal Year 2016-17
Mid-Year Adjustments
FUND:305 WORKERS'COMPENSATION FUND
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Licenses,Permits and Service Charges
Charges for Services - 646,043 323,893 - 646,043 0.0%
Use of Money and Property
Investment Interest 2,198 800 1,488 - 800 0.0%
Operating Transfers In
General Fund 250,000 - - - - 0.0%
Total Revenues and Other Sources 252,198 606,843 325,381 646,843 0.0%
Expenses by Category
Operations and Maintenance 61,111 178,886 72,223 - 178,886 0.0%
Total Expenses and Other Financing Uses 61,111 178,886 72,223 178,886 0.0%
Excess of Revenues Over(Under)Expenses 191,087 467,957 253,158 - 467,957 0.0%
Net Position,Beginning of Year 229,182 420,269 420,269 - 420,269 0.0%
Net Position,End of Year 420,269 888,226 673,427 - 888,226 0.0%
Fund Description
The Workers' Compensation Fund was established in Fiscal Year 201415 as the City transitions to aself-insured status for Workers'
Compensation liabilities. Departments are charged based on each position allocated on a Full Time Equivalent basis,with a cost assigned to
each position based on job duties and potential for risk.
1
' } city of Temecula
Fiscal Year 2016-17
�{ MW-Year Adjustments
FUND: 310 VEHICLES AND EQUIPMENT FUND
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease(
Revenues by Source
Licenses,Permits and Service Charges
Charges for Services 120,097 94,008 49,380 - 94,008 0.0%
Use of Moneyand Property
Investment Interest 11,704 10,000 5,364 - 10,000 0.0%
Total Revenues and Other Sources 131,801 104,008 54,744 104,009 0.0%
Expenses by Category
Operations and Maintenance 119,821 94,554 48,091 - 94,554 0.0%
Total Expenses and Other Finandng Uses 119,921 94,554 48,091 94,554 0.0%
Excess of Revenues Over(Under)Expenses 11,980 9,454 6,653 - 9,454 0.0%
Net Position,Beginning of Year 1,907,683 1,919,663 1,919,663 - 1,919,663 0.0%
Net Position,End of Year 1,919,663 1,929,117 1,926,316 - 1,929,117 0.0%
Fund Description
The Vehicles and Equipment Fund was established to account for the depreciation of vehicles and capital equipment over their estimated
' useful lives,and to accumulate resources for the purchase of future replacement vehicles and equipment.Fund Balance is a combination of
both spendable and non spendable assets.Departments are charged based on their percentage of assigned vehicles that carry a depreciable
value.
} — City of Temecula
Fiscal Year 2016-17
�{ Mid-Year Adjustments
FUND:320 INFORMATION TECHNOLOGY FUND
2016-17 year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
licenses,Permits and Service Charges
Charges for Services 2,195,074 2,790,287 1,379,849 7,917 2,798,204 0.3%
Use of Money and Property
Investment Interest 1,765 2,600 161 - 2,600 0.0%
Operating Transfers In
Measure 5 - 200,000 200,000
Total Revenues and Other Sources 2,196,839 2,792,887 1,380,010 207,917 3,000,804 7.4%
Expenses by Category
Personnel 1,328,651 1,576,662 682,314 16,000 1,592,662 1.0%
Operations and Maintenance 868,217 1,246,335 697,634 200,000 1,446,335 16.0%
Total Exp enses and Other Financing Uses 2,196,868 2,822,997 1,379,948 216,000 3,038,997 7.7%
Excess of Revenues Over(Under)Expenses (29) (30,110) 62 (8,083) (38,193) 26.8%
Net Position,Beginning of Year 38,222 38,193 38,193 - 38,193 0.0%
Net Position,End of Year 38,193 8,083 38,255 (8,083) (0) -100.0%
Fund Description
The Information Technology Fund was established to fund and account for computer and telephone system operating and maintenance
expenses. It is also used to depreciate all related computer and telephone equipment over their useful lives.Fund Balance is a combination of
both spendable and non spendable assets.Departments are charged based on the number of workstations assigned.The Temecula Public
Library facility is charged directly for all IT expenditures and personnel costs related to the facility.
I City of Temecula
4
Fiscal Year 2016-17
Mid-Year Adjustments
FUND: 325 TECHNOLOGY REPLACEMENT FUND
2016-17 Year to Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actwls Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Licenses,Permits and Service Charges
Charges for Services 239,210 241,652 139,290 - 241,652 0.0%
Operating Transfer In
Measure S Fund - - - 25,000 25,000 0.0%
Use of Money and Property
Investment Interest 2,664 1,300 2,004 - 1,300 O.D%
Total Revenues and Other Sources 241,874 2421952 141,294 25,000 267,9S2 10.3%
Expenses by Category
Operations and Maintenance 241,873 242,953 140,705 25,000 267,953 10.3%
Total Expenses and Other Financing Uses 241,873 242,953 140,705 25,OOo 267,953 10.3%
Excess of Revenues Over(Under)Expenses 1 (1) 589 - (1) 0.0%
Net Position,Beginning of Year 1,227,948 1,227,949 1,227,949 1,227,949 0.0%
Net Position,End of Year 1,227,949 1,227,948 1,228,538 - 1,227,948 0.0%
' Fund Description
The Technology Replacement Fund was established In Fiscal Year 2014-15 in order to accumulate resources for computer and telephone
equipment and software to fund future equipment replacement.Fund Balance is a combination of both spendable and non spendable assets.
Contributions to this fund are made by departments utilizing the assets in an amount equivalent to the estimated cost to replace the item at
the end of Its useful life.
1 _ City of Temecula
Fiscal Year 2016-17
Mid-Year Adiustments
FUND:330 SUPPORT SERVICES FUND
2016-17 yearto Date Proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Ac'tuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
licenses,Permits and Service Charges
Charges for Services 510,921 460,060 189,876 - 460,060 0.0%
Use of Money and Property
Investment Interest 2,971 3,000 1,496 - 3,000 0.0%
Total Revenues and Other Sources 513,892 463,060 191,372 463,060 0.0%
Expenses by Category
Personnel 334,649 292,673 123,632 1,000 293,673 0.3%
Operations and Maintenance 173,178 170,386 66,812 - 170,386 0.0%
Total Expenses and Other Financing Uses S07,a27 463,059 190,444 1,000 464,059 0.2%
Excess of Revenues Over(Under)Expenses 6,065 1 928 (1,000) (999) -100000%
Net Position,Beginning of year 454,869 460,934 460,934 - 460,934 0.0%
Net Position,End of year 460,934 460,935 461,862 (1,000) 459,935 -0.2%
Fund Support Sere
The Support Services Fund was established as a cost center for the City's central receptionist,duplicating,printing,and mailing activities. It is
also used to depreciate all related copying and mailing equipment over their useful lives,and to accumulate resources for the purchase of
future equipment. Fund Balance is a combination of both spendable and non spendable assets.Departments are charged based on a count of
copies made in the previous fiscal year.
' f City of Temecula
Fiscal Year 2016-17
Mid-Year Adiustments
FUND:340 FACILITIES FUND
2016.17 Year to Date proposed 2016-17
2015-16 Current Actuals Increase Revised %Increase
Description Actuals Budget 12/31/2016 (Decrease) Budget (Decrease)
Revenues by Source
Licenses,Permits and Service Charges
Charges for Services 1,267,838 1,418,917 736,131 - 1,418,917 0.0%
Use of Money and Property
Investment Interest 2,731 2,500 1,478 2,500 0.0%
Total Revenues and Other Sources 1,270,s69 1,421,417 737,609 1,421,417 0.0%
Expenses by Category
Personnel 490,484 492,987 238,405 - 492,987 0.0%
Operations and Maintenance 749,743 930,766 367,105 930,766 0.0%
Total Expenses and Other Financing Uses 1,240,227 1,423,753 605,s11 1,423,753 0.0%
Excess of Revenues Over(Under)Expenses 30,342 (2,336) 132,098 - (2,336) 0.0%
Net Position,Beginning of Year 464,452 494,794 494,794 - 494,794 0.0%
Net Position,End of Year 494,794 492,458 626,892 - 492,458 0.0%
Fund Description
The Facilities Fund was established to account for the cost of the Civic Center, Former City Hall Facility, City Maintenance Facility, Field
Operations Center,and Civic Center Parking Structure operations and maintenance. Fund Balance is a combination of both spendable and
non spendable assets.Departments are charged based on square footage allotted as well as full time staff equivalents assigned.
L.
City Temecula
( � Fiscal Year 2016-17
Mid-Year Adjustments
EXHIBIT D
Budget and Fiscal Policies
FY2016-17 Mid-Year Budget
' Fiscal Year 2016-17 Mid-Year Budget Adjustments
City of Temecula
Fiscal Year 2016-17
Mid-Year Budget
BUDGET AND FISCAL POLICIES
I. FINANCIAL STRATEGIC PLAN PURPOSE AND ORGANIZATION
A. Annual Operating Budget(AOB)
Through its Annual Operating Budget,the City will link resources with results by:
1. Identifying community needs for essential services that improve quality of life
through strategic planning that:
a. Organize the programs required to provide these essential services;
b. Establish program policies and goals, which define the nature and level of
program services required;
C. Identify activities performed in delivering program services.
2. Proposing goals for improving the delivery of program services that:
a. Identify and appropriate the resources required to perform program
activities and accomplish program goals.
b. Set objectives to measure Performance(progress)pertaining to:
• Long term goals that align Council priorities with financial resources;
• Output of program activities;
• Accomplishment of program objectives;
• Expenditure of program appropriations.
3. The AOB process encompasses the development, implementation, and evaluation
of a plan for the provision of services for the upcoming fiscal year. The process
includes political, managerial, planning, communication, and financial dimensions.
