On motion by Council Member ______, seconded by Council Member _______, and on the following roll-call vote, to wit:
AYES: Council Members –
NOES: Council Members –
ABSENT: Council Members –
ABSTAIN: Council Members –
RECUSED: Council Members –
the foregoing Resolution No. 22-__ was PASSED, APPROVED, and ADOPTED at a regular meeting by the City Council on June 13, 2022.
____________________________________
JEFF LEE, MAYOR
Attest:
______________________________
WENDI SIMS, CITY CLERK
**DRAFT**
Agenda Item No. 5
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: June 13, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Greg Ray, Public Works Director/City Engineer Erin Wiggin, Capital Improvement Project Manager
SUBJECT: Resolution Confirming a List of Street Projects Funded by SB 1: The Road Repair and Accountability Act
RECOMMENDATION
Adopt the Resolution to incorporate the list of street projects funded by SB 1: The Road Repair and Accountability Act into the FY 2022-23 budget.
BACKGROUND
On April 28, 2017, the Governor signed Senate Bill (SB) 1 (Beall, Chapter 5, Statutes of 2017), which is known as the Road Repair and Accountability Act of 2017. The Act intends to address basic road maintenance, rehabilitation and critical safety needs on both the state highway and local streets and road system. SB 1 increased per gallon fuel excise taxes; diesel fuel sales taxes and vehicle registration fees; and provided for inflationary adjustments to tax rates in future years.
As part of the Act, the bill created the Road Maintenance and Rehabilitation Account (RMRA) to fund road maintenance and other projects. The City has received approximately $950,000 in RMRA funding to date with approximately $250,000 annually. To receive RMRA funding each year, cities and counties must submit a list of projects to the California Transportation Commission (CTC). All projects proposed must be adopted by resolution by the City Council at a regular public meeting which the Council adopted affirming the list of SB 1 projects.
To date, the Council has allocated this funding for improvements to major city streets. Council awarded the design of the first three major streets to be improved including North 4th Street (West Grand Avenue to Ocean View Avenue), South Oak Park Boulevard (West Grand Avenue to Mentone Avenue), and West Grand Avenue (11th Street to Oak Park Boulevard). The design work was funded with SB 1 funds along with the construction of South Oak Park Boulevard (CIP 2284).
Given housing and other redevelopment opportunities on West Grand Avenue, the Council has provided direction to construct the West Grand Avenue Streetscape Project (CIP 2287) in FY 2022-23. As a result, staff is recommending allocation of SB 1 funds for FY 2022-23 to the West Grand Avenue Streetscape project (CIP 2287) along with the North 4th Street Project (CIP 2285).
Pending Council action to confirm the use SB 1 funds, staff will send a copy of the adopted resolution to the CTC pursuant to direction from CTC staff.
Staff Report: Resolution Confirming SB-1 Projects Page 2 June 13, 2022
FISCAL IMPACT
Adoption of this Resolution will allow the City to receive SB 1 funding estimated to be $299,887 for FY 2022-23. Depending on additional revenue estimates by the California Transportation Commission and State Controller, additional funding may be available for programming in the future.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Adopt the Resolution to incorporate the list of street projects funded by SB 1: The Road Repair and Accountability Act into the FY 2022-23 budget; or
2. Do not adopt the Resolution and do not fund the above capital projects or fund them using other funding sources; or
3. Provide staff with alternative direction.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Resolution
RESOLUTION NO. 22-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GROVER BEACH, CALIFORNIA, ADOPTING A LIST OF PROJECTS FOR FISCAL YEAR 2022-23 FUNDED BY SB 1: THE ROAD REPAIR AND ACCOUNTABILITY ACT OF 2017 WHEREAS, Senate Bill 1 (SB 1), the Road Repair and Accountability Act of 2017 (Chapter 5, Statutes of 2017) was passed by the Legislature and Signed into law by the Governor in April 2017 to address the significant multi-modal transportation funding shortfalls statewide; and WHEREAS, SB 1 includes accountability and transparency provisions that will ensure the residents of our City are aware of the projects proposed for funding in our community and which projects have been completed each fiscal year; and
WHEREAS, the City of Grover Beach must adopt by resolution a list of projects proposed to receive fiscal year funding from the Road Maintenance and Rehabilitation Account (RMRA), created by SB 1, which must include a description and the location of each proposed project, a proposed schedule for the project’s completion, and the estimated useful life of the improvement; and
WHEREAS, the City of Grover Beach will receive an estimated $299,887 in RMRA funding in Fiscal Year 2022-23 from SB 1; and
WHEREAS, this is the sixth year in which the City of Grover Beach is receiving SB 1 funding and will enable the City of Grover Beach to continue essential road maintenance and rehabilitation projects; and
WHEREAS, the City of Grover Beach used a Pavement Management System to develop the SB 1 project list to ensure revenues are being used on the most high-priority and cost-effective projects that are not eligible for the City’s Measure K-14 bond funds and that also meet the community’s priorities for transportation investment; and WHEREAS, the City of Grover Beach has undergone a public process to gather public input for the project list; and
WHERAS, the funding from SB 1 will help the City of Grover Beach maintain and rehabilitate its Major Streets including West Grand Avenue and North 4th Street; and WHEREAS, the current Pavement Condition Index value is 43 for the City’s Major Streets and this revenue will help us increase the overall quality of our road system and over the next decade it will help bring our streets and roads to a PCI of 65; and WHEREAS, the SB 1 project list and overall investment in our local streets and roads infrastructure with a focus on basic maintenance and safety, investing in complete streets infrastructure, and using cutting-edge technology, materials and practices, will have significant positive co-benefits city and countywide.
Attachment 1
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Grover Beach, does hereby adopt that Capital Improvement Projects (CIP) #2287 West Grand Avenue Streetscape and CIP # 2285 Major Street Rehabilitation North 4th Street are to incorporate SB 1 Funds into the Fiscal Year 2022-23 Budget for the identified projects.
Project Title: CIP 2287 West Grand Avenue Streetscape
Project Description: Construction of medians and pavement rehabilitation to provide a pedestrian friendly corridor
Project Location: West Grand Avenue from 4th Street to 8th Street Estimated Project Schedule: Start (07/22)– Completion (07/23) based on the component being funded with RMRA funds
Estimated Project Useful Life: 20 years
Project Title: CIP 2285 Major Street Rehabilitation North 4th Street Project Description: Pavement Rehabilitation
Project Location: North 4th Street from West Grand Avenue to Ocean View Avenue
Estimated Project Schedule: Start (10/22)– Completion (05/23) based on the component being funded with RMRA funds
Estimated Project Useful Life: 15 years
On motion by Council Member, seconded by Council Member, and on the following rollcall vote, to wit:
AYES: Council Member –
NOES: Council Member –
ABSENT: Council Member –
ABSTAIN: Council Member –
RECUSED: Council Member –
the foregoing Resolution was PASSED, APPROVED, and ADOPTED at a regular meeting of the City Council of the City of Grover Beach, California this 13th day of June 2022. ___________________________________
JEFF LEE, MAYOR
Attest:
_______________________________
WENDI SIMS, CITY CLERK
Agenda Item No. 6
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: June 13, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Kristin Eriksson, Deputy City Manager
SUBJECT: Introduction and First Reading of an Ordinance Amending Chapter 2 (Compensation) of Article II (Administration) of the Grover Beach Municipal Code to Add Insurance Benefits
RECOMMENDATION
Introduce and conduct the first reading, by title only, the Ordinance to amend Chapter 2 (Compensation) of Article II (Administration) of the Grover Beach Municipal Code (GBMC) regarding Council health benefits and schedule a hearing for June 27, 2022 to provide a second reading and adopt the Ordinance.
