HomeMy WebLinkAboutApprove for Introduction Ordinance No. 4143 amending Hunting )qPPR6V9b T6R rA8kUbUe-nvN 7 D Dept. ID FN17-019 Page, of 3
Meeting Date: 12/18/2017
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CITY OF HUNTINGTON BEACH
_ REQUEST FOR. CITY COUNCIL ACTION/PUBLIC FINANCING
AUTHORITY/SUCCESSOR AGENCY
MEETING DATE: 12/18/2017
SUBMITTED TO: Honorable Mayor and City Council Members/Board Members
SUBMITTED BY: Fred A. Wilson, City Manager/Executive Director
PREPARED BY: Chuck Adams, Interim Chief Financial Officer
SUBJECT: Approve for Introduction Ordinance No. 4143 amending Huntington Beach
Municipal Code (HBMC) Chapter 1.13 to change the fiscal year for the City; and,
adopt Public Financing Authority Resolution No. 23 and Successor Agency
Resolution No. 2017-15 affirming the change of the fiscal year
Statement of Issue: Currently the City's fiscal year is from the period of October 1st to September
30th. Monthly the City pays to CalPERS an employer's payroll cost, as well as an unfunded liability
cost. There exists an opportunity for the City to significantly reduce its annual pension costs by
implementing a CalPERS prepay option in July of each year, to pay a reduced amount for the
unfunded liability portion. These costs are for the billing period of July to June each year (the
CaIPERS fiscal year). However, due to the City not being aligned with the CalPERS fiscal year, the
City cannot participate in the pre-payment option without a negative impact to its reserves and cash
balances at September 30 (the end of the city's current fiscal year). This negative impact would be
eliminated if the City returns to a July to June fiscal year period.
Financial Impact: For Fiscal Year 18/19 there will be an estimated $900,000 CalPERS cost
savings (unfunded liability portion) if the City returns to a July to June fiscal year consistent with the
CaIPERS fiscal year. These savings will be slightly offset by reduced investment earnings of
approximately $100,000. Also, for FY 18/19 there will be one-time transition costs of $15,000 to
$30,000 for increases to the City's auditing contract and required modifications to the City's
financial software system related to the fiscal year change.
Future fiscal years will recognize approximately $1 million of similar CalPERS cost savings. These
will also be slightly offset by reduced investment earnings.
City Council/Public Financing Authority/Successor Agency Recommended Action:
A) Approve for Introduction Ordinance No. 4143, "An Ordinance of the City Council of the City of
Huntington Beach Amending the Huntington Beach Municipal Code by Amending Chapter 1.13 to
Change the Fiscal Year for the City" to a July 1 to June 30 period; and,
B) Adopt Resolution No. 23, "A Resolution of the Public Financing Authority of the City of
Huntington Beach Changing the Fiscal Year for the City;" and,
C) Adopt Resolution No. 2017-15, "A Resolution of the Successor Agency of the City of Huntington
Beach Changing the Fiscal Year for the City."
Alternative Action(s): Do not approve the recommended action and direct staff accordingly.
Item 23. - 1 HB -442-
Dept.ID FN17-019 Page 2 of 3
Meeting Date: 12/18/2017
Analysis:
A review of the December 1993 Council Memo originally approving the change to the City's fiscal
year from July to June to October through September reveals that the primary cause for the change
was the State's frequent inability to adopt a budget by July 1 of each year. Cities then had to
readjust their budgets well after the beginning of their fiscal year to address the State's negative
fiscal impacts.
However, since 1993, two voter-approved State propositions have addressed these concerns:
• Proposition 1A, (2004 Elections) amended the California constitution to restore predictability
and stability to local budgets.
• Proposition 25, (2010) adjusted the two-thirds vote requirement for adopting a budget to a
majority vote.
• Proposition 25, (2010) required legislatures to forfeit their pay if they fail to act by June 15.
As a result of these changes, since 2010, the State has adopted its annual budget by June 15.
Other 1993 rationales presented included having alignment with federal grant receipts, improving
projections of holiday sales tax and property tax revenues, and implementing rate and fee
adjustments at October 1.
A current review of these rationales indicates that:
• Federal grants are only 0.8% of the City's FY 17/18 All Funds Adopted budget.
• Enhanced monitoring by staff, augmented by external consultants and auditors, has
improved revenue projections.
• Adjustments to rates and fees can continue to be implemented on October 1 or another
month depending on the circumstances.
Finance Commission Actions
On November 29, 2017, the Finance Commission met to review staff's recommendations to change
the fiscal year and unanimously passed a motion recommending for the City Council to approve:
1. Changing the fiscal year from October 1 through September 30, to July 1 through June 30;
and,
2. To ensure a timely implementation of the new fiscal year, as well as recognizing the impact
of escalating CalPERS costs on the city's budget, adopt a Status Quo General Fund Budget
for Fiscal Year 2018/2019.
Environmental Status: Not Applicable.
Strategic Plan Goal:
Improve quality of life
Enhance and maintain infrastructure
Strengthen economic and financial sustainability
Enhance and maintain public safety
Enhance and maintain City service delivery
HB -443- Item 23. - 2
Dept. ID FN17-019 Page 3 of 3
Meeting Date: 12/18/2017
Attachment(s):
1. Ordinance No. 4143, "An Ordinance of the City Council of the City of Huntington Beach
Amending the Huntington Beach Municipal Code by Amending Chapter 1.13 to Change the
Fiscal Year for the City."
2. Resolution No. 23, "A Resolution of the Public Financing Authority of the City of Huntington
Beach Changing the Fiscal Year for the City."
3. Resolution No. 2017-15, "A Resolution of the Successor Agency of the City of Huntington
Beach Changing the Fiscal Year for the City."
Item 23. - 3 HB -444-
ORDINANCE NO. 4143
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH
AMENDING THE HUNTINGTON BEACH MUNICIPAL CODE BY AMENDING
CHAPTER 1.13 TO CHANGE TJIE FISCAL YEAR FOR THE CITY
WHEREAS, the City Council will have better knowledge of state actions that affect
city revenue during budget adoption by adopting a later fiscal year and Section 600 of the City
Charter authorizes the Council to change the fiscal year by ordinance.
NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby
resolve as follows:
1. A Revised Chapter 1.13.020 First Interim Term: There shall be a one-time nine-
month fiscal year from October 1, 2017, and ending on June 30, 2018.
2. A Revised Chapter 1.43.030 Second Interim Term: A normal 12-month fiscal
yea:will begin on July 1, 2018, and end on June 30, 2019.
3. A Revised Chapter 1.13.040 Third Interim Ten: : [Reserved]
4. A Revised Chapter 1.13.050 Term: Continuing thereafter, the City's fiscal year
will begin on July I"and end on June 301n
This ordinance shall take effect thirty (30) days after its adoption.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the ,6` cis"a:=of:.J�nu ry .2 18
ATTEST:
Mayor
City Clerk
REVIEWED AND APPROVED APPROVED AS TO ORM:
i Manager City Attorney N.,v
ZITIATED AND APPROVED:
Chief Financial Officer
17-6150/170221;NV
Ord. No. 4143
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU, the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing ordinance was read to said City Council at
a Regular meeting thereof held on December 18, 2017, and was again read to said City
Council at a Regular meeting thereof held on January 16,2018, and was passed and
adopted by the affirmative vote of at least a majority of all the members of said City
Council.
AYES: O'Connell, Semeta, Peterson, Posey, Delgleize, Hardy, Brenden,
NOES: None
ABSENT: None
ABSTAIN: None
I,Robin Estanislau,CITY CLERK of the City of Huntington
Beach and ex-officio Clerk of the City Council,do hereby
certify that a synopsis of this ordinance has been published in n
the Huntington Beach Wave on January 25,2018.
In accordance with the City Charter of said City.
Robin Estanislau, City Clerk City Clerk and ex-officio Clerk
Senior Deputy City Clerk of the City Council of the City
of Huntington Beach, California
LEGISLATIVE DRAFT
HBMC CHAPTER 1.13
Chapter 1.13 FISCAL YEAR
.
1.13.010 Established
Chapter 1.13 is hereby enacted and inserted in Title 1, General Provisions of the Huntington
Beach Municipal Code. (3199-1/94)
1.13.020 First Interim Term
That f� year 1 oo2/93,.,,II GGGUF Ally 1 1992 throughjuly 30,1993-There shall be a one-
time nine-month fiscal year from October 1. 2017, and ending on June 30, 2018. (3199-
1/94)
1.13.030 Second Interim Term
A one time 15 month fiSGal year will begin en july 1, 1993, and will eRd an Septernber-�,
1994.A normal 12-month fiscal year will begin on July 1. 2018, and end on June 30, 2019.
(3199-1/94)
1.13.040 Third interim Ter"'fRESERVEDI
4 n m I 1 nth f aI year will hnnin nn (l toter 199A and d on Septomhor 30
r-z�-�ry rm�'v-rG-'1y-Ii�rlctY-r��arY�:a1-wnrvcsn�--vrrvGYl7v CI--I��v�,�rrcre•nv-vrrvcPtcri�vc�-vim
4995. (3199-1/94)
1.13.050 Term
Continuing thereafter, the City's fiscal year will begin on 9Etebef4"l 1 st and end on
Septernbe 30th. (3199-1/94)
17-6150/170340/mv
RESOLUTION NO. 23
A RESOLUTION OF THE PUBLIC FINANCING AUTHORITY OF THE CITY OF
HUNTINGTON BEACH CHANGING THE FISCAL YEAR FOR THE CITY
The Public Financing Authority ("Authority") of the City of Huntington Beach now
convenes for the purpose of passing Resolution No. 2017-70, changing the fiscal year for the
Authority.
WHEREAS, the Authority will have better knowledge of state actions that affect the
Authority and city revenue during budget planning by adopting a later fiscal year and the City
Council has changed the fiscal year of the City by Ordinance No. 4143,
NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby
resolve as follows:
1. There shall be a one-time nine-month fiscal year from October 1, 2017, and ending
on June 30, 2018.
2. A normal 12-month fiscal year will begin on July 1, 2018, and end on June 30,
2019.
3. Continuing thereafter, the Authority's fiscal year will begin on July 1st, and end on
June 30th.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 18th day of December, 2017.
u
Mayor
REVIEWED AND APPROVED: APPROVED AS TO RM:
f4diager ity Attorney µV
IATED AND ROVED:
Chief Financial Officer
17-6150/170222/MV
Res. No.23
STATE OF CALIFORNIA )
COUNTY OF ORANGE )
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU, the duly appointed, qualified Secretary
of the Huntington Beach Public Financing Authority, do hereby certify that the
whole number of members of the Board of Directors of the Huntington Beach
Public Financing Authority is seven; that the foregoing resolution was passed and
adopted by the affirmative vote of at least a majority of all the members of said
Board at a Regular meeting thereof held on December 18, 2017 and that it was
so adopted by the following vote:
AYES: Directors: O'Connell, Semeta, Peterson, Posey, Delgleize, Hardy, Brenden
NOES: Directors: None
ABSENT: Directors: None
ABSTAIN: Directors: None
444wu
Secretary of the Board of Directors
of the Huntington Beach Public
Financing Authority
RESOLUTION NO. 2017-15
A RESOLUTION OF THE SUCCESSOR AGENCY OF THE CITY OF HUNTINGTON
BEACH CHANGING THE FISCAL YEAR FOR THE CITY
The Successor Agency ("Agency") of the City of Huntington Beach now convenes for
the purpose of passing Resolution No. 2017-7 1, changing the fiscal year for the Authority.
WHEREAS, the Agency will have better knowledge of state actions that affect the
Agency and city revenue during budget planning by adopting a later fiscal year and the City
Council has changed the fiscal year of the City by Ordinance No. 4143.
NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby
resolve as follows:
1. There shall be a one-time nine-month fiscal year from October 1, 2017, and ending
on June 30, 2018.
2. A normal 12-month fiscal year will begin on July 1, 2018, and end on June 30,
2019.
3. Continuing thereafter, the Agency's fiscal year will begin on July 1st, and end on
June 30th
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 18th day of December, 2017.
Mayor
REVIE D AND APPROVE;, APPROVED AS TO F RM:
c
Ci Manager City Attorney My
INITIATED AND APP OVED:
C_Jle
-�
Chief Financial Officer
17-6150/170223/MV
Successor Agency
Res. No. 2017-15
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU the Clerk of the Successor Agency to the
former City of Huntington Beach Redevelopment Agency, Huntington Beach,
California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted
by The Successor Agency to the Redevelopment Agency of the City of Huntington
Beach at a special meeting held on December 18, 2017 and that is was so
adopted by the following vote:
AYES: Board Members: O'Connell, Semeta, Peterson, Posey, Delgleize,
Hardy, Brenden
NOES: Board Members: None
ABSENT: Board Members: None
ABSTAIN: Board Members: None
4q4vu �&4vdJit4d
Clerk of The Successor Agency to
the Redevelopment Agency of the
City of Huntington Beach, California
Oz 7 12/19/2017
Proposed Change :' • • Cons •"
City Council Meetin
1)(,(, 111bel 18, 277q I
What is driving this?
• How to pay Ca1PERS annual costs for HB's unfunded
liability:
• Pay Ca1PERS $25.8M over is months beginning July
OR
• Pay Ca1PERS $24.9M one-time in July
AND SAVE sgooK
BUT...
1
12/19/2017
Current Fiscal Year
October i through September 30
through September 30
RCA — December 6, 1993
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2
12/19/2017
i
Justificati
on for the Current Fiscal Year
From RCA Dated December 1993
1993 Rationale:
State's Budget had an adverse fiscal impact on local
governments, and was usually not adopted until after the
beginning of the fiscal year.
2017 Status:
2004 Elections, Proposition iA amended the California
constitution to restore predictability and stability to local
government budgets.
➢aoio Elections, Proposition 25 adjusted the two-thirds vote
requirement for adopting a budget to a majority vote.
➢zoio Elections, Proposition 25 also required legislators to
forfeit their pay if they failed to act by June 15.
5
Proposed Fiscal •
July through June
12/19/2017
Pros
77Annual savings will begin at $gook and rise to
$iM+ in succeeding years.
This savings will be partially offset by approximately
$look in reduced investment earnings.
Quickens the closing timeframe of the City's year-end
financial books.
➢The final property tax receipts would be received prior
to fiscal year-end close (April vs. December).
7 Pros
Consistent with the State, County of Orange, majority
of California cities, granting agencies, JPAs and
Ca1PERS fiscal years.
➢Huntington Beach is the only Orange County City on
October to September year.
v Huntington Beach is one of seven (7) of all 487
California municipalities that operate on the October to
September fiscal year.
➢Eliminates cumbersome manual processes for
monitoring, forecasting, and year-end reconciling of
final quarter estimates; replaces these estimates with
actual costs.
B
4
12/19/2017
Orange County
Municipalities
7JulytojuneYear October to September Year
City of Huntington Beach
I
`y
Cons
Transition Impacts
Increase to the City's auditing contract ($5 - $iok
annually- may be absorbed within the current
budget).
One-time cost to update the City's financial system
($io - $zok).
Transition will impact staff workloads in the first year
Budget and fiscal year-end process will start three
months early.
5
12/19/2017
AW
Financial Impact CaIPERS Prepay: Oct to Sept FY
cp�4 tiQ
HB Fiscal Year 2017/2018
Current FY misaligned with Ca1PERS FY
$24.9M due to Ca1PERS by July 31, 2oi8
Funding Source - 3 month from CY appropriations and 9
months from reserve ($17M for General Fund)
Financial Impact at Year End (FY15/16 CAFR)
Cash- decrease by$17M to $39.7M
- Economic Uncertainties Reserve- decrease by$17M to $8M
General Fund Impact
Oct to Sept FY
The prepaid Ca1PERS item reduces the emergency
safety net for the City by $17 million (9 months)
City Council approval would be required to change the
reserve policy; and cut $17 million from the Economic
Uncertainty Reserves
Potential Wall Street Concerns Regarding Changes in
Reserves
6
12/19/2017
]cn aTmpac ay:
July to June FY
➢City's FY will aligned with Ca1PERS FY
➢S24.9M due to Ca1PERS by July 31, 2o18
➢Funding Source - 12 month appropriation available from
Current Year Budget. NO RESERVES REQUIRED.
➢Financial Impact at Year End - NONE
➢NO NEGATIVE IMPACT TO THE AVAILABLE
EMERGENCY RESERVES
➢GROSS$9ooK+ SAVINGS ANNUALLY
p
Finance Commission
Approved Motion
For City Council to approve i) changing the fiscal
year from October ist through September 30th to
July is' through June 30th
%And a) recognizing the escalating Ca1PERS costs
and to ensure a timely implementation of the new
fiscal year, a status quo FY 2o18/19 General Fund
budget be presented to the Council.
7
Switzer, Donna
From: David Ward [daward@scng.com]
Sent: Thursday, January 18, 2018 10:10 AM
To: Switzer, Donna
Subject: Re: Publication of Ord No. 4143
Good morning Donna.
I hope your day has gotten off to a GREAT start.
Your notice is all set and ready to go.
Have a great rest of the day and weekend!!!
A ll#I1068004
Run Date 1/25
PROOF
i
CITY OF HUNTINGTON BEACH
LEGAL NOTICE
ORDINANCE NO. 4143
Adopted by the City Council on JANUARY 16, 2018
"AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF HUN-
TINGTON BEACH AMENDING THE HUNTINGTON BEACH MU-
NICIPAL CODE BY AMENDING CHAPTER 1 .13 TO CHANGE THE
FISCAL YEAR FOR THE CITY"
WHEREAS, the City Council will have better knowledge of state ac-
tions that affect city revenue during bud et adoption by adopting a
later fiscal year and Section +600 of the ity Charter authorizes the
Council to change the fiscal year by ordinance.
NOW, THEREFORE, the City Council of the City of Huntington
Beach does hereby resolve as follows:
1. A Revised Chapter 1.13.020 First Interim Term: There shall be a
one-time nine-month fiscal year from October 1, 2017, and ending
on .tune 20, 2018.
2. A Revised Chapter 1.13.030 Second Interim Term: A normal 12-
month fiscal year will begin on July 1, 2018, and end on ,June 30,
2019.
3. A Revised Chapter 1.13.040 Third Interim Term: [Reserved]
4. A Revised Chapter 1.13.050 Term: Continuing thereafter, the
City's fiscal year will begin on July lstand end on June30th.
PASSED AND ADOPTED by the City Council of the City of Hunting-
ton Beach at a regular meeting held January 16, 2018 by the following
roll call vote.-
AYES: O,Connell, Semeta, Posey Delgleize, Hardy, Brenden,
Peterson
NOES: None
ABSTAI N: None
ABSENT: None
THE FULL TEXT OF THE ORDINANCE IS AVAILABLE IN
THE CITY CLERK'SOFFICE.
This ordinance is effective 30 days after adoption.
CITY OF HUNTINGTON BEACH
2000 MAIN STREET
HUNTINGTON BEACH, CA 92648
714-536-5227
ROBIN ESTANISLAU, CITY CLERK
Publ ished; The Huntington Beach Wave January 25, 2018110+68004
2