STAFF REPORT
Meeting Date: December 13, 2022
To: Honorable Mayor & City Council
From: Jeff S. Muir, Director of Finance
Tatiana Szerwinski, Assistant Director of Finance
Brandy Gros, Budget Manager
Subject: Update on Fiscal Year 2021-22 Audited General Fund Financial Results, Recommendation for Allocation of Fiscal Year 2021-22 General Fund Available Balance, First Quarter Results for Fiscal Year 2022-23, and Approval of Appropriations Totaling
$1,337,487 from Various Funds
Attachments: None
INTRODUCTION
This item will provide an update of the City’s fiscal year 2021-22 audited results compared to the most recent interim year forecast previously presented to Council. Also provided is a brief synopsis of first quarter results for fiscal year 2022-23 in comparison to the first quarter of last fiscal year. Staff recommends that City Council provide direction on the proposed allocation of the fiscal year 2021-22 General Fund available balance and approve a General Fund appropriation of $1,018,921 for Tourism and Marketing and $318,566 net appropriation from various funds for the City lease of various Water Fund properties.
DISCUSSION
Fiscal Year 2021-2022 Audited General Fund Financial Results On May 10, 2022, Finance presented a revised General Fund financial forecast for fiscal year 2021-22 which, based on information available at that time, projected an operating surplus (before one-time net revenue) of $24.4 million. When taking into consideration one-time major development project net revenue ($8.4 million) and non-operating net transfers ($17.5 million), the resulting estimated surplus was $15.3 million. At the conclusion of fiscal year 2021-22, the operating year-end surplus was $40.2 million; however, when further including one-time major development net revenue ($10.4 million) and non-operating net transfers ($16.5 million), the resulting year-end surplus from Meeting Date: December 13, 2022
current year resources nets to $34.1 million. One-time net revenue totaling $10.4 million is from major development projects such as One Beverly Hills, Cheval Blanc and the 9908 S. Santa Monica Blvd. Mixed-Use Project (formerly Friars Club), and includes $5.0 million in public benefit contributions, $4.0 million in fees for development agreement term extensions, and $1.5 million in associated building permit and plan check revenue, net of $0.1 million of fiscal year 2021-22 personnel costs for the Major Projects Team (five new positions in Community Development approved by Council on December 7, 2021 to service large development projects). Additionally, staff executed two transfers from committed fund balance in fiscal year 2021-22 of previously authorized City Council earmarks: (1) a transfer of $10.0 million to the Water Fund to subsidize the Water Enterprise Plan (WEP) project, and (2) a transfer of $10.0 million to the Section 115 OPEB Trust to provide further funding for the OPEB (retiree medical) liability. With all financial transactions recorded for the fiscal year ending June 30, 2022, revenues exceeded expenditures and net transfers (including previous year earmarks) by $14.1 million.
Forecast
as of May
2022
Actuals
Variance
from
Forecast
Operating Revenue (including Operating Transfers In) $ 281.6 $ 290.8 $ 9.2 Operating Expenditures (including Operating Transfers Out) 257.2 250.6 (6.6) Operating Surplus / (Deficit) before One-Time Revenue 24.4 40.2 15.8 One-Time Major Development Projects Net Revenue 8.4 10.4 2.0 Non-Operating Net Transfers (17.5) (16.5) 1.0
Total Surplus / (Deficit) from Current Year Resources 15.3 34.1 18.8 Transfers Out of Committed Fund Balance (20.0) (20.0) - Total Surplus / (Deficit) $ (4.7) $ 14.1 $ 18.8
General Fund
($ Millions)
FY 2021-22
Overall, General Fund operating revenue (before one-time revenue) was approximately $9.2 million (3.3%) above the forecast and operating expenditures were $6.6 million (2.6%) lower than forecasted. The total surplus was $18.8 million higher than the May forecast. For additional perspective, detailed actual results for fiscal years 2018-19 (the last “pre-pandemic year”) though 2020-21 are included below along with a comparison of the May 2022 forecast to audited actuals for fiscal year 2021-22.
Meeting Date: December 13, 2022
Forecast
as of May
2022
Actuals
Property Tax 70,791 78,074 86,391 92,586 93,842 1,256 1.4% Sales Tax 37,410 30,463 37,235 40,456 45,489 5,033 12.4% Transient Occupancy Tax 50,023 30,415 19,255 39,986 42,411 2,425 6.1% Business License Tax 51,744 54,052 43,765 52,972 53,726 754 1.4% "Big Four" Tax Sub-Total 209,969 193,004 186,646 226,000 235,469 9,469 4.2% Other Taxes 2,066 1,425 1,663 1,670 2,165 495 29.7%
Intergovernmental Revenue 508 969 1,259 1,364 1,527 163 11.9% Federal Recovery Funds 0 0 4,320 4,042 4,042 0 0.0%
Licenses and Permits 17,712 17,793 14,964 17,752 19,132 1,380 7.8% Fines and Penalties 6,077 4,931 5,333 6,710 7,585 875 13.0% Use of Money and Property 9,529 8,750 5,610 5,719 4,288 (1,431) -25.0% Net Change in Fair Value of Investments 619 965 (788) 0 (4,917) (4,917) N/A Service Fees and Charges 12,913 10,148 9,793 11,042 10,804 (239) -2.2% Miscellaneous Revenue 16,959 34,350 19,034 7,247 10,607 3,360 46.4% Operating Transfers In 494 339 83 21 90 69 328.7%
Operating Revenue before One-Time Net Revenue 276,845 272,676 247,915 281,569 290,791 9,222 3.3%
EXPENDITURES
Salaries and Benefits 118,141 131,125 127,830 128,914 129,390 476 0.4% Materials and Supplies 2,341 2,334 2,164 2,057 2,247 190 9.2% Contractual Services 39,812 40,276 43,707 51,092 44,219 (6,873) -13.5% Capital Outlay 311 812 60 864 1 (863) -99.9%
Internal Service Charges 53,080 58,459 42,085 51,758 51,758 (0) 0.0% Other Charges 9,749 10,338 10,291 9,317 9,391 74 0.8%
Transfer to Pension Trust 0 5,000 5,000 5,000 5,000 0 0.0% Pension Liability Paydown from Trust 0 0 2,279 0 0 0 0.0% Operating Transfers Out 7,051 6,263 7,748 8,162 8,527 365 4.5% Operating Expenditures 230,486 254,607 241,166 257,165 250,534 (6,631) -2.6% Operating Surplus / (Deficit) before One-Time Net Revenue 46,360 18,069 6,750 24,404 40,257 15,853 65.0% One-Time Major Development Projects Net Revenue 0 0 0 8,414 10,360 1,946 23.1% Non-Operating Transfers In 416 24 7,000 32 1,055 1,023 3184.9% Non-Operating Transfers Out** (33,333) (20,429) (2,800) (17,543) (17,543) 0 0.0% Total Surplus / (Deficit) from Current Year Resources 13,443 (2,336) 10,950 15,307 34,129 18,822 123.0% Transfer of North Portal Earmark from Committed Fund Balance 0 0 (15,000) 0 0 0 0.0% Transfer of WEP Earmark from Committed Fund Balance 0 0 0 (10,000) (10,000) 0 0.0% Transfer to OPEB Trust from Committed Fund Balance 0 0 0 (10,000) (10,000) 0 0.0% Total Surplus / (Deficit) 13,443 (2,336) (4,050) (4,693) 14,129 18,822 -401.0% NOTE: The Section 115 Pension Trust is included in the General Fund for purposes of financial reporting in the Annual Comprehensive Financial Report. The results above exclude the Section 115 Pension Trust. **FY 2021-22 non-operating transfers out include $11.5 million to the Infrastructure Fund for CIP projects, and $6.0 million to the Parking Fund to subsidize operations.
