Two Noteworthy 20 March 2012 Special City Council Meeting Agenda Items: Five-Year Financial Forecast & Capital Improvement Plan

ABSTRACT:  Two Noteworthy 20 March 2012 Special City Council Agenda Items, namely Receive and file the City of Carmel-by-the-Sea five-year financial forecast and Receive and review the City of Carmel-by-the-Sea Capital Improvement Plan and refer it to the Planning Commission to review for General Plan Consistency, are presented.  Sections of Agenda Item Summaries are presented, the Packet is embedded, including  Five Year Financial Forecast and Five Year Capital Improvement Plan, July 1, 2012 – June 30, 2017, and HIGHLIGHTS, including PROJECTS BY PRIORITY, are presented.

CITY OF CARMEL-BY-THE-SEA

CITY COUNCIL AGENDA PACKET

Special Meeting

Tuesday, March 20, 2012

4:30 p.m., Open Session

Live & Archived Video Streaming

City Hall

East side of Monte Verde Street between Ocean and Seventh Avenues

II. Roll Call

IV. Orders of Council

A. Receive and file the City of Carmel-by-the-Sea five-year financial forecast.

Description: The Council will receive a report of the City’s five-year financial forecast highlighting the projected financial context. The five-year forecast of discretionary General Fund revenues and their uses is intended to provide a context that may be helpful in weighing the financial consequences of current year decisions. The five-year forecast shows an increasing gap between revenues and expenditures as anticipated expenditures outpace projected revenue. This gap is $500,000 in FY 2012-13 growing to $1.4 million in Fiscal Year 2016-17. The City Council has taken action to reduce the future gap by adopting a second tier retirement system for new employees and by reducing service levels. Additional measures to bridge the gap will be presented to the City Council as part of the recommended FY 2012-13 budget.

Staff Recommendation: Review and provide direction.

Important Considerations: The City Council is anticipated to adopt the budget prior to the start of the fiscal year with budget hearings scheduled for May 17, 2012, May 24, 2012, June 12, 2012, and June 19, 2012.

HIGHLIGHTS 
Five Year Financial Forecast 

FINANCIAL FORECAST OVERVIEW

The five-year forecast shows an increasing gap between revenues and expenditures as anticipated expenditures outpace projected revenue. This gap is $500,000 in FY 2012-13 growing to $1.4 million in Fiscal Year 2016-17. The City Council has taken action to reduce the future gap by adopting a second tier retirement system for new employees and by reducing service levels.

FIVE-YEAR FINANCIAL FORECAST

Introduction and Summary

The five-year forecast of discretionary General Fund revenues and their uses is intended to provide a context that may be helpful in weighing the financial consequences of current year decisions. The revenue projections focus on discretionary General Fund revenues. Discretionary revenue is derived from local taxes, especially property, transient occupancy, and sales taxes. On the expenditure side, the forecast projects the use of discretionary revenue for department operations, including salaries and benefits; capital improvements; and debt payment requirements.

The forecast revenue expenditure gap is driven by:

• The use of one-time sources to maintain levels of service for FY 2010-11 and FY 2011-12 which, with flat revenue projections, exacerbate the structural imbalance in future years;

• Continued growth in salary and benefit costs;

• Increasing deferred maintenance and capital investment costs;

• No increases in staffing and annual average wage increases of 2.16%;

• An average 7.0% increase in the actuarial cost of funding existing retirement obligations with the adopted second tiers;

• Modest revenue growth slowly rebounding as the economy improves.

Closing the gap will require services to continue to shrink, employees to be compensated less, and/or new revenue sources to be created, from economic development, annexation, natural growth of the economy (if any), fee increases, and/or voter approved tax increases.

Summary of Forecast

§         Revenue are not projected to keep pace with anticipated expenditures

§         Increases in levels of service are unlikely without additional revenue

§         Further expenditure management and cooperation with the employees will be necessary to maintain current levels of service.

Revenues

• Revenue is projected to have modest growth during the forecast period 

• Big 3:
• Property tax average projected growth 1.74%
• TOT average projected growth 3.6%
• Sales tax average projected growth 2.9%

• Average revenue growth $400,000 annually

Expenditures

• Salaries and benefits are expected to grow on average $350,000 annually with no increase in number of staff
• Health insurance costs expected to growth by 8.4% annually 

• CalPERS rates expected to grow by 7% annually

• Forecast projects creating a litigation reserve and a vehicle replacement fund

B. Receive and review the City of Carmel-by-the-Sea Capital Improvement Plan and refer it to the Planning Commission to review for General Plan Consistency.