BACKGROUND:
At the April 11, 2022 Council meeting, Council Member Miller requested scheduling an agenda item to consider increasing the compensation received by the Council given increases in cost of living. The Council concurred with this request and provided direction to staff to schedule this item for an upcoming meeting. The current compensation of $600 per month for Council Members and $750 per month for the directly-elected Mayor was approved on December 4, 2017 and became effective in December 2018 following the November 2018 election. Previously, Council compensation had not been adjusted since 1986 and was the lowest level among the seven cities in San Luis Obispo County.
At the April 25, 2022 Council meeting, the Council heard a presentation on Council compensation which provided the relevant legal requirements, as shown in Attachment 1, and compared stipends, insurance benefits and equipment allowances for other city councils in the county. As shown in Attachment 1, the report indicated that the City’s Council stipends are on the low end as compared to other cities in the county and that the City is the only city in the county that does not offer any health insurance benefits to Council Members. The Council directed staff to draft an ordinance to increase Council stipends by the maximum allowable amount of 20% (5% for each of four years since the last increase became effective) and to bring back an agenda item for further deliberation of providing health insurance benefits to the Council At the May 23, 2022 meeting, the Council adopted an Ordinance raising Council Member salaries to $720 per month and the Mayor’s salary to $900 per month. The Council also received a report on health benefits provided to Council Members in other cities in the county and provided staff direction to add health benefits to the Council’s compensation to match the contribution provided to Management and Confidential employees of the City as shown in Attachment 2. The attached Ordinance (Attachment 3) will codify Council’s direction along with the previous amendment to increase Council Member stipends by 20% to $720 per month and to increase the Mayor’s stipend by 20% to $900 per month. The new stipend will be effective in December 2022 following the Attachment 3 Amended
Staff Report: Introduction and First Reading of an Ordinance Amending Council Compensation Page 2 May 9, 2022
November 2022 election while the health benefits coverage would be effective in January 2023 in conjunction with the City’s open enrollment process for health insurance.
FISCAL IMPACT
There is no fiscal impact associated with this agenda item. Subsequent adoption of the Ordinance amending the Municipal Code to add health benefits to Council compensation will result in an annual cost increase of $98,400 and a prorated increase of $49,200 for FY 2022-23. This amount would be absorbed in the City’s operating budget.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Introduce and conduct the first reading, by title only, the Ordinance to amend Chapter 2 of Article II (Administration) of the Grover Beach Municipal Code (GBMC) regarding Council health benefits and schedule a hearing for June 27, 2022 to provide a second reading and adopt the Ordinance; or
2. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Legal References (Grover Beach Municipal Code and Government Code)
2. Management & Confidential Employee Group Coverage Contribution Rates
3. Ordinance Amending Chapter 2 (Compensation) of Article II (Administration) of the Grover Beach Municipal Code Include Health Benefits
Compensation for Council Members
Grover Beach Municipal Code Sec. 2201. Compensation of Council Members. Each member of the Council shall receive, as salary, the sum of six hundred dollars ($600) per month and, pursuant to Government Code section 36516.1, as may be amended from time to time, the directly elected Mayor shall receive, as salary, seven hundred and fifty dollars ($750) per month. (Ord. No. 22; Am. Ord. 75-11; Ord. 86-2; Am. Ord. 17-08) Government Code Sec. 36516.
(a) (1) A city council may enact an ordinance providing that each member of the city council shall receive a salary based on the population of the city as set forth in paragraph (2). (2) The salaries approved by ordinance under paragraph (1) shall be as follows:
(A) In cities up to and including 35,000 in population, up to and including three hundred dollars ($300) per month.
(B) In cities over 35,000 up to and including 50,000 in population, up to and including four hundred dollars ($400) per month.
(C) In cities over 50,000 up to and including 75,000 in population, up to and including five hundred dollars ($500) per month.
(D) In cities over 75,000 up to and including 150,000 in population, up to and including six hundred dollars ($600) per month.
(E) In cities over 150,000 up to and including 250,000 in population, up to and including eight hundred dollars ($800) per month.
(F) In cities over 250,000 population, up to and including one thousand dollars ($1,000) per month.
(3) For the purposes of this subdivision, the population of a city shall be determined by the last preceding federal census, or a subsequent census, or estimate validated by the Department of Finance.
(4) The salary of council members may be increased beyond the amount provided in this subdivision by an ordinance or by an amendment to an ordinance, but the amount of the increase shall not exceed an amount equal to 5 percent for each calendar year from the operative date of the last adjustment of the salary in effect when the ordinance or amendment is enacted. No ordinance shall be enacted or amended to provide automatic future increases in salary.
(b) Notwithstanding subdivision (a), at any municipal election, the question of whether city council members shall receive a salary for services, and the amount of that salary, may be submitted to the electors. If a majority of the electors voting at the election favor it, all of the council members shall receive the salary specified in the election call. The salary of council members may be increased beyond the amount provided in this section or decreased below the amount in the same manner.
(c) Unless specifically authorized by another statute, a city council may not enact an ordinance providing for compensation to city council members in excess of that authorized by the procedures described in subdivisions (a) and (b). For the purposes of this section, compensation includes payment for service by a city council member on a commission, Attachment 1
committee, board, authority, or similar body on which the city council member serves. If the other statute that authorizes the compensation does not specify the amount of compensation, the maximum amount shall be one hundred fifty dollars ($150) per month for each commission, committee, board, authority, or similar body.
(d) Any amounts paid by a city for retirement, health and welfare, and federal social security benefits shall not be included for purposes of determining salary under this section, provided that the same benefits are available and paid by the city for its employees. (e) Any amounts paid by a city to reimburse a council member for actual and necessary expenses pursuant to Section 36514.5 shall not be included for purposes of determining salary pursuant to this section.
(f) A city council member may waive any or all of the compensation permitted by this section. (Amended by Stats. 2009, Ch. 332, Sec. 68. Effective January 1, 2010.) Government Code Sec. 36516.1.
A mayor elected pursuant to Sections 34900 to 34904, inclusive, may be provided with compensation in addition to that which he or she receives as a council member. That additional compensation may be provided by an ordinance adopted by the city council or by a majority vote of the electors voting on the proposition at a municipal election.
Government Code Sec. 36516.5.
A change in compensation does not apply to a councilman during his term of office; however, the prohibition herein expressed shall not prevent the adjustment of the compensation of all members of a council serving staggered terms whenever one or more members of such council becomes eligible for a salary increase by virtue of his beginning a new term of office. (Added by Stats. 1966, 1st Ex. Sess., Ch. 12.)
Attachment 2
ORDINANCE NO. 22-__
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GROVER
BEACH, CALIFORNIA, AMENDING CHAPTER 2 (COMPENSATION) OF
ARTICLE II (ADMINISTRATION) BY ADDING SUBSECTION B TO
SECTION 2201
WHEREAS, Grover Beach Municipal Code Article II, Chapter 2 provides for compensation for City Council members; and
WHEREAS, the City of Grover Beach is the only city in the County of San Luis Obispo that does not provide any health insurance benefits for council members; and WHERAS, on May 23, 2022, the City Council approved adding health insurance benefits at the same level of management and confidential employees for City Council members to the City Council’s compensation; and
WHEREAS, California Government Code section 36516(d) provides that any amount paid to council members for health benefits is not included in the determination of salary, provided that city employees have the same benefits available NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Grover Beach as follows:
PART 1: Chapter 2 (Compensation), Section 2201 of Article II (Administration) of the Grover Beach Municipal Code is hereby amended by adding subsection B which reads as follows:
Sec. 2201. Compensation of Counsel Members. [(A)] Each member of the Council shall receive, as a salary, the sum of seven hundred twenty dollars ($720) per month and, pursuant to Government Code section 36516.1, as may be amended from time to time, the directly elected Mayor shall receive, as a salary, nine hundred dollars ($900) per month.
[(B) Each member of the Council is entitled to participate in the City employee medical insurance policy. The City will pay for the elected official’s participation up to the amount contributed by the City for Management and Confidential employees, except the elected officials shall not receive an opt out amount or cash payment in lieu of coverage.]
PART 2: Severability. If any section, subsection, subdivision, paragraph, sentence, clause, or phrase of this Ordinance or any part thereof is for any reason held to be in violation of the law, such decision shall not affect the validity of the remaining portion of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase thereof, irrespective of the fact that any one or more sections, subsections, Attachment 3
Amended to correct Part 1 Section
2201 and Part 3 Effective Date
Ordinance No. 22-__ Page 2
subdivisions, paragraphs, sentences, clauses or phrases be declared in violation of the law.
PART 3: Effective Date. This Ordinance shall not become effective and in full force and effect until 12:01 a.m. on the thirty first day after its final passage. However, subsection (A) was adopted by Council on May 23, 2022 and shall become effective consistent with Ordinance 22-04 and the added health insurance benefits for Council members pursuant to this Ordinance shall become effective on January 1, 2023, and within fifteen (15) days after adoption by the City Council, the Ordinance shall be published once, together with the names of the Council Members voting thereon, in a newspaper of general circulation within the City.
INTRODUCED at a regular meeting of the City Council held ________ and PASSED, APPROVED, and ADOPTED by the City Council on __________, on the following roll call vote, to wit:
AYES: Council Members –
NOES: Council Members –
ABSENT: Council Members –
ABSTAIN: Council Members –
APPROVED:
__________________________
JEFF LEE, MAYOR
ATTEST:
____________________________________
WENDI SIMS, CITY CLERK
APPROVED AS TO FORM:
_____________________________________
DAVID P. HALE, CITY ATTORNEY
**DRAFT**
Agenda Item No. 7
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: June 13, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Wendi Sims, City Clerk
SUBJECT: Appointment to the Planning Commission
RECOMMENDATION
Confirm and approve Mayor Lee’s recommendation and adopt the Resolution to Appoint Anne Holden to a four-year term of office on the Planning Commission, scheduled to expire on May 31, 2026.
BACKGROUND
There is one vacancy on the Planning Commission due to the expiration of the remaining fouryear term of office held by Commissioner Anne Holden (term expired on May 31, 2022).
Commissioner Holden agreed to continue serving on the Planning Commission until the Council made an official appointment. Consistent with State law, staff advertised the Planning Commission vacancies with press releases, notices on the City website, government cable access Channel 20, and posted notices on the bulletin board located at City Hall.
Commissioner Holden has re-applied to serve on the Commission and Mayor Lee recommends for Council approval the re-appointment of Anne Holden to a four-year term of office scheduled to expire on May 31, 2022. Commissioner Holden will begin serving her new term at the next scheduled Planning Commission meeting.
FISCAL IMPACT
There is no fiscal impact with the recommended action.
ALTERNATIVES
The City Council has the following alternatives to consider:
1. Accept and confirm Mayor Lee’s recommendation and adopt the Resolution to appoint Anne Holden to a four-year term of office, scheduled to expire on May 31, 2026.
2. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Staff Report: Appointment to Planning Commission Page 2 June 13, 2022
Attachments
1. Draft Resolution
2. Application (Note: redacted copies posted to the City website. Copies without redactions are available by request to the City Management Department.) RESOLUTION NO. 22-__
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GROVER BEACH,
CALIFORNIA AUTHORIZING THE APPOINTMENT OF ANNE HOLDEN TO
THE GROVER BEACH PLANNING COMMISSION
WHEREAS, the Planning Commission is a body of five lay citizens; and WHEREAS, one (1) vacancy currently exist on the Commission due to the scheduled expiration of remaining four-year Commission terms of office held by Commissioner Anne Holden who was appointed on May 20, 2019.
WHEREAS, the City actively solicited potential candidates to serve on the Planning Commission; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Grover Beach hereby accepts Mayor Lee’s recommendation and approves the appointment of Anne Holden to a four-year term of office, scheduled to expire on May 31, 2026.
On motion by ________, second by ________, and on the following roll-call vote, to wit:
AYES: Council Members -
NOES: Council Members -
ABSENT: Council Members -
ABSTAIN: Council Members -
the foregoing Resolution was PASSED, APPROVED, and ADOPTED at a Regular Meeting of the City Council of the City of Grover Beach, California this 13th day of June 2022. _____________________________
JEFF LEE, MAYOR
Attest:
______________________________
WENDI SIMS, CITY CLERK
Attachment 1
**DRAFT**
City of Grover Beach
APPLICATION FOR APPOINTMENT TO SERVE
ON A CITY COMMISSION, COMMITTEE OR BOARD
This application will remain active and on file for one (1) year.
This is a public record open for inspection and reproduction.
You must be a registered voter of Grover Beach to apply.
City of Grover Beach
MAY 13 2022
RECEIVED
I wish to be considered for appointment to the following Commission, Committee or Board:
(Check only one. Submit a separate application if you are interested in more than one.) • Planning Commission
□ Traffic Committee
□ Parks, Recreation and Beautification Commission
□ Citizen Oversight Committee for City Revenue Measures Name: A hlf)Q,,. }j J±o [d <Lb Date: 5-/2.,- 2 ?.-
(Please print)
Home Address: _Vl____._U~Q.,~----
Mailing Address: __________________________ _
(If different from home address)
Occupation/Employer: -~ .......... ---'<L_:!......_·l__._v'_ui=""'------------------ Home Phone: ___ ________ __ Work Phone: ___ ___ __ _
Cell Phone: E-mail:
May we contact you at work? 0 Yes O No Years lived in Grover Beach: _g~- Are you related or married to any elected or appointed City official or employee? 0 Yes a No If yes, name of relative and their position with the City of Grover Beach: _______ _ Community Service Ex erience:
Organization Dates Served Position
Employment History (If aoolicable):
Company Dates Served Position
Attachment 2
Application for Appointment to Commission, Committee, or Board Page2 Other relevant experience, education, or training: I ha,, \{Q d Q,, I[ v Q J <!) V) ±b~ p~:o;o=:;L½ i~~~
jo/2 ~ ft44 44
What is your understanding of the role and responsibilities of the Commission/ Committee/Board?