General Fund
($ Thousands)
REVENUES
FY 2018-19
Actuals
FY 2019-20
Actuals
FY 2020-21
Actuals
FY 2021-22 Variance
from
Forecast
% Var
The major operating revenue variances between the last forecast and audited actual results are as follows:
• Overall, “Big Four” tax revenues were up $9.5 million (4.2%) compared to the forecast, and exceeded the last full pre-pandemic year (FY 2018-19) by $25.5 million. Of the City’s four major revenue sources in the General Fund, only fiscal year 2021-22 Transient Occupancy Tax still trailed pre-pandemic levels. o Property tax totaled $93.8 million, and came in $1.3 million (1.4%) over the May forecast. Healthy increases in assessed valuations (4.1%) as well as an increase in the amount of actuarially-determined annual public safety pension obligations that are recoverable through the public safety pension override tax contributed to strong results in property tax revenue.
Meeting Date: December 13, 2022
o Actual sales tax remittances from the State were $45.5 million, approximately $5.0 million (12.4%) more than forecasted. The main explanation for the difference is that retail and online sales activity rebounded even more significantly than expected by our consultant for the final months of the fiscal year.
o Transient Occupancy Tax (TOT) was $42.4 million, or $2.4 million (6.1%) more than forecasted. This was due mostly to conservative estimates and significant improvements in hotel activity over the final months of the fiscal year sparked by events such as Super Bowl 2022. Although TOT rebounded significantly over the prior year, it was still down $7.6 million compared to the last full pre-pandemic year (FY 2018-19). o Business License Tax was $53.7 million, which was $0.8 million (1.4%) more than forecasted and only $0.3 million (0.6%) shy of the City’s alltime high in fiscal year 2019-20. • Remaining General Fund operating revenue categories (excluding one-time revenue) totaled $55.3 million, nearly equal to the forecast. Notable variances from the forecast are primarily in the following categories:
o Other Taxes exceeded the forecast by $0.5 million due to higher than projected property transfer tax.
o Licenses and Permits were stronger than expected driven by greater than projected building permit revenue.
o Fines and Penalties outpaced the forecast due to increased enforcement of parking ordinance violations.
o Use of Money and Property underperformed relative to the forecast related to investment earnings projections.
o Net Change in Fair Value of Investments reflects a $4.9 million “unrealized loss” recognized through the change in fair market value adjustment to the investment portfolio, as required by accounting standards. Because the City generally holds its investments to maturity, these losses are ultimately not realized.
o In Miscellaneous Revenue, reimbursements from Metro and municipal surcharge revenue (tied to TOT revenue) exceeded the prior forecast.
The major expenditure variances between the last forecast and audited actual results are as follows:
o Contractual Services were $6.9 million (13.5%) less than forecasted.
This is largely a timing difference, as unspent funds were carried over to the current fiscal year when work could be completed.
o Capital Outlay expenditures were not incurred in fiscal year 2021-22 because the City extended the useful life of equipment beyond when it was expected to be replaced. Like contractual services, this represents a timing difference as unspent funds were carried over to the current fiscal year to fund equipment replacement, as needed.
One-time net revenue from large development projects also exceeded the forecast by nearly $2.0 million related to fees for extending the term of developer agreements that were budgeted to be received in fiscal year 2022-23 but were actually received and recognized in fiscal year 2021-22. Non-operating transfers in exceeded the forecast due to the transfer of $1.0 million of accumulated SB 1608 revenue from Fund 260 (reclassified from special revenue to General Fund revenue).
Meeting Date: December 13, 2022
Fiscal Year 2021-22 financial results reflect not only substantial recovery of major tax revenues to near-normal or beyond, but also established a new peak in General Fund revenue. Despite these encouraging results, staff remains vigilant about fiscal responsibility, as the City contends with challenges like significant capital funding needs, inflation, supply chain issues, and possible recession.
Allocation of Fiscal Year 2021-22 General Fund Available Balance Staff is seeking direction from Council on how to allocate the $34.1 million of additional fund balance generated by fiscal year 2021-22 general fund activities. Staff has provided the recommendations below for consideration.
