TITLE
Recommendation to approve the Fiscal Year 2011 second quarter departmental and fund budget appropriation adjustments in accordance with existing City Council policy. (Citywide)
DISCUSSION
On September 14, 2010, the City Council adopted the Appropriations Ordinance governing the City's Adopted Budget for Fiscal Year 2011 (FY 11). Periodically, changes in revenue or operating conditions require appropriation adjustments. For example, in certain cases these adjustments enable departments to expend recently awarded grant revenue for which there is no existing appropriation. In addition, changes for multi-year grants/projects are necessary to bring appropriations in line with final grant/project award amounts. In accordance with the City's practice, these adjustments are presented quarterly to the City Council for consideration. Please see Attachment A for a Fund Balance Analysis of impacted City funds, Attachment B for a recap of FY 11 General Fund Expenditure Budget Adjustments and Attachment C for a list of All-Years Carry-over Budget Adjustments.
This matter was reviewed by Assistant City Attorney Heather A. Mahood on April 15, 2011.
TIMING CONSIDERATIONS
The following requests for adjustments to FY 11 departmental and fund appropriations are necessary to reflect changes in operating conditions. City Council action is requested on June 7, 2011 to enable the timely processing of payments.
FISCAL IMPACT
Airport
On August 10, 2010, the City Council approved a contract with Delmac Construction and Development, Inc., to make lighting, electrical, mechanical and storm drain system improvements to the Spring Street and Lakewood Boulevard tunnels, and also approved an appropriation increase of $1,025,156 in the Gas Tax Street Improvement Fund. Subsequently, the Airport requested and was awarded additional funding from the Department of Transportation when it was discovered that hazardous materials clean-up would increase contract costs. An appropriation increase of $35,648 is requested for the supplemental funds awarded for an overall total of $1,060,804.
· Increase appropriations in the Gas Tax Street Improvement Funds (SR 181) in the Airport Department (AP) by $35,648.
Development Services
On February 17, 2010, The Long Beach Housing Development Company approved a loan to Brookfield Atlantic Avenue, LLC, to provide a Development/Gap Financing Loan of $7,808,000 for the development of the Coronado project, consisting of 48 for-sale units available to moderate-income first-time homebuyers. Upon the sale of each unit, sale proceeds will be returned to the City to pay down the Development Loan. These funds will then be utilized to provide second mortgage assistance to the individual borrowers.
· Increase appropriations in the Housing Development Fund (SR 135) in the Development Services Department (DV) by $7,808,000.
Long Beach Transit recently completed a modernization of the transit mall on First Street between Long Beach Boulevard and Pacific Avenue in the Downtown Redevelopment Project Area. The City partnered with Long Beach Transit to include elements identified in the Pine Avenue Streetscape Improvement Project, such as artwork, new street lighting, replacement of damaged sidewalks and resurfacing of the street. The City's portion of the project is approximately $900,000, and is funded by the Los Angeles County Metropolitan Transportation Authority Proposition A Local Return Program, which provides funding to local agencies to improve public bus services and transportation infrastructure. An appropriation increase is necessary in order to reimburse Long Beach Transit for the City's share of the project costs.
· Increase appropriations in the Redevelopment Fund (RD 224) in the Department of Development Services (DV) by $900,000.
Fire
On October 13, 2009, the City Council authorized the City Manager to execute a contract with the City of Los Angeles to receive and expend Department of Homeland Security grant funding for the 2008 Urban Area Security Initiative (UASI) Grant, in an amount not to exceed $3,951,754. Included in the original grant award was $506,610 for the Fire Department to upgrade its self-contained breathing apparatuses (SCBAs). As the Fire Department was able to upgrade its SCBAs with a prior UASI grant award, the City of Los Angeles is now amending the UASI 08 grant agreement with the City of Long Beach to reduce the grant award by the $506,610 and will reallocate these funds to another fire agency. The Los Angeles Area Fire Chiefs Consortium is in agreement with this UASI 08 reallocation. There is no net impact to the General Fund nor to the General Grants Fund.
· Decrease appropriations in the General Grants Fund (SR 120) in the Fire Department (FD) by $506,610.