Ti:> v:,,a..ka I a l'ld _u :;q_ d er i 3; o V\ s c. ol():;, i,::, i /1.lo + w ·,-H-, C ·,f L\ p-o \ \ c ', e :-, . lJ 1 ( \ '1 o~ + o o.. tl o.\{\d rn o Q,±, nJ 5 , w a. 13b i Ret~~hdi~riThm~a~~~ifci{otlr lnYet~n s#rvi~g~~ t~i <commission/Committee/ Board:
I lJJ a.V)± j-p Q D Vl l' '1 (\ U Q \[V\~ WC It"'\<_ £0 \f' ¼ <2 B b. o._c_ b a. 21 o.. Cs IN) oo ·, » 'Q c o V\ .e If' , You may attach additional pages or information that may be beneficial to the Advisory Body Screening Committee, City Council and/or City official(s) when considering your application.
Please be advised that this application may be discussed by the City Council at an open meeting.
Information provided to the City Council at open meetings is copied to the news media.
Have you ever attended a meeting of this Commission, Committee, or Board? •ves No If yes, how many in the last year? A 11 Wny did you attend? ~ s o,, C Q m ro \ s s \ o n Q r Financial Disclosure: In compliance with state law and the City's Conflict of Interest Code, all City Commissions, Committees or Boards are required to file a Statement of Economic Interests (Form 700) upon appointment, annually thereafter, and upon leaving office. The Form 700 is a public document regarding personal and business information including sources of income, loans, investments, and interests in real property. For more information visit: http://www.fppc.ca.gov City of Grover Beach is sincerely appreciated!
Please submit completed application to:
For Office Use Only
Office of the City Clerk
154 South 8th Street
Grover Beach, CA 93433
Or via email: [email protected]
Interview Date: ______ Appointed: 0 Yes O No Appointed Date:
Appointment is for: O Unexpired Term Ending _______ O Full Term Ending _____ _ Agenda Item No. 8
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: June 13, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Annette Munoz, Finance Manager
SUBJECT: Annual Approval of the City of Grover Beach Investment Policy
RECOMMENDATION
Review and approve the City of Grover Beach Investment Policy
BACKGROUND
Senate Bills 866 and 564 were signed into law in 1995 to provide additional requirements on public agency investments. SB 866 added to California Government Code Section 53600, Section 53600.3 (the “prudent investor” standard) and Section 53600.5 mandating and prioritizing three objectives of investing public funds (i.e., safety, liquidity, and yield) and Section 53600.6 declaring the deposit and investment practices of local agencies to be an issue of statewide concern. SB 564 also repealed and rewrote California Government Code Section 53646 mandating cities and other local agencies to adopt a written investment policy and submitting it to the legislative body of the local agency. Further, this policy and any changes shall be considered at least annually at a public meeting. SB 564 also required quarterly reports concerning financial holdings, a statement of compliance along with the report and a statement concerning the ability to meet cash flow needs in the ensuing six months that must be filed with the agency’s governing body.
Attachment 1 contains the City’s Investment Policy which is presented to the Council for annual approval pursuant to SB 564. There are no substantive changes to the policy recommended for the Council’s consideration.
FISCAL IMPACT
There is no fiscal impact with approving the Investment Policy.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Review and approve the City of Grover Beach Investment Policy; or
2. Do not approve the City of Grover Beach Investment Policy; or
3. Provide alternative direction to staff
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Investment Policy
−1−
THE CITY OF GROVER BEACH
INVESTMENT POLICY
Updated: June 2022
Attachment 1
−2−
City of Grover Beach Investment Policy
I. Scope
This policy applies to the investment of short-term operating funds. Longer-term funds, including investments of proceeds from certain bond issues, are covered by a separate policy.
1. Pooling of Funds
Except for cash in certain restricted and special funds, the City of Grover Beach will consolidate cash balances from all funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.
II. General Objectives
The primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield:
1. Safety
Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. a. Credit Risk
The City of Grover Beach will minimize credit risk, the risk of loss due to the failure of the security issuer or backer, by:
· Limiting investments to the safest types of securities · Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisers with which the City of Grover Beach will do business · Diversifying the investment portfolio so that potential losses on individual securities will be minimized.
b. Interest Rate Risk
The City of Grover Beach will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, by:
· Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity
· Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools.
2. Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring Investment Policy
−3−
the portfolio so that securities mature concurrent with cash needs to meet anticipated demands (static Liquidity). Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets (dynamic Liquidity). A portion of the portfolio also may be placed in money market mutual funds or local government investment pools which offer sameday liquidity for short-term funds.
3. Yield
The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, while taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments are limited to relatively low risk securities in anticipation of earnings a fair return relative to the risk being assumed. Securities shall not be sold prior to maturity with the following exceptions:
a. A security with declining credit may be sold early to minimize loss of principal. b. A security swap would improve the quality, yield, or target duration in the portfolio. c. Liquidity needs of the portfolio require that the security be sold.
III. Standards of Care
1. Prudence
The standard of prudence to be used by investment officials shall be the “prudent person” standard, and shall be applied in the context of managing an overall portfolio.
Investment officers, acting in accordance with written procedures and this investment policy and exercising due diligence, shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy.
Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital, as well as the probable income to be derived.
2. Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions.
Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City of Grover Beach.
Investment Policy
−4−
3. Delegation of Authority
Authority to manage the investment program is granted to City Treasurer, hereinafter referred to as investment officer and derived from the following:
Responsibility for the operation of the investment program is hereby delegated to the investment officer, who shall act in accordance with established written procedures and internal controls for the operation of the investment program consistent with this investment policy. Procedures should include references to: safekeeping, delivery vs. payment, investment accounting, repurchase agreements, wire transfer agreements, and collateral/depository agreements. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the investment officer. The investment officer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials.
IV. Safekeeping and Custody
1. Authorized Financial Dealers and Institutions
A list will be maintained of financial institutions authorized to provide investment services. In addition, a list also will be maintained of approved security broker/dealers selected by creditworthiness (e.g. a minimum capital requirement of $10,000,000 and at least five years of operation). These may include “primary” dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C2-1 (uniform net capital rule).
All financial institutions and broker/dealers, who desire to become qualified for investment transactions, must supply the following as appropriate:
b. Audited financial statements
c. Proof of National Association of Securities Dealers (NASD) certification d. Proof of state registration
e. Completed broker/dealer questionnaire
f. Certification of having read and understood and agreeing to comply with the City of Grover Beach’s investment policy.
An annual review of the financial condition and registration of qualified financial institutions and broker/dealers will be conducted by the investment officer.