The One Beverly Hills (OneBH) development agreement provides for $100.0 million in public benefit contributions through August 2029. The first $5.0 million public benefit contribution payment for OneBH occurred in fiscal year 2021-22. The City’s financial policies provide that one-time revenue should be used to increase reserves for one-time expenditures or reduce debt, rather than be used for ongoing operations. In accordance with this policy, Staff recommends fiscal year 2021-22 one-time public benefit contributions of $5.0 million from the OneBH development project be earmarked to committed fund balance for a future public benefit purpose yet to be determined. Staff will return to Council for direction on specific use of these one-time funds when appropriate.
In June 2022, the City Council approved a five-year Capital Improvement Plan that included significant spending in the Infrastructure Fund, which is funded almost exclusively from the General Fund, to fund major projects including, but not limited to, the Metro Rodeo Station North Portal, Santa Monica Blvd. Corridor Reconstruction, Citywide Lighting and Décor, and Complete Streets. This plan was largely consistent with the prior year’s CIP plan. At each of the past two CIP Budget Study Sessions, Council was presented with a summary of proposed General Fund transfers over the five-year period that would be required to support the approved Capital Improvement Plan and other operations, both reflecting significant contributions from the General Fund in fiscal years 2022-23, 2023-24 and 2024-25 towards capital projects in the Infrastructure Fund. Historically, typical annual transfers from the General Fund to the Infrastructure Fund ranged from $5.0 to $7.0 million; however, based on the increased capital improvement spending plan, the last CIP budget included a General Fund transfer to the Infrastructure Fund of $12.5 million budgeted in the current fiscal year 2022-23. It also included $23.5 million in fiscal year 2023-24, $33.5 million in fiscal year 2024-25, $11.5 million in fiscal year 2025-26, and $11.0 million in fiscal year 2026-27 (four-year projected future need of $79.5 million). With the increase in capital projects and the rise in the cost of construction, subsequent transfers are not expected to return to the $5.0 to $7.0 million range, but more likely be in the $10+ million per year range, prospectively.
Staff believes it would be prudent to use fiscal year 2021-22 General Fund surplus towards significant upcoming transfers required to fund capital projects in the Infrastructure Fund and recommends that Council approve an earmark of $29.1 million to that end. This includes the remaining $5.3 million of one-time revenue from major development projects to be applied to one-time capital projects. This earmark would also be consistent with the City’s adopted financial policies. If approved, staff would incorporate the transfer of committed funds to the Infrastructure Fund into the proposed budget for the particular year needed based on capital project timelines. The City Council may also provide alternative direction to staff.
Meeting Date: December 13, 2022
General Fund Reserves
Based on the audited results for fiscal year 2021-22, the City has a total General Fund balance of $225.9 million, which increased by $10.6 million from the previous fiscal year’s total of $215.3 million, as detailed below. This overall increase resulted from the total fiscal year 2021-22 surplus of $34.1 million driving up unassigned reserves, offset by the $20.0 million decrease in committed fund balance related to the execution of the Retiree Medical Liability (OPEB for $10.0 million) and WEP transfers ($10.0 million), along with decreases in non-spendable fund balance ($1.2 million), restricted fund balance due to additional contributions from the pension trust to CalPERS ($3.5 million), and increases in encumbrances/carryovers ($1.2 million).
The economic/contingency reserve required by the City’s financial policies is comprised of at least 40% of General Fund expenditures, and shall not decrease unless approved by the Council. Council has also established a budget stabilization reserve available for one-time deficits. It should be noted that throughout the pandemic, utilization of either of these reserve sources has been unnecessary, a testament to the financial stability and resiliency of the City. Additional elements of total reserves include funds committed by Council for specified purposes or other restricted funds. This leaves an unassigned fund balance of $63.0 million, above current restrictions, contingency, and stabilization reserves, which is available for one-time use per direction of the City Council. As referenced above, staff is recommending that the $34.1 in surplus funds be committed ($5 million to one-time public benefit and $29.1 million to the Infrastructure Fund), thus reducing the unassigned fund balance from $63.0 million to $28.9 million. As discussed during the June 2022 budget presentation, the budgeted $3.8 million deficit for the current fiscal year 2022-23 was proposed to be funded using unassigned reserves, which would bring the total fund balance to $222.1 million.
General Fund Reserves (Fund Balance)
($ Millions)
FY 2020-21
Audited
Actuals
FY 2021-22
Audited
Actuals
FY 2021-22
Audited Actuals
with
Recommendations
Change from
FY 2020-21
Economic/Contingency Reserve (minimum 40%)
Contingency Reserve (minimum 25%) $ 63.3 $ 63.3 $ 63.3 $ - Economic Reserve (minimum 15%) 38.0 38.0 38.0 -
Total Economic/Contingency Reserve 101.3 101.3 101.3 -
Budget Stabilization Reserve 13.0 13.0 13.0 -
Committed Fund Balance (Council earmarks) -
Metro Rodeo Station North Portal - - - -
Property Acquisition (Subway related) 5.0 5.0 5.0 -
Water Fund (WEP Support) 10.0 - - (10.0)
Retiree Medical Liability 10.0 - - (10.0)
Street Tree Removal & Replacement 1.1 1.1 1.1 -
One-time Public Benefit Contributions - - 5.0 5.0
One-time Capital Improvement Plan Contributions - - 29.1 29.1 Committed Fund Balance Total 26.1 6.1 40.2 14.1
Nonspendable (long-term receivables/advances to other funds) 6.9 5.7 5.7 (1.2) Restricted (Pension trust) 22.7 19.2 19.2 (3.5)
Encumbrances/Carryovers 16.4 17.6 17.6 1.2
Unassigned 28.9 63.0 28.9 0.0
Total Fund Balance $ 215.3 $ 225.9 $ 225.9 $ 10.6
Use of Unassigned Fund Balance for FY 2022-23 Budget Deficit - (3.8) (3.8) (3.8) Total Remaining Fund Balance $ 215.3 $ 222.1 $ 222.1 $ 6.8 Meeting Date: December 13, 2022
Fiscal Year 2022-23 First Quarter (Q1) Update
The table below summarizes the fiscal year 2022-23 General Fund Adopted Budget and first quarter results, and includes prior year first quarter results for comparison purposes.
While first quarter results reflect a large deficit, this is due to the cyclical nature and timing of major revenue cash flows and is expected to improve significantly over the next two quarters. Compared to fiscal year 2021-22 first quarter results, the fiscal year 2022- 23 first quarter operating deficit before one-time revenue is $2.8 million higher than the prior year, while the total deficit is $0.1 million lower than the prior period.
Property Tax 96,928 7,298 4,147 3,152 76.0%
Sales Tax 40,646 11,670 10,662 1,008 9.5%
Transient Occupancy Tax 44,000 7,448 5,814 1,634 28.1%
Business License Tax 52,100 610 573 38 6.5%
"Big Four" Taxes Sub-Total 233,674 27,027 21,196 5,831 27.5% Other Taxes 1,965 341 433 (92) -21.3%
Intergovernmental Revenues 797 30 4,181 (4,151) -99.3%
Licenses and Permits 26,139 4,895 3,910 985 25.2%
Fines and Penalties 6,660 1,893 2,237 (344) -15.4%
Use of Money and Property 4,657 1,040 590 450 76.2%
Net Change in Fair Value of Investments 0 6 (561) 567 -101.1% Service Fees and Charges 11,587 3,890 2,962 928 31.3%
Miscellaneous Revenues 7,491 2,431 2,205 226 10.2%
Operating Transfers In 6 0 8 (8) -100.0%
Operating Revenue before One-Time Revenue 292,977 41,552 37,161 4,392 11.8%
EXPENDITURES
Salaries and Benefits 140,463 31,509 30,449 1,061 3.5%
Materials and Supplies 2,354 534 511 23 4.5%
Contractual Services 45,507 10,330 8,671 1,660 19.1%
Capital Outlay 934 0 0 0 N/A
Internal Service Charges 66,556 22,415 17,832 4,583 25.7% Other Charges 9,470 6,580 6,745 (165) -2.4%
Transfer to Pension Trust 5,000 5,000 5,000 0 0.0%
Operating Transfers Out 8,042 2,010 1,994 17 0.8%
Operating Expenditures 278,326 78,379 71,201 7,178 10.1% Operating Surplus / (Deficit) before One-Time Revenue 14,651 (36,827) (34,040) (2,786) 8.2% One-Time Major Development Projects Revenue 0 1,500 2,000 (500) -25.0% Non-Operating Transfers In 0 0 8 (8) -100.0%
Non-Operating Transfers Out** (18,500) (4,625) (5,543) 918 -16.6% Total Surplus / (Deficit) from Current Resources (3,849) (39,952) (37,576) (2,376) 6.3% Transfer of WEP Earmark from Committed Fund Balance 0 0 (2,500) 2,500 -100.0% Total Surplus / (Deficit) (3,849) (39,952) (40,076) 124 -0.3% FY2022-23
Adopted
Budget
**FY 2022-23 adopted non-operating transfers out include $12.5 million to the Infrastructure Fund for CIP projects, and $6.0 million to the Parking Fund to subsidize operations. One-quarter of those transfers were recognized in Q1 2022-23.
NOTE: The above represents actual activity during these first three months of the fiscal year and disregards certain accounting/accrual entries in order to assist with comparison. Immaterial differences may exist when adding rounded figures above.
General Fund
($ Thousands)
%
Variance
Variance
from Prior
Year
FY2021-22
July - Sept
Actuals
FY2022-23
July - Sept
Actuals
Meeting Date: December 13, 2022
High-level revenue variances between Q1 2022-23 and Q1 2021-22 are as follows:
• “Big Four” tax revenues are up $5.8 million (27.5%) from the same period last fiscal year, driven by increases in Property, Transient Occupancy, and Sales taxes.
o Property tax remittances rose sharply in the first quarter of the current year and the increase in the property tax override stemming from an updated actuarial calculation of recoverable costs contributed to strong gains.
o Transient Occupancy Tax continues to improve with increased tourism as the pandemic recharacterizes itself as an endemic.
o Increased consumption in general consumer goods, restaurants and hotels, and the County pool allocation brought improved results in sales tax.
• Intergovernmental Revenue saw a big drop compared to prior year because the final installment of Federal Recovery Funds from the American Rescue Plan Act was recognized in July 2021.
• Licenses and Permits benefitted from rising building and plan check revenue, as well as a resurgence of special event revenue.
• Decreases in Fines and Penalties relate to lower parking ordinance violations. • With rising interest rates, Use of Money and Property results saw a meaningful increase over the first quarter of last year.
• In Service Fees and Charges, nearly all recreation and safety-related fees and charges are outperforming the first quarter of the prior year due to increased program activity as the pandemic subsides.
• Miscellaneous Revenue in Q1 2022-23 increased due to higher collections of reimbursements from Metro and municipal surcharge revenue (tied to TOT revenue).
High-level expenditure variances between Q1 2022-23 and Q1 2021-22 are as follows:
• Salaries and Benefits were slightly higher than the same period last fiscal year predominantly due to MOU increases for the Police Officers Association and the Police Management Association.
• Contractual Services grew due to increased spending on private armed security and more funding of the Conference and Visitors Bureau and the Rodeo Drive Committee from the tourism and marketing budget.
• Internal Service Charges are up considerably as all charges that were deferred in the prior year to combat pandemic-induced pressure on the General Fund were reinstated in fiscal year 2022-23, and increasing insurance costs have driven up the allocations for the Liability Fund.
One-time revenue in Q1 2022-23 reflects a $1.5 million public benefit contribution from the 9908 S. Santa Monica Blvd. Mixed-Use Project, whereas $2.0 million was received in Q1 2021-22 for development agreement term extensions. The variance in nonoperating transfers out predominantly relates to a Q1 2021-22 transfer of funding from Metro reimbursements to the Infrastructure Fund for a $1.5 million mid-year appropriation to the Subway Mitigation CIP.
Meeting Date: December 13, 2022
Overall, variances between the first quarter of the current fiscal year compared to the prior year are explainable and generally within expectations. The fact that expenditures greatly outpace revenues for the first quarter is a typical pattern each fiscal year, as Property Tax is primarily received from December through June and Business Tax is primarily received in January.
Staff intends to bring a formal mid-year review of the current fiscal year to the City Council in February, which will include updated revenue and expenditure forecasts.
Tourism and Marketing / TOT True-Up
For many years, the City has maintained a policy of funding its Tourism and Marketing programs from one-seventh (or 2%) of the 14% Transient Occupancy Tax, at the direction of Council. Each year, the Tourism and Marketing budget is established based on TOT projections made during the budget process and approved through budget adoption by the Council. Because the fiscal year 2021-22 TOT realized ($42,410,847) exceeded the originally budgeted amount of $35,278,400, staff recommends City Council approve a General Fund appropriation of $1,018,921 to the Tourism and Marketing fiscal year 2022-23 budget (00101311-734400) to true it up to the full oneseventh of TOT from fiscal year 2021-22.
Other Item
The Water Fund owns three properties that are used either solely or partially by the City for purposes other than the direct operations of the water utility. To ensure water ratepayers are not subsidizing other City functions, the Water Fund is reimbursed at a fair market rate. In 2016, the City appraised the market value of rental indicators at three properties owned by the Water Fund:
1. 345 N Foothill Road – occupied by City staff in the Public Works department
2. 333 S. La Cienega Blvd. – leased to The Academy Foundation in 1989 for a term of 55 years
3. 621 N. Robertson Blvd. (“log cabin property”) – leased and ultimately sold to City of West Hollywood (during fiscal year 2021-22)
Following this initial appraisal, the General Fund paid the Water Fund annually for the difference between lease revenue collected and the appraised market value of the rental indicators for 333 S. La Cienega Blvd. and 621 N. Robertson Blvd. The fair market value adjustment of lease payments to the Water Fund for 345 N. Foothill Road was allocated among the General Fund, certain Internal Service Funds, and Enterprise Funds in proportion to their use of the facility. In March 2022, the City sold 621 N.
Robertson Blvd. to the City of West Hollywood and in June 2022, the City reappraised the other two properties.
2016
Appraised
Value
2022
Appraised
Value
Change in
Interfund
Transfer
345 N. Foothill Road $1,705,000 $2,392,500 $687,500
333 S. La Cienega Blvd. 766,760 1,157,500 390,740
621 N. Robertson Blvd. 637,240 - (637,240)
$3,109,000 $3,550,000 $441,000
Meeting Date: December 13, 2022
Accordingly, staff recommends City Council approve a net appropriation of $318,566 to update payments to the Water Fund effective fiscal year 2022-23, as follows:
Fund
345 N. Foothill
Road
333 S. La
Cienega Blvd.
621 N.
Robertson Blvd. Total
General Fund 164,567 390,740 (637,240) (81,933)
Capital Assets Fund 66,694 - - 66,694
Policy, Admin & Legal Fund 101,166 - - 101,166
Vehicle Fund 42,167 - - 42,167
Parking Fund 39,008 - - 39,008
Solid Waste Fund 72,204 - - 72,204
Wastewater Fund 33,901 - - 33,901
Stormwater Fund 45,358 - - 45,358
Net Appropriation Request 565,066 390,740 (637,240) 318,566 Water Fund* 122,434 - - 122,434
Total 687,500 390,740 (637,240) 441,000
*The Water Fund owns the properties and does not make lease payments for internal use.
FISCAL IMPACT
The $1,018,921 General Fund appropriation request for the Tourism and Marketing / TOT true-up and the $318,566 appropriation for City lease of Water Fund property would be funded through reserves.
RECOMMENDATION
This financial report is intended for City Council’s information. Staff recommends City Council provide direction on the allocation of the fiscal year 2021-22 General Fund available balance. It is also recommended the City Council approve the $1,018,921 General Fund appropriation request for Tourism and Marketing and the $318,566 net appropriation request from various funds for the City lease of two Water Fund properties.
Tatiana Szerwinski
Assistant Director of Finance
Jeff S. Muir
Director of Finance
Approved By Approved By