Library Services
The Long Beach Public Library has received $59,179 from the Friends of the Long Beach Public Library to supplement the Library's budget for materials and supplies. Additional funds have been received through the Long Beach Public Library Foundation as follows: $207,325 from Jet Blue as payment in-lieu of City fines; $45,354 from the John Crews Estate; and $3,027 in Gutenberg funds. The funds are designated for purchase of Library materials; 60 percent of these funds will be used to obtain materials for branch libraries and 40 percent will be used to obtain materials for the Main Library. An appropriation increase is requested in order to expend the donations in FY 11. This increase in expense appropriation is offset by a corresponding increase in revenue in the General Grants Fund (SR 120).
· Increase appropriations in the General Grants Fund (SR 120) in the Department of Library Services (LS) by $314,885.
Long Beach Gas and Oil
The Tideland Oil Revenue Fund (TORF) is used to account for all oil operations occurring within the Tidelands area of the City. Revenues and expenditures can fluctuate greatly because of changes in the price of oil. Payments made to the State (as required by various operating agreements), represent the vast majority of expenses within TORF. The remaining expenses support oil operations and other Tidelands operations. The FY 2011 Adopted Budget for TORF was based on a conservative projection of oil prices, and was set at $70 million. This approach was taken to avoid any negative impact caused by the volatility of oil prices, which occurred in FY 2009.
Revenues are expected to perform higher than budget for the remainder of the fiscal year. At this time, staff is requesting City Council approval to increase budget in the TORF to $279.9 million, of which $264.7 million will be forwarded to the State. Recommended appropriation changes are as follows:
Long Beach Gas and Oil Department staff closely monitors oil price changes and will request additional appropriation, as necessary.
General Fund revenue is currently projected to end the year approximately $5.1 million less than the FY 11 Adopted Budget. Staff recommends that the higher oil revenue be used to offset this revenue shortfall. It is also recommended that anticipated additional one-time oil revenue funds, estimated to be approximately 10.5 million by Fiscal Year End, be appropriated through future quarterly budget adjustments.
· Increase appropriations in the Tidelands Oil Revenue Fund (NX 420) in the Long Beach Gas and Oil Department (GO) by $279,874,549.
· Increase appropriations in the Upland Oil Fund (SR 134) in the Long Beach Gas and Oil Department (GO) by $5,080,516.
Appropriation increases are required for one-time capital projects funded by additional net revenue from TORF. The projects include improvements to beach facilities, Rainbow Harbor, and Los Cerritos Channel.
· Increase appropriations in the Tidelands Operations Fund (TF 401) and the Department of Parks, Recreation and Marine (PR) by $400,000.
· Increase appropriations in the Tidelands Operations Fund (TF 401) and the Department of Public Works (PW) by $400,000.
Parks, Recreation and Marine
On January 15, 2008, the City Council recognized a $100,000 donation from Long Beach Container Terminal. The donation will be used for a universally accessible playground at the new Baker Park in the Seventh Council District. The requested appropriation increase will be offset by $94,703 forwarded from Partners of Parks to the City, which includes other small private donations and is net of an administrative fee charged by Partners of Parks.
· Increase appropriations in the Capital Projects Fund (CP) in the Department of Parks, Recreation and Marine (PR) by $94,703.
A requirement of Lease No. 21204 with Hornblower Dining Yachts, Inc., provided $22,000 in the form of a security deposit to be retained by the City. The Lease expired in 2000, and the security deposit is available to use at the discretion of the City Council. The Department of Parks, Recreation and Marine is requesting authorization to utilize the $22,000 to repair the dock adjacent to the Aquarium, known as the Hornblower platform. This platform is used by the Aquarium to acquire fresh seawater to ensure the health and safety of the marine life housed at the Aquarium.
· Increase appropriations in the Tidelands Operations Fund (TF 401) in the Department of Parks, Recreation and Marine (PR) by $22,000.
The Department of Parks, Recreation and Marine was designated additional funds for FY 11 from the Fourth Council District's FY 10 General Fund budget savings. The $8,000 was designated to provide programs at Whaley Park in the Fourth District. The increase in appropriation is offset by the associated General Fund balance.
· Increase appropriations in the General Fund (GP) in the Department of Parks, Recreation and Marine (PR) by $8,000.
Police
The Police Department was designated additional funds for FY 11 from the Fourth Council District's FY 10 General Fund budget savings. The $2,400 was designated for the procurement of a fully equipped police bicycle, which includes gear bags, front and back lighting and a police siren. The bicycle will be used in patrolling the Anaheim Street Corridor, Outer Traffic Circle, Los Altos Shopping Center and the bike path along the San Gabriel River, as well as other areas of the East Division. The increase in appropriation is offset by the associated General Fund balance.
