HomeMy WebLinkAbout2010/08/17 Item 11
CITY COUNCIL
AGENDA STATEMENT
'-:":,\-,
~lf? CITY OF
~ (HULA VISTA
August 17, 2010, Item~
ITEM TITLE:
FISCAL HEALTH PLAN AND FINANCIAL UPDATE
REPORT
SUBMITTED BY:
REVIEWED BY:
DIRECTOR OF ~rrRFASURER~
CITY MANAGE
ASSISTANT CITY ANAGER 7)
4/5THS VOTE: YES D NO I X I
SUMMARY
In January 2009, the City Council endorsed the City Manager's proposed Chula Vista
Fiscal Health Plan, which serves as the blueprint to move the City back to strong
financial standing on a long-term basis. Tonight's report will provide an overview of the
progress that has been made to date in implementing the Chula Vista Fiscal Health Plan
as well as on update on the City's financial outlook over the next few years with a focus
on fiscal year 2011-12.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed action for compliance
with the California Environmental Quality Act (CEQA) and has determined that the
activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines
because the action only involves fiscal issues which do not involve any commitment to
any specific project which may result in a potentially significant physical impact on the
environment; therefore, pursuant to Section 15060( c )(3) of the State CEQA Guidelines
the activity is not subject to CEQA.
RECOMMENDATION
That Council hears the report on the Fiscal Health Plan and Financial Update Report.
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BOARDS/COMMISSION RECOMMENDATION
Not Applicable.
DISCUSSION
The City of ChuIa Vista has experienced a significant reduction in revenues as a result of
the national economic recession and the significant slowdown in local development
activity. Since 2007, the City Council has approved several budget balancing plans in an
effort to keep expenditures in line with revenues. In January 2009, the City Council
endorsed the City Manager's proposed Chula Vista Fiscal Health Plan. The Plan is a
blueprint to address the immediate financial emergency and to move the City back to
strong financial standing on a long-term basis. Tonight's report will provide an overview
of the progress that has been made to date in implementing the Chula Vista Fiscal Health
Plan as well as an update on the City's financial outlook over the next few years with a
focus on fiscal year 2011-12.
Due to the City Council's actions to reduce expenditures and the cooperation of the
City's bargaining groups the City was able to end Fiscal Year 2008-09 without impacting
the General Fund reserves - the Chula Vista Employees Association (CVEA), Western
Council of Engineers (WCE), and Chula Vista Mid Managers/Professional Association
(CVMM/PROF A) eliminated their salary increases and the International Association of
Fire Fighters (IAFF) and Police Officers Association (POA) deferred their scheduled
salary increases. This was a significant undcrtaking during a time of economic
meltdown. This also led to a reaffirmed bond rating (credit rating) from Standards &
Poors of A- (stable outlook) resulting in savings as the City restructured some
outstanding debt.
Unfortunately, in fiscal year 2009-10 the economy continued to decline further impacting
the City's major revenues. On June 8, 20 I 0 the City Council adopted the City Manager's
proposed budget for fiscal year 2010-11 that included $1.3 million in expenditure
reductions. and the application of $9.6 million in one-time revenues, needed to close a
budget deficit of $10.9 million. The Five-Year Financial Forecast, which was also
presented to Council at the June 8, 2010 Council meeting, projects this deficit grows to
$12.5 million in fiscal year 2011-12 as the City continues to struggle with the impacts of
a declining revenue base. Given the magnitude of the projected deficit, the City Manager
is recommending starting the fiscal year 2011-12 budgct process early in order to explore
several options for balancing the budget.
Fiscal Health Plan
The Chula Vista Fiscal Health Plan is comprised of four major parts and is an outline
designed to move the City back to strong financial standing on a long-term basis.
. Expenditure Cuts
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. Increase/Protect Revenues
. Economic Development
. Budget and Fiscal Reforms
Expenditure Cuts - The City began making significant expenditure cuts in fiscal year
2006-07 and has continued to do so in an attempt to avoid dcficit spending. Including the
cuts implemented with the fiscal year 2010-11 budget reduction plan, there has been a net
reduction of 259 permanent positions citywide. During ,this same time period, hourly
staffing has been reduced by approximately 50%. An overview of the budget rcductions
to date is provided later in this report.
Increase/Protect Revenues - - In the coming year thc City will consider a number of
revenue related actions, including the following:
. Master Fee Schedule Update - A comprehensive review of the Master Fee Schedulc
began in 2009 to ensure that the City fees are set at appropriate levels. On June 8,
2010 Council approved Phase I of the Master Fee Schedule update. Phase II is
schedulcd to go to Council later this year, the third and final phase of the update is
scheduled for Spring 2011.
. Utility Users Tax ballot measure - Later this year, voters will be asked to consider a
measure updating the City's Utility Users Tax (OUT) ordinance to reflect
technological changes in the telecommunications industry. Approval of the
ordinance would protect these critical existing General Fund revenues. This revenue
source totaled $5.2 million in fiscal year 2008-09 based on the audited financial
statements.
. Storm Drain Maintenance Program Funding - The City will also continue to search
for possible funding solutions for the City's storm drain maintenance program.
Likely solutions to be considcrcd will include a combination of user fees and an
increase in the City's Stonn Drain fee.
. Sales Tax Revcnuc - The City will focus on developing a stratcgy to encourage
Chula Vista residcnts to shop in Chula Vista and to improve busincss to business
sales thereby improving thc City's salcs tax revenue basc. Chula Vista is currently
in the lowest quartile in sales tax per capita among jurisdictions in the County.
Economic Development - A critical clement towards thc City's long-term fiscal health is the
continued development and diversification of the City's rcvenuc base. Potential future
growth areas include sales tax and transient occupancy tax from new and expanded
commercial development in the City's Bayfront and through a Wcstem Chula Vista
Revitalization Program. Development of the City's Bayfront can also serve as a catalyst for
redevelopment in Western Chula Vista, which will increase property values on a long-term
basis. Development of the Eastern Urban Center (Millcnia) and the University and
Technology Park will contribute towards the City's long-term fiscal stability by providing
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high paying local jobs. Implementation of these projects continues to move forward, to
follow is a brief project status:
. Bayfront - The Chula Vista Bayfront Master Plan Environmental Impact Report,
Port Master Plan Amendment and the City's Local Coastal Plan all received critical
approvals in May 2010. State-level hearings seeking approvals for key elcments of
the Master Plan will begin 4th Quarter 2010 and continue through 2011.
. University and Technology Park - The University project continues to move forward
with analysis underway on regional higher education needs and potential financing
options.
. Millenia project - Environmental documents and SPA Plans were approved for this
project.
Budget and Fiscal Reforms - In addition to securing additional revenues, the Fiscal Health
Plan recommends implementation of a number of budget reforms. The specific actions
recommended include the following:
. Detailed fiscal impact analysis of the short-term and long-term impacts of Council
actions in staff reports (Implemented).
. Cross-departmental analyst support (Implemented)
. Update of General Fund Reserve Policy (Approved with long-term goal of building
operating reserves to 15% and establishing two new reserves funds. The Economic
Contingency Reserve to be set at 5% of the operating budget and the Catastrophic
Event Reserve to be set at 3% ofthe operating budget).
. Implementation of zero-based budgeting (In Progress)
. Development of a City of Chula Vista Long-Term Financial Strategy for
sustainability (In Progress)
Summary of Budget Reductions Fiscal Year 2006-07 to Fiscal Year 20 I 0-11
As mentioned above, the City has made significant expenditure cuts since fiscal year 2006-
07 in order to the address the deficits caused by a sharp decline in revenues coupled with
increased expenditures. These reductions include cuts in the City's General fund,
Redevelopment (RDA) and Housing funds, Fleet fund, and Development Services fund
(DSF). The estimated net cost reduction achieved in the General Fund through each round
of budget cuts is summarized in Table l.
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Table 1 - Budget Reductiou History
April 2007
December 2007
April 2008
January 2009
April 2009
FY 2007-08
FY 2007-08
FY 2008-09
FY 2009-10
FY2010-11
$10.1 M
$15.5 M
$10.8 M
$ 20.0 M
$ 10.9 M
Notes:
1. T71e net cost reductions summarized above cannot be considered cumulatively.
There are instances in which reductions were ejfective jar a single fiscal year
onZv (jar example, Feezing a vacant position jar one year). The same position
may have then been permanently eliminated in a later budget reduction prngram.
2. The fiscal year 2010-11 budget was halanced using a one-time revenue of $9.61'vf
and various departmcnt net cost reductions totaling $1.3M
3 The overall operating budget has decreased Fom $170.1 million infiscal year
20U6-07 to $133.2 million in Fiscal Year 20ID-ll. when comparing the Council
adopted budget for these jiscal years. However, the reduction in the budget
rejlects the various budget reduction plans put in place to mitigate revenue
shortfalls and a change in budgeting where programs that were jidly fimdcd by
non-General Fund sources were transferred to their respectivc jill1ds.
Through these various budget reduction processes, the number of City staff has been
reduced considerably. The adopted operating budget for the City in fiscal year 2006-07
included funding for 1,263.75 authorized permanent full time equivalent (FTE) positions.
The fiscal year 2010-11 adopted operating budget included 1004.75 positions, which
reflects a reduction of 259.00 FTE since fiscal year 2006-07. This equates to a 20%
reduction in permanent staffing.
The following table reflects the Council adopted staffing for fiscal year 2006-07 to fiscal
year 2010-11. The table also reflects a change in the budgeting whereby staff that was fully
funded by lion-General Fund sources was transferred to their respective funding source. For
example, as part of the fiscal year 2008 budget Transit staff was transferred from Public
Works in the General Fund to the Transit fund.
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Table 2 - Staffing Reductions by Fund
".'. 1 I, 1
General Fund 1,248.25 939.00 869.50 864.25 (384.00)
Development Svcs Fund 70.00 39.00 39.00 39.00
Parking Meter Fund 0.50 0.50 0.50 (0.50)
Public Safety Fund 21.00 21.00 22.50 21.00 21.00
ARRA Fund 6.50 6.50
Environmental Services 3.00 4.00 4.00 4.00
Housing 5.00 7.00 7.00 7.00 7.00
Fleet 1vlanagement 14.00 14.00 10.00 10.00 10.00 (4.00)
Transit Fund 3.00 3.00 3.00 3.00 3.00
Sewer Funds 43.00 46.00 46.00 46.00 46.00
RDA Funds 1.00 6.00 10.00 4.00 4.00 3.00
Total 1,263.75 1,248.50 1,109.50 1,005.00 1,OU4.75 (259.00)
Note: The Public Safety Fund includes the California Border Alliance Group (CBAG).
The City of Chula Vista serves as the fiscal agent for CBAG. CBAG employees do not
provide direct services for Clwla Vista residents.
It is imp0l1ant to note that during this same time period, population for the City of Chula
Vista has continued to grow. Chart I graphs the staffing (permanent and hourly staffing) as a
ratio of population from 1987 to 2010. The FTEs per thousand ratio for fiscal year 2010-11
is 4.61, the lowest level of staffing the City has had during this time period. At the same
time the City's infrastructure has also grown significantly, the City added 235.28 acres of
parkland since 1986 and has increased from 200 center line miles to 460 center line miles.
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Chart 1- Budgeted Permanent and Hourly Staffing'
FTEs per 1,000 Population, Citywide Total
7.00
6.50
6.00
.
w 5.50
>-
~
5.50 5.46
5.38
5.00
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,. ,. ..,," \ H
5~8_ _ _ _ _ _ _ _ _-_-_-~-_-~~~~\-
4.50
4.61
4.00
198719881989199019911992199319941995199619971998 1999 2000 2001200220032004200520062007200820092010
Fiscal Year
Notes.'
1. Hour~v stuffing FTE estimatedfor FY 2006-2010 using umended hourly wages budget
and average hourly wuge rate.
2. Sources - Budgcted Permanent & Hourly Staffing: Budget documents, amended hourly
wage budget und authorized staffing report. City of ehula Vista population: California
Department of Finance, all estimates us ofJunuary 1.
Through these various budget-balancing processes an effort has been made to streamline
City operations and minimize impacts to service delivery. Because of the magnitude of the
budget reductions that have been made over the last few years a number of City services
have been eliminated or reduced. To follow is a brief summary of some of the service
impacts since fiscal year 2007, this list is not all-inclusive but is meant to highlight the
impact ofthe budget reductions.
. Eliminated 11 sworn police positions (4% reduction since FY07)
. Eliminated 4 police dispatchers (17% reduction since FY07)
. Eliminated 8 Community Service Ofticers (73% reduction since FY07)
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.
Reduced street maintenance starting, creating pavement repairs list backlog
.
Reduced park maintenance staffing, resulting in visible degradation to the lawns and
planted areas
.
Eliminated one storm drain crew
.
Reduced Fire Prevention staffing
.
Eliminated Fourth of July fireworks on the Bayfront
.
Eliminated City support of STRETCH and DASH programs
.
Reduced funding for Library resource materials
.
Eliminated Recreation middle school programs
.
Transitioned operation of Nature Center to non-profit organization
.
Contracted Fire Communications Serviccs
.
Reorganized and combined Departments
.
Eliminated Police Commercial Enforcement officer
.
Reduced Police Investigations staffing
.
Reduced services for Seniors offered through Recreation Depm1ment
.
Reduced hours of operation of Recreation centers, all facilities closed Sundays
.
Eliminated Therapeutics program
.
Reduced aquatics programs and activities
.
Reduced hours of operation at all three Library branch locations
.
Eliminated Library Department's Educational Services Division including Adult
Literacy program
.
Eliminated Cultural Arts program
.
Eliminated Concerts in the Park and Taste of the Arts
.
Suspended construction of Rancho del Rey Library
.
Eliminated or reduced median landscape and/or hardscape maintenance leading to
complaints and visible neglect
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. Reduced preventative maintenance in fleet
. Eliminated employee health and wellness initiatives
. Reduced funding for safety programs causing delays in facility safety inspections
. Transitioned City Clerk records management to low priority, resulting in less
efficient records retrieval, retention and storage
. Increased time in producing City Council meeting minutes
. Reduced fi'ont counter hours at Finance Department, impacting customer service
. Reduced number of Finance check runs for vendor payments
. Delays in Finance grant reporting and monitoring
. Eliminated Graffiti removal contract
. Reduced Advanced Planning staffing
. Eliminated mail distribution of Spotlight
. Eliminated dedicated staff for legislative analysis and governmental relations
program
. Reduced Information Technology Services staffing, increasing response times for
computer SUPPOlt
. Eliminated one of two Webmaster positions delaying the rollout of additional e-
government applications
. Reduced City Attorney staffing, eliminating specialized legal expertise in certain
areas including redevelopment, employment, and labor law
. Eliminated a sign crew, resulting in backlogs for deferred maintenance associated
with traffic sign repairs and maintenance
. Reduced custodial staffing, resulting in reduced cleaning services at the Recreation
Centers, Libraries, and other City facilities
. Reduced park maintenance staffing, resulting in mowing turf reduced from weekly
to biweekly, cleaning restrooms at some parks reduced from twice a day to once a
day
. Eliminated all City painters (two full-time positions)
. Reduced Fire Training Division staffing
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. Eliminated all in-house employee development programs
. Closed Chula Vista Youth Center
Financial Update
Since fiscal year 2006-07, the City has implemented cost cutting measures in an effort to
address the impact of major reductions in the City's primary revenue sources. The
continued impact of the economic recession on the City's major revenue sources and
growing expenditures resulted in a budget deficit in fiscal year 2010-11. The structural
imbalance that exists in fiscal year 2010-11 was largely addressed through the use of one-
time revenues totaling $9.6 million. In fiscal year 2011-12, the budget deficit is projected
to grow to $12.5 million once the one-time revenue has been eliminated and expenditures
have been adjusted for salary increases for POA and IAFF, increased pension
contributions, health care premium increases and other projected cost increases. The
projected deficit for fiscal year 2011-12 does not account for the potential loss of the
UUT revenue estimated at $5.6 million annually, should the ballot measure fail. In fiscal
year 2011-12, discretionary revenues are projected to stabilize but because of the slow
economic recovery the increase in discretionary revenues is expectcd to be very
moderate. The projected growth in discretionary revenues is not expected to be sufficient
to address the structural imbalance in the General Fund.
In order to focus on the changes to the City's discretionary revenue, the following table
excludes program revenue and one-time revenues. It compares the fiscal year 2009
discretionary revenues and projected revenues for fiscal year 2009-10 and fiscal year
2010-11.
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Table 3 - Discretionary Revenne by Fiscal Year
h. , "
Property Taxes $ 29,258,925 $ 25,311,485 $ 24,073,147 $ (5,185,778) -18%
Sales Tax $ 25,589,021 $ 23,244,508 $ 23,633,851 $ (1,955,170) -8%
Franchise Fees $ 9,379,964 $ 8,446,505 $ 7,652,012 $ (1,727,952) -18%
Utility Taxes $ 7,848,557 $ 9,401,279 $ 8,755,835 $ 907,278 12%
Transient Occupancy Taxes $ 2,302,412 $ 1,890,930 $ 1,890,930 $ (411,482) -18%
Other Local Taxes $ 2,023,063 $ 1,991,402 $ 1,991,402 $ (31,661) -2%
Use of Money & Property $ 1,147,006 $ 967,756 $ 930,000 $ (217,006) -19%
Motor Vehicle Licenses $ 19,904,630 $ 17,716,642 $ 16,933,500 $ (2,971,130) -15%
Revenue from Other Agencies $ 955,884 $ 970,716 $ 945,717 $ (10,167) -1%
Charges for Services $ 180,211 $ $ $ (180,211) -100%
Other Revenues $ 1,500,806 $ UI8,IOJ $ 960,244 $ (540,562) -36%
Total Discretionary Revenue $ 100,090,479 $ 91,059,324 $ 87,766,638 $ (12,323,841) -12%
Note: The U,'e of J1;Joney und Property revenue categOlY has been adjusted to exclude
one-time increases in the loan repayment from the RDA to the General Fund. In fiscal
year 2008-09, the General Fund received $2.6 million in this cutegOl)' from the RDA; in
fiscal year 2010-11 the General Fund will receive $4.6 million in this category;rom the
RDA. For compurison pUlposes these one-time revenues have been excluded ;rom the
table above.
As noted on Table 3, the City's major revenues have continued 10 drop sharply. With the
exception of Utility Users Tax, every discretionary revenue is projected to drop when
comparing the fiscal year 2010-11 budget to the fiscal year 2008-09 revenues. The
largest decrease is reflected in Property Tax revenue, which is projected to drop $5.2
million since fiscal year 2008-09. This reflects a reduction in assessed property values of
10.4% in fiscal year 2009-10 and 3,8% in fiscal year 2010-11; assessed property values
are provided by the County Assessor's Office. Under State law (Proposition 13), property
assessments can be adjusted 10 reflect an inflationary rate increase of 2% or a reduction
as shown in the California Consumer Price Index (CPl). For fiscal year 2010-11,
assessed property values were decreased based on a negative 'change in cpr. This
reduction represents the first drop in assessed properly values based on a negative CPT
since Prop 13 became law.
Motor Vehicle License Fees, which are largely based on assessed property values, show
the next largest decrease ($2.9 million). The third largest decrease is in Sales Tax
Revenue, which experienced a decrease of $2.3 million from fiscal year 2008-09 to fiscal
year 2009-1 O. Sales Tax revenue is expected to stabilize in fiscal year 20 I 0-11.
Discretionary revenues continued to fall short of projections during fiscal year 2009-10,
creating a structural imbalance in the General Fund. The structural imbalance increased
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to $10.9 million in fiscal year 2010-11 and $12.5 million in fiscal year 2011-12. For
fiscal year 2009-10, it is anticipated that the City will be able to avoid impacting General
Fund reserves for these unanticipated revenue shortfalls through the use of one-time
revenues and departmental expenditure savings. For fiscal year- 2010-11, the City
Manager's proposed budget for fiscal year 2010-11 included $1.3 million in expenditure
reductions and the application of $9.6 million in one-time revenues, resulting in. a
balanced budget. While these solutions resulted in a balanced budget and minimal
service impacts they did not resolve the structural deficit problem.