Description: At this meeting, the City Council will review the Capital Improvement Plan (CIP). Staff will present an overview of the five-year plan and describe each of the projects.  The Planning Commission then will review the projects contained in the CIP and will advise the City Council on its recommendations regarding the proposed capital projects (Carmel Municipal Code 3.06.020) and review it as to determine its consistency with the City’s General Plan (California Government Code 65403). The Planning Commission’s findings will be transmitted to the City Council.

Staff Recommendation: Review and provide direction.

Important Considerations: The City Council is anticipated to adopt the budget prior to the start of the fiscal year with budget hearings scheduled for May 17, 2012, May 24, 2012, June 12, 2012, and June 19, 2012.

HIGHLIGHTS
Capital Improvement Plan

City of Carmel-by-the-Sea, CA

2012/13 – 2016/17

The CIP (Capital Improvement Plan) identifies 77 projects for the five-year period. The CIP identifies new facility construction, facility refurbishment, and infrastructure projects, and their respective funding sources, if any, to create a sound planning document. The program includes the design, construction, and major rehabilitation of capital improvements that have a long-term life span, and cost more than $10,000. With these projects, the City Council would be investing approximately $7.5 million over the next five years. This major investment in the City’s infrastructure represents a significant commitment to our community’s future.

The 5-Year Capital Improvement Program for Fiscal Year 2012-2013 through 2016-2017 includes various projects for the benefit of the citizens of Carmel-by-the-Sea. Each of the projects meets some or all of the following criteria:

• Elimination of potentially hazardous or unsafe conditions and potential liabilities

• Replacement of high maintenance and inefficient/ineffective infrastructure

• Improvement to and/or creation of new services to the Public

• Outside agency regulatory requirements and mandates

• Stimulation of the local economy/eliminate blighted conditions

• Compliance with the City of Carmel-by-the-Sea General Plan

• Preservation of existing assets

Each project is prioritized in accordance with the following priority label categories.

Priority 1: The project is urgent and/or mandated, and must be completed quickly. The City could face severe consequences if the project is delayed, possibly impacting the health, safety, or welfare of the community, or having a significant impact on the financial well being of the City. The project must be initiated or financial/opportunity losses will result.

Priority 2: The project is very important and addressing it is necessary. The project impacts safety, law enforcement, health, welfare, economic base, and/or quality of life in the community.

Priority 3: The project is important and would enhance the quality of life and would provide a benefit to the community.

Priority 4: The timing of the project is less important but completion of the project would improve the community providing cultural, recreational, and/or aesthetic effects.

Priority 5: The project would be an improvement to the community, but need not be completed within a five-year CIP.

PROJECTS BY PRIORITY (Department) (Total Project Cost or Total Over Time Period)

Priority 1 Critical

Del Mar Master Plan (Community Planning & Building) Total: $200,000

ASBS Dry Weather Diversion (Community Planning & Building) Total Project Cost: $383,000

Ambulance Lease Purchase (Safety; Ambulance) Total: $62,522

Replace Ambulance Vehicle (Safety; Ambulance) Total Project Cost: $150,000

Heart Monitor (Safety; Ambulance) Total Project Cost: $27,000

Self Contained Breathing Apparatus (Safety; Ambulance) ) Total Project Cost: $24,000

Utility Truck Lease (10/11) (Safety; Fire) Total: $23,744

Fire Engine 09/10 (Safety; Fire) Total: $282,208

Alerting System (Safety; Fire) Total Project Cost: $42,000

Self Contained Breathing Apparatus (Safety; Fire) Total Project Cost: $36,000

Interface for patrol audio/video equipment (Safety; Police) Total Project Cost: $30,559

Mobile Data Terminal software and installation (Safety; Police) Total Project Cost: $16,000

Street and Road Projects (Public Works) Total Project Cost: $1,455,800

Caterpillar Loader (Public Works) Total: $89,040

Sunset Center Roof Repairs (Facilities) Total Project Cost: $75,352

Forest Theater Renovation (Facilities) Total Project Cost: $1,150,000

650/chipper (Forest, Parks & Beach) Total: $43,578

City Hall Garden (Forest, Parks & Beach) $25,000
TOTAL COST: $4,115,803.