· Increase appropriations in the General Fund (GP) in the Police Department (PD)
by $2,400.
Public Works
In 2005, the City Council authorized the City Attorney to establish an ordinance for downtown parking meter rates and revenue sharing between the City and Downtown Long Beach Association (DLBA) to support Downtown activities. In FY 11, based on expected parking meter revenue, it is estimated that approximately $375,000 will be paid to the DLBA from the parking meter operating budget in Public Works. Since this amount is not budgeted, an appropriation increase is requested and will be offset by the revenue collections from the parking meters in the Downtown area.
· Increase appropriations in the General Fund (GP) in the Department of Public Works (PW) by $375,000.
The Department of Public Works was designated additional funds for FY 11 from the Fourth Council District's FY 10 General Fund budget savings. The $23,000 was designated for sidewalk improvements in the Fourth District. The increase in appropriation is offset by the associated General Fund balance.
· Increase appropriations in the General Fund (GP) in the Department of Citywide Activities (XC) by $23,000.
· Increase appropriations in the Capital Projects Fund (CP) in the Department of Public Works (PW) by $23,000.
On January 18, 2011, the City Council authorized City Manager to enter into On-Bill Financing agreements with Southern California Edison (SCE) to fund municipal energy efficiency project improvements at the Long Beach Convention Center. On-Bill Financing is a financial mechanism that enables local governments to finance qualified energy efficiency projects, and SCE's Program provides zero-interest, no-fee loans that can be conveniently repaid through the City's monthly SCE bills. SCE and the City have identified four projects for this program to be completed at a cost of $321,567. Initial costs will be incurred in the Tidelands Fund, and SCE will reimburse the City through an interest-free loan for project costs upon completion and final inspection. The City will repay SCE through realized energy savings.
· Increase appropriations in the Tidelands Operations Fund (TF 401) and in the Department of Public Works (PW) by $321,567.
Citywide Activities
On April 25, 2000, the City Council approved the creation of a sales tax revenue sharing agreement with Edison Material Supply (EMS), which purchases equipment, machinery, supplies and other tangible property for resale to Southern California Edison. Under the agreement, beginning with 2010, EMS receives 75 percent of the sales tax revenue they generate in Long Beach in excess of $3 million. Sales Tax generated by EMS has grown by 30 percent since 2009 and is anticipated to increase by 10 - 20 percent per year over the next three years. To date, EMS sales tax revenue has exceeded the $3 million base by $1 million. At this rate, we anticipate they will exceed last year's rebate by several million dollars. An increase in appropriation is needed to designate funds to cover the increased rebate of sales tax revenue over the previous year plus the projected growth. This increase is fully offset by a revenue growth in sales tax.
· Increase appropriations in the General Fund (GP) in the Department of Citywide
Activities (XC) by $3,107,640.
In 2006, the City received notification of Economic Development Initiative (EDI) special project funding in the amount of $148,500 provided by the Department of Housing and Urban Development (HUD). This grant funding was designated for the Aquarium of the Pacific, to develop an exhibit on the Ports of San Pedro Bay. The Aquarium recently notified the City that the grant will be fully expended in FY 11, and an appropriation is needed for the City to forward the grant reimbursement to the Aquarium. There is no net financial impact to the City, or to the Tidelands Operations Fund.
· Increase appropriations in the Tidelands Operations Fund (TF 401) and in the Department of Citywide Activities (XC) by $148,500.
Multi-Year Funds Carry-over
Each fiscal year, appropriation increases and decreases are necessary to make technical corrections related to grants and capital projects citywide. Budget amounts not spent by the end of a fiscal year for multi-year grants are carried forward and re-appropriated in the ensuing fiscal year. The FY 11 Adopted Budget contained estimated amounts of carry-over balance from FY 10. The necessary corrections represent the difference between the estimate and the actual carry-over amount. Attachment C lists the corrections that require City Council approval by fund and by department for FY 11. The net adjustment for the affected funds and departments is an appropriation increase of $65,778,748. All of the funds are grant or bond proceeds and, therefore, restricted to their related projects and do not impact the General Fund.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
DAVID NAKAMOTO
ACTING DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER