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HomeMy WebLinkAboutCC Reso 2019-09 RESOLUTION NO. 2019-09 A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY, CALIFORNIA, APPROVING A CAPITAL IMPROVEMENT PROGRAM (CIP) FOR FISCAL YEARS 2020 THROUGH 2024. WHEREAS, the City Council has received the proposed summary of CIP approved projects for Fiscal Years 2020 through 2024; and WHEREAS, the City Council reviewed said CIP of planned projects and conferred with the City Manager and the Administrative Services Director; and WHEREAS, the City Council desires to adopt the CIP of planned projects for the five-year period; and NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Cathedral City as follows: SECTION 1. The City Council does hereby adopt the five-year CIP of planned projects for Fiscal Years 2020 through 2024, a summary of which is attached hereto and made a part of hereof, and amounts are thereby allocated to the departments, projects, and activities. These amounts are subject to existing priorities and available funds. SECTION 2. Since budgets for Capital Improvement Projects are appropriated prior to the commencement of the individual project, the attached CIP is intended to be a planning document only. The adoption of the attached CIP identifies the amounts planned to be expended during the FY 2019-20 and FY 2020-21 budget periods and in each of the subsequent three fiscal years. SECTION 3. Each project in the attached CIP has previously received independent final approval from the City Council. SECTION 4. The funding for each previously approved project is based on the anticipated funding mechanism as of the current date. SECTION 5. The City Manager or the Administrative Services Director shall have the authority to adjust amounts within each fund, provided however, the total amount for the CIP project does not exceed the amount approved for the CIP project. PASSED, APPROVED, AND ADOPTED this 8th day of May 2019. M 7)CJ2- rk arnev ayor ATTEST: X1/1 ' I.• Tracey R. Peartinez, City Clerk APPROVp AS TO FORM: t /1 a^ l \}V�-`�n/\`^� { '�N CIN 1 uI`� I, TRACEY R. MARTINEZ, CITY CLERK of the City of Cathedral City, do hereby certify that the foregoing Resolution was introduced and adopted at a regular meeting of the City Council of the City of Cathedral City held on the 8th day of May 2019 by the following vote: AYES: Councilmembers Gutierrez and Gregory; Mayor Pro Tem Aguilar and Mayor Carnevale NOES: None ABSENT: None ABSTAIN: None Tracey R. FRartinez, City Clerk BUDGET MESSAGE • Budget Message . . � . .. / y - ��\����\ 5IPage iti Cathedral City This page intentionally left blank. BUDGET MESSAGE Cathedral City HONORABLE MAYOR, MEMBERS OF THE CITY COUNCIL AND RESIDENTS OF CATHEDRAL CITY: After months of review and discussions, we are pleased to present the adopted Biennial Budget for Fiscal Years (FY)2019-20 and 2020-21 for the City of Cathedral City(Operating Budget and Capital Improvement Project(CIP) Plan), the Successor Agency to the Cathedral City Redevelopment Agency ("Successor Agency"), Cathedral City as the Housing Successor Agency, and the Cathedral City Public Financing Authority. This biennial budget was developed with a primary focus to accomplish City Council goals established in January 2019. Departments reviewed their past accomplishments and developed objectives focusing on achieving these overarching City Council goals: • Economic Development • Infrastructure • Fiscal • Public Safety • Code Enforcement • Parks • Human Resources • Housing • Council Planning, Future Actions FINANCIAL STATUS OVERVIEW In the past two years, we are happy to see the City of Cathedral City continuing to experience positive signs of an economic recovery. There continues to be increases in property values and decreases in unemployment rates. These indicators are translating into increased revenues for the City. For the past ten years, balancing the budget has been a challenge. For the three successive years from FY 2009- 10 through 2011-12, the City adopted general fund budgets with structural deficits. In order to achieve stabilization in balancing the budgets for the next five successive years, FY 2012-13 through FY 2016-17, difficult employee- related decisions, including layoffs and concessions,were necessary. For the past two fiscal years,the general fund budgets were adopted with structural deficits; however, net surplus was achieved in FY 2017-18, and we anticipate a net deficit will be recognized in FY 2018-19. To illustrate, revenues remained flat from $33.982 million in FY 2009-10 to$33.876 million in FY 2012-13.With the economic downturn, it was necessary to generate a stable source of revenues to ensure the City's ability to maintain 7IPage BUDGET MESSAGE, continued financial solvency.This stability was achieved through the support of Cathedral City residents to pass local revenues measures. The transactions and use tax (Measure H) was passed in 2010 coupled with Measure B in 2014 eliminating the Measure H tax sunset resulting in a secure revenue source. In FY 2015-16,the City Council pursued diversifying the City's tax revenue source through a Cannabis and Marijuana Tax (CMT) allowing this burgeoning business sector to establish dispensary, cultivation and manufacturing businesses in the City. During these next two budget years, we anticipate continued growth of the new CMT revenue source. Revenues/Transfers In vs. Expenditures/Transfers Out (thousands) $52,664 $52,000 - - — $50,684 $49,500 $46,295_ _ $52,661 $47,000 _$##;31$.