From time to time, the investment officer may choose to invest in instruments offered by minority and community financial institutions. In such situations, a waiver to the criteria under Paragraph 1 may be granted. All terms and relationships will be fully disclosed prior to purchase, will be reported to the appropriate entity on a consistent basis and should be consistent with state or local law. These types of investment purchases should be approved by the appropriate legislative or governing body in advance.
Investment Policy
−5−
2. Internal Controls
The investment officer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City of Grover Beach are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by management.
Accordingly, the investment officer shall establish a process for an annual independent review by an external auditor to assure compliance with policies and procedures. The internal controls shall address the following points:
c. Control of collusion
d. Separation of transaction authority from accounting and record keeping e. Custodial safekeeping
f. Avoidance of physical delivery securities
g. Clear delegation of authority to subordinate staff members h. Written confirmation of transactions for investments and wire transfers i. Development of a wire transfer agreement with the lead bank and third-party custodian
3. Delivery vs. Payment
All trades where applicable will be executed by delivery vs. payment (DVP) to ensure that securities are deposited in an eligible financial institution prior to release of funds.
Securities will be held by a third-party custodian as evidenced by safekeeping receipts.
V. Suitable and Authorized Investments
1. Investment Types
Consistent with the GFOA Policy Statement on State and Local Laws Concerning Investment Practices, the following investments will be permitted by this policy and are those defined by state and local law where applicable:
a. U.S. government obligations, U.S. government agency obligations, and U.S. government instrumentality obligations, which have a liquid market with a readily determinable market value;
b. Canadian government obligations (payable in local currency); c. Certificates of deposit and other evidences of deposit at financial institutions, bankers; acceptances, and commercial paper, rated in the highest tier (e.g., A-1, P-1, F-1, or D-1 or higher) by a nationally recognized rating agency; d. Investment-grade obligations of state, provincial and local governments and public authorities;
e. Repurchase agreements whose underlying purchased securities consist of the forgoing:
1. Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist only of dollar-denominated securities; and:
Investment Policy
−6−
2. Local government investment pools, either state-administered or through joint powers statutes and other intergovernmental agreement legislation.
Investment in derivatives of the above instruments shall require authorization by the appropriate governing authority. (See the GFOA Recommended Practice on “Use of Derivatives by State and Local Governments,” 1994.)
1. Collateralization
Where allowed by state law and in accordance with the GFOA Recommended Practices on the Collateralization of Public Deposits, full collateralization will be required on non-negotiable certificates of deposit. (See GFOA Recommended Practices, Appendix
3.)
2. Repurchase Agreements
Repurchase agreements shall be consistent with GFOA Recommended Practices on Repurchase Agreements. (See GFOA Recommended Practices, Appendix 3.) VI. Investment Parameters
1. Diversification
The investments shall be diversified by:
b. limiting investments to avoid over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities), c. limiting investment in securities that have higher credit risks, d. investing in securities with varying maturities, and e. continuously investing a portion of the portfolio in readily available funds such as local government investment pools (GLIPs), money market funds or overnight repurchase agreements to ensure that appropriate liquidity is maintained in order to meet ongoing obligations. (See the GFOA Recommended Practice on “Diversification of Investments in a Portfolio: in Appendix 3.)
2. Maximum Maturities
To the extent possible, the City of Grover Beach shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow the City of Grover Beach will not directly invest in securities maturing more than five (5) years from the date of purchase or in accordance with state and local statutes and ordinances. The City of Grover Beach shall adopt weighted average maturity limitations (which often range from 90 days to 3 years), consistent with the investment objectives.
Reserve funds and other funds with longer-term investment horizons may be invested in securities exceeding five (5) years, if the maturity of such investments are made to coincide as nearly as practicable with the expected use of funds. The intent to invest in securities with longer maturities shall be disclosed in writing to the legislative body. (See the GFOA Recommended Practice on “Maturities of Investments in a Portfolio” in Appendix 3.)
Investment Policy
−7−
Because of inherent difficulties in accurately forecasting cash-flow requirements, a portion of the portfolio should be continuously invested in readily available funds such as LGIPs, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations.
VII. Reporting
1. Methods
The investment officer shall prepare an investment report at least quarterly, including a management summary that provides an analysis of the status of the current investment portfolio and transactions made over the last quarter. This management summary will be prepared in a manner which will allow the City of Grover Beach to ascertain whether investment activities during the reporting period have conformed to the investment policy. The report should be provided to the investment officer, the legislative body, and any pool participants. The report will include the following:
a. Listing of individual securities held at the end of the reporting period. b. Realized and unrealized gains or losses resulting from appreciation or depreciation by listing the cost and market value of securities over one-year duration that are not intended to be held until maturity (in accordance with Governmental Accounting Standards Board (GASB) requirements).
c. Average weighted yield to maturity of portfolio on investments as compared to applicable benchmarks.
d. Listing of investment by maturity date.
e. Percentage of the total portfolio which each type of investment represents.
1. Performance Standards
The investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a market average rate of return during a market/economic environment of stable interest rates. A series of appropriate benchmarks shall be established against which portfolio performance shall be compared on a regular basis.
2. Marking to Market
The market value of the portfolio shall be calculated at least quarterly, and a statement of the market value of the portfolio shall be issued at least quarterly. This will ensure that review of the investment portfolio, in terms of value and price volatility, has been performed consistent with the GFOA Recommended Practice on “Mark-to-Market Practices for State and local Government Investment Portfolios and Investment Pools.” (See GFOA Recommended Practices, Appendix 3.) In defining market value, considerations should be given to the GASB Statement 31 pronouncement. −8−
Investment Policy
VIII. Policy Considerations
1. Exemption
Any investment currently held that does not meet the guidelines of this policy shall be exempted from the requirements of this policy. At maturity or liquidation, such monies shall be reinvested only as provided by this policy.
2. Amendments
This policy shall be reviewed on an annual basis. Any changes must be approved by the investment officer and any other appropriate authority, as well as the individual(s) charged with maintaining internal controls.
3. Waivers of Investment Policy
There will be circumstances from time to time when strict adherence to a provision of this Investment Policy is not possible or not in the best interest of the City of Grover Beach.
If the City of Grover Beach Staff has determined that a waiver of one or more provisions of this investment Policy should be considered, staff will prepare an analysis for the governing body describing the rationale and the impact of the waiver on the proposed investment.
Provisions of this Investment Policy may be waived by the approval of the governing body.
The failure of an investment to comply with one or more provisions of this investment Policy shall in no way affect the validity of any investment entered into by the City of Grover Beach in accordance with applicable laws.
IX. List of Attachments
The following documents, as applicable, are attached to this policy:
· Appendix 1: Glossary
· Appendix 2: Investment Pools
· Appendix 3: GFOA Recommended Practices and Policy Statements · Listing of authorized personnel
−9−
Appendix 1: Glossary
Accrued Interest - The accumulated interest due on a bond as of the last interest payment made by the issuer.
Agency - A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government. Federally sponsored agencies (FSAs) are backed by each particular agency with a market perception that there is an implicit government guarantee. An example of federal agency is the Government National Mortgage Association (GNMA). An example of an FSA is the Federal National Mortgage Association (FNMA).
Amortization - The systematic reduction of the amount owed on a debt issued through periodic payments of principal.
Average Life - The average length of time that an issue of serial bonds and/or term bonds, with a mandatory sinking fund feature, is expected to be outstanding.
Basis Point - A unit of measurement used in the valuation of fixed-income securities equal to 1/100 of 1 percent of yield, e.g., “1/4" of 1 percent is equal to 25 basis points.
Bid - The indicated price at which a buyer is willing to purchase a security or commodity.
Book Value - The value at which a security is carried on the inventory lists or other financial records of an investor. The book value may differ significantly from the security’s current value in the market.
Callable Bond - A bond issue in which all or part of its outstanding principal amount may be redeemed before maturity by the issuer under specified conditions.
Call Price - The price at which an issuer may redeem a bond prior to maturity. The price is usually at a slight premium to the bond’s original issue price to compensate the holder for loss of income and ownership.
Call Risk - The risk to a bondholder that a bond may be redeemed prior to maturity.
Cash Sale/Purchase - A transaction which calls for delivery and payment of securities on the same day that the transaction is initiated.
Collateralization - Process by which a borrower pledges securities, property, or other deposits for the purpose of securing the repayment of a loan and/or security.
Commercial Paper - An unsecured short-term promissory note issued by corporations, with maturities ranging from 2 to 270 days.
Convexity - A measure of a bond’s price sensitivity to changing interest rates. A high convexity indicates greater sensitivity of a bond’s price-to-interest rate changes. −10−
Appendix 1: Glossary con’t.
Coupon Rate - The annual rate of interest received by an investor from the issuer of certain types of fixed-income securities. Also known as the “interest rate.” Credit Quality - The measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer’s ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer, because the risk of default is lower. Credit quality ratings are provided by nationally recognized rating agencies.
Credit Risk - The risk to an investor that an issuer will default in the payment of interest and/or principal on a security.
Current Yield (Current Return) - A yield calculation determined by dividing the annual interest received on a security by the current market price of that security.
Delivery Versus Payment (DVP) - A type of securities transaction in which the purchaser pays for the securities when they are delivered either to the purchaser or his/her custodian.
Derivative Security - Financial instrument created from, or whose value depends upon, one or more underlying assets or indexes of asset values.
Discount - The amount by which the par value of a security exceeds the price paid for the security.
Diversification - A process of investing assets among a range of security types by sector, maturity, and quality rating.
Duration - A measure of the timing of the cash flows, such as the interest payments and the principal repayment, to be received from a given fixed-income security. This calculation is based on three variables: term to maturity, coupon rate, and yield to maturity. The duration of the security is a useful indicator of its price volatility for given changes in interest rates.
Fair Value - The amount at which an investment could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
Federal Funds (Fed Funds) - Funds placed in Federal Reserve banks by depository institutions in excess of current reserve requirements. These depository institutions may lend fed funds to each other overnight or on a longer basis. They may also transfer funds among each other on the same-day basis through the Federal Reserve banking system. Fed funds re-considered to be immediately available funds.
Federal Funds Rate - Interest rate charged by one institution lending federal funds to the other.
Government Securities - An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. Securities market. (See “Treasury Bills, Notes, and Bonds.”) Appendix 1: Glossary con’t
−11−
Interest Rate - (See “Coupon Rate.”)
Interest Rate Risk - The risk associated with declines or rises in interest rates, which cause an investment in a fixed-income security to increase or decrease in value.
Internal Controls - An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points:
1. Control of Collusion - Collusion is a situation where two or more employees are working in conjunction to defraud their employer.
2. Separation of transaction authority from accounting and record keeping - By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved.
3. Custodial safekeeping - Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party for custodial safekeeping.
4. Avoidance of physical delivery securities - Book-entry Securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities.
5. Clear delegation of authority to subordinate staff members - subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities.
6. Written confirmation of transactions for investments and wire transfers - Due to the potential for error and improprieties arising from telephone and electronic transactions, all transactions should be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and if the safekeeping institution has a list of authorized signatures.
7. Development of a wire transfer agreement with the lead bank and third-party custodian - The designated official should ensure that an agreement will be entered into and will address the following points: controls, security provisions, and responsibilities of each party making and receiving wire transfers.
Inverted Yield Curve - A chart formation that illustrates long-term securities having lower yields than short-term securities. This configuration usually occurs during periods of high inflation coupled with low levels of confidence in the economy and a restrictive monetary policy.
Investment Company Act of 1940 - Federal legislation which sets the standards by which investment companies, such as mutual funds, are regulated in the areas of advertising, promotion, performance reporting requirements, and securities valuations.
Appendix 1: Glossary con’t
−12−
Investment Policy - A concise and clear statement of the objectives and parameters formulated by an investor or investment manager for a portfolio of investment securities.
Investment-grade Obligations - An investment instrument suitable for purchase by institutional investors under the prudent person rule. Investment-grade is restricted to those obligations rated BBB or higher by a rating agency.
Liquidity - An asset that can be converted easily and quickly into cash has high liquidity.
Local Government Investment Pool (LGIP) - An investment by local governments in which their money is pooled as a method for managing local funds.
Mark-to-market - The process whereby the book value or collateral value of a security is adjusted to reflect its current market value.
Market Risk - The risk that the value of a security will rise or decline as a result of changes in market conditions.
Market Value - Current market price of a security.
Maturity - The date on which payment of a financial obligation is due. The final stated maturity is the date on which the issuer must retire a bond and pay the face value to the bondholder. (See “Weighted Average Maturity.”)
Money Market Mutual Fund - Mutual funds that invest solely in money market instruments (short-term debt instruments, such as Treasury bills, commercial paper, bankers’ acceptances, repos and federal funds).
Mutual Fund - An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by the following Securities and Exchange Commission (SEC) disclosure guidelines;
1. Report standardized performance calculations.
2. Disseminate timely and accurate information regarding the fund’s holdings, performance, management and general investment policy.
3. Have the fund’s investment policies and activities supervised by a board of trustees, which are independent of the adviser, administrator or other vendor of the fund.
4. Maintain the daily liquidity of the fund’s shares.
5. Value its portfolios on a daily basis.
6. Have all individuals who sell SEC-registered products licensed with a self-regulating organization (SRO) such as the National Association of Securities Dealers(NASD).
7. Have an investment policy governed by a prospectus which is updated and filed by the SEC annually.
Appendix 1: Glossary con’t
−13−
Mutual Fund Statistical Services - Companies that track and rate mutual funds, e.g.
IBC/Donoghue, Lipper Analytical Services, and Morningstar.
National Association of Securities Dealers (NASD) - a self-regulatory organization (SRO) of brokers and dealers in the over-the-counter securities business. Its regulatory mandate includes authority over firms that distribute mutual fund shares, as well as other securities.
Net Asset Value - The market value of one share of an investment company, such as a mutual fund. This figure is calculated by totaling a fund’s assets which includes securities, cash, and any accrued earnings, subtracting this from the fund’s liabilities and dividing this total by the number of shares outstanding. This is calculated once a day based on the closing price for each security in the fund’s portfolio. (See below.)
[(Total assets) - (Liabilities)]/(Number of shares outstanding) No Load Fund - A mutual fund which does not levy a sales charge on the purchase of its shares.
Nominal Yield - The stated rate of interest that a bond pays its current owner, based on par value of the security. It is also known as the “coupon,” “coupon rate,” or “interest rate.” Offer - An indicated price at which market participants are willing to sell a security or commodity. Also referred to as the “Ask price.”
Par - Face value or principal value of a bond, typically $1,000 per bond.
Positive Yield Curve - A chart formation that illustrates short-term securities having lower yield than long-term securities.
Premium - The amount by which the price paid for a security exceeds the security’s par value.
Prime Rate - A preferred interest rate charged by commercial banks to their most creditworthy customers. Many interest rates are keyed to this rate.
Principal - The face value or par value of a debt instrument. Also may refer to the amount of capital invested in a given security.
Prospectus - A legal document that must be provided to any prospective purchaser of a new securities offering registered with the SEC. This can include information on the issuer, the issuer’s business, the proposed use of proceeds, the experience of the issuer’s management, and certain certified financial statements.
Prudent Person Rule - An investment standard outlining the fiduciary responsibilities of public funds investors relating to investment practices.
Appendix 1: Glossary con’t
−14−
Regular Way Delivery - Securities settlement that calls for delivery and payment on the third business day following the trade date (T+3). (Payment on a T+1 basis is currently under consideration.) Mutual funds are settled on a same day basis; government securities are settled on the next business day.
Reinvestment Risk - The risk that a fixed-income investor will be unable to reinvest income proceeds from a security holding at the same rate of return currently generated by that holding.
Repurchase Agreement (repo or RP) - An agreement of one party to sell securities at a specified price to a second party and a simultaneous agreement of the first party to repurchase the securities at a specified price or at a specified later date.
Reverse Repurchase Agreement (Reverse Repo) - An agreement of one party to repurchase securities at a specified price from a second party and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified date.
Rule 2a-7 of the Investment Company Act - Applies to all money market mutual funds and mandates such funds to maintain certain standards, including a 13-month maturity limit and a 90- day average maturity on investments, to help maintain a constant net asset value of one dollar ($1.00).
Safekeeping - Holding of assets (e.g., securities) by a financial institution.
Securities Exchange Commission (SEC) -
Serial Bond - A bond issue, usually of a municipality, with various maturity dates scheduled at regular intervals until the entire issue is retired.
Sinking Fund - Money accumulated on a regular basis in a separate custodial account that is used to redeem debt securities or preferred stock issues.
Swap - Trading one asset for another.
Term Bond - Bonds comprising a large part or all of a particular issue which come due in a single maturity. The issuer usually agrees to make periodic payments into a sinking fund for mandatory redemption of term bonds before maturity.
Total Return - The sum of all investment income, plus changes in the capital value of the portfolio. For mutual funds, return on an investment is composed of share price appreciation, plus any realized dividends or capital gains. This is calculated by taking the following components during a certain time period.
(Price appreciation) + (Dividends paid) + (Capital gains) = Total Return Treasury Bills - Short-term U.S. government non-interest bearing debt securities, with maturities of no longer than one year and issued in minimum denominations of $10,000.
Auctions of three- and six-month bills are weekly, while auctions of one-year bills are monthly.
Appendix 1: Glossary con’t
−15−
The yields on these bills are monitored closely in the money markets for signs of interest rate trends.
Treasury Notes - Intermediate U.S. government debt securities with maturities of one to ten years and issued in denominations ranging from $1,000 to $1 million or more.
Treasury Bonds - Long-term U.S. government debt securities with maturities of ten years or longer, and issued in minimum denominations of $1,000. Currently, the longest outstanding maturity for such securities is 30 years.
Uniform Net Capital Rule - SEC Rule 15C3-1 outlining capital requirements for broker/dealers.
Volatility - A degree of fluctuation in the price and valuation of securities. “Volatility Risk” Rating - A rating system to clearly indicate the level of volatility and other non-credit risk associated with securities and certain bond funds. The rating for bond funds range from those that have extremely low sensitivity to changing market conditions and offer the greatest stability of the returns (“aaa” by S&P; “v-1" by Fitch) to those that are highly sensitive with current identifiable market volatility risk (“ccc-“ by S&P, “V-10" by Fitch).
Weighted Average Maturity (WAM) - The average maturity of all the securities that comprise a portfolio. According to SEC rule 2a-7, the WAM for SEC registered money market mutual funds may not exceed 90 days and no one security may have a maturity that exceeds 397 days.
When Issued (WI) - A conditional transaction in which an authorized new security has not been issued. All “when issued” transactions are settled when the actual security is issued.
Yield - The current rate of return on an investment security generally expressed as a percentage of the security’s current price.
Yield-to-call (YTC) - The rate of return an investor earns from a bond assuming the bond is redeemed (called) prior to its nominal maturity date.
Yield Curve - A graphic representation that depicts the relationship at a given point in time between yields and maturity for bonds that are identical in every way except maturity. A normal yield curve may be alternatively referred to as a positive yield curve.
Yield-to-maturity - The rate of return yielded by a debt security held to maturity, when both interest payments and the investor’s potential capital gain or loss are included in the calculation of return.
Zero-coupon Securities - Security that is issued at a discount and makes no periodic interest payments. The rate of return consists of a gradual accretion of the principal of the security and is payable at par upon maturity.
−16−
Appendix 2: Investment Pools
1. Definition
In most states, there are provisions for the creation and operation of a government investment pool. The purpose of a pool is to allow political subdivisions to pool investable funds in order to achieve a potentially higher yield.
There are basically three (3) types of pools: 1) state-run pools, 2) pools that are operated by a political subdivision where allowed by law and the political subdivision is the trustee, and 3) pools that are operated for profit by third parties. Prior to any political subdivision being involved with any type of pool, a thorough investigation of the pool and its policies and procedures must be reviewed.
2. Pool Questionnaire
Prior to entering a pool, the following questions and issues should be considered:
Securities:
Government pools may invest in a broader range of securities than an entity may invest in. It is important to be aware of, and comfortable with, the securities a pool buys. The following is a list of questions an investment officer may wish to ask a prospective Pool.
1. Does the pool provide a written statement of investment policy and objectives?
2. Does the Statement contain:
a. a description of eligible investment instruments?
b. the credit standards for investments?
c. the allowable maturity range of investments?
d. the maximum allowable dollar weighted average portfolio maturity? e. the limits of portfolio concentration permitted for each type of security? f. the policy on reverse repurchase agreements, options, short sales and futures?
3. Are changes in the policies communicated to the pool participants?
4. Does the pool contain only the types of securities that are permitted by your investment policy?
Interest:
Interest is not reported in a standard format, so it is important to know how interest is quoted, calculated, and distributed in order to make comparisons with other investment alternatives.
