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HomeMy WebLinkAbout030122-09.1 ADMINISTRATIVE STAFF REPORT 9.1 TO: Mayor and Town Council March 1, 2022 SUBJECT: Resolution No. 17-2022, accepting the mid-year Financial Report, approving mid-year adjustments to the Fiscal Year 2021/22 Operating Budget Resolution No. 18-2022, accepting the mid-year Financial Report, approving mid-year adjustments to the Fiscal Year 2021/22 Capital Improvement Project INTRODUCTION The Operating Budget is the Town’s annual plan for service delivery. The budget focuses on services, programs and activities that are prioritized by the Town Council to meet the Town’s mission, which is “To provide superior municipal services that make people’s lives better.” The Capital Improvement Program (CIP) is the Town’s capital budget. The CIP identifies high priority current and future capital needs and identifies potential sources of funding. On June 15, 2021, the Town Council adopted Resolution 29-2021, approving the 2021/22 Operating Budget and setting the 2021/22 Appropriation Limit; and Resolution 30-2021, approving the 2021/22 through 2025/26 Capital Improvement Program. The purpose of the mid-year update is to review actual mid-year revenues and expenditures in comparison to the adopted budget and CIP, and make any necessary mid-year adjustments. BACKGROUND The onset of the global Coronavirus pandemic in March 2020 created significant economic uncertainty for local governments. Over the subsequent two years, the Town took decisive action aimed at ensuring that the fiscal condition of our local government would remain strong. This included taking deliberate steps to reduce operating and capital spending by $7.5 million over two years, in anticipation of the fiscal impacts that would result from the pandemic. The Town’s actions to reduce spending and staffing were made in lieu of utilizing Town reserves or anticipating any form of federal assistance. As part of this process, revised revenue forecasts anticipated that economic recovery would occur in two to four years. From a service delivery standpoint, the Town has prioritized ongoing support of local businesses, uninterrupted service delivery and public safety. Danville is among those cities and towns in the Bay Area whose hours of operation and service delivery have been least affected by the pandemic. The prompt and decisive course correcting steps that were taken by the Town have proven critical to navigating the economic impacts of the pandemic upon Town operations. Several additional factors have contributed to facilitating the Town’s economic recovery. Most significantly: Mid-year Financial Report & Adjustments To FY 2021-22 2 March 1, 2022 • Continued appreciation in property values which have yielded increased property tax revenue. • Significant growth in online commerce, generating new sales tax that has partially offset sales tax losses from local brick and mortar businesses. • Robust building permit activity as owners continued to reinvest in their homes and properties. • Federal assistance received by the Town in the form of the 2020 Cares Act and the American Rescue Plan Act of 2021 (ARPA). Initial expenditure reductions enacted by the Town combined with these additional factors have resulted in the restoration of 2021/22 operating expenditures to pre-pandemic 2019/20 levels, suggesting a two year recovery period. With economic recovery well underway, the ten-year forecast covering 2021/22 through 2030/31 sees the Town continuing to chart a fiscally sustainable course, albeit at minimally reduced service levels in some areas. DISCUSSION As of December 31, 2021, overall revenues are tracking ahead of the approved budget, while expenditures are on track to finish the fiscal year within budget. Overall fiscal condition remains strong, and the Town expects to finish the year on a positive note. OPERATING BUDGET Revenues Total revenues of $35.8 million were forecast for 2021/22, an 11.5% increase from $32.1 million for 2020/21. General Fund General Fund revenues are tracking positively compared to budget. Property Tax – Revenues are received in December, April and June. For the 2020/21 fiscal year the Town received total revenues of $16,139,839. Total revenues of $15,200,000 were forecast for 2021/22. At mid-year, actual revenues are exceeding the forecast. Mid-year receipts of $6,798,599 are $715,266 more than 2020/21 mid-year receipts. Mid-year receipts indicate that actual revenues are expected to exceed the budget forecast. Sales Tax – Total sales tax includes revenues received from local (brick-and-mortar) business and the countywide pool. The Town tracks sales tax revenues monthly, quarterly and annually. For 2021/22 total revenues of $5,250,000 were forecast. Mid-year receipts indicate that actual revenues are expected to exceed the budget forecast. Mid-year Financial Report & Adjustments To FY 2021-22 3 March 1, 2022 Property Transfer Tax – High demand and prices in the real estate market are generating high numbers of property sale and transfer transactions. As a result, mid-year revenues are already 69.4% of the annual forecast. Year-end transfer tax revenues for 2020/21 totaled $1,070,766. Mid- year receipts indicate that actual revenues are expected to exceed the budget forecast. Business License Tax – Business license payments were due by December 30 and mid-year receipts represent 93.7% of the forecast for the year. Mid-year receipts indicate that revenues are expected to meet the budget forecast. Franchise Fees – Franchise fees for Cable, Solid Waste and Gas and Electric are tracking closely with prior years on a percentage basis. Mid-year receipts indicate that revenues are expected to meet the budget forecast. Recreation Fees and Charges - Recreation Fees and Charges continue to be significantly impacted by the pandemic. Changes in health orders and requirements will continue to impact the how classes, programs, activities and facility rentals can be offered, and staff will continue to adapt and adjust services and offerings as requirements change. The budget forecast of $1,500,000 represents approximately 60% of the revenue that would be received during a non-pandemic year. Mid-year receipts indicate that revenues are expected to meet the budget forecast. Donations – No donation revenue was forecast for 2021/22. Subsequently the Town has received a $10,000 donation from a private party to allow the Police Department to purchase specialized technical investigative equipment. A mid-year adjustment of $10,000 is recommended to recognize the receipt of the $10,000 in donations. Special Revenue Building and Planning – Permit activity and workload continue to be high. Revenues collected total 60.8% of the budget forecast. For 2020/21, the Town collected revenues of $2,739,645. Mid- year receipts indicate that actual revenues are expected to exceed the budget forecast. Gas Tax - Revenues collected total 60.5% of the budget forecast at mid-year. In 2020/21 gas tax revenues totaled $1,781,892. The revenue forecast for 2021/22 was $1,664,828. Mid-year receipts indicate that actual revenues are expected to exceed the budget forecast. Measure J Return to Source (RTS) – RTS revenues come from the countywide half cent sales tax for transportation and are received as single year end payment. For the 2020/21 the Town received total Measure J revenues of $782,219. Mid-year receipts indicate that actual revenues are expected to exceed the budget forecast. Solid Waste Diversion Incentive Fees – Solid Waste DIF is based upon a percentage of the compensation due to the Town’s solid waste and recycling haulers, which allows for accurate year over year estimates. Mid-year receipts indicate that revenues are expected to meet the budget forecast. Mid-year Financial Report & Adjustments To FY 2021-22 4 March 1, 2022 Lighting and Landscape Assessment District – LLAD revenues are based upon set assessment rates. The percentage of revenues received through mid-year is comparable to that received in each of the three prior years. Mid-year receipts indicate that revenues are expected to meet the budget forecast. Successor Agency Real Property Tax Trust Fund (RPTTF) revenues are budgeted at $2,274,714, inclusive of Town re- payment under the Re-stated Cooperation Loan Agreement with the former CDA. RPTTF revenues fund debt service payments for the 2001 and 2005 Certificates of Participation, the 2001 Taxable Revenue Bonds, and reimbursement of allowed administrative costs. Mid-year receipts indicate that revenues are expected to meet the budget forecast. Revenue Summary Thus far in 2021/22, the Town Council has not approved any budget adjustments to increase or decrease revenues. At mid-year, one adjustment is recommended to increase Special Revenue - Donations by $10,000 in order to allow the donation received for the Police Department to be expended. At mid-year, significant positive variances to the 2021/22 budget forecast are anticipated for property tax, sales tax, property transfer tax, Building and Planning fees, gas tax and Measure J return to source. Barring any significant unforeseen expenses, total revenues for 2021/22 are expected to comfortably exceed the budget forecast by year end. Given the anticipated positive variance, no further mid-year revenue adjustments are necessary at this time. Table 1 summarizes the adopted budget forecast, prior amendments and recommended mid- year adjustments. Table 1 Mid-Year Revenue Summary Adopted Prior Mid-Year Budget Amendments Revised TOTAL $ 38,048,880 $ 38,048,880 $ 38,058,880 General Fund $ 26,210,144 $ 26,210,144 $ 26,210,144 Special Revenue $ 9,564,022 $ 9,564,022 $ 9,574,022 Successor Agency $ 2,274,714 $ 2,274,714 $ 2,274,714 Expenditures Mid-year Financial Report & Adjustments To FY 2021-22 5 March 1, 2022 General Government – 2021/22 budget is $1,945,545. All direct and contract costs are tracking within budget and no mid-year adjustments are recommended. Police Services – 2021/22 budget is $10,806,192. All contract and direct costs are tracking within budget. A private party donation received will be used to purchase specialized technical investigative equipment. One mid-year adjustment is recommended to increase the Police Services Management Budget by $10,000. Administrative Services – 2021/22 budget is $3,954,123. Costs are tracking within budget and no mid-year adjustments are recommended. Development Services – 2021/22 budget is $4,954,302. The department continues to operate with reduced staffing in Building, Planning and Engineering. In addition, significant efforts such as the 2023-30 Housing Element and the Downtown Master Plan are underway and increased development-driven demand continues to occur in Building and Engineering. Mid- year adjustments are recommended to address these areas, including: • Engineering - Engineering continues to operate with a deficit of 2.0 Public Works Inspectors. A mid-year adjustment is recommended to appropriate $80,000 in Engineering Special Revenues to provide contract public works inspection services for the balance of the fiscal year. • Building – Building has operated with staffing deficits including the Chief Building Official and Permit Technician positions, which have caused increased reliance upon consultants to help backfill. A mid-year adjustment is recommended to appropriate $100,000 from the Building and Planning fund to provide increased consultant support through the end of the fiscal year. Maintenance Services – 2021/22 budget is $8,001,658. Mid-year adjustments are recommended to increase the following Maintenance program budgets: • Street Light Maintenance – LLAD Zone C costs for electricity are expected to exceed budget by approximately $35,000 by year-end. A mid-year adjustment is recommended to increase LLAD Zone C expenditures by $35,000 to cover this cost. • Equipment Maintenance – Based upon current prices, the gasoline budget is expected to experience a shortfall of approximately $30,000 by year-end. A mid-year adjustment is recommended to increase the Equipment Maintenance (General Fund) budget by $30,000 to offset increased costs. Recreation, Arts and Community Services – The 2021/22 budget is $3,588,144, a 10.7% reduction from 2020/21. Department operations continue to be impacted and guided by changes in current health orders and requirements imposed by the CDC, California Department of Public Health and Contra Costa Health Services. Mid-year adjustments are Mid-year Financial Report & Adjustments To FY 2021-22 6 March 1, 2022 recommended to increase General Fund expenditures in the following Recreation, Arts and Community Services program budgets: • RACS Management - $14,000 to fund temporary salaries and additional contracted services. • Adult Services - $18,000 to fund additional contract instructor fees. • Senior Services - $10,000 to fund additional temporary salaries. • Cultural Arts - $13,500 to fund additional instructor fees and contracted services. • Facilities - $8,500 to fund temporary salaries for facility attendants. • Sports and Fitness - $36,000 to fund temporary salaries for sports, fitness and aquatics, and instructor fees. • Teen Services - $18,000 to fund temporary salaries and instructor fees for classes and camps. • Youth Services - $52,000 to fund temporary salaries, contracted services and instructor fees. Personnel – 2021/22 budget for regular and part-time temporary employees is $13.3 million, a 9.8% increase from the prior year. At mid-year, 42.2% of the budget has been expended. No mid-year adjustments are recommended. Successor Agency For 2021/22, Successor Agency operating expenditures total $1,174,714 for debt service and administrative costs. Re-payment of the outstanding balance owed under the former CDA/Town loan funds capital transfers of $1,100,000. Successor Agency expenditures remain unchanged. No mid-year adjustments are recommended. Expenditure Summary Thus far in 2021/22 the Town Council has approved three budget adjustments totaling $163,421, including: • Resolution No. 53-2021, appropriating $38,421 from the Asset Replacement Fund to upgrade audio/video technology at the Town Meeting Hall. • Resolution No. 55-2021, appropriating $35,000 from the Asset Replacement Fund to purchase for the replacement of one police traffic motorcycle. • Resolution No. 56-2021, appropriating $90,000 from the General Fund to upgrade police radio system, including encryption for portable, vehicle, and desk radios. • Resolution No. 7-2022 appropriating $40,000 from the Comprehensive Planning Fee fund for community survey consulting services for the Housing Element Update Mid-year Financial Report & Adjustments To FY 2021-22 7 March 1, 2022 As described above, total mid-year expenditure adjustments of $425,000 are recommended, including: General Fund $200,000 Special Revenue Donations $ 10,000 Engineering $ 80,000 Building and Planning $100,000 LLAD - Zone C $ 35,000 Table 2 illustrates 2021/22 expenditures, including the adopted budget forecast, prior amendments and recommended mid-year adjustments. Table 2 Mid-Year Expenditure Summary Adopted Prior Mid-Year Budget Amendments Revised TOTAL $ 32,424,678 $ 34,588,099 $ 35,053,099 General Fund $ 23,300,924 $ 23,390,924 $ 23,590,924 Special Revenue $ 9,949,040 $ 10,022,461 $ 10,287,461 Successor Agency $ 1,174,714 $ 1,174,714 $ 1,174,714 Transfers and Designations The 2021/22 budget includes General Fund transfers of $4,306,773 ($1,100,000 for LLAD operations, $250,000 for CIP - Pavement Management, $2,206,773 for CIP - Park Facilities and $750,000 for CIP – Project B-626). On November 16, 2021, the Town Council adopted Resolution No. 75-2021, approving the 2020/21 ACFR and transferring $8,086,215 from the General Fund, including $6,100,000 for Capital Improvements, $1,500,000 for the Operating Reserve, and $486,215 for the Contingency Fund. This increased the total transfers and designations in 2021/22 to $12,392,988. Mid-Year Budget Summary The Town’s overall financial condition remains positive with overall revenues exceeding the budget forecast and expenditures tracking closely with the approved 2021/22 Operating Budget. Mid-year adjustments are recommended to increase expenditures by 1.27%. CAPITAL IMPROVEMENT PROGRAM The 2021/22 CIP included appropriations of $9,413,612 to fund 35 separate projects. Following adoption of the CIP, the Town Council has approved the following additional funding appropriations totaling $3,820,961: Mid-year Financial Report & Adjustments To FY 2021-22 8 March 1, 2022 • Resolution No. 58-2021 appropriating $612,090 to undertake cybersecurity measures to safeguard against security intrusions into Town Government operations for Project B- 626 – Town Office Relocation Project, including $599,726 in ARPA funds and $12,364 in ITMP funds. • Resolution No. 64-2021, which appropriated $2,559,143 in ARPA funds to construct the following improvements: o $500,000 for Project A-330, Town-wide Storm Drain Master Plan; o $500,000 for Project A-620, Fiberoptic Cable Interconnect; o $1,000,000 for Project B-626 – Town Office Relocation; and o $1,059,143 for Project B-628 - Town Green and Arts District • Resolution 73-2021 appropriating $42,600 in Contingency funds for Project A-362 – Downtown Improvement Project. • Resolution 77-2021, appropriating $107,128 in ITMP Funds for Project B-626 – Town Office Relocation Project. Mid-year funding adjustments are recommended for the following projects: • Project C-055 – Diablo Road Trail - Increase the project funding appropriation by $1,432,000 through the following transfers: o $987,000 in Measure J Major Streets Funds from CIP Project C-578 – San Ramon Valley Boulevard Slurry Seal and Striping; and o $445,000 in Measure J Major Streets Funds from CIP Project C-600 – San Ramon Valley Boulevard Improvements. • Project C-578 – San Ramon Valley Boulevard Slurry Seal and Striping (South): Eliminate the project and combine with Project C-600 San Ramon Valley Boulevard Improvements (North). • Project C-600 – San Ramon Valley Boulevard Improvements: This project scope will be expanded to include the previous Project C-578. Project cost of $1.2 million to be funded with $475,000 in Measure J Major Streets funds and $725,000 in new federal grant (OBAG Quick Strike) funds. • Project B-626 – Town Office Relocation Project: Revise the ARPA funding appropriation included in Resolution No 64-2021 to replace HVAC units, from $500,000 to $375,000. • Project C-609 – Town-wide Bicycle Master Plan: Change the previous $25,000 funding source from Measure J-CC-TLC (2017) to Measure J Sub Trans 28c. RECOMMENDATION Adopt Resolution No. 17-2022, accepting the mid-year Financial Report, approving mid-year adjustments to the Fiscal Year 2021/22 Operating Budget; and adopt Resolution No. 18-2022, approving mid-year adjustments to the Fiscal Year 2021/22 Capital Improvement Project. Mid-year Financial Report & Adjustments To FY 2021-22 9 March 1, 2022 Prepared by: Joseph Calabrigo Town Manager Lani Ha Finance Director/Treasurer Attachments: Resolution No. 17-2022 Resolution No. 18-2022 RESOLUTION NO. 17-2022 ACCEPTING THE MID-YEAR FINANCIAL REPORT, APPROVING MID-YEAR ADJUSTMENTS TO THE FISCAL YEAR 2021/22 OPERATING BUDGET WHEREAS, all revenue and expenditure projections, which were made in preparing the Fiscal Year 2021/22 Operating Budget, have been reviewed; and WHEREAS, the following mid-year adjustments to the Fiscal Year 2021/22 Operating Budget are recommended to reflect increased expenditure needs: General Fund – Expenditures • Increase General Fund expenditures – Recreation, Arts and Community Services - Management by $14,000; • Increase General Fund expenditures – Recreation, Arts and Community Services – Adult Services by $18,000; • Increase General Fund expenditures – Recreation, Arts and Community Services – Senior Services by $10,000; • Increase General Fund expenditures – Recreation, Arts and Community Services – Cultural Arts by $13,500; • Increase General Fund expenditures – Recreation, Arts and Community Services – Facilities by $8,500; • Increase General Fund expenditures – Recreation, Arts and Community Services – Sports and Fitness by $36,000; • Increase General Fund expenditures – Recreation, Arts and Community Services – Teen Services by $18,000; • Increase General Fund expenditures – Recreation, Arts and Community Services – Youth Services by $52,000; and • Increase General Fund expenditures - Maintenance Services – Equipment Maintenance by $30,000; increasing total General Fund expenditures from $23,390,924 to $23,590,924. Special (Restricted) Revenue - Expenditures • Increase Donations expenditures – Police Services - Management by $10,000; • Increase – Engineering expenditures - Development Services – Engineering by $80,000; • Increase – Building/Planning - Advance Planning Fee Fund expenditures - Development Services – Planning by $40,000; • Increase Building/Planning expenditures – Development Services – Building by $100,000; and • Increase LLAD Zone C expenditures – Maintenance Services – Street Light by $35,000; increasing total Special Revenue expenditures from $10,022,461 to $10,287,461. WHEREAS, sufficient funding is available in the Town’s funds; now, therefore, be it RESOLVED, that the Danville Town Council hereby approves the mid-year adjustments to the Fiscal Year 2021/22 Operating Budget. DocuSign Envelope ID: DB857D66-209E-42FA-8F3D-58668BFD5A1F PAGE 2 OF RESOLUTION NO. 17-2022 APPROVED, by the Danville Town Council at a regular meeting held on March 1, 2022, by the following vote: AYES: NOES: ABSTAINED: ABSENT: _________________________________ MAYOR APPROVED AS TO FORM: ATTEST: ________________________________ _________________________________ CITY ATTORNEY CITY CLERK DocuSign Envelope ID: DB857D66-209E-42FA-8F3D-58668BFD5A1F RESOLUTION NO. 18-2022 APPROVING MID-YEAR ADJUSTMENTS TO THE FISCAL YEAR 2021/22 CAPITAL IMPROVEMENT PROGRAM WHEREAS, Government Code Sections 65302 et seq. require that the Town of Danville must take into consideration future capital facilities when planning for the development of the community; and WHEREAS, the Town Council adopted Resolution 30-2021 approving the 2021/22 through 2025/26 capital improvement program and appropriating funding for 2021/22 projects on June 15, 2021; and WHEREAS, the Town has completed a mid-year review of all 2020/21 projects; and hereby recommends the following mid-year adjustment to the adopted 2021/22 Capital Improvement Program: • Appropriate $1,432,000 from the transfer of $987,000 in Measure J Major Streets Funds from CIP Project C-578 (San Ramon Valley Boulevard Slurry Seal and Striping (South), and $445,000 in Measure J Major Streets Funds from CIP Project C-600 (San Ramon Valley Boulevard Improvements (North) to increase funding to CIP Project C-055 – Diablo Road Trail; • Close out CIP Project C-578 – San Ramon Valley Boulevard Slurry Seal and Striping (South) and combined with CIP Project C-600 – San Ramon Valley Boulevard Improvements (North); • Appropriate a total of $1,200,000 from Measure J Major Streets Funds for $475,000, and $725,000 from federal grant (OBAG Quick Strike) funds, to increase funding to CIP Project C-600 – San Ramon Valley Boulevard Improvements (North); • Revise the appropriation amount from Resolution No 64-2021 to show correct designated amount to replace HVAC units to project B-626 - Town Office Relocation from $500,000 to $375,000; • Change funding source of the appropriated $25,000 in CIP 2021-22 from Measure J- CC-TLC (2017) to Measure J Sub Trans 28c for project C-609 – Town-wide Bicycle Master Plan; and WHEREAS, sufficient funding is available in the Town’s funds; now, therefore, be it RESOLVED, that the Danville Town Council hereby approves the mid-year adjustments to the 2021/22 Capital Improvement Program. DocuSign Envelope ID: 4667AD74-7B34-485C-8E9F-78714DC13E9B PAGE 2 OF RESOLUTION NO. 18-2022 APPROVED, by the Danville Town Council at a regular meeting held on March 1, 2022, by the following vote: AYES: NOES: ABSTAINED: ABSENT: _________________________________ MAYOR APPROVED AS TO FORM: ATTEST: ________________________________ _________________________________ CITY ATTORNEY CITY CLERK DocuSign Envelope ID: 4667AD74-7B34-485C-8E9F-78714DC13E9B