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HomeMy WebLinkAboutFY 2011-2012 Infrastructure Fund Annual Report 10 ( OiLd Council/Agency Meeting Held: Deferred/Continued to: 9"4,4 40, 'g Ap ov d ❑ Conditionally Approved ❑ Denied City Jerk' Signa e Council Meeting Date: August 20, 2012 Department ID Number: PW12-049 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: Travis K. Hopkins, PE, Director of Public Works SUBJECT: Receive and File Infrastructure Fund Annual Report for FY 2011-2012 Statement of Issue: The City Charter requires an annual review and performance audit of the Infrastructure Fund, and a report of the findings to the City Council prior to adoption of the following fiscal-year budget. This review covers the current fiscal year (FY) 2011/12. Financial Impact: Not applicable Recommended Action: Motion to: Receive and File the Infrastructure Fund Annual Report for FY 2011-2012 Alternative Action(s): Instruct staff to make revisions and resubmit at a later date. Analysis: The Infrastructure Fund was established in 2002, by City Charter Section 617(c). The City Council shall by ordinance establish a Citizens Infrastructure Advisory Board to conduct an annual review and performance audit of the Infrastructure Fund and report its findings to the City Council prior to adoption of the following fiscal-year budget." The Public Works Commission serves as the Advisory Board. The single substantial revenue source to the fund is General Fund excess fund balance per the Financial Policy adopted in Fiscal Year 2006/07. The Policy was revised beginning in Fiscal Year 2009/10 to allow for an Economic Uncertainties Reserve commitment. No transfer of excess fund balance to the fund in the current fiscal year is anticipated for the current fiscal year. It is projected that expenditures from the fund for FY 2011-12 will total approximately $260,000, leaving a fund balance of approximately $1.9 million. Environmental Status: Not applicable Public Works Commission Action: The Public Works Commission has reviewed the report and recommended that it be forwarded to Council at their July 18, 2012 meeting by a vote of 5-0-2 (O'Connell, Spencer absent). Strategic Plan Goal: Improve the City's infrastructure Item 8. - I HB -70- REQUEST FOR COUNCIL ACTION MEETING DATE: 8/20/2012 DEPARTMENT ID NUMBER: PW12-049 Attachment: o - scriplo 1. Infrastructure Fund Annual Report for Fiscal Year 2011/12 HB -71- Item 8. - 2 ATTACHMENT # 1 • �J CITY OF HUNTINGTON BEACH PUBLIC WORKS COMMISSION 113 REQUEST FOR ACTION Item No. PW 12-22 SUBMITTED TO: Chairman Herbel and Members of the Commission SUBMITTED BY: Travis K. Hopkins, PE, Director of Public Works DATE: July 18, 2012 SUBJECT: Approve Infrastructure Fund Annual Report for Fiscal Year 201 1/12 (Final) Statement of Issue: The City Charter requires an annual review and performance audit of the Infrastructure Fund, and a report of the findings to the City Council. This review covers the current fiscal year (FY) 201 1/12. Funding Source: Infrastructure Fund No. 314 Recommended Action: Motion to recommend to City Council approval of the Infrastructure Fund Annual Report. Alternative Action(s): Direct staff to modify the Annual Report. Analysis: The Infrastructure Fund was established in 2002, by City Charter Section 617. "...(c) The City Council shall by ordinance establish a Citizens Infrastructure Advisory Board to conduct an annual review and performance audit of the Infrastructure Fund and report its findings to the City Council prior to adoption of the following fiscal-year budget." The single substantial revenue source to the fund is General Fund excess fund balance per the Financial Policy adopted in Fiscal Year 2006/07. The Policy was revised beginning in Fiscal Year 2009/10 to allow for an Economic Uncertainties Reserve commitment. Excerpts addressing the Infrastructure Fund for the previous and current policies are shown in Attachment 1 . Revenue 1 . No transfer of excess General Fund balance is anticipated for FY 201 1/12. 2. The maintenance agreement for the traffic signal at Beachmont Plaza provides annual revenue of approximately $10,000. 3. Interest is paid in proportion to the citywide investments and fund balance. HB -73- Item 8. - 4 Expenditures Budgeted expenditures for FY 2011/12 consisted of carry over projects from 2010/11, including: • Water Quality Improvements at Greer and Carr Lakes - The expenditures represent charges for the regular dredging of the lakes. The unexpended encumbered balance was carried over into FY 201 1/12 and is anticipated it will be 100% spent by the end of the fiscal year. Energy Efficiency Improvements - $150,000 was encumbered prior to the end of FY 2010/11 for a portion of the design/build of the improvements at City facilities. It is anticipated that the project will be substantially completed by the end of the fiscal year. A clerical error resulted in an additional $150,000 being included in the annual CIP carry over appropriation. This additional $150,000 reflected in the budget will not be spent and will remain in the fund balance at the end the current fiscal year. • $46,750 was included in the annual CIP carry over for City Yard Building Improvements. It is anticipated that these funds will be spent by the end of the fiscal year. • Heil Pump Station Property Acquisition - It is anticipated that the funds will be carried forward into the new fiscal year. A Hazard Mitigation Grant that would provide $2,250,000 in funding to complete the project is pending. No additional projects are proposed for FY 2012/13. Item 8. - 5 xB -74- INFRASTUCTURE FUND (314) Summary Report for FY 2011112 Total Projected Budget FY Projected Budget/Carry 2011/12 Revenue and Over to FY 2012- Expenditures 13 Beginning Fund Balance 9/30/11 $2,153,997 Projected Fund Balance 9/30/2012 $1,913,826 Revenue Transfer from General Fund $640,000 Hazard Mitigation Grant(pending) $2,250,000 Interest $15,300 $20,450 $15,000 Market Adjustments ($11,546) Maintenance Agreement- Beachmont $10,000 $10,000 Plaza Total Revenue $18,904 $2,915,000 Expenditures Water Quality Improvements @ Greer and Carr Lakes ($62,325) ($62,325) $0 Energy Efficiency Improvements ($300,000) ($150,000) $0 City Yard Building Improvements ($46,750) ($46,750) $0 Heil Pump Station Property Acquisition ($1,029,200) $0 ($1,029,200) Heil Pump Station Construction ($2,250,000) Total Expenditures ($259,075) ($3,279,200) Projected Fund Balance 9/30/2012 $1,913,826 Projected Fund Balance 9/30/2013 $1,549,626 Attachments: 1 . Excerpts from Financial Policy adopted FY 2006/07 and 2009/10 HB -75 Item 8. - 6 City of Huntington Beach Financial Policies Adopted FY 2006/07 FINANCIAL REPORTING AND ACCOUNTING STANDARDS The City's accounting system will be maintained in accordance with generally accepted accounting practices and the standards of the Government Accounting Standards Board and the Government Finance Officers Association. The annual financial report will be prepared within six months of the close of the previous fiscal year. The City will use generally accepted accounting principles in preparing the annual financial statements and will attempt to qualify for the Government Finance Officers Association's Excellence in Financial Reporting Program. The City will strive for an unqualified audit opinion. An unqualified opinion is rendered without reservation by the independent auditor that financial statements are fairly presented. The City will contract for an annual audit by a qualified independent certified public accounting firm. The independent audit firm will be selected through a competitive process at least once every five years. The contract period will be for an initial period of three years, with two one-year options. BUDGETING The budget will be prepared consistent with the standards developed by the Government Finance Officers Association and California Society of Municipal Finance Officers. In addition, a summary version will ' provided to the public in a user-friendly format. The City will maintain a balanced operating budget for all funds with estimated revenues being equal to, or greater than, estimated expenditures, and with periodic City Council reviews and necessary adjustments to maintain balance. On-going revenues will support on-going expenditures. Revenues from one-time or limited duration sources will not be used to balance the annual operating budget. Support function appropriations will be placed in the department in which they are managed. GENERAL FUND BALANCE The General Fund reserve (designation) will be a minimum of seven percent of the General Fund budget. In addition, a second tier reserve will consist of the net accumulation of amounts that were in excess of the seven percent reserve (designation) and remained in the General Fund after application of the financial policy that immediately follows. This second tier reserve will be used to balance budget fluctuations. Allocation of the audited General Fund balance in excess of the above reserves (designations) may be as follows: 25 percent for capital projects (transferred to the Capital Improvement Reserve) 25 percent for InfrastructureJtransferred to the Infrastructure Fund) 50 percent to increase the 2 tier reserve All supplemental appropriations from the General Fund minimum reserve that cannot otherwise be funded during the current fiscal year operating budget must meet one of the three following criteria: It is an unanticipated emergency. It is required to implement a Memoranda of Understanding (MOU) or a mandate. It is a new expense that is offset by related revenues. Item 8. - 7 HB -76- City of Huntington Beach09Z00 Financial Policies Adopted Budget— FY 2009110 FINANCIAL REPORTING AND ACCOUNTING STANDARDS fl The City's accounting system will be maintained in accordance with generally accepted accounting practices and the standards of the Government Accounting Standards Board (GASB)and the Government Finance Officers Association (GFOA). ❑ The annual financial report will be prepared within six months of the dose of the previous fiscal year. The City will use generally accepted accounting principles. in preparing the annual financial statements and will attempt to qualify for the Government Finance Officers Association's Excellence in Financial Reporting Program. ❑ The City will strive for an unqualified audit opinion. An unqualified opinion is rendered without reservation by the independent auditor that financial statements are fairly presented. ❑ The Cty will contract for an annual audit by a qualified independent certified public accounting firm. The independent audit firm will be selected through a competitive process at least once every five years. The contract period will be for an initial period of three years, with two one-year options. BUDGETING ❑ The budget will be prepared consistent with the standards developed by the Government Finance Officers Association and California Society of Municipal Finance Officers (CSMFO). In addition, a summary version will be provided to the public in a user-friendly fomnat. n The City will maintain a balanced operating budget for all funds with estimated revenues being equal to, or greater than, estimated expenditures, and with periodic City Council reviews and necessary adjustments to maintain balance. ❑ On-going revenues will support on-going expenditures. Revenues from one-time or limited duration sources will not be used to balance the annual operating budget. ❑ Support function appropriations will be placed in the department in which they are managed_ GENERAL FUND BALANCE ❑ There will be an established Economic Uncertainties Reserve commitment in the General Fund. The goal is to have an Economic Uncertainties Reserve commitment equal to the value of two months of the General Fund expenditure adopted budget amount. ❑ Once established, appropriations from the Economic Uncertainties Reserve commitment can only be made by formal City Council action. Generally, appropriations and access to these funds will be reserved for emergency situations. Examples of such emergencies include, but are not limited to: ■ An unplanned, major event such as a catastrophic disaster requiring expenditures over 5% of the General Fund adopted budget ■ Budgeted revenue taken by another government entity Drop in projected/actual revenue of more than 5% of the General Fund adopted revenue budget ❑ Should the Economic Uncertainties Reserve commitment be used, and its level falls below the minimum amount of two months of General Fund expenditures adopted budget, the goals is to replenish the fund within three fiscal years. 350 HB -77- Item 8. - 8 City of Huntington Beach =.., Financial Policies MOB Adopted Budget — FY 2009/10 ❑ Allocation of the audited General Fund unassigned fund balance will be done as follows if, and until, the Economic Uncertainties Reserve commitment is fully funded (i.e., two months of General Fund expenditures): • 50%to Economic Uncertainties Reserve commitment • 25%for Infrastructure Fund 256/o to Capital Improvement Reserve (CI R) commitment ❑ Once the Economic Uncertainties Reserve commitment attains full funding, unassigned fund balance will be divided as follows: ■ 25%for Infrastructure Fund 25% to Capital Improvement Reserve (CI R)commitment ■ 501D/o to Equipment Replacement commitment ❑ Any unanticipated and unrestricted revenues received during the fiscal year will be added to the fund balance of the General Fund. FUND BALANCE CLASSIFICATION ❑ The City's fund balance is made up of the following components: • Nonspendable fund balance typically includes inventories, prepaid items, and other items that, by definition cannot be appropriated. The restricted fund balance category includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation. • The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the City Council. The City Council has authority to establish, modify, or rescind a fund balance commitment. • Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes but do not meet the criteria to be classified as restricted or committed. The City Administrator or designee has the authority to establish, modify, or rescind a fund balance assignment. • Unassigned fund balance is the residual classification for the City's funds and includes all spendable amounts not contained in the other classifications. ❑ The City considers restricted or unrestricted amounts to have been spent when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available. ❑ The City's committed, assigned, or unassigned amounts are considered to have been spent when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. APPROPRIATION AUTHORITY ❑ The City Council is the appropriation authority for the City Budget. As required by state law, appropriations expire at the end of each fiscal year. 351 Item 8. - 9 HB -78-