HomeMy WebLinkAbout2009/05/12 Item 12
Qe.. \ -sed " \)e~ SIDK N~Ket
~\~ CITY OF
~~= CHULA VISTA
MA Y 12,2009, Itcm_' ~
ITEM TITLE:
SUBMITTED BY:
REVIEWED BY:
SUMMARY
QUARTERLY FINANCIAL REPORT FOR THE QUARTER
ENDED MARCH 31, 2009
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROPRlATING $120,000 FROM THE
AVAILABLE BALANCE OF THE GENERAL FUND AND
AMENDING THE PERSONNEL SERVICES BUDGET FOR THE.
RESIDENTIAL ABANDONED PROPERTY PROGRAM BASED
ON OVERREALIZED REVENUES (4/5THS REQUIRED)
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROPRIATING $1,450,000 FROM THE
AVAILAI3LE BALANCE OF THE GENERAL FUND FOR
UNANTICIPATED PUBLIC LIABILITY EXPENDITURES AND
FOR EXPENDITURES INCURRED FOR SERVICES PROVIDED
BY THE COUNTY OF SAN DIEGO REGISTRAR OF .vOTERS
.
FOR THE PROPOSITION A BALLOT MEASURE (4/5THS
REQUIRED)
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE
CITY OF CHULA VISTA AUTHORIZING AN APPROPRIATION
FOR REPAYMENT FROM THE MERGED PROJECT FUND TO
THE GENERAL FUND OF ADVANCES IN AN AMOUNT
ESTIMATED AT $900,000 BUT WILL BE BASED ON
AVAILABLE FUND BALANCE AT FISCAL YEAR END (4/5THS
REQUIRED)
DIRECTOR OF F~I CE/TREASUREI~
CITY MANAGER
ASSISTANT CITY ANAGER 7'/
4/5THS VOTE: YES 0 NO D
Section 504 (I) of the City Charter requires quarterly financial reports to be tiled by the Direetor of
Finance through the City Manager. Appropriations are being requested li'om the availablc balancc
ofthc Gencral Fund for hourly stat1ing of code enforcemcnt activitics, public liability expenditures
and services rendered by thc County of San Diego Registrar of Voters lor the Proposition A ballot
measure. The RDA is requesting an appropriation in ordcr to repay the Gcneral Fund for advanccs
the RDA has rcceived in the past
MAY 12,2009, Item~
Page 2 0 I' 5
I~NVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance with the
California Environmental Quality Act (CEQA) and has determined that liling of the quarterly
financial status repOlt is not a "Projeet" as delined under Section 15378 of the State CEQA
Guidelines because it will not result in a physical change to the environment: therefore, pursuant to
Section 15060(e)(3) of the State CEQA Guidelines the actions proposed arc not subject to CEQA.
RECOMMENDATION
I. Council accepts the report.
2. Council approves the resolutions.
BOARDS/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
Attached for your consideration is the financial report for the third quarter of liscal year 2008/09.
The detailed financial report tor the quarter ending March 31, 2009 discusses the financial
outlook tor the City's General Fund for the remainder of fiscal year 2008/09.
Fiscal Year 2008/09 General Fund
In the second quarter report for fiscal year 2008/09, the combined General Fund and
Development Services Fund deficit was projected at $3.5 million. The deficit was due to a
worsening economy and continued credit crisis and housing market meltdown. A plan to
mitigate the CUlTent year deficit ineluded laying olT city employees in April, and imposing an
administrative ti'eeze on all discretionary spending such as travel, conferences, memberships, and
vehicle purchases. Also, due to better than anticipated tax increment revenues, an inter-limd
loan repayment ti'om the Redevelopment Agency of approximately $900,000 is recommended to
close the current year deficit.
Other options to mitigate the current year delicit include reduced funding to the Workers
Compensation Fund of $0.7 million, which would leave approximatcly $1.0 million in reserves
for unanticipated claims. In addition, reduced limding to the Equipment Replacement Fund of
approximately $0.6 million could also be applied to avoid additional delicits in the ClllTent year.
These options could create potential future impacts to the General Fund if larger than usual
unanticipated workers compensation claims materialize and when future replacement of vehieles
is necessary.
Fiscal Year 2008/09 Development Services Fund
With the approval of the Fiscal Year 2008/2009 budget, the City Council authorized the creation
of a stand-alone Development Services Fund (DSF) comprised of staff Irom the Departments of
Planning & Building, Public Works and Engineering responsible tor the planning, permitting,
plan review, and inspection of development projects.
MAY 12,2009, Item Iv
Page 3 01'5
As the fiscal year has progressed it has become apparent that despite cuts made to the
Development Services Fund as part of Council actions taken on September 9,2008, development
related revenues are insufficient to support expenditure levels. The Development Services Fund
gap has increased from the reported $1.3 million at the November 17 budget workshop and is
now projected to be at $1.7 million and it docs not appear it will be mitigated in the current fiscal
year. Current DSF projections are displayed in the table below.
',,,", Projected projeeteil . Pr9j~~ted '
Division Revenues Expend'itures Net Imoae!"