Five Year Financial Forecast
At the June 8, 2010 Council meeting, the Five Year Financial Forecast was presentcd to
Council. The forecast serves as a tool to identify financial trends and identify projected
shOltfalls so that the City can proactively address them. As noted throughout this report.
the City has made significant efforts to reduce expenditures to be in line with a shrinking
revenue base. In the development of the fiscal year 2010-11 budget, the City Manager
recommended and the Council approved closing the deficit through the application of one
time revenues in order to avoid additional service level impacts and employee layoffs.
Further, the application of one-time revenues afforded the City the opportunity to
continue to monitor economic trends and corne forward in the future with adjustments
based on additional months of economic data. Based on current economic trends, the
Five Year Financial Forecast continues to identify structural challenges to the City's
General Fund.
To follow is a summary of the General Fund forecastfor fiscal year 2011-12 to 2014-15.
Table 3 - General Fund Forecast Snmmary
(in millions)
Revenues $ 138.3 $ 126.3 $ 123.6 $ 123.8 $ 127.1 $ 130.5 $ 134.0
One-Time Revenues $ 2.2 $ 4.0 $ 9.6 $ $ $ $
Total Revenues $ 140.5 $ 130.3 $ 133.2 $ 123.8 $ 127.1 $ 130.5 $ 134.0
Expenditures $ (140.4) $ (130.3) $ (133.2) $(136.3) $ (137.0) $(140.3) $ (142.7)
Surplus/(Deficit) $ 0.1 $ $ $ (12.5) $ (9.9) $ (9.8) $ (8.7)
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Notes:
1. Expenditures include adjustments to fimd balance.
2. Voters will consider a measure updating the City's Utility Users Tax (UUT)
ordinance to reflect technological changes in the telecommunications industry on
the Nuvemher 2010 ballot. The Five-Year Forecast reflects a cuntinued
collection of UUT revenue; should the measure fail the projected deficit could
grow hy as much as S5.2 million annually (hased on the audited FY 2008-09
fil1ancial statements).
3. One Time Revenues Utilized to Offset continuing decline in discretionaJY
reve nue .'\':
a. FY 2008-09 Increased RDA Reimhursement hy S900,000 and reduced
contribution to Workers Comp Fund and Equip Replacement Fund.
b. FY 2009-10 Increased RDA Reimbursement by S2.2 million. Increased
staff time reimbursements by S2.0 million related to Prop B
c. FY 2010-11 Increased RDA Reimbursement as a result of PAD land sale
transaction.
The Five Year Financial Forecast report is included as attachment A to this report and is also
available on the City's website at www.chulavistaca.gov
The following table summanzes the change assumptions for the City's major revenue
sources.
Table 3 - Forecast of Major General Fund Revenues
% Changes from Prior Year
-9.6~o 1.7%
-2.',lt;/(] -9.41)1"
5.9% 0.5% -4.4%1 3.9%
77'Yo 6.4% ~6.9% 0.5%
-2.5% -14.6O,,() 0.0% 2.0%
Notes:
1. For fiscal year 2009-10 and fiscal year 2010-11, Property Ta.y and 1\10tor
Vehicle License Fee change reflects drop in Assessed Values per Cuunty uf San
Diego - Assessors Ojjice.
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2. For fiscal yeor 2009-10 and .fiscal year 2010-1/, Sales Tax change reflects
continued impacts related to recent economic dml'nturll. This is based on most
recent report ji'om J'vfzllliServices 3rd quarter update and County of San Diego.
3. Franchise Fees and UUT anticipate closure o(South Bay Power Plant in Fiscal
Year 2010-11.
The d~ficitfor jisca/year 20ll-I2 is aforecast; a more detailed baseline budgetfor fiscal
year 2011-12 will be developed later this year. The projected deficit for fiscal year 2011-
12 will be refined as updated information becomes available on factors like PERS rate
contributions, health care premium rates, sales ten: revenues, and franchise fee revenues.
The projected budget deficit for fiscal year 2011-12 will change based on updated
information. However, given the magnitude of the projected deficit and the impact on the
already lean General Fund operating budget, it is the City Manager's recommendation
that staff start working on developing a budget-balancing plan early which will allow
Management to work with the Council, bargaining groups, employees, and community
groups to develop and consider multiple budget balancing options.
Department Target Reductions
In order to achieve a balanced budget for fiscal year 2011-12 it will be necessary to reduce
expenditures. There arc currently several options being considered for allocating the target
reductions by department. One manner the reductions can be allocated is by net cost. Net
cost is defined as program expenditures less program revenues. The difference shows the
portion of the department that is supported by General Fund discretionary revenues such as
sales tax, property tax, and franchise fees. As can be seen in the following chart, 76% of
total General Fund discretionary revenues are allocated to public safety and public works
services, making it very difficult to absorb major reductions in discretionary revenues
without impacting these service areas.
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Chart 2 - FY 2010-11 Net Cost by Department
Fire $20.9M
23%
Public Works
$11.2M
12%
ITS $3.1M
Next Steps
The tiscal year 2011-12 budget process presents many challenges for the City as difficult
decisions will need to be made in order to reduce expenditures to be in line with revenue
projections. Starting the budget proccss early will provide thc City with the time necessary
to develop a budget balancing plan that positions Chula Vista to emerge from this financial
crisis with a budget that addresses the more immediatc imbalance and is sustainable fiscally
and operationally on a long tcrm basis. Over the next few months, City Management will
work with Council, the City's bargaining groups, employees, and community groups in
order to make the dim cult choices needed in order to develop a balanced budget for fiscal
year 2011-12 while continuing to address long-term financial sustainability.
The City has also hired a tinancial advisor to provide an independent review of the Five
Year Forecast and the assumptions used to develop the Forecast. Thc Five Year Forecast
will also be used as the basis for creating a 10-year long-term financial plan.
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DECISION MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is
not site specific and consequently the 500 foot rule found in Cal ifornia Code of
Regulations section 18704.2(a)(l) is not applicable to this decision.
CURRENT YEAR FISCAL IMP ACT
Thcre is no impact in the current fiscal year as a result of accepting the report.
ONGOING FISCAL IMPACT
The City is facing a projected budget deficit of $12.5 million in fiscal year 2011-12 and
an ongoing structural deficit of approximately $10.0 million. The adopted budget for
fiscal year 2010-11 included $1.3 million in expenditurc reductions and the application of
$9.6 million in one-time revenues, resulting in a balanced budget. However, thesc
solutions did not resolve the structural deficit in the General Fund.
The projected budget deficit for fiscal year 2011-12 could grow by as much as $5.6
million should the UUT ballot measure fail.
ATTACHMENTS
I. Five-Year Financial Forecast Report: Fiscal Years 2010-] 1 through 2014-15
Prepared by: AnKelica Aguilar, Budget and Analysis Jvlanager, Finance Department
11 -16
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11-18
(Cable oJ~ C?OJ1 teJ! tJ'
I. Executive Summary .................................................................................................................1
Financial Focus ....... ............. .... ......... ................ ............. ...........2
Fiscal Health Plan ......... ......................... ....................... .....................................2
Overview of Fiscal Year 2008-09 ...................... ........................... 3
Fiscal Years 2009-10 and 2010-11 Overview .................................................................4
General Fund Reserves.......................................... ................. ................ .4
Projected Major Revenues & Expenditures... ...............5
Forecast Summary/Conclusion......... ............. .5
Future Budget Balancing Strategies............. ....6
II. Economic & Demographic Assumptions .............................................................................. 9
UCLA Anderson Forecast - National Forecast ..................... ............. 9
UCLA Anderson Forecast - California Forecast... ................... ....9
USD Index of Leading Economic Indicators ............. ............10
Population & Housing. .................................11
III. General Fund Revenue & Expenditure Assumptions .......................................................15
IV. General Fund Revenues ......................................................................................................19
Property Taxes ........... ................. ........................ ........19
Sales Taxes ......................... .................... ................ . ....................................22
Franchise Fees... . ............. ............................................ ..................... ....24
Motor Vehicle License Fees ... ........................... . ............. .......25
Utility Users Tax.. ........................................ . ..................25
Transient Occupancy Tax.......................... .......................... ................. ............26
V. General Fund Expenditures .................................................................................................29
Personnel Services......... ........................ ...............29
Debt Service ................................... ............................. ......................37
VI. I nfrastru ctu re Summa ry....................................................................................................... 39
Pavement. .......................................................... ..................... .39
Sewer/Storm Drains.......... ........................................ ................. ..............................41
Other Infrastructure.... .................................. ....................... ...... 42
City Facilities....... .................. ........................... ...43
Undergrounding Districts ..... ................................ .. .............. ............... .....44
VII. Redevelopment Agency ......................................................................................................47
CA Redevelopment Agency.............. .................... ............... ... . ...............................47
Tax Increment Financing .......................... .. ............................. .... ...............................47
Redevelopment Agency History ..................... ...................... ....... .......... ......48
Merged BayfrontlTown Centre I Project Area ................ ........................ ........48
Merged Chula Vista Project Area.... ............... ................ ................... ........49
Housing Set Aside ......................... ..................... ....50
RDA Revenues/Expenditures............... ...................... ............. ...............50
VIII. PFDIF Prog ram ...................................................................................................................53
General Impact Fee Requirements ..................... . ........... ................... .........53
PFDIF Program Scope ....... .. .. ......................... .................... ...................... ............55
PFDIF Funds...................... ............. ................ ..... ............... .................56
A !tach ments ............................................................................................................................... 57
Five-Year Forecast Summary .................. .................. ........57
Five-Year Major Milestones Timeline .................. .................. ....................... ..59
11-19
11-20
~v~ CITY OF
~CHULAVISTA
FINANCE DEPARTMENT
I. Executive Summary
The goal of the Five-Year Financial Forecast is to assess the City's ability over the next five years
to continue current service levels based on projected growth, preserve our long-term fiscal health
by aligning operating revenues and costs, rebuild the reserves to the Council policy level of 8% and
within the next 10 years build the operating reserves up to 15%. The General Fund Five Year
Forecast serves as a tool to identify financial trends, shortfalls, and issues so the City can
proactively address them.
In December 2007, the national economy officially entered a recession, which has been labeled as
the worst since The Great Depression of 1929. The City felt the effects of the recession earlier
than most agencies primarily due to the rapid residential growth experienced during the past six
years and the effects of the foreclosure crisis, which eventually spread across the Country. In
order to avoid impacts to the General Fund reserves, the City acted promptly by preparing a
comprehensive budget reduction plan which entailed the elimination of 98.0 positions and
reductions of approximately $20 million in fiscal year 2009-10.
This long-term financial outlook continues to identify structural challenges to the City's General
Fund primarily due to the loss of revenues from the South Bay
Power Plant, continued decline in property values and increases
in salaries and pension cost. Specific recommendations to
achieve a balanced budget going forward will be presented as !
part of future budget workshops. Subsequent forecasts will be
updated once revenue projections are revised and budget
balancing alternatives are identified and approved.
It is important to stress that this forecast is not a budget. It
doesn't make expenditure decisions but does assess the need to
prioritize the allocation of City resources. The purpose of the
forecast is to provide an overview of the City's fiscal health based on various assumptions over the
next five years and provide the City Council, management and the citizens of Chula Vista with a
"heads up" on the financial outlook beyond the annual budget cycle. The five-year forecast is
intended to serve as a planning tool to bring a long-term perspective to the budget process.
The Government Finance Officers Association (GFOA) recognizes the importance of combining
the forecasting of revenues and expenditures into a single financial forecast. The GFOA also
11-21
recommends that a government should have a financial planning process that assesses long-term
financial implications of current and proposed policies, programs, and assumptions that develop
appropriate strategies to achieve its goals.
Financial Focus
The General Fund is the City's operating fund which pays for public safety services, libraries,
parks, recreation and administration. All the major discretionary revenues such as Property Taxes,
Sales Taxes and Motor Vehicle License Fees are accounted for within the General Fund. The
forecast reflects final figures for fiscal years 2008-09, projected figures for fiscal year 2009-10 and
forecasted figures for fiscal years 2010-11 through 2014-15.
The General Fund is the primary focus of the forecast report but in order to provide for a broader
review of funds, which play into the City's financial health, the Redevelopment Agency was added
in the previous years forecast report. This year the financial forecast will be expanded to include
the Public Facilities Development Impact Fee Funds. Ultimately the forecast report will also include
the Sewer Funds and various other funds which are key components that play into the City's long
term financial viability.
Fiscal Health Plan
The Chula Vista Fiscal Health Plan, which was endorsed by the City Council in January 2009, is
comprised of four major parts and is an outline designed to move the City back to strong financial
standing on a long-term basis.
. Expenditure Cuts
. Revenues
. . Economic Development
,
. Budget and Fiscal Reforms
Expenditure Cuts - The City began making significant expenditure cuts in fiscal year 2006-07 and
has continued to do so in an attempt to avoid deficit spending. Including the cuts implemented with
the Budget Reduction Plan, the total staff reductions by departments range from -4% to -64%.
With the severe reduction in staffing levels citywide, operational reviews are currently being
discussed in order to provide an unbiased analysis regarding staffing efficiencies.
Revenues - A comprehensive review of the Master Fee Schedule is underway to ensure that City
fees are set at appropriate levels.
2
11-22
Economic Development - A critical element towards the City's long-term fiscal health is the
continued development and diversification of the City's revenue base. Potential future growth
areas include sales tax and transient occupancy tax from new and expanded commercial
development in the City's Bayfront and through a Western Chula Vista'Revitalization Program.
Development of the Millenia Project (Eastern Urban Center) and the University and Technology
Park will contribute towards the City's long-term fiscal stability by providing high paying local jobs.
Budget and Fiscal Reforms - In addition to securing additional revenues, the Fiscal Health Plan
. recommends implementation of a number of budget reforms. The specific actions recommended
include the following:
. Detailed fiscal impact analysis of the short-term and long-term impacts of Council actions in
staff reports (Implemented).
. Cross-departmental analyst support (Implemented)
. Update of General Fund Reserve Policy (Approved with long-term goal of building
operating reserves to 15%)
. Implementation of zero-based budgeting (In Progress along with the Departmental
Operational Reviews)
. Development of a City of Chula Vista Long-Term Financial Strategy for sustainability (In
Progress)
Overview of Fiscal Year 2008-09
The severity of the recession which began in the fourth quarter of calendar year 2008 and
continued through the second quarter of 2009 placed significant financial pressures on every
municipality in the State but particularly cities like the City of Chula Vista which experienced
significant growth over the past several years. The City did not waste any time in trying to avoid
significant impacts to the City's reserves and implemented a Budget Reduction Plan which
included an early retirement program, layoffs, elimination of funding for after school programs,
reduced staffing for public safety, reduced operating hours for libraries and recreation centers,
overall reduced public hours at all city facilities and an overall administrative freeze on any
discretionary spending.
As a result of all these efforts, the fiscal year 2008-09 General Fund reserves ended at $9.3 million.
This was the first time in 6 years that the City ended the year without impacting the reserves which
is a significant accomplishment considering the magnitude of the economic recession experienced
during this time period.
3
11-23
Fiscal Years 2009-10 and 2010 -11 Overview
A balanced fiscal year 2009-10 General Fund budget of $133 million was adopted by Council June
9, 2009. Since that time, revenues have continued to decline as reported in the First and Second
Quarter Financial Reports in the current fiscal year. The Third Quarter Financial Report presented
to Council on May 25, 2010, projected a revenue shortfall of $4.6 million in the current year.
Through a combination of expenditure savings and one-time revenues, the City anticipates ending
the current fiscal year with no impact to General Fund reserves. One-time revenues applied to
offset the revenue shortfall include $2.0 million in Proposition 42 funds (reimbursement of staff time
related to street maintenance costs) and $0.7 million in additional loan repayments from the
Redevelopment Agency for outstanding debt owed to the General Fund.
The preliminary base budget for Fiscal Year 2010-11 identified a projected General Fund deficit of
$10.9 million. The projected deficit is primarily the result of significant decreases in major revenue
sources which primarily occurred in fiscal year 2009-10 coupled with moderate expenditure
increases. In an effort to avoid additional service level impacts and employee layoffs, the
application of $9.6 million in one time revenues through loan repayments is recommended in the
General Fund Spending Plan, leaving $1.3 million to be offset through expenditure reductions and
to a lesser degree the identification of new revenues. The application of one-time revenues affords
the City the opportunity to continue to monitor economic trends and come forward in the future with
additional adjustments, as necessary. There are signs that an economic recovery is on the
horizon, and additional expenditure reductions in the future may not be as great as currently
projected.
General Fund Reserves
The Council's General Fund minimum reserve level policy of 8%, which became effective in 1996,
was established to prudently protect the fiscal solvency of the City. Reserves are important in
order to mitigate the negative impact on revenues from economic fluctuations, to withstand State
budget grabs and to fund unforeseen expenditure requirements.
The City's General Fund reserves placed the City in the enviable
position to withstand the State's revenue cuts during fiscal years
2005 and 2006 and provided the City with the opportunity to reinvest
back into the community. Due to the significant slowdown in the
housing market and the overall economy, the reserves dropped to 6.3% at the end of fiscal year
2007. During fiscal years 2007-08 and 2008-09, due to the City's prompt response to "The Great
Recession", as it is now being referred, there was no or minimal impact to the General Fund
reserves as shown in the chart below.
4
11-24
On November 5, 2009, the City Council approved a revised General Fund operating reserve policy
setting a long-term goal of building the reserves to 15%. In addition, the Council approved the
establishment of two additional reserves, the Economic Contingency Reserve and Catastrophic
Event Reserves at 5% and 3% respectively. The additional reserve categories were established to
provide for greater distinction, increased security and accountability in the use of reserves.
General Fund Reserves
12.0%
2.0%
10.0%
8.0%
4.0%
0.0%
2005
2006
2007
2008
2009
2010
Projected Major Revenues and Expenditures
The Five Year Financial Forecast includes a baseline projection of revenues and expenditures
used to evaluate the City's future financial condition and capacity to fund existing services and
infrastructure needs. The growth assumptions in the baseline projection are based primarily on
most recent economic data provided by various sources, a 2% infiation rate, and existing City
contractual obligations (e.g. labor agreements and debt service).
General Fund revenues are projected to continue declining due to ongoing economic challenges in
2011 and into 2012. Major discretionary revenues are projected to increase by an annual average
of 1.4% during the next five-year period (2011-2015). This compares to a historical annual
average increase of 3.3%, over the past five years (2006-2010), which included some historical
revenue highs and historical revenue declines. Expenditures are projected to grow at an annual
average rate of 1.8% during the next five years which takes into account the final payment of the
City's Pension Obligation Bonds in fiscal year 2011-12. The changes take into account the
significant downturn in the economy experienced over the past year and the assumption that the
economy will experience a very slow recovery.
Forecast Summary/Conclusion
This long-term financial outlook continues to identify structural challenges to the City's General
Fund. Specific recommendations to achieve a balanced budget for fiscal year 2010-11 will be
5
11-25
presented as part of the budget workshops. Subsequent forecasts will be updated once revenue
projections are updated and budget balancing alternatives are identified and approved.
Forecast Summary
(In millions - further details included under appendix)
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Actual Projected eM Proposed Forecast Forecast forecast forecast
Revenues S 140.5 $ 130.3 $ 133.2 $ 123.8 $ 1271 $ 130.5 $ 134.0
Expenditures/Fund Balance Adj. $ (140.4) $ (130.3) $ (133.2) $ (136.3) $ (137.0) $ (1403) $ (142.7)
Subtotal Deficit/Surplus $ .01 $ 0 $ 0 $ (12.5) S (9.9) $ (9.8) S (8.7)
General Fund Reserves $ 9.3 $ 9,3 $ 9.3
:%~~~~~~~~~~~!;~~'tJ:tf,~~;7~~;;t:::__:~::"\6fi.o/,i;~17~~;r"'}~ :6"fffi!?;~~.. \., ::-':!~;i~7~~~<:;~,:~~;{:s~:r.'~fi~;,':'~~l~tt"kt1
During these transitional times and environment of economic uncertainty, financial planning is
always a prudent activity and development of a long-term financial plan is essential to sound fiscal
management. The plan is not able to predict with certainty the City's fiscal future, rather it will
serve as a tool to highlight significant issues or problems that must be addressed if the City's goal
of maintaining fiscal sustainability over the long term is to be achieved.
It should be noted that this report has focused on the City's ability to provide for operating service
programs that are currently in effect using existing sources of revenue. As the City continues to
grow in population, additional parks, public facilities and roads will need to be added in order to
maintain service levels mandated by the Growth Management Ordinance. Based on the five year
forecast report, funding for any new programs or other major initiatives will require trade
offs during the budget process.
Future Budget Balancing Strategies
As refiected in the financial forecast the City will likely continue to experience financial strain due to
the severity of the recent recession and overall economic meltdown.
As presented in the City's Fiscal Health Plan, City Departments are researching various options
which would assist in closing the projected ongoing structural imbalance. Included below is a list of
the various options which are being reviewed for further consideration prior to the preparation of
the fiscal year 2011-12 proposed budget.
. Master Fee Schedule Update - Currently in progress
. Fire Response Fee - Currently in progress
. Storm Drain Fee Update - Currently being reviewed
. Local Sales Tax Outreach - Business to Business Focus - Currently being reviewed
. Alternative Power Plant - Currently being reviewed
6
11-26
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. Pension Reform - Options to be reviewed
. Debt restructuring options for the Police Facility COP - Options to be reviewed
. Advertising on City Vehicles - Options being reviewed
. Franchise Fee Review - Options to be reviewed
. Parcel Tax for Public Safety - Options to be reviewed
. Additional service reductions - Options to be reviewed
These options will be reviewed as part of the City's Long
include a 1 O-year outlook of the City's General Fund.
7
11-27
Term Financial Strategy, which will
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11-28
II. Economic and Demographic Assumptions
UCLA Anderson Forecast - National Forecast
As reported in UCLA's Press Release for the first quarter report of 2010, the UCLA Anderson
Forecast renders a "bipolar" diagnosis for the national economy, referencing the dual conditions of
slow-but-sure growth in the national gross domestic product (GDP), coupled with an
unemployment rate predicted to remain in double digits until 2012. The California economy
remains focused on job creation as well, with conditions ripe for growth that has yet to appear.
In a report titled, ''The Bipolar Economy," UCLA Anderson Forecast Senior Economist David
Shulman explores the duality of a national economy, where GDP is growing while job creation
remains scarce - and is expected to remain scarce through 2012. Shulman suggests that
Washington's economic stimulus packages may have unintentionally caused the economic
schizophrenia. Tax cuts and spending programs, coupled with a non-sustainable zero interest
policy spur growth, but businesses do not make long-term hiring decisions based on temporary
government policies. "Nevertheless, the economy is now on a growth path and employment will
soon be increasing, albeit modestly," Shulman writes.
The Forecast's case for recovery is based on strength in business equipment and software,
exports and a revival in home construction from postwar lows. With the exception of housing, these
factors are already making positive contributions to the economy. Growth will be held back by
declines in non-residential construction and stagnation and retraction in the state and local
government sectors. The Forecast expects the economy to grow at a 3.2% rate for the first quarter
of this year, and then level off to about 2%, leaving 2010's overall growth around 2.3%. In 2011
and 2012, GDP is forecasted to be 2.3% and 3.2% % respectively. However, payroll employment
is still forecasted to be two million jobs below the 2007 peak at the end of 2012.
In a cautionary note, Shulman opines that the real risk to the economy is infiation, as the Federal
Reserve's monetary policy has created circumstance ripe for infiation. Shulman believes the Fed
understands this risk, will tighten monetary policy and that infiation will remain under control. 1
UCLA Anderson Forecast - The California Forecast
Writing about California, UCLA Anderson Senior Economist Jerry Nickelsburg notes that despite
the recession having officially ended, California's unemployment rate continues to rise, while local
governments continue to shed jobs. The outlook for the balance of 2010 is for little or no growth in
the state, with the economy picking up speed slightly by the beginning of next year. More normal
growth rates for California should be in place by the middle of 2011. The keys to California's
recovery are a growing demand for manufactured and agricultural goods from outside the state, the
1 UCLA Anderson Forecast Press Release March 24, 2010
9
11-29
recovery of U.S. consumption, which increased the demand for Asian imports and for products
from California's factories, increased public works construction and increased investment in
business equipment and software.
The Forecast calls for employment in 2010 to climb but not to exceed levels of 2009. Once
employment growth returns in 2011, employment will begin to grow faster than the labor force at a
2.3% rate and the unemployment rate will begin to fall. Real personal income growth is forecast to
be 1.3% in 2010 and 3.7% and 4.5% in 2011 and 2012 respectively. The unemployment rate-
currently at 12.5% -- will fall slowly through the balance of this year and should average 11.8% for
2010. Though the state's economy will be growing, it won't be generating enough jobs to push the
unemployment rate below double-digits until 2012.'
USD Index of Leading Economic Indicators
The University of San Diego's Index of Leading Economic Indicators for San Diego County rose 1.0
percent in March. Leading the way to the upside were strong moves in local stock prices and the
outlook for the national economy. Building permits, initial claims for unemployment insurance, and
help wanted advertising were also positive, but to a lesser extent. The only down component was
local consumer confidence, which fell slightly. With March's advance, the USD Index has now
been up for 12 months in a row.
The outlook for the local economy remains unchanged from recent months: If the local economy
did not bottom out at the end of 2009, it likely did in the first part of 2010. As was mentioned in
previous reports, employment is the indicator that comes out most regularly at the local level, and
employment tends to be a lagging indicator in recent recessions and recoveries. March
employment numbers show a gain of 5,000 jobs compared to February, which was the best
monthly gain in local employment since February 2008. The unemployment rate still edged up for
the month because more workers returned to the workforce in search of employment, which itself is
a positive development. It is a sign that the unemployed are a little more optimistic about their
prospects and not so discouraged as to give up looking for work altogether.
Residential units authorized by building permits finished the first quarter of 2010 up 21 percent
compared to the same period in 2009. The recent strength in the owner-occupied housing market
in terms of prices and sales led to single-family permits nearly doubling (up 97 percent) in the
quarter. However, activity in multi-family construction remains weak, with permits down almost 36
percent compared to the first quarter of 2009. Both of the labor market components continue to do
well. Initial claims for unemployment insurance fell for the sixth straight month, which is a positive
for the Index, while help wanted advertising was up for the fifth straight month. Help wanted
advertising is now at its highest level since December 2008. However, the local unemployment
2 UCLA Anderson Forecast Press Release March 24, 2010.
10
11-30
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rate remains at a high 11 percent in March, compared to revised rates of 11.1 percent in January
and 10.7 percent in February. The trend in local consumer confidence continues to be negative,
although, as in the past, the raw value for the component was actually higher in March. Local
consumer confidence has now fallen over 13 percent compared to the recent peak reached in
August of last year. Local stock prices rebounded with the rest of the financial markets to finish up
10.6 percent for the first quarter. The national Index of Leading Economic Indicators continues to
advance solidly and has now also been up for an entire year. The labor market appears to be
improving, with the national economy adding 162,000 jobs in March, which was the strongest gain
since March 2007. Growth in the Gross Domestic Product (GDP) for the fourth quarter of 2009
was revised downward but still remained strong at a 5.6 percent annual rate.
March's increase puts the USD Index of Leading Economic Indicators for San Diego County at
109.0, up from February's revised reading of 108.0. Revisions in building permits and the national
Index of Leading Economic Indicators affected the previously reported changes and level of the
USD Index for both January and February. The values for the USD Index for the last year are
given below.'
San Diego Index of Leading Economic Indicators
150,0
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125.0
120.0
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Jan05
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Jan 06
Jan07
Jan08
Jan~09
Jan~10
Population and Housing
Overall annual population growth for San Diego County from 1990 to 2007 has averaged 1.275%.
Since 1990 the annual growth has outpaced the US and represents steady moderate growth within
the State. Per estimates provided by SANDAG (San Diego Association of Governments), the
forecasted annual growth from 2008 to 2030 is projected at 1.05%. This growth will continue to
support "real" growth in taxable retail sales and associated revenues.
11
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3 University of San Diego School of Business Administration, USD Index of Leading Economic Indicators, April 28,
2010..
11-31
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Source: County populatIon per State Department of Finance.
Source: County Projections from SANDAG 2030 Regional Growth Forecast Update
In 2003, based on population estimates released by the
Census Bureau, Chula Vista was identified as the 7th
fastest growing city in the United States, The growth
continued through 2006, By mid-2007 the mortgage
crisis came to light and the City began experiencing a
significant number of foreclosures, According to "UCLA
Anderson Forecast San Diego County Economic Outlook
For 2009 Report', "Escondida and Chula Vista had the
highest foreclosure rates at 13,4 and 12,4 foreclosures
per 1,000 homes, respectively, Rates of foreclosures peaked in most areas sometime between
October and December of 2008, All regions have shown declines in the rate of foreclosures
between December 2008 and May 2009," The Anderson forecast states that based on information
received for the first three months of 2009, the bottom may have been reached in San Diego
County,
Data for Oct 2009 Compared to Oct 2008
Foreclosures had a significant negative
impact on property tax revenues 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
,.~'^ ~~'t"~ . " :".: 'i~i~:!~~~~~,~ ~',~:~)~_M~'d i~m lp,rice', j[~ ?:JRerc'ent~j
,-1' ~--:-~
Zip Code';, locale' ~,:, \;;iIi;2009:':.'1;' ":,2008'}~i ~Cilariii<;,
91910 North $ 31 0,000 $ 267,000 16,1%
91911 South $250,000 $ 252,000 -0,8%
91913 Eastlake $ 333,750 $ 325,000 2,7%
91914 NE $ 434,000 $ 501 ,500 -13.5%
91915 SE $ 345,000 $ 359,500 -4,0%
Source: San Diego Union
12
11-32
L
of their homes which would lead to a reduction of property taxes based on the lower assessment.
Positive signs related to the housing market are beginning to be reported. In May 2010, based on
information from DataQuick, a real estate analytical firm in San Diego, reported that San Diego
County's resale housing prices rose 14.7% in the first quarter of 2010. In addition, DataQuick's
median price for San Diego was $360,000 for single-family homes, up 14.3% from a year ago. All
very good trends which should lead to greater stability to the City's property tax revenue base.
The California State Department of Finance (DOF) estimated a Chula Vista population of 237,329
as of January 1, 2010. The General Plan identified the capacity for an additional 30,000 units
throughout the City through build out. Over the nexi decade residential growih rates are expected
to be significantly below the growih experienced during the development boom years of 1999 -
2005.
~E~~~
"~"!1k,.,_'_" ,; ,:,-,. ,.~... :.,'", "I"~,",l,'~'\':",:
g
Chula Vista Population
Chula Vista Population
250
225
w 200
'C
C
ro 175
w
0
0
.c 150
t-
125
100
350
325
300
l/l 275
't:l 250
iij 225
~ 200
0175
t: 150
125
100
C,,"-":iii
,.;~'"
t{t~~;j
%,~~r1
~,"
;:i~t}~j
~,m
j~J~
:~~~'t~
::~~\~':'
;4!;;j+1i,
, ,~'"
;'JI~~lctj
~':"$(,J!
M 00 01 02 03 ~ 05 00 ~ 08 09 10
2010
2020
2030
Source - Population data for 1999 to 2009 reflects California Department of Finance comprehensively revised
population figures as of January 1st
Source - SANDAG 2030 Regional Growth Forecast Update, September 2006 (Report is updated every 3 to 5 years.)
13
11-33
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F'l
~,~~,;:
(Y\ \ ;./
\~~~,~<.. ~.~
~,\ '1', ii
""~"':.~~
/.}
/:l ,it'~
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.: Il ,."r';-'
1/:..(1-/:,....:....:1>
1:'.-
.~ ,.>;;;::'
(?:~t:)}.:::.
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.' ,'..~.~ .i'-'
,.>,.,':-;"':t~~.$'
..,~ '>r,::?~,r-,......:::.~ ~.,.,~~~--
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., .': '. ~..
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~ _l~c-,I l;',.Y 'i~:
14
11-34
III. General Fund Revenue & Expenditure Assumptions
The previous financial forecasts were based on the assumption that no major economic downturns
would occur within the next five years and that development would continue but at a significantly
slower pace. Unfortunately, in December 2007, the national economy officially entered a
recession, now projected to be the worst since the Great Depression of 1929. This significant
decline in economic activity severely impacted all economic sectors including government
agencies. The City of Chula Vista felt the effects of the recession earlier than most agencies
primarily due to the rapid residential growth experienced during the past six years and the
effects of the foreclosure crisis, which eventually spread across the Country. The City has been
going through ongoing budget adjustments in an attempt to bring its expenditures in line with
revenues as the economy continued to deteriorate.
Current economic reports indicate that the nation is finally showing signs of recovery. Revenue
estimates contained in this forecast are based on assumptions that property tax and vehicle license
fees will continue to drop into fiscal year 2010-11 due to continued adjustments downward in the
property values but increase at modest levels for the remainder of the forecast period. Other major
revenues such as sales tax are assumed to flatten out in fiscal year 201 0-11 with modest increases
thereafter. The assumptions will continue to be conservative due to the common belief that the
recovery will be very slow due to the severity of the economic downturn experienced over the past
two years.
Forecast of Major General Fund Revenues
% Changes from Prior Year
Revenue Category 5 yr Avg Actual Projected Forecast Forecast Forecast Forecast Forecast
FY 06-10 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Property Tax 7.8% -0.2% -13.5% -4.9% 0.9% 3.9% 3.9% 4.0%
Sales Tax 0.1% -9.6% -9.2% 17% 2.0% 3.0% 3.0% 3.0%
Franchise Fees -28% -2.9% -10.0% -9.4% 1.9% 1.9% 1.9% 1.9%
MVLF 5.9% 0.5% -11.0% -4.4% 2.0% 3.9% 3.9% 3.9%
Utility Users Tax 7.7% 6.4% 19.8% -6.9% 0.5% 0.5% 0.5% 0.5%
TOT -2.5% -14.6% -15.7% 0.0% 2.0% 2.0% 2.0% 2.0%
Notes for Fiscal Year 2009-10 and Fiscal year 2010-11.
Property Tax and Motor Vehicle License Fee change reflects drop in Assessed Values per County of San Diego -
Assessors Office.
Sales Tax change reflects continued impacts related to recent economic downturn. This is based on most recent report
from Muniservices 3rd quarter update and County of San Diego.
Franchise Fees and UUT anticipate closure of South Bay Power Plant in Fiscal Year 2011
15
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11-35
Following are some key assumptions applied in the preparation of the financial forecast and
are reflected in the tables above:
Economic & Population Growth
. Inflation is a measure of the increase for the cost of goods and services. Inflation impacts
many revenues, such as rents and leases, and most expenditure categories throughout the
five-year forecast and is projected to average 2% per year which is a conservative
assumption based on recent projections provided by the UCLA Anderson Forecast.
. The regional economies will begin to recover at very moderate levels.
. City population will continue to increase but at significantly lower rates than in the past five
years.
. Millenia Project (Eastern Urban Center) and Bayfront Development - No additional
revenues or operating expenses are assumed related to the Millenia Project or the Bayfront
project area. As timing of development becomes more certain the revenues and operating
expenses related to additional service demands will be added to the forecast.
Major Revenues
. Sales Tax revenues will remain relatively flat in fiscal year 2010-11 with moderate
increases throughout the remainder of the forecast period.
. Base assessed value will fall by approximately 4% from fiscal year 2010 to fiscal year 2011
due to the continued fallout of the subprime mortgage and carryover into the commercial
sectors. Beginning in fiscal year 2012-13 and throughout the remainder of the forecast
period, assessed values are assumed to increase by 3.9% per year.
. No additional State takeaways are assumed in the projections although cash flows continue
to be impacted due to the delayed payments in sales tax, vehicle license fees and gas tax
funds.
. The Redevelopment Agency continues to fund loan repayments to the General Fund at an
average of $1.5 million per year with the exception of fiscal year 2010-11 which reflects an
additional significant one time loan repayment from the Redevelopment Agency of $9.6
million.
Personnel Categories
. Expenditures related to negotiated salary increases are reflected in the forecast based on
currently negotiated Memorandum of Understandings. No additional raises, other than
regularly scheduled step increases, are assumed beyond the current MOU's.
. Flex Plan increases of 10% per fiscal year based on historical health care premium
increases.
. CalPERS retirement contribution rates will continue to increase due to market losses and
the additional cost related to the City's early retirement programs. There will be a
16
11-36
significant increase in the City's required annual contribution, estimated at $3.0 million, in
fiscal year 2013-14 due to investment losses which occurred in 2008 and 2009.
. A 2% salary savings factor is assumed anticipating additional vacancies through attrition in
each forecast year.
. All current vacant positions are assumed to remain vacant during the forecast period. This
has been the strategy used by the City in the past to avoid lay-offs during these tough
economic times.
. No additional personnel are assumed for new facilities (i.e. parks).
. Fiscal year 2011-12 reflects final scheduled debt payment for Pension Obligation Bonds.
Additional Assumptions
. Nature Center is no longer receiving financial assistance from the City for operating costs
although in-kind services and debt obligations continue to be funded by the City.
. Franchise Fee revenue projections assumes that the South Bay Power Plant will cease to
operate after fiscal year 2009-10 resulting in a loss of approximately $1.0 million to $2.5
million in discretionary revenues. No other power plant will be in operation to offset the
loss.
. Assumes that the Development Services Fund will not require future subsidies from the
General Fund in order to stay balanced.
Additional details related to the assumptions are discussed in the following sections of the report.
17
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11-37
I ;~
VI I'
<,~ , "
l!.... ~l<..", :~ \\
";~Lc~~~::,~" ~
f,
'f ,,";,.,
!: ~'
': 1"" ~A)I'"
>' fi~ /~~.~" ,...~.
c?'
~"~
." ' 1.:.'~ ,...~'f,";;s::r~~;
(~~;f[-~:!~'~~~:;;~~~~1~~;'~/:i
......\;t'~......," '~;'<"..,..^-I..,~J.l!t,'r' ,.
,A":;:~~:~ ~ .. '" ...:. '1,..q:'i~;::;''''~'~:~'''';, "
,;"'11'11"\1
!:"_d< ~ l\ i,
""'--'\~r->.
Ii 't!' ~~.
'-,,.!~ ~.
'( It "t1:""~I:U'":jY' ,tt"-,
" '~I"" '" J;I'
,," ;",~~, J,l ".~
",'N II ") j;'J" J""
..,',~"" \"" 'I. '
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;~ ii~~ 1 'I,,~ "'~
b fr ,.1 i ~ J /, ,~~\
"'~:'::"",,,'>:I i': ':- jr ~-,Jf \~\
18
11-38
'-
IV. General Fund Revenues
General Fund Revenues
Projected Revenues FY 2009-10 by Category
Other Local Txs
Chgs.for Services 2%
4% --------...
~
Use of $ & R-op.
1%
Fines Forefelt. &
Penalties
2%
Transfers [
12%
Sales Tax
18%
-..
-..
Other Revenue
3%
Inlerfund Reimb.
8%
Develop. Rev
1%
Utility Users T xs
7% ,-
TOT ,/ Franchise Fees
1% -' 6%
One of the City's strengths has been its diversified revenue base. A diversified revenue base
lessens the impact that fiuctuations in specific economic sectors have on the City's ability to
provide services. Although the City maintains a diversified revenue base, the current recession
was so severe that almost every revenue category was impacted. It will be imperative to the
City's fiscal sustainability that it continues to focus on adding to the base by capturing revenues
such at City's TOT (hotel tax) by attracting additional hotels.
Property Taxes (Fiscal Year 2009 -10: $25.3 million 20% of General Fund revenues)
Under Proposition 13, which was enacted in 1979, property taxes for general government
purposes are limited to 1 % of the market value of the property assessed. Assessment of
qualifying property, as well as collection and apportionment of tax revenues are all functions
performed by the County. Increases to assessed values to reflect current market values are
only allowed when property changes hands or when the property is improved. Otherwise,
annual assessment value increases are limited to 2% or the increase in the consumer price
index, whichever is lower. As the chart below indicates, it will be the first time on record that the
CPI actually has gone negative. As a result, the County Assessor will adjust the entire
Assessed Value base impacting property tax revenues received by taxing agencies.
19
11-39
ASSESSED VALUATION ADJUSTMENTS
DRIVEN BY CHANGES IN THE CPI
5%
-Assessed Valuation Increase
-Calif. CPI
15%
10%
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -'- --
2.0
0%
-5%
% ?,*'~';'9~6',;J 6'~?~sP.?6'''>'-r,q>I\lj,.6'"<l'.r6'~6'6'~?6'?,%d'd'&,,, <f9,%> .lb<9"."'?C9.?.9'?<9.j>"''''19,.. "'""\9.sq~\%- -%;~>.9?,% %:tb *+<b;?)'o?'$o-"c.}o"q. 'V,<,& ~ <3t;.:"-td>('~'" ~'o'o.)'"
FISCAL YEAR
Property tax values have continued to fall during this economic recession with Chula Vista being
one of the harder hit areas. The large number of foreclosures have depressed housing values,
and the significant drop in home resale prices has dramatically reduced supplemental property
tax revenues. Supplemental property taxes are calculated based on the difference between the
current value of a property and the resale value of the property. Typically, property values
increase as a property is resold. Due to the current housing crisis, most home resale values
have dropped, resulting in a large reduction in supplemental property tax revenue.
Property tax revenues, projected at $25.3 million for fiscal year 2009-10, is the City's single
largest discretionary revenue source and accounts for 20% of the total revenue for the General
Fund. Based on projections provided by the County Assessors Office, assessed values in
Chula Vista increased by 14% in fiscal year 2007-08 and 2% in fiscal year 2008-09. The most
recent report from the County Assessor shows a decline of -1 0.4% in assessed values for fiscal
year 2009-10. Based on recent analysis by the County Assessors Office, preliminary
estimates show that Chula Vista assessed values for fiscal year 2010-11 may faU an
additional 4% from the prior year. The forecast reflects the continued decline in values.
20
11 -40
Historical Change in Assessed Value
City of Chula Vista and Countywide Comparison
25%
20%
15%
10%
5%
0%
-5% 1995 1995 1997 1998 1999 2000 2001
-10%,
-15%
IllChula Vsta
.County Overall
Source: County of San Diego Assessors Office. The 2011 assessed value change is a preliminary estimate provided
by the County.
Actual Projected Forecast Forecast Forecast Forecast Forecast
Fiscal Year 2009 2010 2011 2012 2013 2014 2015
Property Tax $ 29,258,925 S 25,311,485 S 24,073,147 $ 24,287,941 $ 25,233,722 $ 26,217,154 $ 27,254,540
% Change -0.2% -13.5% -4.9% 0.9% 3.9% 3.9% 4.0%
*Property Tax revenues are projected at -13% in FY 2010 due to continued delinquencies and refunds as reflected in the January 2010
report from the County Assessor.
Many residents believe that property tax fully funds local government costs. The reality is that
the City of Chula Vista only receives an average of 14 7 cents out of every property tax dollar
paid by City residents. This is less than the amount received by the school districts and the
County. In fact, the amount the City receives is about equal to the amount that the City and the
County lose each year to the Educational Revenue Augmentation Fund (ERAF). The ERAF is
the amount the State takes from both cities and counties to provide additional funding for
schools. The City's ERAF loss projected for fiscal year 2007-08 is $6.6 million, for a $60.5
million cumulative reduction since ERAF began in fiscal year 1992-93.
Where do your Property Tax Dollars Go?
~ .c~ ';#:'<$ 7..'t'tpxa ~~~ ~-$,
II -- -:-. ij["O;;;;-~~
~ ~I '~;1~.u IDill,ltT~!{iii
~, _.- . ........,;1!;:;'.,.-, ~"::;;~
~I IJ':! f........","m_'
f' ~t!ll~"'''''"''
\~I e''', C?~4::;
1 I" ~.E' ');;;~.~.'
~I'~ I i ....,."."'.,.:~~~"tl
!~ <.: . 'S"091.6'G.,1
.r #.; .....;:.;,...,...- ~."'~ ~.:.i.~.~.;-..~~~.."'.1
~ 'i[2!~ :~~~Tl,,',
~ ~ ~"""'J;;."",., ~''''''~'I1';',~...j
Q ~ ~t;~:;~E ~~m
,_~ ~:Yi ;.~""t"~ ~,. "'i;~
,.-J t..., L---, L---, t...,
Misc. Southwestern Educational City County Sweetwatt:r
$0.021 Community Rcv(':l1ue of of Union High
College Augmentation Chub San Diego School Dist! ict
DistrIct Fund Vista $0.163 50.188
$0.051 $0.14 $0.147
I
i!
21
11-41
Per Capita Property Tax
Reflecting Fiscal Year 2008-09 Assessed Values
900
800
700 ,. I-
600 ' I-
500 "
400
300
200
100
0_""_
5' 4" :a;
~ I ~~
:.i ; ~"
I- -~-~-;~
'.\, rj.
, \l -111
~ ~ ~
~ -1'-=1:' l10r
~_., ~-, - $ ,
_li1',~: ,~_JIL.J1LJI!Uiil
IYiil Ii!!l
...~
o 9- X- {? " 0 0<V -'- ",'v ,,'" ". ,.. "'<v ,:,0 "" d ,,-'- 0
.p .;p'" ".G t' '0'" ~0 g ~". _<,-v -$> 0" ",0 0 is' ,,0 <;j' 0 GO
~ W # d ~ " ~ 0 ~ ~ ~ ~ ~ ~ & '0 ~ ~
0'<' "_~,,, <v'" ~ 0<t G ~ 0 ,,-S- -y'" O~ 0G 0/ ",0' O~". ~ ~
G OV G 0 de <v~ <; l(;~'0'"
o v ~ ~
Sales Taxes (Fiscal Year 2009 -10: $23.2 million 18% of General Fund revenues)
Prior to fiscal year 2004-05, the City received 1 % in sales and use tax revenue from all taxable
retail sales occurring within the City limits. Beginning in fiscal year 2004-05, the State reduced the
local allocation by 0.25% and applied these funds as security for the State's Economic Recovery
Bonds. The State committed to replacing the 0.25% sales tax revenues dollar-for-dollar in local
property taxes from the County Educational Revenue Augmentation Fund (ERAF). For forecasting
and comparison purposes, sales tax revenues are projected at the full 1 % rate.
Sales tax revenues are collected by the State at a rate of 8.75% for the San Diego County region.
The sales tax revenues are then allocated based on the following rates:
State
State Fiscal Recovery Fund (Economic Recovery Bonds)
Local Jurisdiction (City or County of place of safe or use)
Local Transportation Fund (County of place of sale/use)
Local San Diego County Transnet Funding
*Total Sales Tax Rate - Chula Vista
7. 00%
0.25%
0.75%
025%
0.50%
8.75%
*Total sales tax rates will vary by Gity due to local sales tax initiatives. For example, National City's safes tax rate is
9.75% due to voter approved increase of 1% funding public services.
Sales tax revenue is highly sensitive to economic conditions, and reflects the factors that drive
taxable sales, including the levels of unemployment, consumer confidence, per-capita income, and
business investment In addition, the proximity to the Mexican border and the number of
transactions related to cross border shopping also makes the City's sales tax revenues particularly
susceptible to volatility if a downturn in the Mexican economy were to occur.
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Sales and use tax revenue is the City's second largest discretionary revenue source, accounting
for 18% of total revenue for the General Fund in fiscal year 2009-10. Due to the current economic
recession consumer spending has decreased significantly nationwide; a decrease of 9.2% in sales
tax revenue is projected for fiscal year 2009-10. Since fiscal year 2005-06 the City has
experienced an increase of 0.1 % in this revenue category when the recent declines are taken into
account. Sales tax projections will continue to be conservative until it becomes apparent that the
economy has recovered sufficiently to merit an increase in the forecast.
Actual Projected Forecast Forecast Forecast Forecast Forecast
Fiscal Year 2008 09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Sales Tax $ 25,589,021 $ 23,244,508 $ 23,633,851 $ 24,106,528 $ 24,829,724 $ 25,574,616 $ 26,341,854
% Change -9.6% -9.2% 1.7% 2.0% 3.0% 3.0% 3.0%
As noted on the chart below, sales tax on a per capita basis for the City is only $98 compared to
the County average of $117 and the State average of $118. This comparison indicates that the
City's residents spend a high percentage of their retail dollars elsewhere, especially considering
that a healthy share of our sales and use tax revenues are generated by cross-border shoppers. It
seems clear that the City must continue to place a high priority on developing the retail business
base by focusing on projects such as the expansion of the auto park and the Millenia Development
(Eastern Urban Center) in order to ensure the City's long-term fiscal health.
Annual Sales Taxes Per Capita
$300
$250
$200
County ii.veracie:S11'iislate'ii.iie'raae:S'i18
$150
$100
$50
$0
DelllAar Carlsbad National EI Cajon Escondida La Mesa San Diego CI1ula
$264 $205 Oty $195 $170 $148 $1.58 $'131 Vista $9B
E1 General Retail
o Food Products
o Transportation
I!I Miscellaneous
13 Construction
. Business to Business
Source: MuniServices
23
11 -43
Franchise Fees (Fiscal Year 2009 -10: $8.4 million 6% of General Fund revenues)
Franchise fee revenues are generated from public utility sources such as San Diego Gas & Electric
(2% on gas and 1.25% on electricity), trash collection franchises (9 05% fee), and cable franchises
(5% fee) conducting business within City limits. SDG&E is the single largest generator of franchise
fees and accounts for approximately 35% of the total franchise revenues. SDG&E collects the
franchise fee from Chula Vista customers and through a municipal surcharge imposed on the
South Bay Power Plant based on their usage of natural gas. Due to the volatility of the price of
natural gas and fiuctuation in usage, this component is difficult to project. Trash franchise fees and
cable fees are more predictable due to the fixed rates charged and the monthly and quarterly
receipt of the revenues respectively. Revenue growth is projected based on population and
infiation factors with the exception of the South Bay Power Plant which is impacted by the cost of
natural gas and the actual usage of the plant itself.
The following chart refiects the drop in revenue in the current fiscal year due to the drop in natural
gas prices and the reduced usage of the power plant overall. In addition, the forecast does
assume that the South Bay Power Plant is dismantled and is no longer generating franchise
fee revenues after fiscal year 2010.
Franchise Fee Revenues
Projected out Five Years
$9,0
'"
c
~ '"
~ $7.0
S6.0
55.0
$4.0
$3.0
$2.0
$1.0
'"
20012002200320042005200620072008200920102011 2012 2013 2014 2015
I-+-Energy -+-Trash/Cable I
Actual Projected Forecast Forecast Forecast Forecast Forecast
Fiscal Year 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Franchise Fees $ 9,379,964 $ 8,446,505 $ 7,652,012 $ 7,794,686 $ 7,940,292 $ 8,088,893 $ 8,240,556
% Change -2.9% -10.0% -9.4% 1.9% 1.9% 1.9% 1.9%
24
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Motor Vehicle License Fee (VLF) (Fiscal Year 2009 -10: $17.7 million 14% of General
Fund revenues)
The vehicle license fee was initially established back in 1948 and directed to local government.
The State had previously assessed a 2% of value VLF on car registrants on behalf of local
governments. In May 2004, in an attempt to assist with the State's fiscal crisis, the State dropped
the VLF fee from 2% to 0.65%. Except for the first three months of fiscal year 2004-05, the State
back-filled this fee reduction with other State funds.
Beginning in fiscal year 2004-05, the local government share of VLF has narrowed. Cities
continue to receive the 0.65% portion of the fee directly from the State, but this amount is now
net of County realignment and administrative reductions. The State backfills the gap created by
the fee reduction from 2% to 0.65% with an additional allocation of local property tax from
County ERAF funds, referred to as the VLF swap. After 2006, the VLF swap was valued at the
original 2005 amount, and adjusted by the jurisdiction's annual change in assessed valuation.
As a result in this change by the State, 97% of the City's VLF revenues now fluctuate along with
assessed values. With the recent housing market crash, the VLF revenues dropped by 10%
from fiscal year 2008-09 to fiscal year 2009-10 along with property tax revenues. Over the next
five years, VLF revenues are forecasted to grow at very low levels reflecting the anticipated
slow recovery of the housing market.
Actual PrOjected Forecast Forecast Forecast Forecast Forecast
Fiscal Year 2009 2010 2011 2012 2013 2014 2015
MVLF $ 19,904,630 $ 17,716,642 $ 16,933,500 $ 17,272,170 $ 17,950,810 $ 18,656,364 $ 19,389,884
% Change 0.5% -11.0% -4.4% 2.0% 3.9% 3.9% 3.9%
Utility Users Tax (Fiscal Year 2009 -10: $9.4 million 7% of General Fund revenues)
The City adopted its Utility Users Tax (UUT) in 1970. The City of Chula Vista imposes a UUT on
the use of telecom at the rate of 5% of gross receipts, which represents 63% of the total UUT
revenues received. The UUT on natural gas services is $0.00919 per therm and $0.00250 per
kilowatt on electricity services, which equates to approximately a 1% tax.
Total UUT revenues received in fiscal year 2008-09 were $7.8 million, of which $2.5 million was
from energy and $5.3 million was from telecommunications. Some large telecommunications
providers and taxpayers have taken the position that the UUT does not apply to long distance,
VolP (voice over internet), and cellular phone charges.
25
11-45
The City's UUT ordinance (Chula Vista Municipal Code Chapter 3.44) is outdated as it
applies to telecommunications usage and needs to be amended to reflect recent changes in
Federal tax law and to modernize the definition of telecommunications so that it is
technology neutral. The City will continue to monitor legislation which may require
changes to the assumptions used in the forecast.
Actual Projected Forecast Forecast Forecast Forecast Forecast
Fiscal Year 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Utility Users $ 7,848,557 $ 9,401,279 $ 8,755,835 $ 8,799,614 $ 8,843,612 $ 8,887,830 $ 8,932,269
% Change 6.4% 19.8% -6.9% 0.5% 0.5% 0.5% 0.5%
Note: The drop in UUT in fiscal year 2010-11 is due to lost revenues related to the anticipated closure of the South
Bay Power Plant and reduced vendor collections.
Transient Occupancy Tax (Fiscal Year 2009-10: $1.9 million 1.5% of General Fund
revenues)
The City of Chula Vista imposes a Transient Occupancy Tax (TOT) upon all hotel stays within the
City boundaries. The TOT tax rate in the City is 10%. The potential for significant revenue growth
is feasible provided quality hotels are built in the City. Several potential new hotel developments
are being proposed in the City primarily in the Millenia Project (Eastern Urban Center) and the
Bayfront. Due to the uncertainty regarding the tourism market and with the objective of maintaining
a conservative forecast, no additional TOT revenues are assumed related to these deveiopments.
Actual Projected Forecast Forecast Forecast Forecast. Forecast
Fiscal Year 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
TOT $ 2,302,412 $ 1,940,930 $ 1,940,930 $ 1,979,749 $ 2,019,344 $ 2,059,730 $ 2,100,925
% Change -14.6% -15.7% 0.0% 2.0% 2.0% 2.0% 2.0%
Note: Other than a 2% inflationary factor, no major increases in TOT revenues are anticipated throughout the forecast
period.
Based on the Quarterly Travel Forecast prepared for the San Diego Convention and Visitors
Bureau dated December 2009, "Average daily rates in San Diego fell more sharply than in some
other areas early in the downturn improving San Diego's competitive position. The Average Daily
Rate is expected to grow again next year as occupancy improves." Due to the decline in rates in
San Diego and low occupancy rates local motel/hotels have reduced their daily rates in order to
stay competitive. Accounting for the reduced rates (ranging from 10% to 40%), the weak
economy, less travels to/from Mexico and less overflow from hotels in downtown San Diego, the
City's TOT revenues are projected at approximately $1.9 million which brings the TOT revenues
back to fiscal year 2000 levels. Below is a chart showing the percentage change in TOT revenues
compared to prior year.
26
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11-46
20.0%
15.0%
10.0%
-5.0%
-10.0%
-15.0%
-20.0%
5.0010
i".
.'"6:
~i
0.0%
-~~:
.~"
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
27
11-47
".
Ii 1,
'j'
~~~~;~~{~t~~:,
""y': :': .'..... iI," ...~. . -~..lf'~?,:!::~.....~l,');,
,'" ~'" ""../ /"'. ,,.'
i1 Il '-\ 'j Jr."
~M *~ ~f ''-l.....",!J
{"''''l.' n q. :'.\.'....,,' ";1..' Iliff'" "/' I\
, ,~~2'! t"'" "~ ,~'l,....., (t "l
q . 11 ~F.J l'l ~ 1': ,(~~, '\.1 I;' "; b ,. J~;.
~':;".."., \'( >,', ..,.~..."'? ...."'...lI. '.~'";' Ill....!.,~) 1'}
28
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11-48
V. General Fund Expenditures
General Fund Expenditures
Projected Expenditures by Category for FY 2009-10
Other Expenses
08%
Utilties
3.8%
Debt Service!
Transfers Out
6.7%
Personnel Services
Personnel expenditures (employee salaries and benefits) are by far the largest component of
General Fund expenditures. At the beginning of fiscal year 2006-07, personnel services
represented 81.4% of the overall general fund budget, compared to the current projected level
of 77.6%. The percentage of personnel services expenses as a percentage of the overall
operating budget have come down in each of the past three years due to a reduction of
staffing citywide.
Personnel Service
The personnel category (not includinq health care premiums and retirement benefits) represents
59.5% of the General Fund budget. The personnel category is projected to increase by the
negotiated salary increases (Union contracts) and anticipated increases in workers compensation.
The current employee contracts are scheduled to expire on June 30, 2012 for CVEA, WCE and
Mid Managers/Professionals and on June 30, 2013 for IAFF and POA. No salary increases are
assumed for any employee beyond the current contracts. The forecast does assume that all
vacant positions remain vacant throughout the forecast period. In addition, a 2% vacancy factor is
assumed for attrition.
29
11-49
__._._." o"l'!:"'
Position Counts (Full Time Equivalents)
Despite the City's population growth over the past 5 years, the number of full time, benefited
employees is 20.5% lower than it was during fiscal year 2006-07, which represents the peak for
staffing levels. The following table summarizes the staffing changes by service category from fiscal
year 2006-07 to fiscal year 2010-11 for all funds. During this period, positions have been
eliminated throughout the City as reflected in the table below.
Staffing Level (All Funds) FY 2006-07 to FY 2010-11
-,.~---~~.- .~- ' ..._..~~.".., '" ':i@l"~'~'~.',' ...;;j,~. ......"...,~..~.rn,!.~..~~,....." '":rn,j'!'i!ii" '.:-~' '-"'-""'Im'" .!2I' "',
)';)""~-\"~-"~''';r;,')'o:~'':~lf-i>~~llf~'''''c.~;. ~-"~:v.'\-r,;'~~\/.' ,', ,'-'>' >OJ' ~, ' '
, '~~'~rr;.~'~'<' \',"','"t', ....,',-;[.;! ~"'k:L'f:~?>,1 t >', ~'r .
~;_~I~~dfu~~lJ ...'" ~.~~~~:t" :~f;': ,f~ ~:,~:(hJi0~, ~/~~~~~ ;"m~
Legislative and Administrative 144.50 140.00 128.50 100.50 104.75 -39.75
Development and Maintenance
472.75 458.25 398.25 357.75 351.75 -121.00
Public Safety
532.50 540.50 493.50 480.50 482.50 -50.00
Community Services
114.00 109.75 89.25 66.25 65.75 -48.25
'Total City Staff
1263.75 1248.50 1109.50 1005.00 1004.75 -259.00
*Based on the fiscal year 2009-10 budget there are 869.5 full time equivalent positions approved in the General Fund (not
incfuding hourly employees). The fiscal year 2010-11 City Manager proposed budget includes additional reductions further
reducing positions in the Genera! Fund to 864.25 fulf time equivalents.
Due to budget constraints experienced over the past three years the City has eliminated a total of
259.0 full time equivalent positions from the City's high employment mark of 1,263.75 FTEs during
fiscal year 2006-07. Due to these cuts, the FTE per thousand residents has decreased from 5.6
employees per thousand residents in fiscal year 2006-07 to an estimated 4.2 employees per
thousand residents in fiscal year 2010-11. From January 2006 to January 2010, the City has seen
an increase of 2,851 housing units and 13,589 residents (6.1 % increase). City parkland currently
totals 278 acres with an additional 19 acres to be added during fiscal year 2010-11. Between fiscal
years 2006-07 and 2008-09, the City added 18 miles of streets (4.4% increase) and 12 miles of
sewer lines (2.5% increase).
30
11-50
_~ _. .~,!'l"'"
1,400
1,200
1,000
LW 800
I-
"- GOIl
401l
200
o
City of Chula Vista Staffing (FTEs)
Compared to FTE's per Thousand Residents
FY 2006-07FY 2007-08FY 2008-09FY 2009-10FY 2010-11
1',"'''''ITotal FTE's --'-FTE's/1000
, 6,0
5,0
4,0 '"
'"
'"
3.0 ~
jj)
I-
-- 2,0 "-
1.0
0,0
Negotiated MOUs
As demonstrated below, employee costs have increased significantly during the past several years
as the City has sought to maintain a competitive position in the local labor market Existing
Memorandums of Understanding (MOU) agreements with the City's various employee bargaining
groups originally called for pay increases of 4% per year for the next two years for most
employees; however, due to the current budget crisis, Police and Fire have agreed to defer their
increases as shown in the following chart and all other employees (CVEA', WCE, CONF, PROF2,
Mid Manager", Senior Managers and Executives) have given up their raises, From fiscal year
2005-06 through fiscal year 2012-13, compounded salary increases per the negotiated MOU
agreements total 27,5% for members of the Chula Vista Police Officers' Association (POA), 26,5%
for members of International Association of Firefighters (IAFF), 10,3% for the Chula Vista
Employee Association (CVEA), Western Conference of Engineers (WCE) and Confidential
Employees (CONF) and 6,1% for Professional (PROF), Management and Executive employees,
31
11-51
Summary of MOU Salary Increase by Bargaining Group
~l:;'<~:,-:::~<~r~': ~;:~z'~t;"':"::(,;~'~7{~;~/~ ~';;\-';;~':~'7:.t,(';'~;')~.t:..; :':::.,.;:f ~;r,.H'/' ~'-':~{";,":~;}'}'k'~F ~'~~
'. ..',,,."~..>.P'h~".""""";'.""'!>' ','" ,"".'.."'~. '0' '.". ..,
~"'~"};~;;':~,, ,';~~~~?;f'; e~it~"~y..::;;WJi12:':'''' -'-':'t:~"'".:~:- ;,,',,-.': ','"1"~~~ ' ",' ". <.~~ ~,-' :,~r. -" ':::~
" ,. ....;,.',~., ':~'",., ~';"". ".,""'. ~,:",,,,,I,X1' :."'l, '.
, .,~_ ,,,",'_." ~. ~-"'_","' ..'""-'~_ _._.~ ~j~ .,~~ .J<..' ",.;.ULl,ill..:- ,'1-".'.:, I
10%'
4%,
0%:
4%'
0%
0%:
O%i
1%'
1%:
1%
1.5%:
1,5%:
j,o;i,:
27.5%'
3.4%:
January 2006
January 2007
July 2007
J,:nuary, 200~
January 200~
July 2009,
January 2010
JLJly ~01 0
January 2011
july 2011'(3) ,
January2012
July 2012
January 2013
Compound Increase Jan 2006 - Jan 2013
Average Increase per Year
8%'
2%:
2%:
4%,
0%;
-1%,
0'%/
0%
2%'
2.5%
15%'
1.5%,
15%,
26,5% . See Note (1) :
3.3%: See Note (1) :
3%:
3%,
O%~
4%
0%;
O~/o :
0%:
O%~
0%-4%:
0%'
0%-4%:
(4)
(4)
3%:
3%:
0%:
4%
0'/, .
0%:
0%:
, .
0%:
0%:
0%:
0%:
(4)"
(4)
10.3% '
1.3%:
3%:
3%'
0%:
0%:
,.... .'n.
0%;
0%:
0%:
0%:
'''_.u.___
0%
0%
0%:
(4)
(4\ (4)
3%
3%
0%
0%
0%
0%
0%
0%
0%
0%
0%
-(4f
6.1%: 6,1%
0,8% . 0.8%
1. CVEA employees could receive increases up to 4% in Jan 2011 and Jan 2012 based on a benchmark market study. Any
increase will vary depending on the final negotiated terms.
2. Professional and Mid Manager's salary is subject to reopener and subsequent meet and confer
3. July 2011 IAFF adjustment reflects 1.5% salary increase per Side Letter of Agreement dated February 9, 2009 reinstatement
of 1 % salary reduction implemented in July 2009 per Side Letter of Agreement dated June 16, 2009.
4. Past date of existing contracts.
California Public Employees Retirement System (CaIPERS)
The increase in retirement costs is a significant budgetary challenge facing all governmental
entities. The two key factors driving the increased costs over the past few years have been the
significant investment losses experienced by CalPERs and enhanced benefits during the same
time period. Currently, the payments made to the retirement system equal 15,3% of the City's
total General Fund, The CalPERS expenditure category includes both the employer contribution
and the city-paid employee contribution,
As defined by CaIPERS, "Retirement benefits are funded through contributions paid by
contracting employers, member contributions, and earnings from CalPERS investments.
Employer contribution rates are determined by periodic actuarial valuations under State law.
The actuarial valuations are based on the benefit formulas the agency provides and the
employee groups covered. These contribution amounts are expressed as a percentage of
active member payroll reported to CaIPERS."
11-52
32
The budgetary impacts caused by the increased pension contribution rates have been
significant. The City's PERS contribution rates (combined employer and employee rates) have
increased from 19.3% for safety employees and 11.7% for miscellaneous employees in fiscal
year 1998-99 to 34.5 % and 29.8% respectively in fiscal year 2010-11. This translates into an
increase of $18.7 million in budgeted PERS contributions - from $5.3 million in fiscal year 1998-
99 to $24.0 million in fiscal year 2009-10 for all funds combined. The majority of this increase is
related directly to the CalPERS investment losses during fiscal years 2001, 2002 and 2003. In
addition, the City implemented enhanced pension benefits moving to a 3% @ 50 program for
public safety in 2002 (Fire) and 2003 (Police) and 3% at 60 for the miscellaneous group in 2002.
Changes in City Retirement Contribution Rates
CalPERS Rates
30.00%
.,.,.;"'.~~= ~;>~; :ir:~~', ~':;" '-f.l'",~,.'~~t ~l:il-};;"'l'<ct ".J'~ -t"~",: ;:j";', 'Itli~;r;t~"'.':'':i''"~' -11:(:" ""J};',:'I-:-' '>t.'
, 'Ct-'" : '., 'l'f.",,' "', .'. . "'~>~ ,-" ';/1-:' "'-;"" Ir .," " ,. ';,';." ". ~lt."~oi:;;''''~'I'),.~,.~ \ \,It , ,-, ~~.",~.!'
25.00% . ~""i;~tt"I(~.J?~i::{J}.,' . '" ;j\~~'::'t~ '~~~.; :'\:J,r:,.- :. ",,~it1i,; ~t"t ":L~;F;::"':!'_v~ :; ~:;'.J _~-i:f~~;~~"~ <'
'\(~;\>.f~''; '~'t*l:::'li"~ ~ ';;;'",".~;:r,:"''-fJ;f~.,.,~. ~i!. ~. '~1:1J.';ii~_%1tJ~~':l~s' ~..~jc;;:l'il,...~~'t
;~;~::~:rr:(~~;: t': :~'t.t~~i'~',.:, ~,:~i:\~1 \.~,(:~~~1~t~t}!~ ~X~~:.~~;~~~(;':t,i~.~i~i.,";,;:";"
20.00% ~~- ~~'~~.'''''~~~~,;:~~..,:' X;:;"'~"~~t'F!i~"6f~i?':;:'~"-~~.r ';~~~~:~:;~';~~::." '< .: ,: ~I
.. _ ....'~.... '/~,,!!,(. ,..\", ~~~u~~~~1'i~""~t ':" ", 'i:::~;.~~~~ j~:...,: .'" ,'......"!t'~
15.0O'J''o
, '." .:.~~ .,_":~ ',;' '-i'~"~ .;;'~:(-"~,,~.J1tfjT.7 .:~, ':;,~-.iS:~'; ~~~~1.<r ~~, '1~:"~ .~"!~j;'-;-~;,:,~~~::
; ''i,''j( ~. ~'>'i" '.J! ft t" J~'lD'~li1~':'1~""5;~"~. '8":' . .""I.!'i 1i1r>7;'~~,'I"";'I'..:.~,"~ _' .;,)r,di?~t:,.,
10,00% ,,:.,. '-~ "~;"tn' ;0'" ,,,,,'''If ,,,.~";",,Jt:,:'I\' _,'~' ",::;, ";'-::"~'!'. "l' ,~~I>t:Jk~"l~'~. :4;':i~; ~ 'il.t:::f,~,~Ji; ..::.
~~~~~~~~~~::~~~~~:~~~~~:,
5.00%
"." .'';;'; : ",,,, ,~:t'''';;;;;.''r..-<~~'\i:''lr~oi'';:.''':'''-;.'i';' ~it/.:t,~~,;.t( :'~. +_;
~""t_",j, ~r"'~h~""<j,~~'~'''''''l.~ \\i .f.t' c,' ''</",.',~~.,.;p.'W;','''i"" '.""',
0.00% "\ . '_",J'1:.1-~;';:;';".,,~~ ',,!;:.,;,~~,,- :~l, :f>,~.,. ":.': :::'~~;i,)fl~~k",~l:ir~,~A'1.~ ',,'.~. :..,: .;
87/88 90/91 93/94 96/97 99/00 02/03 05/06 08/09 ,
_ Mise-Employee _Mise-Employer
Safety-Employee ----J>+-- Safety Employer
Notes on Chart
1 Misc. Employee - the 8% employee share is paid by the City as negotiated with individual employee bargaining group.
2. Safety Employee - the 9% employee share was paid by the employee from 87/88 through 93/94. In 94/95 both police and fire
paid 7% and the City paid 2%. In 95/96 police and fire paid 7% and 4% respectively with the City picking up 2% and 5%
respectively as negotiated, For 96/97 and 97/98 police paid 7% and the City paid 2% and the City paid the entire 9% for fire.
From 98/99 forward the City has paid the entire 9% as negotiated with Police and Fire.
3. The City's employer contribution rates rose from 0% for public safety and 0% for miscellaneous in fiscal year 2001 02, during a
time the City was "super funded", to 20.02% and 14.78% respectively in fiscal year 2003-04.
Prior to fiscal year 2005-06, the CalPERS investment pool assumed a rate of return of 8.25%
and any market gains (or losses) less than that amount could significantly affect the City's
overall contribution rate. In fiscal year 2005-06, CalPERS adjusted their investment return
assumption tei 7.75% and have adopted an asset smoothing method whereby any losses are
spread out over a 15 year period to reduce the City's exposure to market volatility. With the
substantial losses in the investment market in 2008 and 2009, the impact on funded status and
the contribution rates that employers will have to pay in the future will be significant ranging from
2% to 4% of payroll. In an attempt to smooth out the impacts of the additional investment
33
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11-53
losses, CalPERS has modified it's smoothing method resulting in minimal impacts to the
contribution rates in the next three fiscal years but increasing thereafter.
CalPERS Historical Market Value Rates of Return
Relative to Assumed Investment Return of 775%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
-5.00%
-10.00%
-15.00%
-20.00%
-25.00%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: CalPERS Facts at a Glance Investment returns as of June 30.
The following table reflects the actual and forecasted employer contribution rates used to project
retirement benefit costs. The actual rates were provided by CalPERS and the forecasted rates
were provided by the City's CalPERS consultant Bartel & Associates. The rates have been
adjusted to include anticipated increases in contribution rates related to the early retirement
program approved by the City Council as part of the Budget Reduction Plan.
Employer CalPERS Contribution Rates
Actual Actual (OActual Forecast Forecast Forecast Forecast
Employee Group 2008-09 2009-10 2010-11 .2011-12 2012-13 2013-14 2014-15
Public Safety 23.9% 23.2% 22.7% 23.4% 24.0% 29.8% 32.0%
Miscellaneous 18.3% 18.2% 19.6% 20.1% 20.5% 24.9% 26.5%
CalPERS provided the 2010-11 employer contribution rates and are included in the base budget. Rates for 2012 - 2015 are
projected by Bartel & Associates and adjusted for the Early Retirement Program.
2. Rates do not reflect additional costs incurred to repay City's Pension Obligation Bonds which are scheduled to be paid off in
fiscal year 2012.
3. Employee contribution rates of 8% and 9% for Miscellaneous and Public Safety respectively are not included in the table
above.
4. Projected contribution rates reflect significant increase in fiscal year 2013-14 due to investment losses experienced by
CalPERS,during 2008 and 2009.
34
11-54
Funded Status
The funded status of a plan is a measure of how well it is funded or "on track" with respect to
assets vs. accrued liabilities. Based on the Annual Valuation Report issued on October 2009, the
funded status for the Public Safety Group and Miscellaneous Group combined was 86% based on
market value as of June 30, 2008. This is based upon an unfunded liability as of June 30, 2008 of
$62.6 million for Miscellaneous employees and $28.8 million for Public Safety employees. As
discussed previously, with the significant investment losses over the past two years, the funded
status for the City will significantly drop once the losses are factored in.
Funded Status
160%
140%
120%
100%
80%
60%
40%
20%
0%
".. ...T.~.j~.~~-~.~~-
...-~...
: .m
1993
1995
1997
1999
2001
2003
2005
2007
I--+-Safety __Msc I
Source: CalPERS Actuarial Valuation Report as of June 30
Health Care Cost
Kaiser and PacifiCare/AETNA insurance premiums have increased an average of 9% per year
since the beginning of fiscal year 2004-05. Taking into account the compounding effect of these
increases over time, Kaiser premiums have increased 54.8% during this time while
PacifiCare/AETNA1 premiums have increased 51.3% over the same period. The annual budget
for flexible spending accounts has increased from $8.5 million in fiscal year 2004-05 to $10.0
million in fiscal year 2010.11 in the General Fund. Recent discussions with health care
professionals indicate these high trends in health care costs are likely to continue for the
foreseeable future, with an anticipated increase of 10% effective January 2011. The anticipated
increase in health care costs is included in the fiscal year 2010-11 proposed budget Included in
the forecast are assumptions that premiums will continue to increase at an average rate of 10% per
year.
35
11-55
Premium Increases by Health Care Provider
(FY 2004-05 to FY 2009-10)
C:!>':~,f.:{~~} >~>":::~~-f:;~~ ;'~::;~~{f-lf;;~1i!.~;~f'~~'~\~::c:~;~~~';.,,"~ ~-'~~~I':"::"'f)~).;>-r&:,~"'1 i
,.'i'l7'o' ,,,if' ",:"""''I\,~_,~;;,,,:,~'1i,;o,' "S~"',iJ~, ''''F''''-~~~r4'' ". .,~. .,".' f,~c.;~'l!:'~.;'s; .' \",,,..,,,,,,,~,,~
~ ," a:> _ m. "'. ,. '~-:'~-i~~:t:~ll'~\':" ' ~'jt~.1 ij;"l -, I.'~, -'J If',.: }.. ","&-"_
., "'. iI ~ ,~ ,~ 7'l'':'':''.:}l;:' ,''''-,." ~.. k];~ -I -...1 .. i,u}- a..-' ....; !~~: i
January 2005
January 2006
January 2007
January 2008
January 2009
January 2010
Annual Avg Premium Increase
19.9%
6.9%
8.5%
5.0%
8.9%
5.6%
9.1%
1 Effective January 2009, the City switched from PacifiCare to AETNA
8.4%
10.0%
16.4%
-2.8%
4.0%
15.3%
8.6%
14.2%
8.5%
12.5%
1.1%
6.5%
10.4%
8.9%
Increasing Health Care Costs
Average of 9. 15%/Year Since 1998
Average Medical Plan Premium Increases for California Employers
20,0% 18.6%__
171%
,16.7%
15.0%
~.O%
12.1%
10.1%
8'.0%---"""
10.0%
'"
7.3%'67"
I 6.1%' "
, .', -21;;'250101,,' 1<
. ItliI 0.2%" '
: _'_!'!I~f1~~__ ~
1992 1994 1996 1998 2000
-1.1%
~]
50%t~8
-'.;
1990
Source: California Health Care Foundation.
Other Post Employment Benefits (OPEB)
15.8%
"'-13:4%
11.4%
8,7% 8.3%
8.'2'oj~"'"'- 8.3%
il,:
2002
2004
2006
2008
Beginning in fiscal year 2007-08, in accordance with Governmental Accounting Standards Board
Pronouncement (GASB) 45, governmental entities were required to identify and disclose the
liability and funding status of other post-employment benefits (OPEBs) similar to pension plans.
This is a significant change in accounting, reporting and disclosure for OPEBs, which are currently
accounted for on a pay-as-you-go basis. The rnost common types of post-employment benefits
include health care insurance, life insurance, long-terrn care and dental insurance for retirees.
36
11-56
The City of Chula Vista does not directly pay for post employment health benefits but does
subsidize the health care insurance premiums paid by retirees who opt to continue to participate in
the City's retiree health care program. The costs associated with the retirees are pooled with the
active members; this pooling creates an artificially low rate for retirees. GASB believes that
retirees who are allowed to pay the same health care benefit rate as active employees are being
subsidized and the indirect cost of this "implicit subsidy" needs to be recognized as an OPEB
liability by the governmental entity' In summary, the City is paying a higher insurance premium
due to the subsidized rates for retirees and accruing an unfunded liability for subsidized health
benefits being earned by current employees and existing retirees.
As a result of GASB 45, the City underwent an actuarial study which calculated its estimated
unfunded retiree medical liability at $9.6 million. This is the same accounting and financial
reporting requirement used for pension benefits which require that the cost of benefits be
recognized as a liability as benefits are earned. This liability is reflected in the City's financial
statements for the year ending June 30, 2009. Management is currently exploring strategies to
address this unfunded liability from a long-term financial perspective.
Debt Service
Over the past few years the City issued debt used to fund several major capital projects such as
the public works yard, the police facility and the expansion of the civic center. The debt service
payments for these capital projects are funded out of various sources such as the General Fund,
Residential Construction Fund and Development Impact Fee Fund.
