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HomeMy WebLinkAboutFY 2012-2013 Infrastructure Fund Annual Report (� Dept.ID PW 13-052 Page 1 of 2 Meeting Date: 8/19/2013 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION MEETING DATE: 8/19/2013 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 the Infrastructure Fund Annual Report for FY 2012-2013 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) 2012-13. Financial Impact: Not applicable. Recommended Action: Motion to: Receive and File the Infrastructure Fund Annual Report for FY 2012-2013. Alternative Action(s): Instruct staff to make revisions and resubmit at a later date. Analysis: The Infrastructure Fund was established 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 FY 2006-2007 and revised in FY 2009-2010 to allow for an Economic Uncertainties Reserve commitment. During the current fiscal year$640,000 was transferred into the fund. Total expenditures this year are projected to be $257,272. The fund balance at year's end is projected to be $4,551,131. Per the City Charter, the Infrastructure Fund is designated for the sole purpose of infrastructure expenditures. "Infrastructure" is defined in the Charter as "long-lived capital assets that normally are stationary in nature and normally can be preserved for significantly greater number of years. They include storm drains, storm water pump stations, alleys, streets, highways, curbs and gutters, sidewalks, bridges, street trees, landscaped medians, parks, beach facilities, playgrounds, traffic signals, streetlights, block walls along arterial highways, and all public buildings and public ways." Environmental Status: Not applicable. Item 7. - 1 HB -88- Dept. ID PW 13-052 Page 2 of 2 Meeting Date:8/19/2013 Public Works Commission Action: The annual Infrastructure Fund Report includes the proposed budget for the following fiscal year. The FY 13-14 Infrastructure Fund proposed budget includes $1.5 million to partially fund the Senior Center. The total cost of the Center is estimated at$20 million. No other funding source is identified for this project in the proposed FY 13-14 budget. At the July 17, 2013, Public Works Commission regular meeting the Commission vote 2-4-0 against recommending Council approval of the Infrastructure Fund Annual Report for FY 2012-2013. Those Commissioners with dissenting votes cited the inclusion of funds for the Senior Center in next year's proposed Infrastructure Fund budget as the reason. Strategic Plan Goal: Improve the City's infrastructure Attachment(s): #1 - Infrastructure Fund Annual Report for FY 2012-2013. HB -89- Item 7. - 2 ATTACHMENT # 1 �� CITY OF HUNTINGTON BEACH PUBLIC WORKS COIV MISSION 3 REQUEST FOR ACTION Item No. PW 13-22 SUBMITTED TO: Chairman Herbel and Members of the Commission SUBMITTED BY: Travis K. Hopkins, PE, Director of Public Works DATE: July 17, 2013 SUBJECT: Approve Infrastructure Fund Annual Report for Fiscal Year 2012/13 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) 2012/13. 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. $640,000 was transferred from the General Fund into the Infrastructure Fund for in FY 2012/13. 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 -91- Item 7. - 4 Expenditures Budgeted expenditures and expenditure adjustments for FY 2012/13 consisted of carry over projects from 2011/12 and new funds, 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 2012/13 and has been expended as the date of this report. • Funds in the amount of $94,397 were carried over to complete the Energy Efficiency Projects at City Hall. These funds have been expended as of the date of this report. • $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. • The Infrastructure Fund is being used as a holding account for developer fees and expenditures related to the proposed Bella Terra Pedestrian Crossing Project. Funds in the amount of $250,000 have been received to date and staff anticipates an additional $250,000 next fiscal year. These funds are designated for this project only and any unspent funds must be returned to the developers. To begin design, $100,000 was appropriated to an expenditure account and is projected to be spent by the end of the fiscal year. Budgeted projects for 2013/14 include the carryover of the Heil Pump Station and the Bella Terra Crossing noted above. In addition, $1.5M has been included to begin work on the new Senior Center should that project move forward next fiscal year. Item 7. - 5 HB -92- INFRASTUCTURE FUND (314) Summary Report for FY 2012113 Budget FY Total Projected Projected Budget/Carry 2012/13 Revenue and Over to FY 2013-14 Expenditures Beginning Fund Balance 9/30/12 $3,893,402 Projected Fund Balance 9/30/2013 $4,551,131 Revenue Transfer from General Fund $640,000 Hazard Mitigation Grant(pending) $2,250,000 Interest $15,000 $15,000 $15,000 Market Adjustments Developer Fees $250,000 $250,000 Maintenance Agreement- Beachmont $10,000 $10,000 Plaza Total Revenue $915,000 $2,525,000 Expenditures Carr& Greer Park Sludge Removal ($16,125) ($16,125) (carry over) Energey Efficiency Improvements (carry ($94,397) ($94,397) over) City Yard Building Improvements ($46,750) ($46,750) $0 Heil Pump Station Construction and Property ($2,352,200) $0 ($2,353,000) Heil Pump Station Design ($150,000) $0 ($150,000) Bella Terra Pedestrain Crossing* ($100,000) ($200,000) Senior Center ($1,500,000) Total Expenditures ($257,272) ($4,203,000) Projected Fund Balance 9/30/2012 $4,551,131 Projected Fund Balance 9/30/2013 $2,873,131 *The Developer Fee is earmarked for the Bella Terra Pedestrian crossing. This revenue is limited to funding this specific project. Attachments: 1 . Excerpts from Financial Policy adopted FY 2006/07 and 2009/10 xB -93- Item 7. - 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 Govemment 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 I- 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 7. - 7 HB -94- - " City of Huntington Beach 3' � . � 1599 2969 Financial Policies " Adopted Budget- PY 2009110 FINANCIAL REPORTING AND ACCOUNTING STANDARDS o 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 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. o 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 o 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 form at. o 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. a On-gang revenues will support on-gang expenditures. Revenues from onetime 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 o 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. o 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 o 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 -95- Item 7. - 8 City of Huntington Beach taus 2008� I Financial Policies , P Adopted Budget — FY 2009110 ❑ 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 25% to Capital Improvement Reserve (CIR) 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 ■ 501)/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 7. - 9 HB -96-