Planning S 2,222,223 $ 2,948,886 S (726,663)
Building 1,742,789 2,449,584 (706,795)
Engineering 1,678,038 1,898,853 (220,815)
Public Works 1,583,695 1,659,187 . 175,492
DSF TOTAL $ 7,226,745 $ 8,956,510 $ 11,729,765)
General Fund Appropriation Requests
Residential Abandoned Pronertv Program
The Code Enforcement Division has implemented the Residential Abandoned Property Program
(RAPP) with a great amount of success. The program has been recognized nationally for its
intent to maintain neighborhoods that have been impacted by foreclosures in residential areas.
The number of foreclosures in Chula Vista has been so numerous that code enforcement stafT has
been unable to keep pace with enforcing the RAPP for all residential foreclosures. In order to
better enforce the RAPP throughout the City there is a need to hire on a temporary basis hourly
non-benefited staff. The amount of the appropriation requested is $120,000 to amend the
Personnel Services budget of the code enforcement budget. The cost of the stalling will be
offset by an increase in revenue beyond previous projections. This increase is a result of previous
enforcement actions !l'om all code enforcement programs.
Public Liability
The City has incurred greater than anticipated costs related to public liability for attorney fees
and settlement costs. In discussions with the City's Risk Manager projected expenditures for
public liability in the current fiscal year arc $1.9 million, which is currently budgeted at
$776.000. An appropriation of $1.2 million is requested at this time to cover these expenditures.
City Clerk
An appropriation of $250,000 is necessary for the City Clcrk's budget lor expenditures related to
services provided by the County of San Diego Registrar of Voters lor the Proposition A ballot
IncaSllrc.
Redevelopment Agency Appropriation Request
Since the Redevelopment Agency's inception, the General Fund has advanced $30.8 million to
the Redevelopment Agency as of the June 30, 2008 audited financial statements. The RDA has
MAY 12, 2009, 1tcm~
Page 4 0 l' 5
been unable to repay the General Fund in the past due to fund balance deficits. At this time it is
anticipated that the RDA will be able to repay between $900,000 to $1.1 million at the end of the
current tiseal year. The actual amount of thc repayment will be determined as part of the fiscal
year end c10sc to ensure that the RDA doesn't fall into a deficit.
The repayments arc possible because tax increment revenues have grown steadily since the
addition of the new project area. In the current fiscal year total tax increment revenues arc
projected at $14.5 million compared to the prior year amount of $13.8 million. In addition, the
RDA has had significant budgetary savings due primarily to vacancies or position cuts in the
current fiscal year.
DECISION MAKER CONFLICT
Staff has reviewed the propeliy holdings of the City Council and has found a eontliet exists, in
that Council Member Ramirez has property holdings within 500 feet of the boundaries of the
property which is the subject of this action. This contliet is only with the Redevelopment
Agency resolution.
CURRENT YEAR FISCAL IMPACT
The City's General Fund ended the fiscal year 2007/08 with an available balance of $9.3 million
or 6.1 percent of the operating budget. For fiscal year 2008/09, due to the significant slow down
in the economy and the continued housing crisis as well as the credit crisis, several major
revenues are being adjusted downward by a total of $4.9 million. Offsetting the revenue
shortfalls arc anticipated savings of approximately $2.7 million with additional offsets that
include a loan repayment of approximately $900.000, reduced funding to the workers
compensation and equipment replacement funds totaling $1.3 million. The appropriations
requested have been already accounted for in the third qumier projections and therefore no
additional impacts to the General Fund reserves are anticipated.
'Amended
Bud et
$ 9.3
143.3
143.3)
,General Fund Rese.ve (millions
Reserves - July 1,2008 (unaudited)
Revenues & Transfers In
Ex enditures & Transfers Out
Projected General Fund Deficit
Pro'ected Develo ment Services Fund Deficit
Total Pro'ected Deficit
$
31'0 Q
Pro'ected
$ 9.3
140.1
140,6
(0.5)
1.7
2.2
$
$
$
$ 0.9
$ 0.7
$ 06
$ 2.2
$
$ 9.3 $ 9.3
6.1% 6.1%
MA Y 12, 2009, ltemE
Page 5 0 f 5
ONGOING FISCAL IMPACT
There arc no ongoing impacts as a result of this action.
A TT ACHMENTS
Attachment 1 Quarterly Financial RepOli
Prepared hy" Phillip Davis, Assislant Director, Finance
CITY COUNCIL &
REDEVELOPMENT AGENCY
AGENDA STATEMENT
ITEM TITLE:
SUBMITTED BY:
REVIEWED BY:
SUMMARY
~!~ CITY OF
~ (HUlA VJSTA
MAY 12, 2009, Item~
QUARTERL Y FINANCIAL REPORT FOR THE QUARTER
ENDED MARCH 31, 2009
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROPRIATING $120,000 FROM THE
AVAILABLE BALANCE OF THE GENERAL FUND AND
AMENDING THE PERSONNEL SERVICES BUDGET FOR THE
RESIDENTIAL ABANDONED PROPERTY PROGRAM BASED
ON OVERREALIZED REVENUES (4/5THS REQUIRED)
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROPRIATING $1,450,000 FROM THE
A V AILABLE BALANCE OF THE GENERAL FUND FOR
UNANTICIPATED PUBLIC LIABILITY EXPENDITURES AND
FOR EXPENDITURES INCURRED FOR SERVICES PROVIDED
BY THE COUNTY OF SAN DIEGO REGISTRAR OF VOTERS
FOR THE PROPOSITION A BALLOT MEASURE (4/5THS
REQUIRED)
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE
CITY OF CHULA VISTA AUTHORIZING AN APPROPRIATION
FOR REPAYMENT FROM THE MERGED PROJECT FUND TO
THE GENERAL FUND OF ADV Ai'JCES IN AN AMOUNT
ESTIMATED AT $900,000 BUT WILL BE BASED ON
AVAILABLE FUND BALANCE AT FISCAL YEAR END (4/5THS
REQUIRED)
DIRECTOR OF FINI;fE/TREASURER--frK
CITY MANAGER.
ASSISTANT CITY' ANAGER 97
4/5THS VOTE: YES 0 NO D
Section 504 (t) of the City Charter requires quarterly financial reports to be filed by the Director of
Finance through the City Manager. Appropriations are being requested from the available balance
of the General Fund for hourly staffing of code enforcement activities, public liability expenditures
and services rendered by the County of San Diego Registrar of Voters for the Proposition A ballot
measure. The RDA is requesting an appropriation in order to repay the General Fund for advances
the RDA has received in the past
12-1
MAY 12, 2009, Item~
Page 2 of 5
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance with the
California Environmental Quality Act (CEQA) and has determined that filing of the quarterly
fmancial status report is not a "Project" as defmed under Section 15378 of the State CEQA
Guidelines because it will not result in a physical change to the environment; therefore, pursuant to
Section 15060(c)(3) of the State CEQA Guidelines the actions proposed are not subject to CEQA.
RECOMMENDATION
1. Council accepts the report.
2. Council approves the resolutions.
BOARDS/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
Attached for your consideration is the financial report for the third quarter of fiscal year 2008/09.
The detailed financial report for the quarter ending March 31, 2009 discusses the financial
outlook for the City's General Fund for the remainder of fiscal year 2008/09.
Fiscal Year 2008/09 General Fund
In the second quarter report for fiscal year 2008/09, the combined General Fund and
Development Services Fund deficit was projected at $3.5 million. The deticit was due to a
worsening economy and continued credit crisis and housing market meltdown. A plan to
mitigate the current year deficit included laying off city employees in April, and imposing an
administrative freeze on all discretionary spending such as travel, conferences, memberships, and
vehicle purchases. Also, due to better than anticipated tax increment revenues, an inter-fund
loan repayment from the Redevelopment Agency of approximately $900,000 is recommended to
close the current year deficit.
Other options to mitigate the current year deficit include reduced funding to the Workers
Compensation Fund of $0.7 million, which would leave approximately $1.0 million in reserves
for unanticipated claims. In addition, reduced funding to the Equipment Replacement Fund of
approximately $0.6 million could also be applied to avoid additional deficits in the current year.
These options could create potential future impacts to the General Fund if larger than usual
unanticipated workers compensation claims materialize and when future replacement of vehicles
IS necessary.
Fiscal Year 2008/09 Development Services Fund
With the approval of the Fiscal Year 2008/2009 budget, the City Council authorized the creation
of a stand-alone Development Services Fund (DSF) comprised of staff from the Departments of
Planning & Building, Public Works and Engineering responsible for the planning, permitting,
plan review, and inspection of development projects.
12-2
MA Y 12, 2009, Item-1L
Page 3 of5
As the fiscal year has progressed it has become apparent that despite cuts made to the
Development Services Fund as part of Council actions taken on September 9, 2008, development
related revenues are insufficient to support expenditure levels. The Development Services Fund
gap has increased from the reported $1.3 million at the November 17 budget workshop and is
now projected to be at $1.7 million and it does not appear it will be mitigated in the current fiscal
year. Current DSF projections are displayed in the table below.
Planning
Building
Engineering
Public Works
DSF TOTAL
$
$
General Fund Appropriation Requests
Residential Abandoned Property Program
The Code Enforcement Division has implemented the Residential Abandoned Property Program
(RAPP) with a great amount of success. The program has been recognized nationally for its
intent to maintain neighborhoods that have been impacted by foreclosures in residential areas.
The number of foreclosures in Chula Vista has been so numerous that code enforcement staff has
been unable to keep pace with enforcing the RAPP for all residential foreclosures. In order to
better enforce the RAPP throughout the City there is a need to hire on a temporary basis hourly
non-benefited staff. The amount of the appropriation requested is $120,000 to amend the
Personnel Services budget of the code enforcement budget. The cost of the staffing will be
offset by an increase in revenue beyond previous projections. This increase is a result of previous
enforcement actions from all code enforcement programs.
Public Liability
The City has incurred greater than anticipated costs related to public liability for attorney fees
and settlement costs. In discussions with the City's Risk Manager projected expenditures for
public liability in the current fiscal year are $1.9 million, which is currently budgeted at
$776,000. An appropriation of $1.2 million is requested at this time to cover these expenditures.
City Clerk
An appropriation of $250,000 is necessary for the City Clerk's budget for expenditures related to
services provided by the County of San Diego Registrar of Voters for the Proposition A ballot
measure.
Redevelopment Agency Appropriation Request
Since the Redevelopment Agency's inception, the General Fund has advanced $30.8 million to
the Redevelopment Agency as of the June 30, 2008 audited financial statements. The RDA has
12-3
MAY 12,2009, Item-.lL
Page 4 of 5
been unable to repay the General Fund in the past due to fund balance deficits. At this time it is
anticipated that the RDA will be able to repay between $900,000 to $1.1 million at the end of the
current fiscal year. The actual amount of the repayment will be determined as part of the fiscal
year end close to ensure that the RDA doesn't fall into a deficit.
The repayments are possible because tax increment revenues have grown steadily since the
addition of the new project area. In the current fiscal year total tax increment revenues are
projected at $14.5 million compared to the prior year amount of $13.8 million. In addition, the
RDA has had significant budgetary savings due primarily to vacancies or position cuts in th~
current fiscal year.
DECISION MAKER CONFLICT
Staff has determined that the action contemplated by this item is ministerial, secretarial, manual,
or clerical in nature and does not require the City Council members to make or participate in
making a governmental decision, pursuant to California Code of Regulations section 18702.4(a).
Consequently, this item does not present a conflict under the Political Reform Act (Cal. Gov't
Code ~ 87100, et seq.).
CURRENT YEAR FISCAL IMP ACT
The City's General Fund ended the fiscal year 2007/08 with an available balance of $9.3 million
or 6.1 percent of the operating budget. For fiscal year 2008/09, due to the significant slow down
in the economy and the continued housing crisis as well as the credit crisis, several major
revenues are being adjusted downward by a total of $4.9 million. Offsetting the revenue
shortfalls are anticipated savings of approximately $2.7 million with additional offsets that
include a loan repayment of approximately $900,000, reduced funding to the workers
compensation and equipment replacement funds totaling $1.3 million. The appropriations
requested have been already accounted for in the third quarter projections and therefore no
additional impacts to the General Fund reserves are anticipated.
$ 0.9
$ 0.7
$ 0.6
$ 2.2
$
$ 9.3 $ 9.3
6.1% 6.1%
12-4
MAY 12, 2009, Item~
Page 5 of5
ONGOING FISCAL IMPACT
There are no ongoing impacts as a result of this action.
ATTACHMENTS
Attachment 1 - Quarterly Financial Report
Prepared by: Phillip Davis. Assistant Director, Finance
12-5
~ \ fc..
-~-
F _
CIlY OF
CHUlA VISTA
OVERVIEW
This financial report summarizes the City's General
Fund financial position for the. fiscal year July 1, 2008
through March 31, 2009. The purpose of this report is
to provide the City Council, Management and the
Citizens of Chula Vista an update on the City's fiscal
status based on the most recent financial information
available.
ECONOMIC UPDATE
National News
In its first quarterly report of 2009, the UCLA Anderson
links the current national recession to slumping,
international economic conditions that will impact the
timing and pace of any national recovery. The
Forecast asserts that a turnaround in the U.S.
economy depends upon a recovery in world trade. The
report also states that regardless of the steps taken by
the U.S. government, national solutions will not be
enough to restore growth and therefore global solutions
are essential. In California, it's forecasted that. the
economy will remain in turmoil for the foreseeable
future as the twin sector engines of consumers and
construction continue to drag.
The UCLA Anderson Forecast reports that real Growth
Domestic Product (GDP) declined by 6.1 % in the fourth
quarter of 2008 and foresees further declines of 6.8%,
4.5% and 1.7% in the first three quarters of 2009.
As a result of the prolonged contraction, the nation's
economy will likely lose 7.5 million jobs from the peak
and unemployment will soar. UCLA Anderson predicts
that the unemployment rate will peak at 10+% in mid-
2010 and the employment recovery of the 2007-2009
recession will be "long and arduous."
The Conference Board Consumer Confidence Index™,
which had posted a slight increase in March, improved
considerably in April. The Index now stands at 39.2, up
from 26.9 in March. Consumer Confidence rose in
April to its highest reading in 2009, driven primarily by
a significant improvement in the short-term outlook.
The Present Situation Index posted a moderate gain, a
sign that conditions have not deteriorated further, and
may even moderately improve, in the second quarter.
The sharp increase in the Expectations Index suggests
that consumers believe the economy is nearing a
. Quarterly Financial Report - General Fund
Third Quarter Ending
March 31, 2009
bottom, however, this Index still remains well below
levels associated with strong economic growth."
The U.S. Census Bureau estimates U.S. retail sales for
March, decreased by 1.1 percent from the previous
month and 9.4 percent below March 2008. Total sales
for the January through March 2009 period were down
8.8 percent from the same period a year ago.
Local News
The University of San Diego's Index of Leading
Economic Indicators for San Diego County fell 2.2
percent in March. All six components in the Index, which
include building permits, unemployment insurance, stock
prices, consumer confidence, help wanted advertising
and the national economy, were down at the end of
March. The largest decline occurred in help wanted
advertising (-4.65%) followed by sharp declines in
consumer confidence (-3.27%) and unemployment
insurance (-2.31%). The USD Index has now fallen in
35 of the last 36 months. It was also the sixth month in a
row that the Index declined by more than two percent,
which corresponds to the six largest drops on record.
San Diego Index of Leading Economic Indicators
150.0
145.0
140.0
135.0
130.0
125.0
120.0
115.0
110.0
105.0
100.0
95.0
Jan~03 Jan-04 Jan-OS Jan-06 Jan-D7 Jan-08 Jan-09
The outlook for the local economy remains strongly
negative at this point with no turnaround in sight. The
bad job growth numbers for February got worse in
March, with San Diego County losing more than 44,000
jobs compared to the year before. Both the national and
local economies are caught in a vicious cycle where job
losses are reducing incomes, which reduces
consumption, auto sales, and home sales, which in turn
leads to even more job losses.
12-6
QUARTERLY FINANCIAL REPORT
THIRD QUARTER OF 2008/09
Page 2 of 5
GENERAL FUND SUMMARY
Revenues
City Council Policy No. 220-03 recommends the City
maintain at least an 8 percent reserve level. As of
June 30, 2008, the General Fund reserve level was at
6.1 percent (audited).
~~{f3!2*WJ.,;\~~t;:'::':~~\~r{i:';~.~~;~~~:,,::;1~t{~,~,::~:(fr:f, ;:~:,i".'~:'~?"~'i~J1~9~~1?\~~;,~.r~~.9,~~~
General Fund Reseve millions y:.':',,;(:;::~...>:'t Bud et:t:J Pro ected
Reserves - July 1, 2008 (unaudited) $ 9.3
Revenues & Transfers In 143.3
Ex enditures & Transfers Out 143.3
Projected General Fund Deficit $
Pro'ected DSF Deficit
Total Pro'ected Deficit
$ 0.9
$ 0.7
$ 0.6
$ 2.2
$
$ 9.3 $ 9.3
6.1% 6.1%
I n the second quarter report for fiscal year 2008/09, the
combined General Fund and Development Services
Fund deficit was projected at $3.5 million. The deficit
was due to a worsening economy and continued credit
crisis and housing market meltdown. A plan to mitigate
the current year deficit included laying off city
employees in April, imposing an administrative freeze
on all discretionary spending such as travel,
conferences, memberships, and vehicle purchases.
Also, due to better than anticipated tax increment
revenues, an inter-fund loan repayment from the
Redevelopment Agency of approximately $900,000 is
recommended to close the current year deficit.
The proposed options to mitigate the current year
deficit include reduced funding to the Workers
Compensation Fund of $0.7 million, which would leave
approximately $1.0 million in reserves for unanticipated
claims. In addition, reduced funding to the Equipment
Replacement Fund of approximately $0.6 million could
also be applied to avoid additional deficits in the
current year. Neither of these options could create
potential future impacts to the General Fund if large
unanticipated workers compensation claims materialize
and when future replacement of vehicles is necessary.
12-7
As the economy continued to worsen throughout the
current fiscal year, several discretionary revenues were
adjusted downward by $2.8 million. A brief discussion of
the revised revenue projections will follow.
~i~!lr~~\~~?~~t~~i1~;'~,:f~:~ '.'.'''A'' FY 2008/09,,,,,,'i\,. fJ~~2B~{~f:~.
.; Budaet! " Prolected:;
,.
Sales Tax $ 29,678 $ 26,890 (52.788)
Property Tax 30,232 29.232 (1.000)
Motor Vehicle License Fee 20,216 19,816 (400)
Franchise Fees 8,732 10,033 1,301
Utility Users Tax 7,122 7,422 300
Transient Occupancy Tax 2.753 2,570 (183
Total $ 98,733 $ 95,963 ($2,770
Reflected in the chart below are departmental
programmatic revenue adjustments of $0.4 million. The
adjustment is necessary due to continued declines in
development related revenues, grant reductions, capital
improvement project revenues and other fees for city
services.
J~~f#%~~*.i\~~~i~t~::;;~:':".,.:,/,,~,~,~ .~ .,..''':If.::;, F.Y' 2008/09::i'9"-lF '~'?~<'~&~li~~,!~
Rs'y'enue' 'Catecio'rv;;(~r) ~" ';(~~ i: Budget' ":' ProjeCted',
Development Revenue $1,966 $995 (5971)
Licenses and Permits $518 5660 $142
Fine, Forfeitures & Penalties 5 1 ,494 $2,231 $737
Use of Money arid Property $2,421 $4,059 $1,638
Other Local Taxes $2,164 52,031 (5133)
Police Grants $1,823 $1,724 (599)
Other Agency Revenue $3,546 $3,201 ($345)
Charges for Services $6,371 $5,834 ($537)
Interfund Reimbursements 59,271 $9,288 $17
Other Revenues $2,712 $3,070 5358
Transfers From Other Funds $12,272 511,058 ($1,214\
Total $ 44,558 $ 44,151 ($407)
Property Taxes. The City of Chula Vista receives
property tax revenue based upon a 1.0 percent levy on
the assessed value of all real property.
Property tax is the City's largest revenue source,
representing 19.1 percent of the General Fund revenue
in fiscal year 2007/08. The City's assessed value grew
at historical rates until recently
with the largest percentage
increase of 20 percent occurring
in fiscal year 2005/06. Based on
the June 2008 County
Assessor's Annual Valuation
Report for fiscal year 2008/09,
the assessed value in Chula
Vista grew by 2.21 percent due
tl~f~~~~~.::"i*,~;
'f'I~'to'eCtro" .'"
'J...~i!i.'y."",' J""~:i"' ~'.~
~{iii~:$~~;:~;~1"
'$700"00 '
~l:~~~;!i~J~:;;~~~~,~,~';,~ 'i~'_~~':: '"t
QUARTERLY FINANCIAL REPORT
THIRD QUARTER OF 2008/09
Page 3 of 5
to a combination of increased commercial values,
addition of the SR125 toll road to the tax roll and the
drop in residential assessed values.
i: ' Q . f ~. '" '~ 1;' i ." .1',,; ::?':;' aJ ' n . l . i:' .
II, 19!!"11'!"t!.,
~ ' . " · r !! i
The fiscal year 2008/09 property tax budget anticipated
a 3.9 percent increase. The current projections for
Property Tax are being further adjusted downwards by
$700,000 for a total adjustment of $1:0 million to reflect
the final Assessor's value of 2.21 percent.
Property Tax Delinquency Rate
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
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;~~;&":.i,:\'~"J:~:':::"::~~~~" ~ "~"'A:':.~;;;ii-.::~ ~~),,~~~tZ';.tr.~_~j'i-"€~S2~~$r_>-,.!.
;:!!.:~?~\kt.i~ ?j,~.tl~h' ,~>r 1-:';. i-;'"~' ~I.:.'~:.~'~: .'':;,1: '~}.~;;~~\~~\1:I;'t:~:.r)gimi'i,i,~ ~;i{ifi,;'" ",.lVit:; :'~
'.::S'i~f-::rl~:u~:~':,; "i':J:.f.J";' ,; ...,~:!<~ . i. ~:~Kq,~:%1'~~'7rj:: -."_..--.}5;d);H'if;::.
J, ....- ~', /.~. , ~, : ",." '.:';'1'" I) .:', . .::; ,:D>_:;>:.1;~~;;i,~;~;~;;-1(.'".?',~;:":',';'..~';;,?::-~"
",:..;",;'.
: :;" ~".,"~,~"i;:.,;~:\:,~' 5...):::". ';J;'
FY98/99
FY01/02
FY04/05
FY07/0B
Also impacting property tax revenues are the property
tax delinquency rates that continue to climb as the sub-
prime mortgage crisis is leaving many homeowners
with mortgages that are greater than the current value
of their homes. As seen in the chart above, the
delinquency rate has more than doubled from an
average of 1.7 percent for fiscal years 1998/99 to
2004/05 to 3.96 percent for fiscal year 2007/08.
~~~":t1J/:)5r~i:l;;'~. :l',;:${~.::",;>':', " ,;c'. Median I?ri ce~.ti:~t~ '" Percent.
Zip' c~lrEi' toeale") ::'.;:' 2009'-:~ '~':'~'.'I 2008Y~; :'C'h~riQe.
91910 North $ 250,000 $ 330,000 -24.2~/o
91911 South $165,000 S 308,000 -46.4%
91913 Eastlake $310,000 $ 391 ,000 -20.7%
91914 NE $ 387,500 $ 496,000 -21.9%
91915 SE $ 344,000 $ 391 ,500 -12.1%
Source: San Diego Union
12-8
A comparison of sales data for March 2008 to March
2009 reveals that prices have dropped dramatically from
March 2008 levels. Recent sales data indicates that the
median price drops range as high as 46.4 percent in the
hardest hit areas of the City.
Foreclosures are having an additional negative impact
on property tax revenues in the City by depressing
housing values. The drop in assessed values has
triggered Proposition 8, a constitutional amendment
passed in 1978 that allows a temporary reduction in
assessed value when real property suffers a "decline-in-
value". Therefore, as assessed values fall, homeowners
can apply for a reassessment of their homes which
would lead to a reduction of property taxes based on the
lower assessment. Many of these downward
reassessments may not appear on property tax bills
requiring further adjustments to the fiscal outlook beyond
fiscal year 2009/10.
Sales Tax. Sales tax is the City's second largest
revenue source, representing 18.5 percent of fiscal year
2007/08 actual revenues. City staff met with the City's
sales tax consultant, MuniServices, to review the most
recent sales tax revenues. They
report that the change in sales tax
receipts between fourth quarter
2007 and the fourth quarter 2008
decreased by -10.8 percent
Statewide, by -12.0 percent in
Southern California and -10.9
percent in Chula Vista.
, t 1 f , ~
, , . i ~ , i
. j ~ ii , ;
!
The chart above compares Chula Vista's sales tax with
that of other jurisdictions in the County during the fourth
quarter of the calendar year. The chart below depicts
the City's sales tax history from fiscal year 1999/2000 to
the end of the current fiscal year. For current fiscal year
QUARTERLY FINANCIAL REPORT
THIRD QUARTER OF 2008/09
Page 4 of 5
2008/09, the projection reflects a decrease of 5 percent
from the prior year actual amount received.
~ $35
"
.
Sales Tax History
FYt9J9I0llIoFY200ll~
'"
Motor Vehicle License Fee (VLF). The State Budget
Act of 2004 deleted the VLF backfill, which had
compensated cities and counties for the State's
reduction of the VLF rate from 2 to 0.65 percent.
Under the swap, 90 percent of City VLF revenue was
exchanged for property tax which means the majority
of VLF revenues for each city will change essentially in
proportion to the growth of real property assessed
values.