The budget incorporates a long-term perspective, establishes linkages to broad
organizational goals, and focuses budget decisions on desired results and
outcomes.The AOB is formalized via the following process:
a. A budget workshop is held with the City Council to receive Council direction
and public comment, prior to budget preparation;
b. Budget team updates policies and procedures for budget preparation,
creates the budget process calendar, and prepares the current budget
schedules for each department to use in preparing the new budget;
C. A budget kickoff workshop is held with the City Manager, Department
Directors, and Department Analysts to discuss the status of the current
fiscal year budget, discuss the Five Year Financial Forecast, review the
upcoming budget process calendar, discuss the impacts of the current
economic conditions at the State and Federal levels, and discuss the
essential principles and elements of the budget process;
d. Individual meetings are held with the budget team and each department to
assist in the budget development process;
r
Fiscal Year 2016-17 Annual Operating Budget
t_
Fiscal of Temecula
r � Fiswl Year 2016-17
Mid-Year Budget
BUDGET AND FISCAL POLICIES
e. The City Manager, in collaboration with the budget team, holds meetings
with each department director (and analysts) to discuss their department
budget request;
f. A budget workshop is held with the City Council to receive public comment
and to review the components of the proposed budget, prior to formal
consideration for adoption;
g. City Manager submits the proposed AOB and salary plan to the City Council
at a public meeting for approval.
B. Balanced Budget
The City will maintain a balanced budget over the period of the Financial Strategic Plan.
This means that:
1. Operating revenues must fully cover operating expenditures;
2. Ending fund balance must meet minimum policy levels. For the General Fund,this
level has been established at 20% of operating expenditures for economic
uncertainties and to support the City's credit worthiness, cash Flow, and response
to local disasters.
' C. Five Year Financial Forecast
The City will prepare a five year financial forecast bi-annually to assist in long range
planning and policy development. The five year forecast provides a tool to evaluate the
ability of the City to fund proposed programs, operating and maintenance costs, capital
expenditures,as well as operating costs related to future capital improvement projects.
1. Revenues are projected using a conservative approach, and are based on
historical trends,stable residential development projections, internal analysis, and
commercial growth that incorporates known development projects. Separate sets
of assumptions are developed for major revenue types such as sales tax property
tax, community development fees, transient occupancy taxes, and investment
income;
2. Departmental expenditure projections are developed using anticipated cost of
living increases for general administrative operating costs.Additional assumptions
are incorporated for major expenditure categories such as public safety to ensure
that commercial and residential growth projections are addressed to main current
service levels. The five year capital improvement program is reviewed with the
annual operating budget, and maintenance costs of each proposed project are
identified and included in the forecast;
3. The five-year forecast indicates whether projected revenue growth will support
anticipated expenditures for current levels of service. However, as the City
continues to grow, it is important to ensure that it can meet increasing demands,
and be in a position to respond to possible changes in economic conditions. The
five-year forecast is a dynamic tool that requires bi-annual update and review of
its underlying assumptions to keep the City in a position of strong fiscal condition.
Fiscal Year 2016-17 Annual Operating Budget
1
City Temecula
R Fiscal Year 2016-17
Mid-Year Budget
BUDGET AND FISCAL POLICIES
I. FINANCIAL STRATEGIC PLAN PURPOSE AND ORGANIZATION (continued)
D. Capital Improvement Program(CIP)
1. CIP Purpose - The purpose of the Capital Improvement Program (CIP) budget
document is to serve as a planning tool, which coordinates the level ranking,
financing, and scheduling of major projects undertaken by the City. All projects
presented in the five-year CIP budget are carefully programmed to ensure the
community's capital improvement needs are met both now and in the future. In
addition, the projects provide additional opportunities and access to the City and
improve the overall quality of life as identified in the Quality of Life Master Plan
(QLMP).
This document is dynamic and, consequently, must be revised annually to address
changing needs, level rankings, and financial conditions. The City's goal in
providing a CIP Budget is to develop a multi-year plan for capital improvement,
update it annually, and follow through with all capital improvements in
accordance with the plan. It also allows staff to budget operating and
maintenance costs into the five year projection in order to determine the total
cost of each project before it is undertaken.
' 2. CIP Development-This CIP budget document is developed by incorporating input
from City Council and key management team members, based on community
comments and feedback received throughout the year. This team then, through
several workshops, identifies and evaluates community needs in the areas of
roads/streets, bridges, public buildings, parks and recreation facilities, and
redevelopment projects. Each proposed project is reviewed and discussed to
ensure funding, timing, and necessity. A CIP City Council workshop is held to
provide the City Council with an opportunity to review each project in detail, and
to receive public comments concerning the five-year program.
3. CIP Projects: $30,000 or More - The capital improvements presented in the
budget are the City's major projects, which exceed $30,000 in cost, have
long-term life spans, and are generally non-recurring. These projects include land
and right of way acquisition, design, construction or rehabilitation of public
buildings or facilities, public infrastructure design and construction, park design
and construction,and redevelopment projects.
4. Proiect Manager - Every CIP project will have a project manager who will prepare
the project proposal, ensure that required phases are completed on schedule,
authorize all project expenditures, ensure that all regulations and laws are
observed,and periodically report project status.
5. Project Benefit - Projects must identify a benefit and reference a Core Value
(QLMP)goal.
6. CIP Review Committee - In determining the relative merit of a proposed project,
key management team members evaluate projects for feasibility, community
enhancement, infrastructure and historic preservation, and safety.
Fiscal Year 2016-17 Annual Operating Budget
City of Temecula
Fiscal Year 2016-17
Mid-Year Budget
BUDGET AND FISCAL POLICIES
I. FINANCIAL STRATEGIC PLAN PURPOSE AND ORGANIZATION (continued)
7. CIP Levels - Projects in the CIP are scheduled in each of five fiscal years based on
community needs, as determined by the City Council and availability of funding.
Level rankings in each major category(Circulation, Infrastructure/Other, Parks and
Recreation, and SARDA/Housing) are assigned in accordance with the following
guidelines:
a. LEVEL I: The project is urgent and must be completed as soon as feasible.
Failure to address the project may impact the health, safety, or welfare of
the community or have a potential significant impact on the financial
well-being of the City. The project must be initiated or financial opportunity
losses may result.
b. LEVEL II:The project is important and addressing it is necessary. The project
impacts safety, law enforcement, health,welfare, economic base, quality of
life,and has been identified as a priority in the Quality of Life Master Plan.
C. LEVEL III:The project will enhance quality of life and will provide a benefit to
the community. Completion of the project will improve the community by
providing cultural, recreational, and/or aesthetic value, or is deemed as a
' necessary improvement to a public facility.
d. Future Years Projects: The project will be an improvement to the
community, but does not necessarily need to be completed within a five
year capital improvement program time frame.
B. CIP Administrative Costs - The administrative costs associated with managing CIP
projects are estimated (generally as five to ten percent of estimated construction
costs), and included in each project budget
9. CIP Operations and Maintenance (0 & Mi - Future operations and maintenance
costs that result from CIP projects are estimated and identified in the CIP project
sheets. These incremental future operating costs are incorporated into the five
year forecast.
10. CIP Phases - The CIP will emphasize project planning, with projects progressing
through at least two and up to ten of the following phases:
a. Designate (Assigned). Appropriates funds based on projects designated for
funding by the Council through adoption of the Financial Strategic Plan.
b. Study. Concept design, site selection, feasibility analysis, schematic design,
environmental determination, property appraisals, scheduling, grant
application, grant approval, specification preparation for equipment
purchases.
C. Environmental Review. Compliance with CEQA, NEPA and other
environmental studies, if necessary.
Fiscal Year 2016-17 Annual Operating Budget
t
Temecula
Fiscal cal Year 2016-17
Mid-Year Budget
BUDGET AND FISCAL POLICIES
FINANCIAL STRATEGIC PLAN PURPOSE AND ORGANIZATION (continued)
d. Real Property Acquisitions. Property acquisition for projects, if necessary.
e. Site Preparation. Demolition, hazardous materials abatements, other pre
construction work.
f. Design. Final design, plan and specification preparation and construction
cost estimation.
g. Construction. Construction contracts.
h. Construction Management. Contract project management and inspection,
soils and material tests, other support services during construction.
i. Equipment Acquisitions. Vehicles, heavy machinery, computers, office
furnishings, other equipment items acquired and installed independently
from construction contracts.
11. CIP Appropriation - The City's annual CIP appropriation for study, design,
acquisition and/or construction is based on the projects designated by the Council
through adoption of the Financial Strategic Plan. Adoption of the Financial
Strategic Plan CIP appropriation does not automatically authorize funding for
specific project phases. This authorization generally occurs only after the
preceding project phase has been completed and approved by the Council and
costs for the succeeding phases have been fully developed. If project costs at the
time of bid award are less than the budgeted amount, the balance will be
unappropriated and returned to fund balance or allocated to another project. If
project costs at the time of bid award are greater than budget amounts,five basic
options are available:
a. Eliminate the project;
b. Defer the project for consideration to the next Financial Strategic Plan
period;
C. Rescope or change the phasing of the project to meet the existing budget;
d. Transfer funding from another specified, lower level ranking project.
e. Appropriate additional resources as necessary from fund balance.
12. CIP Budget Carryover - Project accounts, which have been appropriated, will not
lapse until completion of the project phase.
13. Program Objectives - Project phases will be listed as objectives in the program
narratives of the programs,which manage the projects.
14. General Plan Consistency Review-All projects are evaluated by the City's Planning
Commission to ensure consistency with the provisions of the City of Temecula
General Plan, while considering the City's long-term vision as developed by the
City Council. The proposed Circulation, Infrastructure, and Parks and Recreation
' projects are reviewed and approved by the Planning Commission, Public/Traffic
Safety Commission, and the Parks and Recreation Commission.
Fiscal Year 2016-17 Annual Operating Budget
L_
City Temecula
( R Fiscal Year 2016-17
' Mid-Year Budget
BUDGET AND FISCAL POLICIES
II. FINANCIAL REPORTING
A. Annual Reporting
The City will prepare annual financial statements as follows:
1. The City will contract for an annual audit by a qualified independent certified
public accountant (or accounting firm). The City will strive for an unqualified
auditors'opinion.
2. The City will use generally accepted accounting principles in preparing its annual
financial statements, and will strive to meet the requirements of the GFOA's
Award for Excellence in Financial Reporting program.
