TITLE
Recommendation to adopt resolution requesting that the Board of Harbor Commissioners approve the Fiscal Year 2013 (FY 13) estimated transfer of $18,373,000, based on 5 percent of FY 13 estimated gross operating revenue, from the Harbor Revenue Fund (HR 430) to the Tidelands Operations Fund (TF 401), with a true-up adjustment, if necessary, to reflect the final gross revenue amount upon issuance of the Harbor Department's FY 13 audited financial statements. (Citywide)
DISCUSSION
City Charter Section 1209(c)(4) provides for the transfer of a maximum of 5 percent of Harbor gross operating revenue. The Charter provides that the City Council, by a 2/3 vote expressed by Resolution, may request the transfer in order to meet the lawful obligations of the Tidelands Operating Fund. The provision requires a majority vote of the Harbor Board of Commissioners, expressed by Resolution, to enact the transfer, determining that the funds will not be needed for Harbor Department operations. The Harbor Department FY 14 Proposed Budget, approved by the Harbor Commission on June 17, 2013, includes a transfer amount of $18.37 million, calculated on 5 percent of estimated FY 13 operating revenues of $367.45 million. Approval of the transfer to Tidelands will be considered by the Harbor Commission as a separate budget action in response to this formal request by the City Council.
Tidelands Fund Requirements
Department operating revenues generated in the Tidelands area (parking, leases, service agreements, etc.) and Tidelands base oil revenue are insufficient to fund Tidelands operations. The Harbor revenue transfer to Tidelands is a critical funding source supporting Tidelands operations, and is necessary to support lifeguards, waterfront maintenance, the Convention Center, and Aquarium debt payments.
The passage of Measure D in 2010 clarified the City Charter with regard to the City Council's complete jurisdictional oversight over all City-owned or controlled oil operations and oil revenue. Given the unpredictable nature of oil prices, Measure D oil funds are best used for one-time infrastructure projects, as opposed to operations.
The Measure D oil funds are budgeted annually for infrastructure projects, and the FY 14 Proposed Budget will reflect the same use.
This matter was reviewed by Assistant City Attorney Charles Parkin on June 7, 2013 and Budget Management Officer Victoria Bell on June 10, 2013.
TIMING CONSIDERATIONS
Authority to transfer the funds must be expressed by Resolution (attached). Since the adoption of the FY 14 Tidelands budget is dependent upon the annual transfer, the City Council and Board of Harbor Commissioners must adopt Resolutions prior to the City Council's adoption of the FY 14 Proposed Budget, which includes the budget of the Harbor Department. City Council approval is requested on July 9, 2013 to allow time for the FY 13 transfer amount to be approved by the Board of Harbor Commissioners for the FY 14 Proposed Budget.
FISCAL IMPACT
The estimated FY 13 transfer of 5 percent of gross operating revenue in the amount of $18,373,000 from the Harbor Revenue Fund (HR 430) to the Tidelands Operations Fund (TF 401) will be included in the City Manager's FY 14 Proposed Budget to support Tidelands operations. The final transfer amount will be paid quarterly, and will be based on the actual operating revenues reported in the Harbor Department's FY 13 audited financial statements.
SUGGESTED ACTION
Approve recommendation.
BODY
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LONG BEACH MAKING CERTAIN FINDINGS AND DETERMINATIONS AND REQUESTING THE BOARD OF HARBOR COMMISSIONERS OF THE CITY OF LONG BEACH TO APPROVE A TRANSFER FROM THE HARBOR REVENUE FUND TO THE TIDELAND OPERATING FUND PURSUANT TO THE PROVISIONS OF CITY CHARTER SECTION 1209(C)(4)
Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER