HomeMy WebLinkAboutFY 2010-2011 Year End Budget AdjustmentsCouncil/Agency Meeting Held:
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Council Meeting Date: September 19, 2011 Department ID Number: FN 11-023
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Lori Ann Farrell, Director of Finance
SUBJECT: Fiscal Year 2010-2011 Year End Budget Adjustments
Statement of Issue:
The FY 2010/2011 Budget was adopted by the City Council on September 20, 2010.
Technical year-end budget adjustments are requested to more closely align expenditures
with revenues; reimburse the City for costs incurred in providing certain City services; and
comply with existing tax sharing agreements. Please note these adjustments do not have a
negative impact on the FY 2010/2011 budget as there is a commensurate amount of
revenue and/or fund balance to support each of these adjustments. As actual expenditures
cannot exceed the appropriation amounts contained in the adopted budget, pursuant to
standard accounting rules, budget appropriation adjustments are required to ensure
compliance with GAAP and other legal requirements.
Financial Impact:
1. Economic Development Department (General Fund 100): $275,000; and, Hotel -Motel
BID (Fund 709): $192,000
2. Retiree Medical Fiduciary Fund (Fund 702): $100,000; and Supplemental Retirement
Fiduciary Fund (Fund 703): $275,000
3. Community Facilities Districts (Fund 405,406,408, and 410): $661,342
4. Specific Event Fund (Fund 101): $162,000
Recommended Action: Motion to:
1. Approve a budget adjustment of $275,000 in the Economic Development Department
Budget, General Fund (Fund 100); and a budget adjustment of $192,000 in the Hotel -Motel
Bid Fund (Fund 907); and
2. Approve a budget adjustment of $100,000 in the Retiree Medical Fiduciary Fund (Fund
702); and a budget adjustment of $275,000 in the Supplemental Retirement Fiduciary Fund
(Fund 703); and
3. Approve a budget adjustment of $661,342 in the Community Facilities District Funds
(Fund 405, 406, 408, and 410); and
4. Approve a budget adjustment of $162,000 in the Specific Events Fund (Fund 101).
Item 9. - I HB -286-
REQUEST FOR COUNCIL ACTION
MEETING DATE: 9/19/2011 DEPARTMENT ID NUMBER: FN 11-023
Alternative Action(s):
1. Do not approve the increases in appropriation and direct staff accordingly.
Analysis:
TOT and Sales Tax Sharing Agreements: As has been previously reported, actual
Transient Occupancy Tax receipts have performed above budgeted expectations. As
such, a technical amendment is required to the Economic Development Department's
budget to ensure compliance with existing tax sharing agreements with the Hotel -Motel
Business Improvement District and the Marketing and Visitor's Bureau. Sufficient funds
from Transient Occupancy Tax revenue will support the additional $192,000 to the Hotel -
Motel BID Fund (Fund 709) related to their 2% assessment on hotel stays that the City
remits to the BID as a pass-thru payment. In addition, the City has an agreement with the
MVB stating that 10% of TOT revenues are granted to the MVB for promoting overnight
visits in the City. The original anticipated adjustment to the Marketing and Visitor's
Bureau was $145,000; however, the MVB has agreed to provide the City/Redevelopment
Agency a grant of $70,000 to assist with the $6.8 million State Pay -to -Play payment for
the "voluntary alternative redevelopment program" resulting in a net adjustment of
$75,000 to the MVB (General Fund 100). Please note that actual payments to the Hotel -
Motel Bid and to the Marketing and Visitor's Bureau will be based on final TOT receipts.
Sales tax receipts have also trended well over budgeted expectations, as previously
reported. As such, a technical amendment is also required to comply with existing sales
tax sharing agreements with Pinnacle Petroleum and ACS. An appropriation increase of
$200,000 is requested in the Economic Development Department (General Fund 100) to
ensure conformance with these contractual obligations. Please note that final tax sharing
payments will be based on final actual sales tax receipts.
2. Retiree Medical Fiduciary Fund (702) and Supplemental Retirement Fund (703): The
Retiree Medical (702) and Retiree Supplemental (703) Funds are Fiduciary Funds that
account for contractually required payments to retirees for post -employment medical
insurance and supplemental retirement benefits. The City contributes an actuarially
determined amount to these Fiduciary Funds to pay for these retiree benefits and related
administrative costs. Due to the great success of the early retirement incentive program
offered through the Public Agency Retirement System (PARS), a total of 103 employees
retired by September 30, 2010. The effects of these retirements were not factored into
the FY 2010/2011 adopted budget for these Fiduciary Funds; therefore, these funds do
not currently have adequate appropriations to cover all of the required payments. There
are adequate fund balances in both the Retiree Medical Fund (702) and the Retiree
Supplemental Fund (703) to cover the requested appropriations of $100,000 for Fund 702
and $275,000 for Fund 703.
3. Community Facilities Districts: The Community Facilities Districts (CFDs) are Fiduciary
Funds that account for the debt service activity of the City's CFDs. CFDs were formed to
construct public improvements within the City's boundaries using bond financing. Please
note these bonds are not an obligation of the City. In accordance with the Official
Statements of each of these bonds, the City may charge the CFD for expenses directly
xB -287- Item 9. - 2
REQUEST FOR COUNCIL ACTION
MEETING DATE: 9/19/2011 DEPARTMENT ID NUMBER: FN 11-023
related to the administration of the CFD, however, the City has not allocated City staff
time and associated costs for the administration of these CFDs.
In addition, the official documents authorizing the CFDs and bonds allowed for annual
increases in the amounts the CFDs were reimbursing the City for public safety services
consistent with changes in the Consumer Price Index (CPI). The City's Bond Counsel for
these CFDs has advised the City that these are allowable costs and can be charged to
the CFDs pursuant to the executed bond documents. There are sufficient unrestricted
cash balances available in each of the funds to support these adjustments.
Lastly, interest revenue in the amount of $201,200 was previously allocated to the CFD
funds which should be allocated to various City funds. A total budget adjustment of
$661,342 is requested in the Community Facilities District Funds (Fund 405 - $50,514;
Fund 406 - $396,402; Fund 408 - $36,410; and Fund 410 - $178,015) to recoup all of
these costs. Adequate unrestricted cash balances are available in each of the funds to
support these adjustments.
4. Specific Events Fund: The Specific Event Fund contains fees paid to the City to hold
special events such as the U.S. Open of Surfing. The intent of the Fund is to fully recover
costs incurred by the City to provide services during the event. A budget adjustment is
requested in the Specific Event Fund to reflect the influx of additional revenue associated
with the City's numerous special events. Additional event revenue will fully support a
budget adjustment of $161,754 related to city costs that have been incurred for providing
support at the City's specific events.
Environmental Status:
N/A
Strategic Plan Goal:
1. Maintain financial viability and our reserves
Attachment(s):
Item 9. - 3 HB -288-