-__._. $50,673 --- $44,500 $42,000 — _______._ __. �__� _..._ $46,024 $39,500 --__ —___ ..__._.___--$,6,681 X36;313__. 537,1711_$,36,3 $43,422 $37,000 —$34,987 $33,876 $34,500 _ _ _ ._ $34488-_- $32,000 - -$30-88--$34-$48- __.. $29,500 $31.056--- $27,000 $31,068 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19e 2019-20b 2020-21b mOmRevenues/Transfers In .e.Expenditures/Transfers Out FY 2019-20 AND FY 2020-21 BUDGET OVERVIEW Citywide Financials The City's operating budget includes a variety of funding sources.The General Fund is the largest single fund and represents the City Council's most discretionary revenue. Other funds include the following non-General Fund revenue sources: special revenue funds, capital projects funds, debt service funds, internal service funds, and private purpose trust funds.The total City expenditure budget for FY 2019-20 is$113.6 million; and for FY 2020-21, the total City expenditure budget is$110.6 million.Within the General Fund for FY 2019-20,the budgeted revenues are$50.684 million,and the budgeted expenditures are$50.673 million, resulting in a net surplus of$10,751.Within the General Fund for FY 2020-21, the budgeted revenues are$52.664 million, and the budgeted expenditures are $52.661 million, resulting in a net surplus of$3,598. With these projections for FY 2019-20 and FY 2020-21, the General Fund should retain a fund balance of$21.631 million,which surpasses our policy of maintaining a minimum 33% fund balance of budgeted expenditures/transfers out ($17.378 million). This change in the General Fund is primarily due to rising costs attributable to labor-related expenditures, California Public Employees' Retirement System (CaIPERS) retirement rates, and the Other Post-Employment Benefits (OPEB) liability. Citywide Staffing Over the years, labor force reductions have been in response to budget shortfalls and causing various departments to do more with less. Staffing resources have declined from a high of 238 FTEs (full-time equivalents) in FY 2007- 08 to a projection of 200.5 FTEs in both the FY 2019-20 and FY 2020-21 budgets, resulting in a staffing decrease of 15.75%. In doing so, City departments and staff believe in following the "work smarter, not harder" approach in BUDGET MESSAGE, continued providing high-quality services while protecting the safety of Cathedral City residents through innovation, ingenuity, and employee productivity. To that means, the City is moving closer to enhancing our customer service capabilities through the implementation of a new enterprise-wide resource planning (ERP) system to better service the needs of the Cathedral City community. FINANCIAL OPPORTUNITIES Over the last 10 years, the periodic question from the community has been: "why does the City appear to have a never-ending budget problem?"And, more specifically, "why is there still a problem given the City has had various tax measures?" These questions are valid and are primarily due to these two components: the City is still experiencing a recovery of core revenues, and the City is experiencing increased labor costs. The City's core annual revenues traditionally consisted of taxes(property, sales and use, and transient occupancy), franchise fees, licenses and permits, charges for services, fines and forfeits, intergovernmental revenues, use of money and property, and miscellaneous revenues. In addition to these core revenues, the General Fund would receive transfers in from other City funds for miscellaneous reimbursements. Effective April 1, 2009, the Utility Users' Tax (UUT) became effective. The UUT imposed a 3% tax on the use of telecommunications, cable (video), electricity (including cogenerated), gas, and solid waste. In FY 2019-20, the UUT is projected to generate$2.7 million in annual revenues. Effective June 2010, the Transactions and Use Tax (TUT) became effective imposing a 1%tax on all retailers doing business within the city. In FY 2019-20,the TUT is projected to generate $6.987 million in annual revenues. During FY 2015-16, cannabis and marijuana tax (CMT) tax revenues became effective for licensed/operating dispensary, cultivation and manufacturing facilities. In FY 2019-20, CMT is projected to generate$6.25 million in annual revenues. Going forward, the challenge will be to balance each fiscal year's budget on its own without dipping into General Fund reserves. To ensure long-term viability, the City needs to maintain (and grow) not only the core revenues discussed above, but also the UUT, TUT and the new CMT revenues. Economic and Business Development As was pointed out in the previous section, revenue growth has occurred in core revenues, most notably sales and use taxes which are generated from taxable transactions on goods sold.Total taxable transactions reached a peak of more than$1 billion in Calendar Year(CY)2006, and then a low of$600 million just three years later in CY 2009. Fortunately,the City has seen a consistent rise in taxable transactions since CY 2009 to the current reportable level of $910 million in CY 2017. In the coming years, we strive to pursue opportunities for Cathedral City to not only surpass the$1 billion peak in taxable transactions, but to maintain sustainable growth well into the future. [This space intentionally left blank.] 9IPage BUDGET MESSAGE,continued Total Taxable Transactions (thousands) $1,000,000 G $900,000 __ __ $700,000 I___ _ _ d $600,000 t. __.._ ._ ._ __ .._._i,_ .. r $500,000 __. __ .__._..._._._ _ ..__ __. ..._ i 3 $400,000 $300,000 —_ ..___.__t -- _ -is t �_ y_ $200,000 !__ _ i __� ; ,,. _ T k. r } $100.000 — I — __ S _ t $0 , CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 Taxable $753,076 $606,523 $622,226 $677,067 $717,203 $792,140 $839,998 $899,842 $892,558 $909,764 For the City to continue this growth trend, core revenue growth is accomplished not only by the economy, but also through community engagement and strong community relations, a goal established by the City Council that continues into the upcoming biennial budget period. This will be accomplished through community newsletters, social media presence and the continued growth of special events.As the economy continues to recover, City staff, under the direction of City Council, continues to devise and implement new revenue-generating strategies in order to provide Cathedral City residents with the necessary level and highest quality services available within our current capabilities. Through the City Council-adopted goals, one of the key strategies for that growth is to continue to maintain and improve upon the infrastructure of Cathedral City. Included in this biennial budget, is the Capital Improvement Project (CIP) Plan recommending significant investments in the City's streets and roads, parks, and facilities, not only for our existing residents and businesses that call Cathedral City home, but also in attracting new residents and businesses as part of our City's future growth, especially in the northern portions of Cathedral City. Other key strategies adopted by the City Council are to look at ways to provide necessary infrastructure (both new and improved)and to expand the City's footprint through growth and development opportunities; review and update the City's General Plan; refine our marketing narratives to appropriately define who we are; and continue the fundraising and planning for the development of the downtown Festival Park while the new Heritage Park/Commons, now known as the Cathedral City Community Amphitheater, is finalized during this two-year budget period. In addition, City Council and staff continue to enhance the transparency of city government and the availability of information to the public, while ensuring the ongoing public safety commitment to protect our entire community. In doing so, we feel these investments will continue to attract new businesses and residents in strengthening Cathedral City. ACKNOWLEDGEMENTS We would like to thank the City Council and City Manager for their leadership and overall direction of this budget. We would also like to thank the many residents and business owners providing input and feedback to not only the City Council, but also City staff throughout the year. This has become a valuable resource we are able to tap into during the budget process.All are to be commended for taking the time for being involved in this very important process. BUDGET MESSAGE, continued Finally, we would like to take this opportunity to thank all City staff who participated in developing this budget document. Preparing the budget is a demanding and time-consuming effort for all staff members.This is especially true considering the continued workloads of staff in other areas of responsibility and the budgetary challenges facing the City. "Teamwork" among individuals and departments resulted in this budget document.This same "teamwork" will continue Moving Cathedral City Forward into the future. Respectfully submitted, 1 �. ;dr /4. Tami Scott Administrative Services Director 11 ( Page