3. The City will issue audited financial statements within 180 days after year-end.
B. Interim Reporting
The City will prepare and issue timely interim reports on the City's fiscal status to the
Council and staff. This includes: on-line access to the City's financial management
system by City staff; monthly reports to program managers; formal quarterly reports to
the Council and Department Directors; mid-year budget reviews; and interim annual
reports.
C. Budget Amendments
The Council may amend or supplement the budget at any time after its adoption by
majority vote of the Council members. The City Manager has the authority to make
administrative adjustments to the budget as long as those changes will not have a
significant policy impact nor affect budgeted year-end fund balances.
D. Extended Annual Reporting
The City will prepare extended annual reports as required by federal and state
requirements including, but not limited to:
1. State Controller Report
2. Street Reports
Fiscal Year 2016-17 Annual Operating Budget
t_
City of Temecula
Fiscal Year 2016-17
Mid-Year Budget
BUDGET AND FISCAL POLICIES
111111. FUND BALANCE AND RESERVES
A. Fund Balance Policy
Fund balance represents the accumulation of actual revenues and other financing
sources in excess of actual expenditures and other uses at year-end. In general terms, it
represents the City's accumulated "savings' from year to year, as any fund balance
realized at year-end is added to (or deducted from if expenditures exceeded revenues
for that particular year)the previous year's fund balance. Fund balance is often referred
to as"reserves."
B. Reserve for Economic Uncertainty
The City will maintain a minimum fund balance of at least 20% of operating
expenditures in the General Fund, in order to adequately provide resources in the event
of an unexpected draw on City finances. Eligible uses of these reserve funds include:
• Expenditures due to local disasters/acts of nature
• Loss of major revenue source(s) due to financial hardship or economic
downturn
• State-imposed take of local revenue/mandated payments
• Significant unanticipated expenditures
• Significant payout of Comprehensive Annual Leave for employees leaving City
service
C. Secondary Reserve for Contingencies
In addition to the Reserve for Economic Uncertainty, the City will strive to maintain an
operating reserve within the General Fund in the amount of 5% of General Fund
operating expenditures. Use of these reserve funds shall be limited to:
• Covering annual operating expenditures if revenue falls short of projections,
creating an annual operating deficit.
• Making one-time investments in Capital infrastructure that will create long-term
operational savings to the General Fund, leverage available grant funds, or
provide funding for projects that will create an economic benefit to the City.
D. Future Capital Project Designations
The Council may designate specific fund balance levels for future development of capital
projects that it has determined to be in the best long-term interests of the City.
E. Other Designations and Reserves
In addition to the designations noted above, fund balance levels will be sufficient to
meet funding requirements for projects approved in prior years which are carried
forward into the new year; debt service reserve requirements; reserves for
encumbrances; and other reserves or designations required by contractual obligations,
state law,or generally accepted accounting principles.
Fiscal Year 2016-17 Annual Operating Budget
1 n City of Temecula
. .. l� Fiscal Year 2016-17
"' Mid-Year Budget
BUDGET AND FISCAL POLICIES
1111. FUND BALANCE AND RESERVES (continued)
F. Fund Balance Components
This policy establishes the procedures for reporting unrestricted fund balance in the
General Fund financial statements, as well as a fund balance expenditures hierarchy.
Fund Balance commitments and assignments ensure that there will be adequate
financial resources to protect the City against circumstances such as revenue shortfalls
and unanticipated expenditures. The Policy also authorizes and directs the Director of
Finance to prepare financial reports and categorize fund balance per Governmental
Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions.
There are five separate components of fund balance which identify the specific
purposes for which amounts can be spent: (1) Nonexpendable Fund Balance —
inherently nonexpendable; (2) Restricted Fund Balance — externally enforceable
limitations on use; (3) Committed Fund Balance — self-imposed limitations on use; (4)
Assigned Fund Balance — limitation resulting from intended use; (5) Unassigned Fund
Balance—residual net resources.
1. Nonexpendable Fund Balance - Amounts that cannot be spent because they are
either (a) not in spendable form, such as prepaid items or inventories; or (b)
legally required to be maintained intact, such as the principal portion of an
endowment.
2. Restricted Fund Balance - Amounts for a specific purpose that are either (a)
externally imposed by creditors (such as through debt covenants), grantors,
contributors, other governments' regulations; or (b) imposed by law through
constitutional provisions or enabling legislation.
3. Committed Fund Balance - Amounts authorized for specific purposes by a
government's highest level of decision making authority (City Council). These
committed amounts cannot be used for any other purpose unless the City Council
removes or changes the specified use through the same formal action taken to
establish the commitment. City Council action to commit fund balance needs to
occur within the fiscal reporting period however, the amount can be determined
subsequently. The City's committed fund balance includes a reserve for economic
uncertainty. It is City policy to maintain a reserve of 20% of Annual General
Fund appropriations. Amounts are committed to finance any significant
unanticipated revenue shortfalls, negative State budget impacts or impacts from
natural disasters or other catastrophic events.
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III. FUND BALANCE AND RESERVES (continued)
4. Assigned Fund Balance - Amounts that are constrained for specific purposes, but
are neither restricted nor committed. For all governmental funds other than the
General Fund, any remaining amounts not classified as nonexpendable, restricted,
or committed are considered assigned. For the General Fund,this policy delegates
the authority to assign amounts to be used for specific purposes to the Finance
Director in consultation with the City Manager for the purpose of reporting these
amounts in annual financial statements.
5. Unassigned Fund Balance - Residual net resources of the General Fund in excess
of what can be classified in one of the other four categories.
G. Hierarchy of Spending Fund Balance
Restricted fund balance should be spent first when an expenditure is incurred for which
both restricted and unrestricted fund balance is available. When an expenditure is
incurred for purposes where amounts in any of the unrestricted classifications of fund
balance could be used, committed amounts are to be spent first, followed by assigned
amounts and then unassigned amounts.
' H. Unassigned Fund Balance—General Fund
At the end of each fiscal year, the Finance Department will report on the audited
year-end financial results. In the event that actual General Fund revenues exceed
expenditures and encumbrances, a year-end operating surplus shall be reported. Any
year-end operating surplus which exceeds the levels required by the reserve policies,
noted above, will be deemed as Unassigned Fund Balance, and shall be appropriated for
one-time (non-recurring) expenditures in accordance with the following guidelines,
subject to City Council approval. Ongoing, or recurring expenditures, are not
appropriate uses of available Unassigned Fund Balance.
1. Public Safety equipment or non-recurring programs
2. Asset Management reserves
3. Capital improvement projects
4. Reduction of unfunded liabilities related to CalPERS pension and Other
Post-Employment Benefits (OPEB)
5. Reduction,or avoidance,of City debt
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IV. TRANSACTIONS AND USE TAX FUNDING (MEASURE S)
A. Measure S Revenue
Pursuant to Ordinance 16-06, on November 8, 2016,the people of Temecula approved a
local 1% Transactions and Use Tax, effective on April 1, 2017, to maintain 9-1-1
emergency response times, prevent cuts to local paramedic, police, fire protection,
school safety patrols, youth/after-school, senior, disabled services, improve freeway
interchanges, reduce traffic and provide for other general services.
B. Appropriation Priorities of Measure S Revenue
In accordance with the approved ballot language related to Measure 5, maintaining
Public Safety services is the City's top priority, followed by the appropriate maintenance
and replacement of City assets to ensure long-term viability of City operations. As
surplus funds are available, the City Council may allocate Measure 5 funding to capital
projects identified in the Capital Improvement Program as well as any associated
general services.
1. Public Safety
a. Within the Police Department, the City will strive to maintain a target staffing
ratio of one sworn officer per 1,000 residents (1:1,000), as outlined in the City's
General Plan. Upon receiving Population Estimate from the California
Department of Finance, in May of each year, the Police staffing ratio shall be
evaluated, and if the ratio falls below 1:1,000, the City Council may allocate
available Measure 5 resources to meet the target staffing ratio.
b. Desired Fire Department staffing levels include four persons per fire engine or
fire truck (4-0 staffing). During the Annual Operating Budget process, the Fire
staffing ratio shall be evaluated, and if the ratio falls below 4-0 staffing, the City
Council may allocate available Measure 5 resources to meet the target staffing
ratio.
2. Asset Management/Investment
In accordance with the Asset Management and Replacement (AMAR) Policy, noted
in Section VI., the City strategically manages the life cycle and replacement of its
assets; including capital infrastructure, City facilities and parks, fleet vehicles and
equipment, and the City's technology and communication systems. Ensuring
adequate reserves are set-aside for the future replacement of City-owned assets is
' critical to the long-term viability of the City's operations.
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The City's street and road network serves as the capital infrastructure for public
transportation in and around the City. A Pavement Management Study is designed
to evaluate the current condition of the road network, and establish a
recommended level of investment necessary to properly maintain the condition of
the street and road network. The City Council will strive to allocate an amount up
to the recommended level of investment, as stated in the most recent Pavement
Management Study,to the Capital Improvement Program—Pavement Rehabilitation
Program, or other appropriate capital infrastructure projects designated for street
and road network improvements.
The City Council will strive to allocate an amount to be deposited into each asset
replacement fund, based on the results of the specific asset management plan
conducted periodically for each grouping of asset types (i.e. facilities, parks,vehicles
and technology).
3. Capital Improvement Projects
A Capital Improvement Project is defined as a major project, which exceeds$30,000
in cost, has a long-term life span, and is generally non-recurring. The City Council
may allocate available Measure S resources to fund projects identified in the Capital
Improvement Program.
4. General Services
Operations and maintenance costs associated with City programs, administration
and general services to the public are considered eligible appropriations of Measure
S resources,so long as the abovementioned priorities are considered first.
a. Operations and maintenance costs related to the addition of a new City facility,
program or service funded by Measure S, shall have priority over existing City
general services.
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V. CONTINGENCY PLANNING
In response to adverse financial and economic conditions that could negatively impact
the City's fiscal health, a Contingency Plan will provide for a measured response to
potential fiscal challenges, as opposed to reactionary decision-making that could hinder
the long-term financial solvency of the City.
In accordance with Budget Policies 111.13 and III.C,the City will strive to maintain reserves
in the amount of 25% of General Fund operating expenditures. Eligible uses of these
reserve funds are outlined in the aforementioned policy; however this Contingency Plan
will address the hierarchy of utilizing reserve funds, in the event the City experiences
significant or sudden fiscal constraints.
The type of fiscal challenge will dictate the appropriate budgetary measure to
implement in order to ensure solvency. If the fiscal constraint cannot be absorbed by
annual budgetary savings,the following hierarchy shall be followed:
A. One Time Events
In the event the City is faced with a non-recurring fiscal constraint, such as a State
mandated payment or a natural disaster, the use of reserve funds is an appropriate
' mitigation. The Secondary Reserve for Contingencies shall be utilized first, and fully
exhausted prior to utilizing the Economic Uncertainty Reserve.
B. Ongoing Fiscal Constraints
In the event the City experiences the loss of a major revenue source outside of the City's
control lie. acts of legislation, corporate decisions and/or economic downturn), the City
will need to adjust its operations in order to maintain a balanced budget.
Circumstances may arise when the City is unable to react quick enough to offset a
sudden loss in revenue, and will be required to utilize reserves to supplant the current
Operating Budget. The Secondary Reserve for Contingencies shall be utilized first, and
fully exhausted prior to utilizing the Economic Uncertainty Reserve. Continued use of
reserve funds shall not exceed two budget cycles, to allow adequate time for the
implementation of operational changes, while limiting the ongoing dependency on
reserves.
Implementation of Contingency Plan actions requires the majority approval of the City
Council.
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VI. STAFFING POLICY
A. Regular Staffing
1. The budget will fully appropriate the resources needed for authorized regular
staffing.
2. Regular full-time benefitted employees will represent the core work force and the
preferred means of staffing ongoing, year-round program activities and services.
The City will strive to provide competitive compensation and benefit schedules for
its authorized regular work force. Each regular employee will:
a. Fill an authorized regular position;
b. Receive salary and benefits consistent with labor agreements or other City
Council approved compensation plans.
3. To manage the growth of the regular work force and overall staffing costs,the City
will follow these procedures:
a. The Council will authorize all regular positions.
b. The Human Resources Department will coordinate and approve the hiring of
all regular employees.
'
C. Supplement core staff with a balanced workforce consisting of part-time,
contract,and independent contractors.
d. All requests for additional regular positions will include evaluations of:
• The necessity,term and expected results of the proposed activity;
• Staffing and material costs including salary, benefits, equipment,
uniforms,clerical support and facilities;
• The ability of private industry to provide the proposed service;
• Additional revenues or cost savings,which may be realized.
e. Periodically,and before any request for additional regular positions,existing
programs will be re-evaluated to determine if services can be provided with
existing regular employees.
f. The City will make every effort to conduct an internal recruitment to fill
regular positions. The City will evaluate the advantages and disadvantages
of conducting an internal recruitment versus an external recruitment on a
case-by-case basis.
B. Project Staffing
1. The hiring of project employees will not be used as an incremental method for
expanding the City's regular work force.
2. Project employees include all employees other than regular employees,
temporary staffing, elected officials and volunteers. Project employees will
generally augment regular City staffing as extra-help employees, seasonal
employees,contract employees, interns and work-study assistants.
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VI. STAFFING POLICY (continued)
3. The City Manager and Department Directors will encourage the use of project
employees to meet peak workload requirements, fill interim vacancies, and
accomplish tasks where less than full-time, year-round staffing is required.
Under this guideline, project employees will be hired for up to one year at a time
in conjunction with the annual operating budget on an at-will basis. Moreover,
project employee hours will generally not exceed 50% of a regular, full-time
position (1,000 hours annually). There may be limited circumstances where the
use of project employees on an ongoing basis in excess of this target may be
appropriate due to unique programming or staffing requirements. However, any
such exceptions must be approved by the City Manager based on the review and
recommendation of the Human Resources Department.
C. Temporary Staffing
1. Temporary Staffing agencies can be contacted only in the case of a short-term
assignment such as sick leave, disability leave, maternity leave,etc.
2. The City will pay the Temporary Staffing Agency a fair base rate for the employee
with a negotiated markup while the temporary employee is providing work for the
City.
O. Work Hours
1. Regular employee, project employee,and temporary employee work hours will be
based on the needs of the City and the position.
2. Employee work hours may be flexed in an effort to minimize overtime.
E. Overtime Management
1. Overtime should be used only when necessary and when other alternatives are
not feasible or cost effective.
2. All overtime must be pre-authorized by a Department Director or delegated in
accordance with existing policy.
3. Departmental operating budgets should reflect anticipated annual overtime costs
and departments will regularly monitor overtime use and expenditures.
4. When considering the addition of regular, project, or temporary staffing, the use
of overtime as an alternative will be considered. The department will take into
account:
a. The duration that additional staff resources may be needed;
b. The cost of overtime versus the cost of additional staff;
C. The skills and abilities of current staff;
d. Training costs associated with hiring additional staff;
e. The impact of overtime on existing staff;
f. The impact on quality of services.
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VI. STAFFING POLICY (continued)
F. Independent Contractors
Independent contractors are not City employees.They may be used in two situations:
1. Short-term, peak workload assignments to be accomplished using personnel
contracted through an outside employment agency (OEA). In this situation, it is
anticipated that City staff will closely monitor the work of OEA employees and
minimal training will be required. However, they will always be considered the
employees of the OEA and not the City. All placements through an OEA will be
coordinated through the Human Resources Department and subject to the
approval of the Human Resources Department.
2. Construction of public works projects and delivery of operating, maintenance or
specialized professional services not routinely performed by City employees. Such
services will be provided without close supervision by City staff, and the required
methods, skills and equipment will generally be determined and provided by the
contractor. Contract awards will be guided by the City's purchasing policies and
procedures.
G. Productivity
' The City will repeatedly monitor and review the City's methods of operation to ensure
that services continue to be delivered in the most cost-effective manner possible. This
review process encompasses a wide range of productivity issues, including:
1. Analyzing systems and procedures to identify and remove unnecessary review
requirements.
2. Evaluating the ability of new technologies and related capital investments to
improve productivity.
3. Developing the skills and abilities of all City employees.
4. Developing and implementing appropriate methods of recognizing and rewarding
exceptional employee performance.
S. Evaluating the ability of the private sector to perform the same level of service at
a lower cost.
6. Periodic formal reviews of operations on a systematic,ongoing basis.
7. Maintaining a decentralized approach in managing the City's support service
functions. Although some level of centralization is necessary for review and
control purposes, decentralization supports productivity by:
a. Encouraging accountability by delegating responsibility to the lowest
possible level;
b. Stimulating creativity,innovation and individual initiative;
C. Reducing the administrative costs of operation by eliminating unnecessary
review procedures;
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VI. STAFFING POLICY (continued)
d. Improving the ability of the organization to respond to changing needs, and
identify and implement cost-saving programs;
e. Assigning responsibility for effective operations and citizen responsiveness
to the department.
H. Contracting for Services—Private Sector
1. General Policy Guidelines:
a. Contracting with the private sector for the delivery of services may provide
the City with a significant opportunity for cost containment and productivity
enhancements. As such, the City is committed to using private sector
resources in delivering municipal services as a key element in our continuing
efforts to provide cost-effective programs.
b. Private sector contracting approaches under this policy include construction
projects, professional services, outside employment agencies and ongoing
operating and maintenance services.
C. In evaluating the costs of private sector contracts compared with in-house
performance of the service, indirect, direct, and contract administration
' costs of the City will be identified and considered.
d. Whenever private sector providers are available and can meet established
service levels, they will be seriously considered as viable service delivery
alternatives using the evaluation criteria outlined below.
e. For programs and activities currently provided by City employees,
conversions to contract services will generally be made through attrition,
reassignment or absorption by the contractor.
2. Evaluation Criteria - Within the general policy guidelines stated above, the cost
effectiveness of contract services in meeting established service levels will be
determined on a case-by-case basis using the following criteria:
a. Is a sufficient private sector market available to competitively deliver this
service and assure a reasonable range of alternative service providers?
b. Can the contract be effectively and efficiently administered?
C. What are the consequences if the contractor fails to perform, and can the
contract reasonably be written to compensate the City for any such
damages?
d. Can a private sector contractor better respond to expansions, contractions
or special requirements of the service?
e. Can the work scope be sufficiently defined to ensure that competing
proposals can be fairly and fully evaluated, as well as the contractor's
performance after bid award?
' f. Does the use of contract services provide us with an opportunity to redefine
service levels?
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VI. STAFFING POLICY (continued)
g. Will the contract limit our ability to deliver emergency or other high priority
services?
h. Overall, can the City successfully delegate the performance of the service
but still retain accountability and responsibility for its delivery?
I. Contracting for Services—Government Service Contracts
1. General Policy Guidelines:
a. Contracting with other government entities for the delivery of services such
as police and fire provides the City with significant opportunities for cost
containment and productivity enhancements. The City utilizes government
service contracts to deliver municipal services as a key element in the City's
continuing efforts to provide cost-effective programs.
b. Police Contract Services—The City contracts with Riverside County Sheriffs
Department for police services. Under this contract the City maintains a
ratio of one (1) uniformed police officer for every one thousand (1000)
residents. The City will ensure that contracted staffing levels are
compatible with the City population and needs. Contracting with the County
facilitates an efficient, effective and affordable model of policing for the
community. The police contract allows the city to partner with the County
to leverage resources to reduce costs for supervision, administration,
training,clerical support,vehicles and equipment.
C. Fire Contract Services - The City contracts with the Riverside County Fire
Department for all fire services. Contracting with the County facilitates an
efficient, effective and affordable model of fire protection, disaster
preparedness, fire prevention, and emergency operation services for the
community. The fire contract allows the City to partner with the County to
leverage resources to reduce costs for supervision, administration, training,
clerical support,vehicles and equipment.
J. Contracting for Services—Regional Approach
1. A regional approach to public services leverages economies of scale to improve
outcomes and services to the citizens. Therefore, prior to entering into private or
government service contracts,the City will require the completion of a systematic
assessment to determine whether a regional approach to providing services is
necessary.
a. Animal Control Services - The City contracts with Animal Friends of the
Valleys for animal control services and the County of Riverside (via the
Southwest Community Financing Authority) for animal sheltering services.
Contracting with multi-agencies for these services demonstrates a regional
' approach of leveraging resources to provide efficient services (at a reduced
cost).
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VI. STAFFING POLICY (continued)
K. Classification Plan Transition
1. On September 8, 2015,the Temecula City Council adopted a Side Letter to the 2013
Memorandum of Understanding between the City of Temecula and the General
Employees of the City of Temecula, represented by Teamsters Local 911. The Side
Letter outlined the implementation of the 2014 Classification Structure adopted by the
City Council on March 25, 2014.
a. Effective July 1, 2015, the City will make all good faith attempts to fill all
vacancies following the Reclassification Study/Finalized Reclassification Study
Recommendations instead of a competitive process until all said
recommendations are implemented.
b. Employees filling vacancies and all newly created positions shall use the
2014 Classification Structure and Salary Schedule B.
C. In the event a department does not have adequate salary savings to offset
' the cost associated with the implementation of the 2014 Classification
Structure and Salary Schedule B for said vacancy or newly created position,
the City Manager is authorized to transfer an amount equal to the funding
shortfall from the General Fund Non-Departmental Account No.
001.199.999.5354 — Classification Plan Transition to the affected
department.
J. Comprehensive Annual Leave Time Payout
1. Upon an employee's separation from City service, the employee shall have the
option to defer their official separation date to that which corresponds to the
exhaustion of the employee's Comprehensive Annual Leave (CAL) balance.
2. The separated employee's vacant position will be evaluated by the Department
Director, and upon City Manager approval, the Department Director may fill the vacant
position. In the event the department does not have adequate savings to offset the
cost to fill the vacancy, the City Manager is authorized to transfer an amount equal to
the funding shortfall from the General Fund Non-Departmental Account No.
001.199.999.5353—Separation CAL Payout to the affected department.
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VI1. ASSET MANAGEMENT AND REPLACEMENT(AMAR) POLICY
A. AMAR Definition
Asset Management and Replacement is the practice of strategically managing the life
cycle of the City's capital infrastructure to achieve the greatest return on every tax
dollar invested. The capital infrastructure's life-cycle includes how the asset is planned,
designed, constructed, operated, maintained, replaced, and disposed. Capital
infrastructure includes streets, roads, public facilities, parks and trails, and drainage
facilities,as follows:
1. Streets and Roads - Assets related to the provision of transportation (e.g.
pedestrian,bicycles,commercial vehicles, private vehicles,and public vehicles.)
2. Public Facilities - Building and land assets used for a diverse range of services
including community services, recreation, accommodation, and municipal
administration.
3. Parks and Trails - Assets which provide opportunities for organized and informal
recreation activities (e.g. sports, exercise), provide aesthetic and cultural value to
the community, and provide public spaces for social interaction.
' 4. Drainage Facilities - Assets which provide a measure of flooding protection to the
community from storm water runoff and those assets which improve the water
quality of storm water runoff going into main drains and waterways.
B. AMAR Process
As assets age, their performance (service provided) will deteriorate. Therefore, a
process must be applied to determine when the ability of an asset to meet service
standards deteriorates to an unacceptable level. This means considering all
management options and strategies as part of the asset lifecycle, from planning to
disposal.The objective of managing the assets in this manner is to look at long-term cost
impacts when making asset management decisions. An effective process will be based
on the following sequence:
IWIWComo"
The AMAR Policy provides general direction and guidance for the AMAR Plan.The AMAR
Plan provides more detailed direction and guidance for all major asset classes (Streets
and Roads, Public Facilities, Parks and Trails, and Drainage Facilities). The AMAR
Operational Plans cater for the delivery of specific asset management.
The AMAR Plan is based on applicable management studies, best practices, and analysis
and should be updated every five years. The actual replacement of assets via the AMAR
Operational Plans is dependent on staff analysis and recommendation after a review of
' any intervening variables such as variations in service delivery demands, force majeure,
and programming.
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VII. ASSET MANAGEMENT AND REPLACEMENT (AMAR) POLICY(continued)
C. AMAR Policy
The purpose of the Asset Management and Replacement Policy (AMAR Policy) is to
demonstrate the City's commitment to the responsible management of the City's capital
infrastructure.
The AMAR Policy ensures adequate provisions are made for the long-term replacement
of the City's capital infrastructure by:
1. Incorporating appropriate asset management best practices to ensure that the
City delivers the highest appropriate level of service through its assets to:
a. Ensure service delivery needs form the basis of asset management;
b. Incorporate a life-cycle approach to asset management.
2. Applying transparent and responsible financial management of City assets that:
a. Integrate asset management with budgetary planning;
b. Provide for present needs while protecting resources for future generations.
3. Meeting or surpassing legislative requirements for asset management.
4. Ensuring resources and operational capabilities are identified and responsibility
for asset management is allocated.
D. AMAR Funding Strategy
1. AMAR Fund Policy:
a. The funding strategy will be based on the following:
• An evaluation of available funds in the General Fund, Special Reserve
Funds, and the Internal Service Funds;
• A comparison of available funds against the requirements of AMAR
Plan (based on applicable management studies, best practices, and
analysis);
• Establishment of a separate AMAR Fund and Policy (e.g. designation,
reservation)that best meets the needs of the City.
b. When established,the drafting of the actual AMAR Fund Polity will be
dependent on Council guidance and direction,and based on the analysis of
the completed management studies.
2. The purpose of the Asset Management Fund is to:
a. Accumulate earnings to provide a long-term funding source for
replacement/rehabilitation of City infrastructure while preserving the
principal balance of the Fund;
b. Provide financial reserves to respond to natural disasters and other
emergencies;
C. Provide a source for internal loans and liquidity;
d. Serve as collateral for City debt issues;
e. Asset Management Fund assets may not be used for any purpose without
approval of the City Council.
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IVIL ASSET MANAGEMENT AND REPLACEMENT (AMAR) POLICY (continued)
E. Replacement Funds
1. Fund 310 Vehicles and Equipment Fund has been established as an Internal
Service Fund, for the purpose of accumulating the funds necessary to replace the
City's fleet and major equipment. Annually, each department owning an eligible
vehicle or piece of large equipment contributes an amount equivalent to the
estimated cost to replace the item at the end of its useful life, as summarized in
the Vehicle/Equipment Replacement Schedule. Eligible assets funded through
the Vehicle/Equipment Replacement Schedule include vehicles and large
equipment items that have a useful life longer than three years and cost in excess
of$10,000.
2. Fund 325 — Technology Replacement Fund has been established as an Internal
Service Fund, for the purpose of accumulating the funds necessary to replace the
City's technology infrastructure (hardware and software). Annually, each
department owning an eligible technology-related asset contributes an amount
equivalent to the estimated cost to replace the item at the end of its useful life,as
summarized in the Technology Replacement Schedule. Eligible assets funded
through the Technology Replacement Schedule include those technology-related
assets that have a useful life longer than three years and cost in excess of$3,000.
VIII. INVESTMENTS
A. Introduction
The intent of this Investment Policy is to establish the limits within which the City's
Investment Program will be conducted. Investment goals and objectives are defined.
Authorized investments and reporting requirements are identified. The monies
entrusted to the City Treasurer will be referred to as the "Fund" throughout the
remainder of this document.
B. Objectives
The investment policies and practices of the City of Temecula are based upon State law
and prudent money management.The primary goals of these policies include:
1. To protect the principal monies entrusted to this office. Safety of principal is the
foremost objective of the City of Temecula. Each investment transaction will
seek to ensure that capital losses are avoided, whether from securities default,
broker dealer default, or erosion of market value. The City will seek to preserve
principal by mitigating the two types of risk (credit risk and market risk).
a. Credit Risk - Defined as the risk of loss due to failure of the issuer of a
security, will be mitigated by investing only with issuers whose financial
strength and reputation can be verified to be the highest as rated by
nationally known rating agencies, and by diversifying the investment
portfolio so that the failure of any one issuer would not unduly harm the
City's cash flow.
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VIII. INVESTMENTS (continued)
b. Market Risk-The risk of market value fluctuations due to overall changes in
the general level of interest rates, will be mitigated by (a) structuring the
portfolio so that securities mature earlier than or concurrent with the
timing of major cash outflows, thus eliminating the need to sell securities
prior to their maturity; (b) prohibiting the use of leverage and margin
accounts; and (c) prohibiting the taking of short positions — that is, selling
securities which the City does not own. It is explicitly recognized herein,
however, that in a diversified portfolio, occasional measured losses are
inevitable, and must be considered within the context of the overall
investment return.
2. To provide sufficient liquidity to meet normal operating and unexpected
expenditures. The portfolio will be structured with sufficient liquidity to allow the
City to meet expected cash requirements.This will be accomplished by structuring
the portfolio so that securities mature concurrent with cash needs to meet
anticipated demands. Since all possible cash demands cannot be anticipated, the
portfolio will maintain a liquidity buffer and invest primarily in securities with
active secondary and resale markets.
3. To ensure compliance with all Federal. State. and Local laws governing the
investment of monies under the control of the City Treasurer. The legal basis for
the City's investment activities is the City of Temecula Municipal Code, Chapter
3.04, Revenue and Finance, Fiscal Provisions Generally and Government Code
Sections 5922, 16429.1, 53600 to 53609, and 53630 to 53686, which include
parameters for authorized investments, report of investments and investment
authority.
4. To generate a maximum amount of investment income within the parameters of
prudent risk management and consistent with the above policies. The City's
investment portfolio will be designed to attain a market-average rate of return
through economic cycles. The market-average rate of return is defined as the
average return on three-month U.S. Treasury bills. Whenever possible, and
consistent with risk limitations and prudent investment principles, the Treasurer
will seek to augment returns above the market average rate of return.
The policy will also address risk management because it is such an integral part of
the investment policy. To concentrate only on maximizing return would be
dangerous. Therefore, policy issues will be directed to: 1) limiting the Fund's
exposure to each issue and issuer of debt, and 2) determining a minimum credit
requirement that firms must have in order to hold City money.
C. Scope
This investment policy applies to all funds under the control of the City Treasurer,
' including but not limited to the general fund, special revenue funds, debt service funds,
capital improvement funds,trust funds and bond proceeds in the custody of the
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Treasurer and any other funds under his/her control. California Government Code
Section 53601(1) permits money from bond proceeds, obligations under a lease,
installment sales or other agreements to be invested in any security that meets the
statutory provisions governing the issuance of the bond or other agreements made by
the issuing agency. Furthermore, California Government Code Section 5922(d) provides
that notwithstanding any other provision of law, proceeds of bonds and any moneys set
aside and pledged to secure payment of the bonds or certain other contracts specified
in Section 5922, may be invested in securities or obligations described in the ordinance,
resolution, indenture, agreement, or other instrument providing for the issuance of the
bonds or the contract.
D. Investment Authority
The City of Temecula Municipal Code delegates to the City Treasurer the authority to
invest and reinvest moneys of the city, to sell or exchange securities, and to deposit
them and provide for their safekeeping. The City Treasurer is responsible for daily
management of the investment program, including:
1. Establishing procedures for operation consistent with the investment policy;
2. Approving daily investment transactions;
3. Developing projections of the City's cash requirements for operating needs;
4. Reviewing the liquidity position of the investment portfolio;
5. Ensuring that the City's cash position is consistent with operating requirements;
6. Preparing appropriate investment reports;
7. Developing, implementing and monitoring controls over investments;
8. Developing record keeping for investment transactions.
The City Treasurer may delegate investment authority to qualified and competent
officials and City employees such as the Revenue Manager.
All persons authorized to make investment decisions on behalf of the City are trustees
of the public funds and therefore fiduciaries subject to the following prudent investor
standard as defined in California Government Code Section 53600.3:
When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing
public funds, a trustee will act with care, skill, prudence, and diligence under the
circumstances then prevailing, including, but not limited to, the general economic
conditions and the anticipated needs of the agency, that a prudent person acting in a
like capacity and familiarity with those matters would use in the conduct of funds of a
like character and with like aims, to safeguard the principal and maintain the liquidity
needs of the agency. Within the limitations of this section and considering individual
investments as part of an overall strategy, investments may be acquired as authorized
by law.
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VIII. INVESTMENTS (continued)
E. Safekeeping of Securities
To protect against potential losses by collapse of individual securities dealers, all
securities owned by the City, including collateral on repurchase agreements, will be held
in safekeeping by a third party bank trust department, acting as agent for the City under
the terms of a custody agreement executed by the bank and by the City. All securities
will be received and delivered using standard delivery versus payment procedures (i.e.,
the City's safekeeping agent will only release payment for a security after the security
has been properly delivered). This section is intended to comply with Government Code
Sections 53601 and 53608.
F. Reporting
The City Treasurer will render a monthly report to the City Manager and City Council
showing the type of investment, issuing institution, selling institution, date of maturity,
par and dollar amount of deposit, current market value for all securities, return on the
City's investment portfolio expressed as an annual percentage rate, yield to maturity,
cash flow information demonstrating that the City can meet its upcoming financial
obligations, and such data as may be required by the City Council. The report will also
state its relationship to this statement of investment policy, as directed under the Code.
The Treasurer will at least annually submit a recommended updated Investment Policy
to be reviewed and approved by the City Council. The City's investment reporting policy
meets or exceeds the requirements of Section 53646 of the California Government
Code.
G. Qualified Dealers
The City will transact investments only with banks, savings and loans, state-licensed
investment security broker-dealers, the State of California Local Agency Investment
Fund, or brokerage firms designated as primary government dealers by, and regularly
reporting to, the New York Federal Reserve Bank. Investment staff will investigate
dealers who wish to do business with the City in order to determine if they are
adequately capitalized, market securities appropriate to the City's needs, and are
recommended by managers of portfolios similar to the City's. The City's Broker/Dealer
Questionnaire will be used in this investigation.
The City will, at least annually, send a copy of the current investment policy to all
dealers approved to do business with the City. Confirmation of receipt of this policy will
be considered as evidence that the dealer understands the City's investment policies,
and intends to show the City only appropriate investments.
H. Authorized Investments
Investments will be made in the context of the "prudent investor" rule,which states:
Investments will be made with judgment and care,
' under circumstances then prevailing, which persons of
prudence,discretion,and intelligence exercise in the
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management of their own affairs, not for speculation,
but for investment, considering the probable safety of
their capital as well as the probable income to be
derived.
The City is further governed by the California Government Code, Sections 5922,
16429.1, and 53600 et seq. Within the context of these limitations, the following
investments are authorized,as further limited herein:
1. United States Treasury Bills. Bonds, and Notes, or those for which the full faith
and credit of the United States are pledged for payment of principal and interest.
There is no limitation as to the percentage of the portfolio that can be invested in
this category. Maturity is not to exceed the projected dates of the City's cash
needs or five years,whichever is less.
2. Obligations issued by the Federal Farm Credit Bank System (FFCB), the Federal
Home Loan Bank Board (FHLB), the Federal Home Loan Mortgage Corporation
(FHLMC), the Federal National Mortgage Association (FNMA). and other United
States agency obligations with maturities of five years or less.Although there is no
percentage limitation on the dollar amount that can be invested in these issues,
the "prudent investor" rule will apply for a single agency name. Maturity is not to
' exceed the projected dates of the City's cash needs or five years, whichever is
less.
3. Bills of exchange or time drafts drawn on and accepted by a commercial bank,
otherwise known as banker's acceptances. Banker's acceptances purchased may
not exceed 180 days to maturity or 40% of the market value of the portfolio. No
more than 10% of the market value of the portfolio may be invested in banker's
acceptances issued by any one bank.
4. Commercial paper ranking of the highest letter and number rating by a nationally
recognized statistical rating organization (NRSRO). and issued by a domestic
corporation having assets in excess of$500,000,000 and having an "A-1" or better
rating on its long-term debentures as provided by a NRSRO. Purchases of eligible
commercial paper may not exceed 15% of the market value of the portfolio. No
more than 10% of the market value of the portfolio may be invested in
commercial paper issued by any one corporation. The City may invest in no more
than 10% of a single corporation. The City may invest in no more than 10% of a
single corporation's commercial paper. Maturity is not to exceed 180 days.
5. Negotiable certificates of deposit issued by nationally or state-chartered banks or
state or federal savings and loan associations. Negotiable certificates of deposit
(NCDs) differ from other certificates of deposit by their deposit liquidity. They are
issued against funds deposited for specified periods of time and earn specified or
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variable rates of interest. NCDs are traded actively in secondary markets. When
feasible, an independent trading service will be used as part of the evaluation
process. Issuers must be rated "B" or better by Thomson Bank Watch or
equivalent rating service, or rated A-1 for deposits by Standard & Poors, or P-1 for
deposits by Moodys or comparably rated by a national rating agency.
Transactions in NCDs will not collectively exceed 30% of the total portfolio in
effect immediately after any such investment is made.
6. Repurchase Agreements. The City may invest in repurchase agreements with
banks and dealers with which the City has entered into a master repurchase
agreement which specifies terms and conditions of repurchase agreements.
Transactions will be limited to the primary dealers and the top banking
institutions according to the rating agency based on liquidity, profitability, and
financial strength. The maturity of repurchase agreements will not exceed thirty
days. The market value of securities used as collateral for repurchase agreements
will be monitored daily by the investment staff and will not be allowed to fall
below 102%of the value of the repurchase agreement plus the value of collateral
in excess of the value of the repurchase agreement. In order to conform with
provisions of the Federal Bankruptcy Code which provide for the liquidation of
securities held as collateral for repurchase agreements, the only securities
acceptable as collateral will be certificates of deposit, eligible bankers'
acceptances, or securities that are direct obligations of, or that are fully
guaranteed as to principal and interest by, the United States or any agency of the
United States. No more than 50% of the portfolio may be invested in repurchase
agreements, and a "perfected security interest' will always be maintained in the
securities subject to a repurchase agreement.
7. Local Agency Investment Fund. The City may invest in the Local Agency
Investment Fund (LAIF) established by the State Treasurer for the benefit of local
agencies up to the maximum permitted by State law.
8. Time Deposits. As to the deposits of non-surplus funds, the City may invest in
non-negotiable time deposits collateralized in accordance with the California
Government Code (including, but not limited to, entering into a contract with the
depository institution pursuant to California Government Code Section 53649) in
those banks and savings and loan associations that meet the requirements for
investment in negotiable certificates of deposit. Since time deposits are not liquid,
no more than 15% of the portfolio may be invested in this category. The
depository institution should have been in existence for at least five years. The
City may waive the first $100,000 of collateral security for such deposits if the
institution is insured pursuant to federal law.
In order to secure the uninsured portions of such deposits, an institution will
maintain at least 10% in excess of the total amount deposited. Real estate
' mortgages may not be accepted as collateral.The maximum term for deposits will
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VIII. INVESTMENTS (continued)
be one year. In general, the depository institution must have a minimum 6% net
worth to assets ratio or the minimum ratio established by the Comptroller of the
Currency. The depository institution's operation must have been profitable during
their last reporting period.
9. Money Market Funds. The City may invest in money market funds that invest
solely in U.S. Treasuries, obligations of the U.S. Treasury, and repurchase
agreements relating to such treasury obligations. To be eligible, the money
market fund must have attained the highest ranking available as evaluated by a
nationally recognized rating service and retained an investment advisor with not
less than five years' experience and that is registered with the SEC, and which
advisor has assets under management in excess of$500 million.
Except as otherwise noted,this list of authorized investments is intended to apply
to the investment of all operating and surplus funds. The investment of bond
proceeds will be governed by the permitted investments as specified in the official
statement for each bond issue.
' I. Ineligible Investments
Investments not described herein, including, but not limited to, reverse repurchase
agreements, mutual funds (other than money market funds), zero coupon bonds,
inverse floaters, mortgage-derived securities, common stocks and corporate notes and
bonds are prohibited from use in the City's investment portfolio.
