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RESOLUTION NO. 2022-039
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CORONA, CALIFORNIA, APPROVING THE CITY OF
CORONA’S ADMINISTRATIVE POLICY NO. 01200.606,
RESERVE POLICY FOR UTILITIES DEPARTMENT
OPERATING FUNDS.
WHEREAS, the City Council of the City of Corona (“City Council”) has considered Administrative Policy 01200.606 entitled “Reserve Policy for Utilities Department Operating Funds” (“Policy”) which outlines the policy and procedures to maintain a prudent level of financial resources to protect Utilities Department customers against service disruption in the event of unexpected temporary revenue shortfalls or unpredicted one-time expenditures, and to maintain the credit worthiness of the City and the Utilities Department; and WHEREAS, the Policy establishes a target reserve amount for the Utilities Department Operating Funds, which consists of the Water Utility Fund, the Reclaimed Water Utility Fund, the Sewer Utility Fund and the Electric Utility Fund, at ninety (90) days of operating expenses plus annual depreciation; and
WHEREAS, the Utilities Department has recommended to the City Council that the Policy be approved and established as a policy of the City; and WHEREAS, the City Council now desires to adopt the Policy.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF CORONA, CALIFORNIA, AS FOLLOWS:
SECTION 1. Adoption of Policy. The City Council hereby adopts Administrative Policy No. 01200.606 (Reserve Policy for Utilities Department Operating Funds) attached hereto as Exhibit “A” and incorporated herein by reference.
SECTION 2. Repeal of Conflicting Resolutions. All prior resolutions or policies inconsistent with this Resolution are hereby repealed, but only to the extent that they conflict with this Resolution.
SECTION 3. Effective Date. This Resolution is effective upon its adoption.
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2 PASSED, APPROVED, AND ADOPTED this 18th day of May 2022. ______________________________________
Mayor of the City of Corona, California
ATTEST:
______________________________________
City Clerk of the City of Corona, California
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3 CERTIFICATION
I, Sylvia Edwards, City Clerk of the City of Corona, California, do hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of Corona, California, at a regular meeting thereof held on the 18th day of May, 2022 by the following vote of the Council:
AYES:
NOES:
ABSENT:
ABSTAINED:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Corona, California, this 18th day of May, 2022. ___________________________________
Sylvia Edwards, City Clerk
(SEAL)
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4 EXHIBIT “A”
ADMINISTRATIVE POLICY NO. 01200.606
RESERVE POLICY FOR UTILITIES DEPARTMENT OPERATING FUNDS [SEE ATTACHED THREE (3) PAGES]
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Administrative Policy
ARTICLE I - PURPOSE
Section 1.1 General Purpose
The purpose of this policy is to maintain a prudent level of financial resources to protect Utilities Department customers against service disruption in the event of unexpected temporary revenue shortfalls or unpredicted one-time expenditures, and to maintain the credit worthiness of the City and the department. This policy establishes the appropriate level of financial reserves in the Water Utility Fund (570), the Reclaimed Water Utility Fund (567), the Sewer Utility Fund (572) and the Electric Utility Fund (578). This policy also establishes a plan to build and replenish the reserves as needed and describes the conditions warranting the use of reserve funds.
Section 1.2 Superseded Policies
This policy supersedes and replaces the following policies, which are hereby eliminated in their entirety and are of no further force and effect:
NONE
ARTICLE II - DEFINITIONS AND SCOPE
Section 2.1 Definitions
For purposes of this policy, the following definitions shall apply:
Title: Reserve Policy for Utilities Department Operating Funds Administered By: Utilities Department and Finance Department Policy No. Issue
Date
Revision
Date
Dept. Head
Approved
City Manager
Approved
Mayor
Approved
01200.606 05-18-22 N/A
Administrative Policy 01200.606 (05-18-22)
Reserve Policy for Utilities Department Operating Funds Administered by Utilities Department and Finance Department
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A. Actual Operating Expenses. The term “actual operating expenses” shall mean the actual amount of expenses and debt service incurred by each of the Utilities Department Operating Funds in a given fiscal year.
B. Actual Operating Revenue. The term “actual operating revenue” shall mean the actual amount of revenue earned by each of the Utilities Department Operating Funds in a given fiscal year.
C. Reserve, Reserve Amount or Reserve Funding. The terms “reserve”, “reserve amount” or “reserve funding” shall mean the funding set aside by the Utilities Department and reserved by the Finance Department in accordance with this policy.
D. Target Reserve Amount. The term “target reserve amount” shall mean the desired amount of funding to be set aside and reserved in order to build a financial reserve for each of the Utilities Department Operating Funds.
F. Utilities Department Operating Funds. The term “Utilities Department Operating Funds” shall mean the Water Utility Fund (570), the Reclaimed Water Utility Fund (567), the Sewer Utility Fund (572), and/or the Electric Utility Fund (578).
Section 2.2 General Scope
Unless otherwise stipulated herein, this policy applies to all City employees. All such employees shall comply with the provisions outlined in this policy. It is the responsibility of all supervision to ensure that the provisions outlined in this policy are enforced for those City employees under their authority.
Section 2.3 Exemptions from Scope
NONE
ARTICLE III – RESERVE POLICY
Section 3.1 Target Reserve Amount
Commencing with Fiscal Year 2022, the target reserve amount for each of the Utilities Department Operating Funds shall be set at ninety (90) days of operating expenses for each fund plus the current annual depreciation amount for each fund. The target reserve amount for each of the Utilities Department Operating Funds will be adjusted with each rate study process and incorporate a five-year review of operating expenses and depreciation amounts.
Administrative Policy 01200.606 (05-18-22)
Reserve Policy for Utilities Department Operating Funds Administered by Utilities Department and Finance Department
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To build the target reserve amount, the Utilities Department shall annually contribute ten percent (10%) of the difference between actual operating revenues and actual operating expenses for each of the Utilities Department Operating Funds at the beginning of each fiscal year until the target reserve amount is met. If the reserve amount exceeds the target reserve amount, the additional funds shall remain in reserves.
Section 3.2 Permissible Use of Reserve Funding
Reserve funding may be use for the following purposes subject to the prior approval of the City Council and Corona Utility Authority, as applicable:
As needed in the event of a declaration of a state or federal emergency or a local emergency as defined in Corona Municipal Code Section 2.52.020 Emergency projects
To fulfill debt obligations
To phase in the impact of unforeseen cost increases, such as significant increases in imported water costs, wastewater treatment costs, changes in energy costs, and other significant expense fluctuations To address unexpected revenue shortfalls
Section 3.3 Replenishment of Reserve Funding
Whenever reserve funding is used, as provided in Section 3.2, the Utilities Department shall replenish the balance by contributing 10% of the difference between actual operating revenues and actual operating expenses for the applicable Utilities Department Operating Funds until the target reserve amount is met.
PRIOR VERSIONS
NONE