Under this formula, the remaining 10 percent of
revenues are based on vehicle registrations and the
revenues are distributed in the following order: the
State (for administrative charges), Orange County,
cities incorporated after August 5, 2004 and finally the
remaining funds are allocated among all other cities
based on the proportionate population of all cities.
Motor Vehicle License Fee Revenue
FY04/0S FYOS/OS FYOS/07 FY07/0B FYOS/09
Est
El State Charges IJ1 Orange County 0 Special City 0 Cities
State charges for the DMV and other functions are
based on a forecast of VLF revenues. VLF revenues
have fallen well short of the forecast but the State
budget has not been adjusted to reflect actual
12-9
collections. This has caused a decline in the remaining
revenues available for allocation to cities (illustrated in
the chart above). This revenue shortfall has resulted in
insufficient funds to pay the cities. Chula Vista did not
receive their November or December allocation.
Due to the new formula that relies on assessed
valuations and the decline in automotive sales this
revenue source has been adjusted downward by an
additional $300,000 in the third quarter for a total of
$400,000.
Franchise Fees. The revenue projection was revised
upward in the first quarter by $900,000 to increase the
fiscal year 2008/09 base budget amount to equal actual
amounts received in fiscal year 2007/08. An additional
upwards adjustment of $370,000 is being made due to
the trending of actual revenues received to date.
Utility Users Tax (UUT). Revenues are projected at
$7.4 million, which is the same as the prior year actual
revenues. This revenue stream continues to be at risk
as several legal challenges make their way through the
courts.
Development Related Revenues. Development
related revenues in the General Fund are being adjusted
downwards by $971,000 due to the continued
deterioration of the housing market.
Interfund Transfers & Reimbursements. Interfund
transfers and reimbursements are being reduced by $1,2
million due to reduced staff time reimbursements from
the sewer and development impact fee funds.
Expenditures
D1~~-~~~~iti~ i;'!,:~~~~::~::~: ' ~;-'lj,.__~mer-~~d ~~pe~d~.d ,~X~,!,lable' . Percent
".I \ . Budget: -.' YTD ", Balance.: - E~pen~ded
City Council $ 1,311,626 $ 816,449 $ 495,177 62.2%
Boards/Commissions 14,736 3,931 10,805 26.7%
City Clerk 971,934 625,366 346, 568 64.3%
City Attorney 2,431,634 1.227,124 1,204,510 50.5%
Administration 4,253,392 3,068,222 1,185,170 72.1%
Information Technology 3,824,199 2.562,014 1,262,185 67.0%
Human Resources 4,776,085 4,293.993 482,092 89.9%
Finance 2,737,944 1,837.777 900,167 67.1%
Non-Departmenta! 5,364,967 9,116,359 ($3,751,392) 169.9%
Planning and Building 2,479,239 1,641,778 837.461 66.2%
Engineering 4,756,301 3.245,446 1,510,855 68.2%
Public Works 24,717,673 15,966,906 8,750,767 64.6%
Police 47,990,954 32,447,351 15,543,603 67.6%
Fire 23,103,566 16,307,720 6.795,846 70.6%
Recreation 6,437,754 4,098,331 2.339,423 63.7%
Library 8,089,924 5.193,084 2,896,840 64.2%
Total General Fund 5143,261,928 $102,451,851 $40,810,077 71.5%
The General Fund's Amended Budget reflects the
Council adopted budget of $143.3 million and all mid-
year appropriations ($918,519) approved by City
RESOLUTION NO. 2009-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROPRlATING $120,000 FROM THE
A V AILABLE BALANCE OF THE GENERAL FUND AND
AMENDING THE PERSONNEL SERVICES BUDGET FOR
THE RESIDENTIAL ABANDONED PROPERTY PROGRAM
BASED ON OVERREALIZED REVENUES
WHEREAS, the Code Enforcement Division has implemented the Residential Abandoned
Property Program (RAPP) with a great amount of success, and
WHEREAS, the program has been recognized nationally for its intent to maintain
neighborhoods that have been impacted by foreclosures in residential areas; and
WHEREAS, the number of foreclosures in Chula Vista has been so numerous that code
enforcement staff has been unable to keep pace with enforcing the RAPP for all residential
foreclosures; and
WHEREAS, in order to better enforce the RAPP throughout the City there is a need to hire
on a temporary basis hourly non-benefited staff; and
WHEREAS, the amount of the appropriation requested is $120,000 to amend the Personnel
Services budget of the code enforcement budget; and
WHEREAS, the cost of the staffing will be offset by an increase in revenue beyond previous
projections; and
WHEREAS, this increase IS a result of previous enforcement actions from all code
enforcement programs; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula
Vista does hereby approve the appropriation request of $120,000 from the available balance of
the General Fund amending the Personnel Services of the. Code Enforcement Division
(organizational key 12350).