J. Swapping of Securities
A swap is the movement from one security to another and may be done for a variety of
reasons, such as to increase yield, lengthen or shorten maturities, to take a profit, or to
increase investment quality. The purchase transaction and the sale transaction must
each be recorded separately and any losses or gains on the sale must be recorded.
K. Portfolio Adjustments
Should an investment percentage-of-portfolio limitation be exceeded due to an incident
such as fluctuation in portfolio size, the affected securities may be held to maturity to
avoid losses. When no loss is indicated, the Treasurer will consider reconstructing the
portfolio basing his or her decision, in part, on the expected length of time the portfolio
will be unbalanced.
L. Policy Review
This investment policy will be reviewed at least annually to ensure its consistency with
the overall objectives of preservation of principal, liquidity,and return, and its relevance
to current law and financial and economic trends. The City Council will be responsible
for maintaining guidance over this investment policy to ensure that the City can adapt
' readily to changing market conditions, and will approve any modification to the
investment policy prior to implementation.
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VIII. INVESTMENTS (continued)
M. Ethics and Conflict of Interest
Officers and employees involved in the investment process will refrain from personal
business activity that conflicts with the proper execution of the investment program or
impairs their ability to make impartial investment decisions.
In addition, no funds will be invested in negotiable certificates of deposit issued by, or
non-negotiable time deposits under contract with a State or Federal credit union if a
member of the City Council or any person with investment decision making authority in
the administrative office, manager's office, budget office, auditor-controller's office, or
treasurer's office of the City also serves on the board of directors, or any committee
appointed by the board of directors, or the credit committee or the supervisory
committee of the State or Federal credit union issuing the negotiable certificates of
deposit or in which the non-negotiable time deposit is proposed to be deposited.
Additionally,officers and staff involved in the investment of public funds are required to
annually file a Fair Political Practices Commission Statement of Economic Interest form.
IX. CAPITAL FINANCING AND DEBT MANAGEMENT
' A. Capital Financing
1. The city will consider the use of debt financing only for one-time capital
improvement projects and only under the following circumstances:
a. When the project's useful life will exceed the term of the financing;
b. When project revenues or specific resources will be sufficient to service
the long-term debt.
2. The city will integrate debt issuances with the objectives of the capital
improvement program and will incorporate such integration in the formulation
of the city's financial strategic plan.
3. Debt financing will not be considered appropriate for any recurring purpose
such as current operating and maintenance expenditures. The issuance of
short-term instruments such as revenue, tax or bond anticipation notes is
excluded from this limitation. (see investment policy)
4. Capital improvements will be financed primarily through user fees, service
charges, assessments, special taxes or developer agreements when benefits can
be specifically attributed to users of the facility. Accordingly, development
impact fees should be created and implemented at levels sufficient to ensure
that new development pays its fair share of the cost of constructing necessary
community facilities.
5. Transportation related impact fees are a major funding source in financing
' transportation system improvements. However, revenues from these fees are
subject to significant fluctuation based on the rate of new development.
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IX. CAPITAL FINANCING AND DEBT MANAGEMENT (continued)
Accordingly, the following guidelines will be followed in designing and building
projects funded with transportation impact fees:
a. The availability of transportation impact fees in funding a specific
project will be analyzed on a case-by-case basis as plans and
specification or contract awards are submitted for City Manager or
Council approval.
b. If adequate funds are not available at that time, the Council will make
one of two determinations:
• Defer the project until funds are available;
• Based on the high-priority of the project, advance funds from
the general fund, which will be reimbursed as soon as funds
become available. Repayment of general fund advances will
be the first use of transportation impact fee funds when they
become available.
6. The City will use the following criteria to evaluate pay-as-you-go versus
long-term financing in funding capital improvements:
a. Factors favoring Pay-As-You-Go Financing:
• Current revenues and adequate fund balances are available or
project phasing can be accomplished;
• Existing debt levels adversely affect the City's credit rating;
• Market conditions are unstable or present difficulties in
marketing.
b. Factors favoring Long Term Financing:
• Revenues available for debt service are deemed sufficient and
reliable so that long-term financings can be marketed with
investment grade credit ratings;
• The project securing the financing is of the type, which will
support an investment grade credit rating;
• Market conditions present favorable interest rates and demand
for City financings;
• A project is mandated by state or federal requirements, and
resources are insufficient or unavailable;
• The project is immediately required to meet or relieve capacity
' needs and current resources are insufficient or unavailable.
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IX. CAPITAL FINANCING AND DEBT MANAGEMENT (continued)
B. Debt Management
1. The City will not obligate the General Fund to secure long-term financings
except when marketability can be significantly enhanced.
2. An internal feasibility analysis will be prepared for each long-term financing
which analyzes the impact on current and future budgets for debt service and
operations. This analysis will also address the reliability of revenues to support
debt service.
3. The City will generally conduct financings on a competitive basis. However,
negotiated financings may be used due to market volatility or the use of an
unusual or complex financing or security structure.
4. The City will seek an investment grade rating (Baa/BBB or greater)on any direct
debt and will seek credit enhancement such as letters of credit or insurance
when necessary for marketing purposes,availability and cost-effectiveness.
5. The City will monitor all forms of debt annually coincident with the City's
Financial Strategic Plan preparation and review process and report concerns and
remedies, if needed,to the Council.
6. The City will diligently monitor its compliance with bond covenants, including
but not limited to any federal tax compliance requirements with respect to any
tax-exempt debt obligations, and ensure its adherence to applicable regulations.
7. The City will maintain good, ongoing communications with bond rating agencies
about its financial condition. The City will follow a policy of full disclosure on
every financial report and bond prospectus (Official Statement).
8. The City will periodically review the requirements of, and will remain in
compliance with, any continuing disclosure undertakings, particularly under
Rule 15c2-12 promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934 with respect to debt issues.
9. The City will diligently monitor the use of proceeds from its debt issues, to
ensure that the proceeds will be directed to the intended use. The City will
maintain records of the intended use of the proceeds when the debt was
originally issued (by keeping related documents, such as the Official Statements,
tax certificates, as applicable) and the use of the proceeds at the time they are
expended. Such records shall be retained as long as the debt issue (and any
subsequent debt issue which refunded the debt) remains outstanding and for
three years following the final maturity or redemption. The City shall
consultant legal counsel regarding the use of proceeds that is a change from the
original intended purpose.
10. So long as required by California Government Code Section 8855(k), the City
' shall file annual report(s) to the California Debt and Investment Advisory
Commission ("CDIAC") in accordance with CDIAC's requirements on a timely
basis. The City shall retain a copy of each such annual report.
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IX. CAPITAL FINANCING AND DEBT MANAGEMENT (continued)
11. In connection with each debt issue, the City will file or cause Bond Counsel or
another applicable member of the financing team to file on behalf of the City, a
report of proposed issuance and a report of final sale, as required by California
Government Code Section 8855(1) and (j).
C. Debt Capacity
1. General Purpose Debt Capacity. The City will carefully monitor its levels of
general-purpose debt. Because our general purpose debt capacity is limited, it
is important that we only use general purpose debt financing for high-priority
projects where we cannot reasonably use other financing methods for two key
reasons:
a. Funds borrowed for a project today are not available to fund other
projects tomorrow;
b. Funds committed for debt repayment today are not available to fund
operations in the future. In evaluating debt capacity, general-purpose
annual debt service payments should generally not exceed 10% of
' General Fund revenues; and in no case should they exceed 15%.
Further, direct debt will not exceed 2% of assessed valuation; and no
more than 60% of capital improvement outlays will be funded from
long-term financings.
D. Independent Disclosure Counsel
For any public offering debt issue, the City will retain independent disclosure counsel to
assist with the preparation of the official statement or any other similar offering
document and the continuing disclosure agreement. The roles of bond counsel and
disclosure counsel may be served by the same firm, based on the City's determination
on a case-by-case basis.
E. Land-Based Financings
1. Public Purpose. There will be a clearly articulated public purpose in forming an
assessment or special tax district in financing public infrastructure
improvements. This should include a finding by the Council as to why this
form of financing is preferred over other funding options such as impact fees,
reimbursement agreements or direct developer responsibility for the
improvements.
2. Eligible Improvements. Except as otherwise determined by the Council when
proceedings for district formation are commenced, preference in financing
public improvements through a special tax district will be given for those public
improvements that help achieve clearly identified community facility and
' infrastructure goals in accordance with adopted facility and infrastructure plans
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IX. CAPITAL FINANCING AND DEBT MANAGEMENT (continued)
as set forth in key policy documents such as the General Plan, Specific Plan,
Facility or Infrastructure Master Plans,or Capital Improvement Plan.
Such improvements include study, design,construction and/or acquisition of:
a. Public safety facilities;
b. Major transportation system improvements, such as freeway
interchanges; bridges; intersection improvements; construction of new
or widened arterial or collector streets (including related landscaping
and lighting); sidewalks and other pedestrian paths; transit facilities;
and bike paths;
C. Storm drainage,creek protection and flood protection improvements;
d. Parks,trails,community centers and other recreational facilities;
e. Open space;
f. Cultural and social service facilities;
g. Other governmental facilities and improvements such as offices,
information technology systems and telecommunication systems.
3. Active Role. Even though land-based financings may be a limited obligation of
the City, we will play an active role in managing the district. This means that
the City will select and retain the financing team, including the financial advisor,
bond counsel, trustee, appraiser, disclosure counsel, assessment engineer,
special tax consultant and underwriter, as appropriate. Any costs incurred by
the City in retaining these services will generally be the responsibility of the
property owners or developer, and will be advanced via a deposit when an
application is filed; or will be paid on a contingency fee basis from the proceeds
from the bonds.
4. Credit Quality. When a developer requests a district, the City will carefully
evaluate the applicant's financial plan and ability to carry the project, including
the payment of assessments and special taxes during build-out. This may
include detailed background, credit and lender checks, and the preparation of
independent appraisal reports and market absorption studies. For districts
where one property owner accounts for more than 25% of the annual debt
service obligation, a letter of credit further securing the financing may be
required.
5. Reserve Fund. A reserve fund should be established in the lesser amount of:
the maximum annual debt services; 125%of the annual average debt service; or
10%of the bond proceeds.
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IX. CAPITAL FINANCING AND DEBT MANAGEMENT(continued)
6. Value-to-Debt Ratios. The minimum value-to-debt ratio should generally be
4:1. This means the value of the property in the district, with the public
improvements, should be at least four times the amount of the assessment or
special tax debt. In special circumstances, after conferring and receiving the
concurrence of the City's financial advisor and bond counsel that a lower
value-to-debt ratio is financially prudent under the circumstances; the City may
consider allowing a value-to-debt ratio of 3:1. The Council should make special
findings in this case.
7. Appraisal Methodology. Determination of value of property in the district will
be based upon the full case value as shown on the ad valorem assessment roll
or upon an appraisal by an independent Member Appraisal Institute (MAI),
The definitions, standards and assumptions to be used for appraisals will be
determined by the City on a case-by-case basis, with input from City consultants
and district applicants, and by reference to relevant materials and information
promulgated by the State of California, including the Appraisal Standards for
Land Secured Financings prepared by the California Debt and Investment
' Advisory Commission.
g. Capitalized Interest During Construction. Decisions to capitalize interest will
be made on a case-by-case basis,with the intent that if allowed, it should
improve the credit quality of the bonds and reduce borrowing costs, benefiting
both current and future property owners.
9. Maximum Burden. Annual assessments (or special taxes in the case of
Mello-Roos or similar districts) should generally not exceed 1%of the sales price
of the property; and total property taxes, special assessments and special taxes
payments collected on the tax roll should generally not exceed 2%.
10. Benefit Apportionment. Assessments and special taxes will be apportioned
according to a formula that is clear, understandable, equitable and reasonably
related to the benefit received by, or burden attributed to, each parcel with
respect to its financed improvement. Any annual escalation factor should
generally not exceed 2%.
11. Special Tax District Administration. In the case of Mello-Roos or similar special
tax districts, the total maximum annual tax should not exceed 110% of annual
debt service. The rate and method of apportionment should include a back-up
tax in the event of significant changes from the initial development plan, and
should include procedures for prepayments.
12. Foreclosure Covenants. In managing administrative costs, the City will
establish minimum delinquency amounts per owner, and for the district as a
whole,on a case-by-case basis before initiating foreclosure proceedings.
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IX. CAPITAL FINANCING AND DEBT MANAGEMENT (continued)
13. Disclosure to Bondholders. In general, each property owner who accounts for
more than 10% of the annual debt service or bonded indebtedness must
provide ongoing disclosure information annually as described under SEC Rule
1S(c)-12.
14. Disclosure to Prospective Purchasers. Full disclosure about outstanding
balances and annual payments should be made by the seller to prospective
buyers at the time that the buyer bids on the property. It should not be
deferred to after the buyer has made the decision to purchase. When
appropriate, applicants or property owners may be required to provide the city
with a disclosure plan.
F. Conduit Financings
1. The City will consider requests for conduit financing on a case-by-case basis
using the following criteria:
a. The City's bond counsel will review the terms of the financing, and
render an opinion that there will be no liability to the City in issuing the
' bonds on behalf of the applicant;
b. There is a clearly articulated public purpose in providing the conduit
financing;
C. The applicant is capable of achieving this public purpose.
2. This means that the review of requests for conduit financing will generally be a
two-step process:
a. First asking the Council if they are interested in considering the request,
and establishing the ground rules for evaluating it;
b. And then returning with the results of this evaluation, and
recommending approval of appropriate financing documents if
warranted.
This two-step approach ensures that the issues are clear for both the City and
applicant, and that key policy questions are answered.
3. The work scope necessary to address these issues will vary from request to
request, and will have to be determined on a case-by-case basis. Additionally,
the City should generally be fully reimbursed for our costs in evaluating the
request; however,this should also be determined on a case-by-case basis.
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IX. CAPITAL FINANCING AND DEBT MANAGEMENT (continued)
G. Refinancings
1. General Guidelines. Periodic reviews of all outstanding debt will be
undertaken to determine refinancing opportunities. Refinancings will be
considered(within federal tax law constraints) under the following conditions:
a. There is a net economic benefit;
b. It is needed to modernize covenants that are adversely affecting the
City's financial position or operations;
C. The City wants to reduce the principal outstanding in order to achieve
future debt service savings, and it has available working capital to do so
from other sources.
2. Standards for Economic Savings. In general, refinancing for economic savings
will be undertaken whenever net present value savings of at least five percent
(5%)of the refunded debt can be achieved.
a. Refinancings that produce net present value savings of less than five
' percent will be considered on a case-by-case basis, provided that the
present value savings are at least three percent (3%) of the refunded
debt.
b. Refinancings with savings of less than three percent (3%), or with
negative savings, will not be considered unless there is a compelling
public policy objective.
H. Types of Debt That May be Issued
1. To implement the financing(or refinancing)objectives,the City will consider the
issuance of generally accepted types of debt, including:
a. Revenue Bonds—limited-liability obligations tied to a specific enterprise
or special fund revenue stream where the projects financed clearly
benefit or relate to the enterprise or are otherwise permissible uses of
the special revenue;
b. Special Assessment/Special Tax Bonds — limited liability obligations
secured by special assessments or special taxes as described above
under"Land-Based Financings";
C_ General Fund Supported Lease Revenue Bonds or Certificates of
Participation—generally involves a lease arrangement between the City
and a joint powers authority (or another entity), whereby bonds are
issued by the authority for the financing of the project, and the City
agrees to make lease payments in sufficient amounts to secure debt
service payments on the bonds.
Fiscal year 2016-17 Annual Operating Budget
City of Temecula
Fiscal Year 2016-17
Mid-Year Budget
BUDGET AND FISCAL POLICIES
IX. CAPITAL FINANCING AND DEBT MANAGEMENT(continued)
d. General Obligation Bonds — bonds secured by a dedicated property tax
override (i.e., a property tax in excess of the 1% basic ad valorem
property tax rate) that will be issued only after voter approval pursuant
to the State Constitution and other applicable laws.
e. Tax Increment Bonds — bonds secured by a portion of ad valorem
property tax that are allocated to a successor agency (to a former
redevelopment agency) or another entity formed pursuant by law (such
as an enhanced infrastructure financing district or a community
revitalization infrastructure district). The successor agency will
consider issuance of bonds for refunding purposes. The City has not
yet formed any enhanced infrastructure financing district, community
revitalization infrastructure district or any similar entity, and will
undertake applicable legal and feasibility analysis at the time of
consideration of the formation of any such entity.
f. Conduit Financing Bonds — bonds as described above under "Conduit
' Financings," for which debt service will be secured by the applicant's
payments and the role of the City (or the City affiliated entity) will be
limited to be the conduit issuer,without financial liability.
2. The above list is not exhaustive. The City may from time to time consider
other types of debt to accommodate its financing and refinancing objectives.
I. Policy Goals Related to Planning Goals and Objectives
1. It is a policy goal of the City to protect taxpayers and constituents by utilizing
conservative financing methods and techniques so as to obtain the highest
practical credit ratings(if applicable)and the lowest practical borrowing costs.
2. The City is committed to financial planning, maintaining appropriate reserves
levels and employing prudent practices in governance, management and budget
administration, including debt issuance and management.
3. The City will comply with applicable state and federal law as it pertains to the
maximum term of debt and the procedures for levying and imposing any related
taxes, assessments, rates and charges.
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City of Temecula
Fiscal Year 2016-17
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BUDGET AND FISCAL POLICIES
X. INTERFUND TRANSFERS AND LOANS POLICY
A. Establishment of Various Funds
The City has established various funds to account for revenues whose use should be
restricted to certain activities. Accordingly, each fund exists as a separate financing
entity from other funds, with its own revenue sources,expenditures and fund equity.
B. Transfer between Funds
Any transfers between funds for operating purposes are set forth in the budget. These
operating transfers, under which financial resources are transferred from one fund to
another, are distinctly different from interfund borrowings, which are usually made for
temporary cash flow reasons, and are not intended to result in a transfer of financial
resources. In summary, interfund transfers result in a change in fund equity; interfund
borrowings do not,as the intent is to repay the loan in the near term.
C. Interfund Loans
Interfund loans may be appropriate whenever the loan is expected to be repaid within
the immediate future. The most common use of interfund loans is for grant programs,
where costs are incurred before drawdowns are initiated and received. Receipt of
' funds is typically received shortly after the request for funds has been made.
XI. APPROPRIATIONS LIMITATION
A. Adopting a Resolution
The Council will annually adopt a resolution establishing the City's appropriations limit
calculated in accordance with Article XIII-B of the Constitution of the State of California,
Section 7900 of the State of California Government Code, and any other voter approved
amendments or state legislation that affect the City's appropriations limit.
B. Supporting Documentation Available for Review
The supporting documentation used in calculating the City's appropriations limit and
projected appropriations subject to the limit will be available for public and Council
review at least fifteen days before Council consideration of a resolution to adapt an
appropriations limit. The Council will generally consider this resolution in connection
with final approval of the budget.
C. Calculating Appropriations
The City will strive to develop revenue sources, both new and existing, which are
considered non-tax proceeds, in calculating its appropriations subject to limitation.
D. Review of User Fees and Charges
The City will annually review user fees and charges and report to the Council the
amount of program subsidy, if any that is being provided by the General Fund. An
annual inflator is automatically calculated each year based on changes in the Consumer
' Price Index.
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City of Temecula
Fiscal Year 2016-17
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BUDGET AND FISCAL POLICIES
XI. APPROPRIATIONS LIMITATION (continued)
E. Support of Legislation or Initiatives
The City will actively support legislation or initiatives sponsored or approved by League
of California Cities which would modify Article x111-8 of the Constitution in a manner
which would allow the City to retain projected tax revenues resulting from growth in the
local economy for use as determined by the Council.
F. Voter Approval to Amend Appropriation Limit
The City will seek voter approval to amend its appropriation limit at such time that tax
proceeds are in excess of allowable limits.
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Fiscal Year 2016-17 Annual Operating Budget