$19,628.86: Traffic Relief Congestion Funds Plus Interest Returned to State

Views of Carpenter Street between 5th Avenue & 6th Avenue, a representative block on Carpenter Street

ABSTRACT: The State of California established the Traffic Congestion Relief Fund (TCRF) for “allocating monies to cities and counties for street or road maintenance or reconstruction.” For Fiscal year 2006-06, the City received $18,288.00. To receive and expend funds, a city must meet the requirements of either the “Three-Year Average” or the “Two-Year Option.” The City failed to meet either requirement, being $140,285 below the minimum for the “Three-Year Average” calculation and $269,617 lower than the required “Two-year Option” minimum threshold. Thus, the City must return $18,288.00 of TCRF monies plus $1,340.86 accrued interest, a total amount to be returned to the State of $19,628.86.

City Council Agenda
Regular Meeting
August 7, 2007

VII. Consent Calendar

These matters include routine financial and administrative actions, which are usually approved by a single majority vote. Individual items may be removed from Consent by a member of the Council or the public for discussion and action.

C. Consideration of a Resolution authorizing the return of Traffic Congestion Relief Funds received in fiscal year 2005-06, plus accrued interest, in the amount of $19,628.86 to the State Controller’s Office.

According to Administrative Services Director Joyce Giuffre’s Agenda Item Summary, the California legislature established the Traffic Congestion Relief Fund (TCRF) for “allocating monies to cities and counties for street or road maintenance or reconstruction.” To receive funds, a city must annually expend General Funds for street purposes an “amount not less than the annual average of expenditures from its general funds during FY 1996-97, FY 1997-98 and FY 1998-99." Using this “Three-Year Average” requirement, the minimum that the City of Carmel-by-the-Sea should have expended in FY 2005-06 is as follows:

Total Discretionary Funds
Reported in Annual Street Report
FY 1996-97 $ 855,525
FY 1997-98 1,290,665
FY 1998-99 1,163,209
Total $3,309,399 divided by 3 = $1,103,133 (Three-Year Average Minimum Expenditure)

The City’s actual expenditure for street and road purposes in FY 2005-06 was $962,848 or $140,285 below the minimum Three-Year Average requirement.

If the city fails to meet the minimum Three-Year Average requirement, then the City must then meet the “Two-Year Option” requirement. The “Two-Year Option” requires “the City to spend in the following fiscal year an amount that is not less than twice the three-year average less the previous year’s expenditures combined." The minimum that the City would have to spend in FY 2006-07 to meet this “Two-Year Option” is as follows:”

Total Two-Year Option minimum $1,243,418

"The City spent $973,801, which is $269,617 lower than the required minimum spending threshold.”

Therefore, since the city did not comply with the Three-Year Average or the Two-Year Option requirements, that is, the City’s FY 2003-06 and 2006-07 total expenditures for street purposes did not meet the “minimum maintenance of effort expenditures,” the City must return TCRF monies and interest to the State Controller. For FY 2005-06, the City received $18,288.00 of TCRF monies. With accrued interest, the total amount to be returned to the State is $19,628.86.

Finally, the Summary states, as follows:
“Complying with the Three-Year Average or the Two-Year Option is financially burdensome on the City in fiscal years where minimal road projects are completed. In order to meet the TCRF requirements, the City needs to expend at least $1.1 million on street and road improvements.”
(Source: City Council, Agenda Item Summary, Joyce Giuffre, August 7, 2007)

COMMENTS:
• “Subsequently, Rich was hired by the City of Seaside. While in Seaside, he held the position of Public Works Director, Community Development Director and finally as the Acting City Manager. He assisted with the city's plans for the reuse of Fort Ord Military Base, improving employee morale, and conservatively planning fiscal practices to stabilize the City's financial condition.”
(Source: City Administrator: Rich Guillen, Carmel-by-the-Sea California - Official City Website, http://www.ci.carmel.ca.us/)

• Guillen claims credit for “conservatively planning fiscal practices to stabilize the City’s financial condition” when he was an employee of the City of Seaside.

• The City has a Finance Manager, now an Administrative Services Director

• Yet the City Administrator and the Finance Manager, now Administrative Services Director, did not have the fiscal planning acumen to budget $1,103,133 ($140,285 short) in actual expenditures for “street and road purposes” in FY 2005-06 in order to comply with the State’s requirements to expend Traffic Congestion Relief Funds. Given the long-term deferred maintenance and poor condition of Carmel-by-the-Sea’s streets, roads and avenues, it is reprehensible for the City Administration to have failed to budget the minimum State required amount in order to receive and expend Traffic Congestion Relief Funds.