The General Fund's annual debt service "commitment" is projected to be approximately $11 7
million, or approximately 8.7% of the projected General Fund operating budget for fiscal year 2009-
10.
Major Facility Financing - Debt Service Obligation
1994 Pension Obligation Bonrls
2002 COP - Police Facility
2004 COP - Civic Center Phase I
2004 COP-Infrastructure Improvements
2006 COP - Civic Center Phase II
2006 COP- Nature Center
2010 COP - Civic Center Phase III
2010 COP Corporation Yard - Refunded
Total
',:;.,,:iOrig"inai" ;t~"":Outstan'din9':;j;"~~Term. .,:..: :,llnte're"stffi;! "Scheduled Pay--'rnenfl
.' ...J.~" ~ . j:.""'4" ;.....::"""., ~".F.-_,',) ,lii: ~",.~-...?-'; '.~/.:' T,'__:~ "'~I .''''J'''":;;,-,,,,-, "~01<",~..;~.;..'y!
_.J~:;lss.LJa!J!=e-; fl lJ:_..BalaDfe.!~:: 1~:N_0J,:<.) ~~;{:JRate'#~;: ~:~"~~F.'( 201 OzJ.;1~i',,~_,~!
$16,786,532 $7,000,000 18 years 8.45% $2,635,172
$60,145,000 $55,420,000 30 years 4.93% $3,908,146
$26,692,417 $24,990,094 30 years 4.65% $1,713,947
$10,547,583 $9,874,906 30 years 4.65% $677,271
$18,155,000 $17,440,000 30years 4.32% $1,106,185
$2,170,000 $2,000,000 20 years 4.32% $165,204
$12,835,000 $12,835,000 30 years 5.51% $663,990
$16,520,000 $16,520,000 30 years 5.51 % $841,940
$163,851,532 $146,080,000 $11,711,854
Outstanding Balance as of June 30, 2009 Audited Financial Statements
4 Government Finance Review - August 2006
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L
Note:
Millions
$12
Aggregate Annual Debt Service Payments - General Fund
$10
$8
$6
$4.
'2
I:
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FYOI
.W94 PensionObligalionBonds
. :2002 COP(Polic~Fa~ility)
o 200J Ref COP(800 Mtlz RQ~io Systeml
<:12006 COP(Civi<.C€nt~rExpans;nn\
_2010 1;OPCorp Yard Refunding
,,:'000 COP Series A (CGrporal'O!lYar~)
.. 2003 RerCOPlFi"allc;aISyslern)
. l004 COP (C;v;~ Cent~r E"'pan~lonJ
Ll :200., COP(N~lllr~ C<?flt~r)
02000 COP (8QO MhzEquiprn>nt)
'" 2U03 R~r COP (SarQly CADIMDT $yst~m)
. 2Q04 COP (We~tern CV Pa'.k.'Drdlt,aye)
'" 2010 COPC'VIC C~nt~r III
The final debt service payment for the 1994 Pension Obligation Bonds is scheduled for fiscal year 2011-12.
Debt Service payments per bond issuance are level. The chart reflects high and low points in overall debt
payments due to new bond issuances being added and debt expiring overtime at different points.
38
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VI. Infrastructure Summary
Most of the available capital funding is dedicated to ongoing infrastructure rehabilitation projects.
These include streets, sidewalks and sewers. In particular, street-related rehabilitation projects are
predominant in this program. These projects occur on a citywide basis and are part of a
comprehensive process that the City performs every year to assess the most cost efficient manner
to preserve and rehabilitate the City's infrastructure.
As a result of dedicated funding streams, the City continues to make progress with the preservation
of two major assets - wastewater and pavement. The Wastewater Enterprise Fund structure has
ensured that adequate funding is available to proactively address wastewater asset lifecycles.
Over 50% of the Capital budget revenue is dedicated to local and major street rehabilitation
projects; however this investments falls short of the total amount needed to improve the condition
of the streets in western Chula Vista and maintain a favorable pavement condition index in the east
as the City ages. Significant challenges continue to face the City due to deteriorating infrastructure
that has exceeded its total life cycle. The most challenging unfunded asset to manage continues to
be storm drains; the City continues to experience the failure of several storm drains with corrugated
metal pipe (CMP) annually. These are currently addressed on an emergency basis due to the lack
of funding. Also of paramount importance is the lack of available funding to maintain City-owned
facilities such as libraries, fire stations, recreation centers and historic buildings such as the
Women's Club.
Pavement
The City utilizes a comprehensive pavement management system, which forms the basis for the
development of current and future pavement rehabilitation projects. . Since completion of the
citywide pavement inspection and presentation of a Council workshop on pavement management
in FY 2006-07, the City has completed and begun construction on several contracts involving
pavement preservation! rehabilitation. This includes pavement management and preservation!
.
rehabilitation of approximately 355.114 lane miles of pavement at a total project cost of
approximately $15,129,200 as of December 4, 2009. The Pavement Condition Index (PCI) is
currently at 73 (Good Condition) in comparison to 75 in 2007. Staff anticipates the PCI will
increase slightly in the next reporting period due to the number of pavement projects currently
underway.
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The following PCI Map shows the average 2006 and 2010 PCI by area:
,
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Council adopted Resolution 2007-080 on April 5, 2007, reaffirming Council's commitment to the
implementation of a Pavement Management System which emphasizes maintenance efforts to
preserve good pavement in contrast to a "worst first" strategy, which focuses on streets that require
expensive treatments such as reconstruction. Several pavement preservation/rehabilitation
projects are currently underway and will be completed in FY 2011.
The 2011 Proposed CIP includes funding inspection of all the City's public streets in the five year
Capital Improvement Programs. These efforts should help to establish the effectiveness of the
City's pavement rehabilitation efforts and the amount of deterioration of untreated streets. These
streets include all the City's arterials and collectors, a selection of streets that were rehabilitated
since the last inspection (primarily in 2006), and a random selection of residential streets.
Also in the April 2007 Workshop, the City's consultant presented a graph that estimated the
amount of funds it would take to eliminate the City's pavement preservation backlog. The
estimated amount was $19.2 million per year over a 10-year period. Although the City had a large
TransNet fund reserve to use for its pavement program over the past few years, there is a
significant gap between the annual available pavement preservation revenue and the amount
needed per year. The graph shows the revenue gap from FY 2009 through FY 2013. Limited
duration funding, such as Proposition 1 B and the ARRA Swap, were received during Fiscal Years
2009 and 2010. Total TransNet funds were less than anticipated during these years, and this trend
may extend into the future. If the State borrows from regular funding sources, such as the Gas
Tax, there will be more competition for limited TransNet funds.
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$20.0
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$15.0
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With regard to other street rehabilitation efforts, the City continues to focus significant attention and
resources on street improvements in western Chula Vista. A number of projects have been
undertaken in the past several years, including over $12 million of street rehabilitation projects, as
well as significant sidewalk improvements. That effort will continue and will also include the
formation of additional assessment districts on a number of streets in the Castle Park
neighborhood.
Sewer/Strom Drains
The City continues to focus on its Annual Sewer Rehabilitation Program, which expends
approximately $1 million to $2 million annually for the replacement and rehabilitation of sewer pipes
and manholes. The City also utilizes standardized evaluation and ranking criteria in televising and
evaluating the condition of sewers in order to assure that the most critically impacted sewer
infrastructure is replaced or rehabilitated first
Over the last several years the City has evaluated the condition of its storm drain facilities, which
includes approximately 88,000 lineal feet of corrugated metal pipe (CMP) storm drain within the
City limits. CMP storm drains have not been allowed for permanent use in the City of Chula Vista
for over 20 years due to more rapid deterioration than other types of pipes, such as plastic and
reinforced concrete pipes. The deteriorating CMP storm drains were categorized as Priorities 1
through 5, as follows:
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2,342 ft
24,293 ft
13,207 ft
4,269 ft
22,984 ft
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Much of the CMP identified as Priority 1 has been rehabilitated. However, due to limited funding,
priorities 2 through 5 are being addressed on an as-needed basis, either after failure has occurred
or when failure is imminent. The CIP Program seeks to find dedicated funding for this critical
program; however, due to eligibility limitations and availability of such funds, it has been
increasingly difficult to fund CMP replacement and rehabilitation work. A total of $1.2 million in
TransNet monies was previously appropriated in FY 2009-10, which has funded approximately
$600,000 in emergency drainage projects. The remaining funds will be used to address other
storm drain failures until those funds are depleted.
Other Infrastructure
A substantial amount of the funding is focused on infrastructure improvements in the western
portion of the City and preservation of infrastructure citywide. Over the past few years, City staff
has presented a number of reports to the City Council with regard to the condition and capacity of
existing infrastructure (i.e., pavement, corrugated metal pipe, storm drains, sewers, roadways, etc.)
citywide, as well as the lack of sidewalks and other public improvements primarily within the
western portion of the City, especially within the Montgomery Annexation area. Adequate funding
is currently not available to build new infrastructure and maintain existing infrastructure.
With the adoption of the FY 2004-05 budget, the City Council approved a financing plan for
infrastructure improvements in western Chula Vista. This financing plan revolved around a two-
pronged financing program. One element of the program was a $9 million bond issue that would
be repaid from the City's Residential Construction Tax (RCT) revenues over a period of 30 years.
That financing was completed in late summer of 2004. This portion of the financing was
earmarked for drainage and park improvements. With the receipt of those funds, work has been
completed on a number of drainage projects in western Chula Vista. A total of $4.7 million of the
financing was dedicated to drainage improvements. The balance of these funds was utilized to
construct Harborside Park ($2.1 million), Otay Park renovations ($1.9 million) and improvements to
Lauderbach Park ($.6 million).
The second portion of the financing is a $9.5 million loan through the U.S. Department of Housing
and Urban Development's (HUD) Section 108 loan program. The loan will be repaid through the
City's annual Community Development Block Grant (CDBG) entitlement from HUD and will be paid
back over a period of ten years. The Section 108 loan is earmarked for street improvements in the
Castle Park area. The City formally submitted its application for the loan in May of 2006 and the
loan was approved in FY 2006-07. The loan funds became available to the City in June of 2008.
With the approval of the loan, work has commenced on the projects. The City Council directed that
the main streets in the neighborhood proceed first. Construction of First Avenue, between Naples
Street and Palomar Street, and Glenhaven Way/Amy Street is complete and a number of street
improvement projects are moving forward, including work on Oxford Street (Third Avenue to Alpine
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Avenue), Second Avenue (Naples Street to Palomar Street) and Naples Street (Third Avenue to
Alpine). Future locations include Elm Ave (Naples Street to Oxford Street). Once these projects
on the main streets in the neighborhood are completed, remaining funds will be utilized on streets
within the Castle Park neighborhood.
Also included in the 2011 budget is funding for new ADA accessible curb ramps ($332,695), Traffic
Signal Modification and Installations, Traffic Count Station and Maintenance, System Optimization
and Safety Improvement Program ($1.6 million), and Sewer rehabilitation improvements, pump
station rehabilitation and capacity enhancements ($3.2 million). The City was also the recipient of
Highway Safety Improvement Program (HSIP) and SAFETEA-LU funds. The HSIP will fund
Sidewalk Installation and Traffic Signal Modification at Fourth and G ($0.5 million). The SAFETEA-
LU funding will fund the Gunpowder Point Road Overlay - Access ($0.5 million).
City Facilities
While this focus on public right of way infrastructure continues, the City has also engaged in a
program for the construction of several facilities in recent years. Since 2002, the City has
undertaken over $100 million of renovations to the Civic Center Complex, various recreational and
fire facilities and new fire, park and recreation facility construction. Mt. San Miguel Community
Park is nearing completion and All Seasons Park is currently in construction. Over 160 acres of
new parkland and 58,000 square feet of new recreation center space will have been added
between 2002 and the end of FY 2009-10. The funding sources for these projects included
Development Impact Fees (DIF), Residential Construction Tax (RCT), Redevelopment Funds
(RDA), Park Acquisition Development fees, grants and the General Fund. Funds for any other city
facilities are not anticipated for several years out. As such, while the design of the Rancho Del Rey
Library is complete, Public Facilities Development Impact Fees (PFDIF) are not projected to be
sufficient to support construction in the next 5-years.
Included in the Millenia development is a proposed Fire Station, which will need to be addressed in
the near future. The City has negotiated a development agreement for interim funding related to
the operating costs of the Millenia fire station. Fire Stations 1 and 5 are also need of replacement
however; there are no funds available for new construction or renovation. The Fire Department
applied for ARRA funding to address the replacement of Fire Station 5, which met the eligibility
criteria outlined in the ARRA guidelines. Unfortunately the City has received notice that the Fire
Station will not receive funding at this time.
Bayfront Capital Improvement Projects such as a sewer lift station, fire station and park
improvements will also need to be programmed in future years. These projects are proposed to be
supported by Bayfront development and the Western Transportation Development Impact Fee
(WTDIF). The WTDIF was established in 2008 and covers the Bayfront, Northwest and Southwest
areas of Chula Vista. This $52 million program will help finance over 60 transportation projects
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such as the ultimate improvements for Interstate-5 interchanges, major arterial roadways, light rail
trolley improvements and needed bicycle, pedestrian and traffic signal projects within the benefit
area. The WTDIF is anticipated to be updated in FY 2010-11 to incorporate the approved Bayfront
land use changes.
The only proposed facility related funding for new construction in the FY 2010-11 program is
$840,000 in partial funding for the Orange Avenue Library Park site from repayment from the
Redevelopment Agency to the General Fund as well as funding from SDG&E. The new multi-
purpose park is proposed to be located behind the South Chula Vista Library. The total estimated
cost for this project is $2.5 million of which $840,000 has been identified at this time. Staff has
submitted a Statewide Park Grant application for construction of this park. In May 2010, the City
was notified that the grant application has met eligibility requirements and will proceed to the
second review process. Grant awards are anticipated to occur in October of this year. Staff will
return to Council with a project funding status as soon as the City receives notification from the
State. Should the grant not be awarded, staffs report will include alternatives for funding and
construction of this park.
Additionally, there is no minor CIP budget for facility repairs. In the past the minor CIP was
appropriated $100,000 annually from the General Fund. However, due to fiscal constraints facility
repairs remain unfunded with the exception of the roof repair at South Chula Vista Library
($160,000) and renovations at Lauderbach facility and park site, which are included in the
proposed FY2011 CIP.
Other work on City facilities has been limited to the City's energy conservation effort in partnership
with SDG&E and loans from the California Energy Commission (CEC). Several projects have been
completed such as the Police Department Variable Speed Retrofit, Loma Verde Pool Solar covers,
and Phase I Lighting Retrofit. In addition, several projects are currently underway including but not
limited to the Municipal Solar Photovoltaic Systems and the Citywide Energy Lighting Retrofit
(Phase 2). The FY 2010-11 CIP includes $2 million for Induction Lighting funded by a loan from
the American Recovery Reinvestment Act (ARRA). The Residential Street Light project will
conserve energy and significantly reduce maintenance costs.
Undergrounding Districts
Bayfront utilities were recently undergrounded utilizing 20A funds which are allocated by SDG&E to
help pay for the undergrounding of existing utilities. There are currently two undergrounding
projects underway: Fourth Avenue from L Street to Orange Avenue and East L Street from
Monserate Avenue to Nacion Avenue. The Fourth Avenue project is approximately $6 million and
is expected to be finalized in FY 2010-11. The East L Street project is approximately $3 million and
as part of the project will replace and upgrade the overhead flashing warning beacons at the top of
the East L Street hill. No other undergrounding projects are scheduled due to lack of funds.
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In an effort to contain undergrounding construction costs, the City of Chula Vista as well as several
other local agencies have formed a Utility Undergrounding District subcommittee to meet and
discuss policies and various other methods for controlling underground utility district costs so that
additional conversion districts can be funded in the future. Future conversion districts may be
established and constructed differently than how we have done previous districts.
45
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VII. Redevelopment Agency
The purpose of this five-year financial forecast is to assess the Redevelopment Agency's ability to
generate sufficient annual cash flow to pay for its operations and outstanding obligations. Agency
obligations include the 20% set aside for the low and moderate income housing fund, debt service
payments and statutory and negotiated pass-through payments to the County and school districts.
Remaining resources are available for redevelopment projects and administration of the Agency.
This five-year financial forecast included projections for the current fiscal year 2009-10 and
forecasts for fiscal years 2010-11 to 2014-15.
CA Redevelopment Agency
The California Community Redevelopment Act was enacted in 1945 to address problems common
throughout not only California but also the country. The Cornmunity Redevelopment Act gave
cities and counties in California the authority to establish redevelopment agencies, gave the
agencies the authority to attack problems of urban decay, and enabled the agencies to apply for
grants and loans from the federal government.
In 1951, the Community Redevelopment Act was codified and renamed the Community
Redevelopment Law (Health and Safety Code 33000 et seq.). Most importantly, the authority for
tax increment financing was added after voter approval of Article XIII, Section 19 (now Article XVI,
Section 16) of the California Constitution in 1952.
Tax Increment Financing
In accordance with California Redeveloprnent Law, the Agency obtains funding of its
redevelopment projects through a financing rnethod called "tax increment financing." Under this
method, assessed values of properties within the Redevelopment Project Areas at the time the
redevelopment plan was approved by City Council/Redevelopment Board become the Base Year
Value. Any increase in taxable values of properties in the redevelopment area in subsequent years
over the Base Year Value becomes tax increment. Collections of tax increment are pledged to the
payment of debt service on the obligations issued to finance redevelopment projects. Like other
California redevelopment agencies, the Agency has no power to levy property taxes.
Pursuant to the California Redevelopment Law, redevelopment agencies are required to incur
indebtedness in order to receive their allocation of Tax Increment Revenues. Redevelopment
agencies typically leverage current Tax Increment Revenues by issuing long term debt (including
loans from the City) in order to raise capital to promote economic development within the project
area. The new projects constructed, in turn, generate additional Tax Increment Revenues, which,
again, may only be captured to the ex1ent that the Agency incurs indebtedness. Indebtedness
47
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includes bonded indebtedness, notes, loans, advances, payments due under development
agreements, City loans, pass-through agreements, statutory tax-sharing and the obligation to set
aside funds for low and moderate income housing.
RDA Outstanding Bonded Indebtedness
I;:~' . i';e:, ,,~~::'i'.'~;:: ~,-:p'ri~H.6,af ': ~i-~qGts'~~~i~g '~1~telm - < .Injerest~ ~~~.~e,~1J.~e3 !,~~~y~~~nq
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2003 cop, Parking Structure 11,320,000 4,145,000 10 years 2.67% 1,049,880
2005 - ERAF (State Takeaway) 765,000 505,000 10 years 4.88% 102,118
2006 - ERAF (State Takeaway) 930,000 710,000 10 years 5.87% 125,996
2006 TAB Refunding Series A 13,435,000 12,580,000 20 years 4.58% 1,027,945
2006 TAB Refunding Series B 12,325,000 11,625,000 20 years 5.34% 1 ,000,434
2008 TAB Refunding 21.625,000 21,625,000 28 years 475% 963,636
Total 60,400,000 51,190,000 4,270,009
Outstanding Balance as of June 30, 2009 Audited Financial Statements
Redevelopment Agency History
The Chula Vista Redevelopment Agency was created on October 24, 1972 by City Council
Ordinance No. 1425. Since the Agency's creation, the City has adopted and amended six project
areas to encompass a total of approximately 3,563 acres of City territory. Current land uses within
these areas are mostly commercial and industrial, but also include residential (primarily high and
medium-high density) and public uses (e.g., governmental administrative centers, corporation
yards, streets, etc.). In 1979 and 2000, the City financially merged the various project areas into
two primary configurations: (1) the Merged BayfrontfTown Centre I Redevelopment Project Area
(1979) and (2) the Merged Chula Vista Redevelopment Project Area (2000). The merger of project
areas allows the Agency to pool tax increment revenues generated in different project areas and
leverage them appropriately to create benefit for the entire merged project area. The following
provides a brief historical summary of the Agency's two merged project areas.
Merged BayfrontfTown Centre I Project
Area
Following its creation in 1972, the
Agency's initial focus and resources were
dedicated to the City's waterfront and the
historic downtown Third Avenue business
corridor. On July 16, 1974, pursuant to
Ordinance 1541, the City adopted the
Bayfront Original Project Area, which
encompassed approximately 637 acres of
territory east of the mean high tide line.
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Two years later, the City adopted the Town Centre I Project Area in 1976, encompassing
approximately 138 acres of territory located along and around the downtown Third Avenue
business corridor. On July 17, 1979, the two project areas were consolidated into a single Merged
BayfrontfT own Centre I Redevelopment Project Area to "pool" resources and issue bonds for
financing redevelopment activities.
To help facilitate planning efforts along the waterfront, the City adopted the Bayfront Amended
Project Area in 1998, adding approximately 398 acres of territory west of the mean high tide line to
the Merged BayfrontfTown Centre I Project Area.
Merged Chula Vista Project Area
As the City's population and economic
growth expanded to the south and east
during the next thirty years, the City
incorporated additional urbanized
territories to project areas to leverage
expanding development trends to address
growing housing and infrastructure needs.
The Town Centre II Original Project Area
was adopted in 1978 and included the
Chula Vista Shopping Center along with a
number of commercial properties along
the Broadway business corridor. In 1988, '. .
additional territory was added through adoption of the Town Centre II Amended Project Area.
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In 1983, the City adopted the Otay Valley Project Area to capture and leverage revenues
generated in the City's Auto Park Specific Plan areas. It encompasses 771-acres and contains
light industrial, entertainment and large retail uses, including the Coors Amphitheater, Knott's Soak
City water park, the Chula Vista Auto Park and a 25-acre Chula Vista Public Works Center.
In 1985, the City annexed approximately 2,500 acres known as the Montgomery Area. The
Southwest Project Area was established in 1990 to help address the area's historical infrastructure
issues as an unincorporated County community. Additional territory was added to that area in
1991 through the adoption of the Southwest Amended Project Area. It is the largest project area at
1,050 acres, primarily featuring small family-run industrial and commercial uses, along with
residential development.
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In 2004, the City approved a new Project Area called the Added Area that includes approximately
494 acres of property that is generally contiguous to the other existing Project Areas and provides
opportunities for increased collection of tax increment revenues. Expansion of the Project Area
also enables the Agency to more consistently implement redevelopment projects in the majority of
the commercially zoned areas in the western part of Chula Vista, particularly Broadway and Third
Avenue where (in many areas) the Agency previously did not have redevelopment authority.
Housing Set Aside
In addition to the plans, activities, and projects just described in the redevelopment work programs,
the facilitation and financing of affordable housing in the project areas is an important and
mandatory function of redevelopment. As tax increment revenues are generated in redevelopment
project areas, 20 percent of the gross revenue stream is immediately set aside and placed in the
Low and Moderate Income Housing Fund. Those funds, pooled with other federal and state
resources and tax credits, provide an important financing tool to assist in the development of
income-restricted, affordable housing projects. Low and Moderate Income Housing Funds also
provide important financing for:
. Housing programs, including First Time Homebuyer
. Land purchases for affordable housing
. Rehabilitation of existing multifamily housing
Annual deposits into the Low and Moderate Housing Fund for the next five years are currently
estimated to range from $2.9 million in fiscal year 2009-10 to $3.3 million in fiscal year 2014-15.
Low and Moderate Housing Fund monies may be spent anywhere in the City of Chula Vista. To
promote safe and sanitary affordable housing in western Chula Vista, however, the Agency should
focus and prioritize these important resources within redevelopment project areas in
neighborhoods of greatest need. The construction of new affordable housing within project areas
is also required by statute. State redevelopment law contains an inclusionary housing requirement
that provides that at least 15 percent of all new and substantially rehabilitated dwelling units
developed within a redevelopment project area be available at affordable housing costs to, and
occupied by, persons and families of low and moderate income (Health and Safety Code
!'l33413(b)). Of this 15 percent, at least 60 percent must be available to low and moderate income
persons or families. At least 40 percent must be available to very low- income persons or families.
RDA Revenues/Expenditures (FY 2008-09 to FY 2014-15)
Over the next five years, the Agency can only undertake those activities that can be financially
supported by its revenue stream. The Agency projects tax increment revenues equaling
approximately $13.5 to $14.6 million from all the Project Areas from FY 2008-09 through 2014-15
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respectively to fund necessary administrative activities, projects/programs and loan repayments to
the general fund.
The following tax increment revenue projections are based on current assessed values in the
project areas and an annual growth rate of two percent for those values. They do not account for
future redevelopment projects which may significantly increase tax increment generation in the
project areas.
Redevelopment Agency 5 Year Financial Forecast
Bayfront 2,072,623 2,114,075 2,156,356 2,199,484 2,243,473
TO\Alll Centre I 2,655,095 2,708,197 2,762,361 2,817,608 2,873,960
Otay Valley 2,421,242 2,469,667 2,519,060 2,569,441 2,620,830
Town Centre II 1.602,296 1,634,342 1,667,029 1,700,369 1,734,377
Southwest 3,619,247 3,691,632 3,765,465 3,840,774 3,917,590
Added Area 2,133,316 2,175,983 2,219,502 2,263,892 2,309,170
Interest Earnin s 15,000 15,000 15,000 15,000 15,000
Tax Increment Revenue & Interest Earnin s $ 14,518,819 $ 14,808,896 $ 15,104,774 $ 15,406,569 $ 15,714,400
Expenditures
Statutory & Negotiated Obligations
Low and Moderate 2,900,764 2,958,779 3,017,955 3,078,314 3,139,880
AS1290 Passthrough 1,277,870 1,303,427 1,329,496 1,356,086 1,383,208
Southwest Pass through 1,400,437 1,428,446 1,457,015 1,486,155 1,515,878
Goodrich Relocation 84,061 362,745 341,002 318,824 250,000
L T Adv DSF (payment to Gen Fund) 1,500,000
2003 COP 1,049,880 1,046,273 1,054,438 223,850
2005 ERAF 102,118 98,354 99,526 100,356 100,880
2006 ERAF 125,996 126,052 125,784 125,188 129,282
2006 T AS 2,019,029 2,018,929 2,015,229 2,013,066 2,013,241
2008 T AS 968,636 968,636 968,636 968,636 1,532,136
ERAF (Repymt to Low & Mod) 519,591 1,512,379 1,512,379 1,512,379
Smiser Prop Tax Rebate 35,000 35,000 35,000 35,000 35,000
Debt Service 5,800,659 4,812,834 5,810,991 4,978,475 5,322,918
A enc Personnel Costs 708,167 708,167 708,167 708,167 708,167
Total Obli ations and Debt Service 12,171,958 11,574,399 12,664,626 11,926,021 12,320,051
Available Resources $ 2,346,861 $ 3,234,497 $ 2,440,148 $ 3,480,548 $ 3,394,350
Other S&8, Prof & Consulting Fees 673,500 673,500 300,000 300,000 300,000
City staff 550,000 550,000 550,000 550,000 550,000
CIP 1,123,000
Non~CIP Pa ment to Gen Fund
Pro"eet Costs 2,346,500 1,223,500 850,000 850,000 850,000
Sur lus/(Deficit)~~<'";~,:~;f:~1l&i:,r;[~:;0~~r.~,:;;(~iE~:t:,,;~.! ~$'MI:7:~-~"L~~:~;361~ i$'~ B2)01 Ol997~: ;$':.."j'..::~1,590r:1~8; ~$5:,-:;;2i630f5"8; C$:..m;..JI2;544'350~
Note: The surplus reflected does not account for anticipated loan repayments to the general fund after fiscal year 2010-11.
51
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11-71
The following chart compares the property tax/tax increment revenues captured per City/RDA. As
noted below Chula Vista receives approximately 16.89% of the property tax/tax increment paid by
its constituency. Other Cities such as Poway and Coronado capture more due to their expanded
project areas and healthier tax base.
100.00% '"1""--
9000% --
. i
80.00% ..1.""".................-........,-".- -.--.-----.- - --.~"",-" --- ---..----
70.00% -I -.- . ----64C03%..-.-~7.01% ~.50% 67.~3% --....
60.00% +--...""'""'''., 54.33%--"--- ---- t, ---,"""
SOOO%F' k ----~-, ~~~
40 00% " .~ " 38.23% 0
2941% 2834% 29 59% ~ ~i 0 .'; ~, 31.9SU:.
3000% h 47~---- ~ ---), 23 22%-~-- ---oj J 23:3...0. %- ,:....;: 25'~~.&Yo c..'....'.... --. "'.1-9,38% I'.:'.. -
20 00% -'-------16 8900 f~ 14-23% ~ I . - '"' 16A3~. - -I ) --; ,/" -
1000% tm -~--: ~-! -- ~) ; --t,o --i'- ~ - ,-~. -. -I"
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G'?-'" '<::~V (,0<<:'- 'V <"," <",~ <",,?G i:''?-'' 'v o~ ",-,,0 0""' <ry'?' ~ '?-~'
(, <v v<v~..:;,..'?- <-,'?' <....0"
i! -,
E1RDASHARE
DeiTY SHARE
52
11-72
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_.___ 1~
VIII. Public Facilities Development Impact Fee (PFDIF) Program
General Impact Fee Requirements
Assembly Bill 1600, enacted in 1987 and effective January 1, 1989, as Government Code Section
66000, requires that a city establish a reasonable relationship, or 'nexus', between a development
project or class of development projects and the public improvements for which a developer fee is
charged. The City must:
. Identify the purpose of the fee;
. Identify the use to which the fee will be put;
. Determine that there is a reasonable relationship between the fee's use and the type of
development projects on which the fee is imposed;
. Determine that there is a reasonable relationship between the need for the public facility
and the type of development projects on which the fee is imposed; and
. Lastly, when a city imposes a fee as a condition of development approval, it must
determine that there is a reasonable relationship between the amount of the fee and the
cost of the public facility or portion of that facility attributable to the development.
Government Code Section 66000 also requires that the public agency segregate and account for
the fees received separate from general funds. In addition, if a city has had possession of a
developer fee for five years or more and has not committed or expended that money for a project,
then the City must make findings describing the continuing need for the fees for each fiscal year
after the five year period has expired. Fees excluded from the requirements of Section 66000
include:
. Fees charged in lieu of park land dedication under the Quimby Act;
. Regulatory and processing fees;
. Fees collected pursuant to a development agreement;
. Fees collected pursuant to a reimbursement agreement that exceed the developer's share
of an improvement;
. Assessment district proceedings or taxes; and
. Service charges for utility services such as sewer, water, and electricity.
As described above, current law requires the City to make a finding of continued need if a fee
remains unexpended after five (5) years. Since the City's development timeline runs beyond the
year 2030, it will often be the case that fees remain unexpended after five years. Whether these
funds are committed or not, the city shall make the following findings with respect to the
unexpended funds:
. Identify the purpose to which the fee is to be put;
. Demonstrate a reasonable relationship between the fee and the purpose;
53
11-73
. Identify all sources and amounts of funding anticipated to complete financing of the
improvement; and
. Designate the approximate date on which such funding will be available.
Following the adoption of development impact fees to fund major street improvements in its
eastern territories, the City undertook an in-house study of other public facilities and related capital
needs that were projected to be impacted by future growth. The result of that study was the
adoption of Ordinance 2320 in August of 1989 that established a series of 'supplemental' impact
fees. Collectively, these supplemental fees for public facilities totaled $1,374 per Equivalent
Dwelling Unit (EDU). This initial fee was established on an urgency basis, pending a more
comprehensive review.
During the following year, both the impact fees and the City's capital needs were studied in greater
detail. On January 8, 1991, the City Council adopted Ordinance 2432 (First Reading), amending
Ordinance 2320 and establishing the Public Facilities Development Impact Fee (PFDIF) at $2,150
per EDU.
In 1992 impact fees and needs were again reviewed, in accordance with the City's ordinance.
Although minor adjustments were made in various components, the 1992 study recommended that
the overall fee remain at $2,150 per EDU, pending a more detailed study after the planned
annexation of the Otay Ranch area.
In 2000, a comprehensive study of the PFDIF was presented to Council. This update was initiated
in 1997 and completed in 1999, following the aforementioned Otay Ranch annexation. For this
study, all major facility master plans underlying the PFDIF program were reviewed in detail. In
addition, for the first time in the PFDIF program, the 1999 report included an in-depth cash ftow
analysis so that appropriate financing charges could be integrated into the fee program. The 1999
study recommended increasing the fee per EDU to $2,618, with City Council adopting Ordinance
2810 on June 6th, 2000.
The next study of the PFDIF program was completed in March of 2002. This report recommended
increasing the fee per EDU to $4,888. This increase was largely the result of recently completed
formal master plans for the Civic Center and Police Headquarters Facility. This update also
introduced the ability for developers to prepay their Police Facility and Civic Center components.
The Prepayment Program set a fee rate that incorporated only project costs and omitted financing
costs. The report was presented to Council and approved via Ordinance 2855 on April 9th, 2002.
In November of 2002, the program was updated again to introduce a new 'Recreation Facilities'
component and update the existing component fees. Council approved an increase of the PFDIF
Program fee to $5,048 per EDU per the report's recommendation on November 19th, 2002, via
Ordinance 2887.
54
11-74
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On June 14, 2005, Council approved Ordinance 3010, authorizing the use of an automatic annual
fee increase based upon one of two applicable indexes, the Engineering News Record Building
Construction Cost Index (Los Angeles area) and the Consumer Price Index (San Diego
Metropolitan Statistical Area). The Construction Cost Index was approved for all components with
construction either underway, or planned for in the future (Civic Center, Libraries, Fire Suppression,
and Major Recreation Facilities components). For all other components (Police Facility,
Corporation Yard, and Administration components) the Consumer Price Index was approved. This
action increased the fee to $5,480 per EDU; with the first automatic indexed increase occurring in
October of 2005, increasing the fee to $5,489.
In October of 2006, Council approved the last comprehensive update of the PFDIF program. This
update did not include any new major facilities, instead focusing on updating the program
obligation to account for increased construction and financing costs of previously included projects.
In addition, the 2006 update included increased densities and other land use changes included in
the General Plan Update approved by Council on December 13th, 2005. The next update will
address new facility needs identified in various Master Plan updates currently in progress and is
planned for completion by the end of calendar year 2010.
PFDIF Program Scope
This Public Facilities Development Impact Fee Report is intended to identify the public facilities and
related capital needs required to support future development within the City of Chula Vista's
general planning area. The PFDIF program consists of 11 components:
Component 1 : Civic Center Expansion
Component 2: Police Facilities and Equipment
Component 3: Corporation Yard Relocation
Component 4: Libraries
Component 5: Fire Suppression System
Component 6: Geographic Information Systems (GIS)
Component 7: Computer Systems
Component 8: Telecommunications Systems
Component 9: Records Management System
Component 10 :Administration
Component 11: Recreation Facilities
Individual PFDIF components may include multiple projects. For example, Component 5: Fire
Suppression System includes various fire stations (e.g. Rancho del Rey, Otay Ranch - Village 2,
Otay Ranch - EUC).
55
11-75
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PFOIF Funds
Since the approval of the PFOIF program in 1991, a total of $99 million in fees collected have
funded fire stations, recreation centers, a library and related equipment on a cash basis. The City
financed the construction of the new Corporation Yard, Police Facility and Civic Center with the
debt service payments split between the PFOIF program and the General Fund. As a result of the
significant reduction in development-related fees collected over the past three years, the City has
restructured the Corporation Yard debt and created some cash flow relief to the PFOIF fund for the
next 2 years in order to meet debt obligations and avoid impacts to the General Fund. The
restructuring will provide for cash flow relief until development returns to reasonable levels which
would generate revenue to meet the annual debt payments and at some point move forward with
additional capital projects such as the Rancho Del Rey Library.
PUBLIC FACILITIES.
Administration 563/SFDU 2,655,487
Civic Center Expansion 2,458/SFDU 10,352,154
Police Facilit 1,565/SFDU (805,063)
Corp. Yard Relocation 421/SFDU 3,172,910
LIbraries 1,413/SFDU 8,127,644
Fire Suppression
S stems 1,243/SFDU 17,882,327)
Recreation Facilities 1,072/SFDU (6,494,319)
PUBLIC FACILITIES TOTAL 8,735/SFDU $(873,514)
""Equivalent Dwef/ing Unit (EDU) shown. Fee varies by type of residential unit,
and for commercial and industrial development.
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Key Variable Sensitivity Analysis
City of Chula Vista - General Fund Attachment A
Financial Summary
Actual 6/30/10 (3rd Qtr) eM Prop Budget Forecast Forecast Forecast Forecast
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
I~l
Property Taxes $ 29,258,925 $ 25,311,485 $ 24,073,147 $ 24,287,941 $ 25,233,722 $ 26,217,154 $ 27,254,540
Sales Tax :Sased on Eff. 1 % Tax Rate) 25,589,021 23,244,508 23,633,851 24,106,528 24,829,724 25,574,616 26,341,854
Franchise Fees 9,379,964 8,446,505 7,652,012 7,794,666 7,940,292 8,086,893 8,240,556
Utility Users Taxes 7,848,557 9,401,279 8,755,835 8,799,614 8,843,612 8,887,830 8,932,269
Transient Occupancy Taxes 2,302,412 1,940,930 1,940,930 1,979,749 2,019,344 2,059,730 2,100,925
Motor Vehicle License Fees 19,904,630 17,716,642 16,933,500 17,272,170 17,950,816 18,656,364 19,389,884
"'Subtotal Major Discretionary Revenues S 94,283.509 $ 86,061,349 $ 82.989.274 $ 84,240.687 $ 86,817,510 $ 89,484.587 S 92,260,029
Development Revenue 1 ,198,500 1,494,160 1,350,433 1,376,495 1,405,389 1,447,551 1,490,977
Licenses and Permits 670,962 653,608 711,050 732,367 754,322 776,952 800,261
Fines, Forfeitures & Penalties 2,357,044 2,187,770 2,059,980 2,096,820 2,138,756 2,181,531 2,225,162
Use of Money and Property 4.561.487 1,845,965 6,362,385 1,720,027 1,755,728 1,808,400 1,862,652
Other Local Taxes 2,068,784 2,031,402 2,031,402 2,063,616 2,104,888 2,146,986 2,189,926
Police Grants 1,803,853 1,736,061 1,412,669 1,124,161 1,124,161 1,134,271 1,078,639
Other A~ency Revenue 3,263,452 1,260,031 1,172,629 1,202,120 1,227,112 1,234,514 1,261,100
Charqes for Services 5,972,673 5,703,229 5,714,674 5,862,650 6,002,341 6,147,857 6.297,048
Interfund Reimbursements 11,136,368 10,544,050 9,665,625 9,813,845 9,958,875 10,115,186 10,274,258
Other Revenues - Miscellaneous 2,019,137 1,926,206 1,355,897 1,483,814 1,508,229 1,533,376 1,559,277
Transfers From Other Funds 11,167,169 14,876,249 18,405,004 12,111,173 12,303,716 12,500,192 12,700,681
....Total Revenues $ 140,502,938 $ 130,320,080 $ 133,231,022 $ 123,827,775 $ 127,101.027 $ 130,511,403 $ 134,000.009
b,
~
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ersonnel Services 80.437,019 $72,557,648 $71,704,595 $74,631,782 $75,677,422 $75,813,519 $75,828,236
Flex/lnsurance 9,096,257 $9,103,816 10,336,798 10,961,915 12,058,107 13,263,917 14,590,309
PERS 21,068,595 519,903.441 20,979,385 20,856,163 21,287,661 22,555,249 23,026,174
Supplies and Services 13,275,817 14,511,403 14,269,519 14,554,909 14,846,008 15,142,928 15,445,786
Utilities 4,722,287 4,843,637 5,244,077 5,506,281 5,761,595 6,070,675 6,252,795
Other Expenses 4,303,065 768,208 731,579 746,211 761.135 776,357 791,885
Equipment (Capital not CIP) 84,064 77,636 88,500 90,270 92,075 93,917 95.795
Transfers/Debt Service 7,273,232 8,554,291 8,751,569 8,839,085 6,418.476 6,482,660 6,547,487
Capital Improvement Projects 104,941 1,125,000
Non~CIP Project Expenditures 100,000 100,000 100,000 100,000
Total Expenditures $140.365.277 $130,320,080 $133.231,022 $136,286,616 5137.022,478 $140,299,222 $142.678,467
Adjustment to Fund Balance $ (102,701) $ $ $ $ S $
Net Impact to Fund Balance $34,960 $0 ($12,458,841) ($9,921,451) ($9,787,819) ($8,678,458)
Fund Balance. Fiscal Year End $9.336.805 $9.336.805 $9,336.805
Fund Balance as a % of Projected.Expe'nditur . .. ..,.... :';:,6.-7,%' .6.7% 6.7%
4-Summary
FY 2010 to FY 2015 Forecast.xls OS/28/2010
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1 % Salary ncrease
forPOA
....