Presented by
Approved as to form by
~~~
Bart C. MiesfelcC
City Attorney
D ~?(/7Gf
Maria Kachadoorian
Director of Finance
12-10
RESOLUTION NO. 2009-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROPRlATING $1,450,000 FROM THE
A V AILABLE BALANCE OF THE GENERAL FUND FOR
UNAt'lTICIPATED PUBLIC LIABILITY EXPENDITURES
AND FOR EXPENDITURES INCURRED FOR SERVICES
PROVIDED BY THE COUNTY OF SAN DIEGO REGISTRAR
OF VOTERS FOR THE PROPOSITION A BALLOT MEASURE
WHEREAS, the City has incurred greater than anticipated costs related to public liability for
attorney fees and settlement costs, and
WHEREAS, in discussions with the City's Risk Manager projected expenditures for public
liability in the CUlTent fiscal year are $1.9 million; and
WHEREAS, public liability expenditures for fiscal year 2008-09 are currently budgeted at
$776,000; and
WHEREAS, an appropriation of $1.2 million IS requested at this time to cover these
expenditures; and
WHEREAS, services have been provided by the County of San Diego Registrar of Voters
for the Proposition A ballot measure; and
WHEREAS, an appropriation of $250,000 is necessary to the City Clerk's budget for
expenditures related to services provided by County of San Diego Registrar of Voters; and
WHEREAS, the appropriations requested have been already accounted for in the third
quarter projections and therefore no additional impacts to the General Fund reserves are anticipated;
and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula
Vista does hereby approve the appropriation requests of $1,450,000 from the available balance
of the General Fund amending the Human Resources Department budget and the City Clerk
budget.
Presented by
Approved as to form by
~ ~~ Df?V7l-j
Bart C. Miesfel
City Attorney
Maria Kachadoorian
Director of Finance
12-11
RESOLUTION NO. 2009-
RESOLUTION OF THE REDEVELOPMENT AGENCY OF
THE CITY OF CHULA VISTA AUTHORIZING AN
APPROPRIATION FOR REPAYMENT FROM THE MERGED
PROJECT FUND TO THE GENERAL FUND OF ADVANCES
IN AN AMOUNT ESTIMATED AT $900,000 BUT WILL BE
BASED ON AVAILABLE FUND BALANCE AT FISCAL
YEAR END
WHEREAS, since the Redevelopment Agency's inception, the General Fund has advanced
$30.8 million to the Redevelopment Agency as of the June 30, 2008 audited financial statements, and
WHEREAS, the Redevelopment Agency has been unable to repay the General Fund in the
past due to fund balance deficits; and
WHEREAS, at this time it is anticipated that the RDA will be able to repay between
$900,000 to $1.1 million at the end of the current fiscal year; and
WHEREAS, the actual amount of the repayment will be determined as part of the fiscal year
end close to ensure that the RDA doesn't fall into a deficit; and
WHEREAS, the repayments are possible because tax increment revenues have grown
steadily since the addition of the new project area; and
WHEREAS, in the current fiscal year total tax increment revenues are projected at $14.5
million compared to the prior year amount of$13.8 million; and
WHEREAS, the RDA has had significant budgetary savings due primarily to vacancies or
position cuts in the current fiscal year; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula
Vista sitting as the Redevelopment Agency Board does hereby approve the repayment from the
Redevelopment Agency Merged Project Fund to the General Fund of an amount equal to and
not-to-exceed the Redevelopment Agency available fund balance to be determined at fiscal year
end for fiscal year 2008-09.
Presented by
Approved as to form by
~ 0/~ DiP"''/'
Bart C. Miesfeld
City Attorney
Maria Kachadoorian
Director of Finance/Chief Financial
Officer of the Redevelopment Agency
12-12
~ ",; ~:~;.,!r, 'j!-:;'<~,:J;~~' 1>J4,r", f ;: :';'~;~';i:,:'~r -:"". ~;~~.~-nde ~:,F!a~g'.9,:~
Ge nera I'Fund ;Resc rYe ,(millIons)' ,'j~;~r::'\:,:Budget'.,r,ProJected
Resero.es - July 1,2008 S 9.3 S 9.3
Re\€nues & Transfers In ! 143.3 140.1
Expenditures &'Transters Out .--r"----{T43.3)' "(T4b.i3)
~.3!~:::!ed ~~_~~~~~~dl?~~_cit __"~""~.."_... .."_.L~ (0.~2
Projected DSF Deficit IS (1.7)
Total Projected Deficit I $ (2.2)
,
---1---- -- -~--
Balancing Options
R'iJi\"'Loan -R-epaymenl"------.-.------..---..
ij\'Orke;rsCOmpF"unding Reduction-'
Equipment Replacement Fund Reduction
Total Balancing Options
Deficit
Fund Balance as of June 30, 2009
Percentage of Operating Budget
$ 0.9
- 'ji----07
$ 0.6
1$ 2.2
1$
9.31 $
I
I
i$
9.3
6.1%'
6.1%
:~\~
1
Property Tax Delinquency Rate
4.5% .
4.0% .
3.5% .
3.0% .
2.5% .
2.0%
1.5% .
1.0% .
0.5% .
0.0% .
FY98/99
FY01/02
FYQ4/05
FY07/08
2
General Fund
. $120,000 for hourly Code Enforcement
staffing for the Residential Abandoned
Property Program
. $1.2 M for Public Liability Expenditures
. $250,000 for Services provided by
County Registrar of Voters
. No Impact to the General Fund Reserves
Redevelopment Agency
. $900,000 for Loan Repayment to the
General Fund
~
.)