Priority 2 Very Important

Windows Software Upgrade (Administrative Services) Total Project Cost: $25,000

Network Equipment Priority (Administrative Services) Total: $32,000

Voice over IP Telephone System (Administrative Services) Total Project Cost: $72,000

Critical Network Spare Equipment (Administrative Services) Total: $10,000
Diesel Filter System Monitor (Safety; Ambulance) Total Project Cost: $8,000

Diesel Filter System (Safety; Fire) ) Total Project Cost: $25,000

Patrol Vehicle Replacement (Safety; Police) Total: $412,432

Parking Vehicle (Safety; Police) Total: $51,509

Street Sweeper Lease (Public Works) Total: $95,908

Guadalupe to 5th Storm Drain (Public Works) Total Project Cost: $300,000

Santa Fe & 4th Storm Drain (Public Works) Total Project Cost: $300,000

PD HVAC Replacement and Re-Roof (Facilities) Total Project Cost: $385,000

Sunset Center Downspout/Gutter Repairs (Facilities) Total Project Cost: $10,000

Sunset Center Mission Street Planter Repairs (Facilities) Total Project Cost: $15,000

Card Key Security System (Facilities) Total Project Cost: $25,000

Scenic Rd. Restrooms (Forest, Parks & Beach) Total: $225,000

Waterfront Area Signs (Forest, Parks & Beach) Total Project Cost: $12,000

Mission Trail Invasive Tree Removal (Forest, Parks & Beach) Total Project Cost: $45,000

TOTAL COST: $2,048,849.

Priority 3 Important

Financial System Upgrades (Administrative Services) Total: $32,000

Website Update (Administrative Services) Total: $35,000

Admin Copier (Administrative Services) Total Project Cost: $14,400

Permit Tracking Software (Community Planning & Building) Total Project Cost: $20,000

Housing Element Update (Community Planning & Building) Total Project Cost: $60,000

Park Branch Library carpeting (Library) Total Project Cost: $38,000

Art Appraisal (Library) ) Total Project Cost: $17,500

Park Branch Library Painting – Interior (Library) Total Project Cost: $16,665

Paint/Sign Truck Total Project Cost: $95,000

Superintendent Vehicle (Public Works) Total Project Cost: $42,000

Gardener Trucks (Public Works) ) Total Project Cost: $70,000

Dump Truck (Public Works) ) Total Project Cost: $90,000

Water Truck (Public Works) ) Total Project Cost: $80,000

PD/PW Roof/Patio Replacement (Facilities) Total Project Cost: $850,000

PD/PW Re-Painting (Facilities) Total Project Cost: $27,000

PW Garage Roll-Up Door Replacement (Facilities) Total Project Cost: $9,800

Sunset Center Planter Re-construction (Facilities) Total Project Cost: $12,000

Sunset Center Re-painting (East side) (Facilities) Total Project Cost: $25,000

Sunset Center North Side Re-painting (Facilities) Total Project Cost: $25,000

Harrison Memorial Library Re-painting Project (Facilities) Total Project Cost: $28,000

Flanders Plumbing and Plaster Repairs (Facilities) Total Project Cost: $24,000

Flanders re-roof project (Facilities) Total Project Cost: $225,000

Flanders Sewer Line Repair/Replacement (Facilities) Total Project Cost: $35,000

Sand Replenishment (Forest, Parks & Beach) Total: $185,000

Tennis Court renovation (Forest, Parks & Beach) Total Project Cost: $55,000

Beach stair maintenance (Forest, Parks & Beach) Total Project Cost: $24,000

Mission Trail Park water tank (Forest, Parks & Beach) Total Project Cost: $35,000

Beach fire baskets tank (Forest, Parks & Beach) Total Project Cost: $23,000

Replace Forester Truck (Forest, Parks & Beach) Total Project Cost: $30,000
TOTAL COST: $2,223,365.

Priority 4 Less Important

Energy Efficient Vehicle (Community Planning & Building) Total Project Cost: $25,000

GPS & License Plate recognition (Safety; Police) Total Project Cost: $104,176

PW Offices Floor Replacement (Facilities) Total Project Cost: $6,800

Vista Lobos Electrical Main Panel Replacement (Facilities) Total Project Cost: $6,800

PD Parking Lot Re-surfacing (Facilities) Total Project Cost: $14,500

Sunset Center Wood Patio Stage Replacement (Facilities) Total Project Cost: $8,000

Sunset Center Bach Offices Building Re-Roof (Facilities) Total Project Cost: $25,000

Rio Park Improvements (Forest, Parks & Beach) Total Project Cost: $40,000

TOTAL COST: $230,276.

Priority 5

None

GRAND TOTAL: $8,618,293. (FY 2012/2013 through 2016/2017

City Council Special Meeting March 20 2012 OCR Document

Special City Council Meeting, March 20, 2012 Packet