....
o
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....
2% Salary Increase 'I""'t
for IAFF 0
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Final Paymen
for 1994
POBs
$2.7 million
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Increase for POA
1.5%., Salary
Increase for POA
POA MOU Expires
IAFF MOU Expires
Benchmark Study
for CVEA
....
....
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N
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10
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Expires
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for CVEA
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1.5% Salary
Increase for lAFF
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Facility callable
dates - opportunity
to restructure debt jf
necessary for
PFDIF & GF
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0 1 % Salary Increase .... 1 % Salary Increase N CVEA MOU Expires M Anticipated
.... ,oj ,oj ....
0 forPOA 0 forPOA 0 0 sigllificantlllcrease
N N N WeE MOU Expires N in pension costs
WeE Furlough 2.5% Salary due to CalPERS
,..; Expires 0 .-I Increase for IAFF 0 MMIPROF MOU ,..; investment losses
(V')
>- ,oj >- Expires M >- in 2008 and 2009.
:J 0 :J IAFF Professional OJ :J
....., N South .Bay Power ~ Enrichment & C .... ....., Estimated impact
:J 0
,..; Plant Scheduled to Uniform AlIo\vance ....., N $3.8 rnHlion.
.... stop operating, Reinstated
OJ resulting in loss of .-I
.D $2.5 million of CVEA. CONF, >- 1 % Salary Increase
E Franchise Fee MM/PROF Furlough .... for IAFF
10
OJ revenue to the City. Expires :J
u C 1.5% Salary
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0 .....,
Prepared by Finance Department. January 2010
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CV>Fiscal Health Plan'
Adopted in January 2009
I. Expenditure Cuts
II. Increase/Protect Revenues
III. Economic Development & Job Creation
IV. Budget Reforms
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CV Fiscal Health Plan
Overview
I. Expenditure Cuts
a. Budget reduction plan To be developed October 2010
b. Operational reviews Spring 2010 - Fire Department
c. STARS program Implemented
d. Pension reform Under review
e. Volunteer/intern program Implemented
f. Goodrich LEAN program Implementation Ongoing
e
dh
CV Fiscal Health Plan
Overview
II. Increase/Protect Revenues
a. Fee review Phase I adopted June 2010. Phase II
in progress; Phase III Spring 2010
b. Grant funds Ongoing
c. Contract review Ongoing
d. New partnerships Ongoing
e. UUT ballot measure November 2010 election
f. Improve sales tax revenues Ongoing
2
III. Economic Development & Job Creation
a. Major Projects
1. UniversityfTech Park (RFP) Ongoing
2. Western CV Revitalization Ongoing
3. Eastern Urban Center Ongoing
4 Bayfront (EIR) Ongoing
b. Small Business Assistance Ongoing
c. Development & diversification of Ongoing
revenue
IV. Budget Reforms
a. Fiscal Impact Review Implemented
b. Department Analysts Implemented
c. Debt Restructuring Implemented
d. Fiscal Policies Ongoing
e. Zero. base Budget Ongoing
f. Financial Forecast Implemented
g. Long Term Financial Plan In prog ress
h. Increased Transparency Ongoing
i. Finance Advisory Committee August 2010
3
Budget cuts started in 2007
. Cuts made in General Fund, Redevelopment, Housing,
Fleet, & Development Services
. FY 2007 - FY 2011 staffing cuts:
259 permanent positions citywide
50% reduction to hourly staffing
. Major revenue sources continue to trend downward,
including:
Property Tax
Sales Tax
Motor Vehicle License Fees
April 2007
December 2007
April 2008
September 2008 - DSF
January 2009
A ril2010
FY 2007-08
FY 2007-08
FY 2008-09
FY 2008-09
FY 2009-10
FY 2010-11
$ 10.1 M
$ 15.5 M
$ 10.8 M
$ 1.5 M
$ 20.0 M
$ 10.9 M
Noles
1. The net cost reductions summarized above cannot be considered cumulatively. There are instances
in which reductions were effective for a single fiscal year only (for example, freezing a vacant pOSition
for one year). The same po.~ition may have thl:m been permanently eliminated In a laler budget
reduction program
2. The fiscal veal 2010-11 budget net cost reduction included the use of a one-time revenue of $9.6M.
4
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City of Chula Vista
BudgetedPerma""nt&HourlyStaffmg.
FT~s pcr 1,000 Population, Citywide Total
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5.79
0>0
~""'-""V 5'"7,m
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4.50
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1"~7 1968 1".9 109<' '"~' 199~ 1M3 1(}94 1995 1996 10Q7 1%0 1999 20(}l) 2001 2002 LOa, 2004 7006 .006 <<l07 ~006 ~aog 2010
FIS<.IYNr
'H',unjsl,ffing FrEe,',,,,"'" 'oen ,0000,Q1u"'''''''.m'''....d''''"'''''''''O."OO~^,.rd.ve'.'e~"'lywage'"'e
Sm""~' _ S",*",fed I'<'Im,n"," & Ho,,/, Stoff,,,l/. Bud"", oocomeols, .m,,"''''' '-'~ wago budge' an<! ''''''0''''''' ,<""i,,~ ",poll
C'tydChul"V<s'''popul.I,,,,,'C..romioueo,,,'",,,,"ofFi,,,,,,,,,,.II,,,liln,l.s"'D/Jan",,'Y'
Public Safety 53250 540.50 493.50 480.50 482.50 -50.00 9%
Community Services 114,00 109.75 89.25 6625 65.75 -4825 -42%
Development and Maintenance 472.75 458.25 398.25 35775 351.75 -121.00 ~2G%
Le~islative and Administrative 144.50 14000 128.50 100.50 104.75 -39.75 28%
Total Citywide 1263.75 1248.50 1109.50 1005.00 1004.75 -259.00 ~20%
5
,
.<._.._. .!O""
. General Fund budget cuts have resulted in service impacts
in departments and diminished the City's ability to provide
services.
. City staff continues to work diligently to provide the best
services we can provide with limited resources.
. Service Impacts Include:
- Eliminated 11 sworn police positions (4% reduction since FY07)
- Eliminated 4 police dispatchers (17% reduction since FY07)
- Eliminated 8 Community Service Officers (73% reduction since
FY07)
- Reduced street maintenance staffing, creating pavement repairs list
backlog
- Eliminated one storm drain crew
Reduced park maintenance staffing, resulting in visible degradation to
the lawns and planted areas
Reduced Fire Prevention staffing
Eliminated Fourth of July fireworks on the Bayfront
Eliminated City support of STRETCH and DASH programs
Reduced funding for Library resource materials
Eliminated Recreation middle school programs
Transitioned operation of Nature Center to non-profit organization
Reduced custodial staffing, resulting in reduced cleaning services at
the Recreation Centers, Libraries, and other City facilities
Reduced park maintenance staffing, resulting in mowing turf reduced
from weekly to biweekly, cleaning restrooms at some parks reduced
from twice a day to once a day
6
Contracted Fire Communications Services
Reorganized and combined Departments
Eliminated Police Commercial Enforcement officer
Reduced Police Investigations staffing
Reduced services for Seniors offered through Recreation Department
Reduced hours of operation of Recreation centers, all facilities closed
Sundays
Eliminated Therapeutics program
Reduced aquatics programs and activities
Reduced hours of operation at all three Library branch locations
Eliminated Library Department's Educational Services Division
including Adult Literacy program
Eliminated Cultural Arts program
Eliminated Concerts in the Park and Taste of the Arts
Suspended construction of Rancho del Rey Library
Eliminated or reduced median landscape and/or hardscape
maintenance leading to complaints and visible neglect
Reduced preventative maintenance in fleet
Eliminated employee health and wellness initiatives
Reduced funding for safety programs causing delays in facility safety
inspections
Transitioned City Clerk records management to low priority, resulting in
less efficient records retrieval, retention and storage
Increased time in producing City Council meeting minutes
Reduced number of Finance check runs for vendor payments
Delays in Finance grant reporting and monitoring
Eliminated Graffiti removal contract
Reduced Advanced Planning staffing
Eliminated mail distribution of Spotlight
7
I
I
~~,..
~.~.
" <~
"~~
~"~.
'T'~;\t'j" '
'\..'.."..,."., "
"
Servic~ Impacts
Eliminated dedicated staff for legislative analysis and governmental
relations program
Reduced Information Technology Services staffing, increasing
response times for computer support
Eliminated one of two Webmaster positions delaying the rollout of
additional e-government applications
Reduced City Attorney staffing, eliminating specialized legal expertise
in certain areas including redevelopment, employment, and labor law
Eliminated a sign crew, resulting in backlogs for deferred maintenance
associated with traffic sign repairs and maintenance
Eliminated all City painters (two full-time positions)
Reduced Fire Training Division staffing
Eliminated all in-house employee development programs
Closed Chula Vista Youth Center
Financial ForecaSt
'~
~
~""~'
,,, 10 ... '
"-.., ,
'"
,i~\
{ C '
, C.,,.-
~
-~
8
rn:~;;'ir.1~ "iiir~iY
Property Taxes
Sale5Tax
FrarlchiseFees
Utility Taxes
TransienlOccuparlCyTaxes
OltlerLocalTaxes
UseofMoney&Property
Motor Vehicle Licerlses
ReverluefromOtherAgen('les
Charges for SerYlces
OIherRevenues
Total Di5cretionary Revenue
Total General Fund Revenue
General Fund Revenues (in thousands)
t:;;'.itj~lf''r.lll'"F.llh..Wll..J",.I'I:,fi''12:W::illillm::m:md;;loA.H:i{.1F'..H&'..J!_;;IofJ"leI",o!I'I'JIl!~r::1 Jti/""~'.hl'J.:LiI
$ 29,259 $ 25,311 $ 24,073 $ 15,186) -18%
$ 2.';,58<) $ 23,:'<45 $ 23,634 $ (1,955) ~e%
$ 9,:'80 $ 8,447 $ 7,652 $ (1,728) -18%
S 7,849 S 9,401 $ 8,756 $ 907 12%
S 2,302 S 1,891 $ 1,891 S (411) 18%
S 2,023 S 1,991 S 1,991 S (32) -2%
$ 1,147 $ 9b8 S 930 S (217) -19%
$ 19,905 $ 17,717 S 16,934 $ (2,971) -15%
$ 956 $ 971 $ 946 $ (10) 1%
$ 180 $ $ $ (180) -100%
$ 1/;01 $ 1,118 $ 900 $ (541) -3G%
S 100,090 $ 91,059 $ 87,767 $ (12.324) -12%
140,503 130,320 133,231 (7,272) -5%
Note- The Use of Money and Property revenue category has been adjusted to exclude one time incre3ses in the loan
rerayment from the RDA to the General Fund. In flsca] year 2008-09, the General Fund received $2.6 million in this
category from the RDA; in fiscal year 2010-11 the General Fund will receive $4.6 million in this category from the RDA
For comparison purposes these one-time revenues have been excl udedfrom the table above
en $120
c:
g $100
:;:
$80
$60
$40
$20
$0
FY06
Actual
FY07
Actual
FY08
Actual
FY09
Actual
FY10 proj FY11
Budget
III Property Tax
El Franchise Fees
o Transient Occupancy Taxes
o Sales Tax
o Utility Taxes
&J Motor Vehicle License Fess
I
9 I
j
_~;l':""
. Slow Economic Recovery
. No funding for Vacant Positions
. No revenues assumed for South Bay Power Plant
. 2% Attrition Factor
. RDA loan repayments averaging $1.5 million per year
. Health Care increases of 10% per year
. No Salary increases beyond existing MOU agreements
. Assumes continued collection of UUT revenues
. Does not include potential CVEA MOU increases
I
L-
Revenues
One-Time Revenues
Total Revenues
Expenditures
~ili.W':"::;i;) ~.lInl;'" ~ ~tt]: ~~l ffi[~}d;~ ;;J
!i.Ill.lm1l ~ 7".,,[0/11 ~ ::"."",w ~
&!ili.r':Ct:}'!l
$ 138.3 $ 126.3 $ 123.6 $ 123.8 $ 127 1 $ 130 5 $ 134,0
$ 22 $ 40 $ 9.6 $ $ $ $
$ 140.5 $ 130.3 $ 1 33.2 $ 123.8 $ 127 1 $ 130.5 $ 134.0
$ (140.4) $ (130.3) $ (133.2) $ (136.3) $ (1370) $ (140 3) $ (142.7)
$ 0.1 $ $ $ (12.5) $ (9.9) $ (9.8) $ (8.7)
Surplus/(Deficit)
Nute,
Projecled <ieficit is based un lorecasled figures for fiscal year2011.12, theprojectedd~fiCltwill be rer,ne<lwhen tile l.>a;e budget forfi5cal year2()11.
12 is developed laterlh,., year, which will include ul->1aled revenue and <'xpenditure projections and adj"~tments lor PERS oonllibutinns and FLEX
casts which are nol,roown at this time.
As noted on the prevIous slide, positin~s that ate frozen in the current year bu<lget ar.. assumed to be fruzen for the remaind~r o/the tor~ca5t period
The elimination ufthcse vacant and non-funded positions res"lb in nobudg~tarysavings
One Tune Rt'venuD' Utilized 10 Off,BI con/tnwn\J decline ill discretIOnary feVenlleS
FY 2008 09 Il1crlHlsed RDA RelmiJursemenl by $900,000 arid reduced contril,,~ion to WOI1cers Camp Fund and Eqwpment Replacemel~
Fund (as repart,.,i in th~ Quar/E'rty Final1cial Repnrts for FY 200809)
FY 2009_10 Increased RDA Reimbursement by $2,2 mdllon Increa~ed slafftime lelmbursemel1/s by $2 0 mrllron relatlJd (a Prop B (as
n:porIedin II"" QuarteliyFmancialRepo:JrtsforFY2009 10)
FY 201O-11/"",eased RDA ReimtJuls~ment as a result of PAD land sai" transaction (as apPloved by City COur1cii and Inciuded in IIJe
CDur1CfIAdDpledBUr/gfll)
10
$145.0
$140.0
$135,0
$130.0
$125.0
$120.0
$115.0
$110.0
"
~ ~ I
FY2010
FY2011
FY2012
FY2013
FY2014
FYZ015
~Expenditures
~Revenues (less UUT)
-0,"", Revenues
Nole5:
1. The drop in ["<'woue from FY2011 to FY2012 largely cor,~,~b ur the ~llminallon uf one-time rcveowe 01 $9 6 million usen to balance FY2011
2. The pro)"Cled Gene,al Fund defidt is projer:tedto decreJ"e by 52,6 million trom FY2012to FY2013. frum $12,5M tu $9,9M
3 Revenues (less UUT) represents llle loss of $5,6 mllliun annually in rev~nueS 5hnuld lh~ UUT ballot measure tail; ttle projected gap for FY2012
grow~ from $12,5M to S18, 1M without tllis revenue. POl~nllallo,s of UUT is mfleeted at FY1 0 aCl,mb (nnalJnited): actual revenue loss Will
eJep"'lIdoncarnersandcurrentconlmcls
category"",
Property Tax
Sales Ta,
franchisefee5
MVLF
Utility Users Tax
TOT
rt~~I1"6~OO"r4-li0mi00m:2tj09~1.D.:i:i!F.d"litY2~J!)I1Jm mmUi2OT1';f2;:t,::""",,"20r2~f~ mmmm'203"3:"14-.l
7 8% 0.2% -13,5% 4 9% 0.9% 3,9% 3,9%
0.1% 9,6% -9.2% 17% 2,0% 3,0% 3,0%
-2.8% 2,9% -10,0% -94% 1,9% 1,9% 1,9%
5.9% 0.5% -110% -4.4% 2.0% 3,9% 39%
7,7% 6.4% 198% -6,9% 0.5% 05% 05%
2,5% -14,6% -157% 0,0% 2,0% 2,0% 20%
2i,1:4'-","'$
40%
30%
10%
3,9%
0.5%
2.0%
Notes
For fiscal year 200910 and fiscal year 2010-11, Property Tax and Motor Vehicle License Fee
change leflects drop in Assessed Values per County of San Diego - Assessors Officp
2 For fiscal year 21109.10 and fiscal year 2010-11, Sales Tax change rel/ects continued Impacts
related to recent economic downturn, ThiS rs based on most recent report from MuniServices 31d
quarttilupd:;i!ti
3 Franchise Fees and UUT anticipate closure of South Bay Power Plant in Fiscal Year 2011
II
__'_,.._,,--'-'1'1'
General Fund Expenditures
Program Revenue
Net Cost
Excluded Non Dept Expenditures
Adjusted Budget
$ 133.2
$ 31.1
$ 102.1
$ (11.3)
$ 90.8
Note: Non Departmental expenditures include debt service, insurance
premiums, public liability expenditures, and computer hardware and software
expenses
Finance$2.0M
2%
CllyCouncil$12M
1%
City AlIorney $2 OM
2%
City Clerk $O.9M
1%
Administration
$1.1M1%
Conservation$02M
0%
Human Resources
$35M4%
]2
Proposals to be researched andlor considered during next 12 months:
Master Fee Schedule Update
Storm Drain Fee
Local Sales Tax Outreach - Business to Business
Alternative Power Plant
Pension Reform
Debt Restructuring
Franchise Fee Review
Additional Service Reductions
Increasing Contractual services (outsourcing)
~:: ..
~eXt+Steps .. :
-,; ,>.."
.~ ':
August Establish Finance Advisory Committee
August Executive Team meetings discussing reduction lists and
prioritization of services
August- September Budgetary Informational Meetings to Union Representatives
and City Employees.
August- September Meet and Confer with Bargaining Groups related to impacts.
2010
Early September Finance Advisory Committee to review and discuss budget
balancing options and review base budget.
13
~ Next Steps
.~ 0
September-October Public meetings related to proposed budgetary reductions
October 5, 2010 City Council Workshop - Present departmental reduction
lists and recommended cuts. (No Council Action requested
at this stagel Public Information and Feedback)
November- Development of detailed baseline budget which will take into
December account updated revenue and expenditure assumptions, ie
PERS contribution rates, sales tax, and property tax,
department budget adjustments, equipment replacement
January 2011 Departments finalize budget reduction plan based on
updated FY 2011-12 budget
e NextSteps
.~ February 2011 Base budget and proposed reduction plan presented to the
City Council for approval
March 2011 Layoff notices issued by Human Resources effective July 1,
2011
April- May 2011 Finalize City Manager's FY 2011-12 budget
June 2011 Council adopts and appropriates FY 2011-12 budget
]4