Interest Calculations
1. Does the pool disclose the following about yield calculations:
a. the methodology used to calculate interest? (simple maturity, yield to maturity, etc.)
b. the frequency of interest payments?
c. how interest is paid? (credited to principal at the end of the month, each quarter; mailed?)
d. how are gains/losses reported? factored monthly or only when realized? −17−
Appendix 2: Investment Pools
Reporting
1. Is the yield reported to participants of the pool monthly? (If not, how often?)
2. Are expenses of the pool deducted before quoting the yield?
3. Is the yield generally in line with the market yields for other investment alternatives?
4. How often does the pool report? What information does the report include? Does it include the market value of securities?
Security:
The following questions are designed to help safeguard funds from loss of principal and loss of market value.
1. Does the pool disclose safekeeping practices?
2. Is the pool subject to audit by an independent auditor at least annually?
3. Is a copy of the audit report available to participants?
4. Who makes the portfolio decisions?
5. How does the manager monitor the credit risk of the securities in the pool?
6. Is the pool monitored by someone on the board of a separate neutral party external to the investment function to ensure compliance with written policies?
7. Does the pool have specific policies with regard to the various investment vehicles? a. What are the different investment alternatives?
b. What are the policies for each type of investment?
8. Does the pool mark the portfolio to its own market value?
9. Does the pool disclose the following about how portfolio securities are valued? a. What is the frequency with which the portfolio securities are valued? b. What is the method used to value the portfolio (cost, current value, or some other method)?
Operations:
The answers to the following questions will help determine whether this pool meets the entity’s operational requirements:
1. Does the pool limit eligible participants?
2. What entities are permitted to invest in the pool?
3. Does the pool allow multiple accounts and sub-accounts?
4. Is there a minimum or maximum account size?
5. Does the pool limit the number of transactions each month? What is the number of transactions permitted each month?
6. Is there a limit on transactions amounts for withdrawals and deposits? a. What is the minimum and maximum withdrawal amount permitted? b. What is the minimum and maximum deposit amount permitted?
7. How much notice is required for withdrawals/deposits? −18−
Appendix 2: Investment Pools
8. What is the cutoff time for deposits and withdrawals?
9. Can withdrawals be denied?
10. Are the funds 100 percent withdrawable at any time?
11. What are the procedures for making deposits and withdrawals? a. What is the paperwork required, if any?
b. What is the wiring process?
12. Can an account remain open with a zero balance?
13. Are confirmations sent following each transaction?
Statements:
It is important for the City Treasurer and the Agency’s trustee (when applicable) to receive statements monthly, so the pool’s records of activity and holdings are reconciled by the City Treasurer and its trustee.
1. Are statements for each account sent to participants? a. What are the fees?
b. How often are they passed?
c. How are they paid?
d. Are there additional fees for wiring funds? (What is the fee?)
2. Are expenses deducted before quoting the yield?
Questions to consider for Bond Proceeds:
It is important to know (1) whether the pool accepts bond proceeds and (2) whether the pool qualifies with the U.S. Department of the Treasury as an acceptable commingled fund for arbitrage purposes.
1. Does the pool accept bond proceeds subject to arbitrage rebate?
2. Does the pool provide accounting and investment records suitable for proceeds of bond issuance subject to arbitrage rebate?
3. Will the yield calculation reported by the pool be acceptable to the IRS, or will it have to be recalculated?
4. Will the pool accept transaction instructions from a trustee?
5. Are separate accounts allowed for each bond issue so that the interest earnings of funds are subject to rebate are not commingled with funds not subject to regulations?
−19−
Appendix 3: GFOA Recommended Practices and Policy Statements GFOA’s Standing Committee on Cash Management has developed recommended practices and policy statements pertaining the prudent investment of public funds. State and local governments should carefully consider the factors outlined in the GFOA recommended practices and policy statements when making investment decisions and entering into investment transaction.
The following recommended practices and policy statements are attached:
Collateralization of Public Deposits (1984, 1987 and 1993) Diversification of Investments in a Portfolio (1997)
Governmental Relationship with Securities Dealers (1986 and 1988) Market Risk (Volatility) Ratings (1995)
Mark-to-Market Practices for State and Local Government Investment Portfolios and Investment Pools (1995)
Master Trust and Custodial Bank Security Lending Programs (1995) Maturities of Investments in a Portfolio (1997)
Repurchase Agreements, Reverse Repurchase Agreements, Leveraging, and Prudent Investment Practices for Cash Management (1986 and 1995) Selection of Investment Advisers (1992)
State and Local Laws Concerning Investment Practices (1997) Use and Application of Voluntary Agreements and Guidelines and Support for Written Investment Policies for State and Local Governments (1995) Use of Derivatives by State and Local Governments (1994) Use of Various Types of Mutual Funds by Public Cash Managers (1987) GFOA Recommended Practice
−20−
Collateralization of Public Deposits (1984, 1987 and 1993) Background. The safety of public funds should be the foremost objective in managing public funds. Collateralization of public deposits through pledging of appropriate securities by depositories is the only way to fully guarantee the safety of such deposits. State programs pertaining to the collateralization of public deposits have generally proved to be cost-effective and beneficial for both the public sector and its depositories.
However, federal law imposes certain limitations on collateral agreements between financial institutions and public entities to provide adequate collateral for public entities to secure sizable public unit deposits. Under certain circumstances, the Federal Deposit Insurance Corporation (FDIC) may be able to avoid a perfected security interest and leave the public depositor with only the right to share with other creditors in the pro rata distribution of the assets of a failed institution.
Recommendation. The Government Finance Officers Association (GFOA) favors the use of pledging requirements as protection for state or local governments, and as incentives for the use of state and local obligations in the satisfaction of such pledges. GFOA further favors and encourages state and local governments to establish adequate and efficient administrative systems to maintain such pledged collateral, including state or locally administered collateral pledging or collateral pools. To accomplish these goals, GFOA recommends that:
1. Public entities implement programs of prudent risk control. Such programs could include a formal depository risk policy, credit analysis, and the use of fully secured investments. In the absence of an effective statewide collateralization program, local officials should establish and implement collateralization procedures.
2. State and local government depositories take all possible actions to comply with federal requirements in order to ensure that their security interests in collateral pledged to secure deposits are enforceable against the receiver of a failed financial institution. Federal law provides that a depositor’s security agreement, which tends to diminish or defeat the interest of the FDIC in an asset acquired by it as receiver of an insured depository, shall not be valid against the FDIC unless the agreement
· is in writing;
· was executed by the depository institution and any person claiming an adverse interest, contemporaneously with the acquisition of the asset by the depository institution; · was approved by the board of directors of the depository or its loan committee; and · has been continuously, from the time of its execution, an official record of the depository institution.
GFOA Recommended Practice
−21−
Diversification of Investments in a Portfolio (1997)
Background. State and local governments are charged with observing the investment management objectives of safety, liquidity, and yield. Portfolio risk includes all the risks associated with investments, such as credit risk and market risk. Risks to safety and liquidity can be mitigated through diversifying and types and maturities of securities purchased. Because ensuring safety and liquidity are paramount, entities should seek to reduce portfolio risk as much as possible in their investment policies through appropriate diversification of investments in the portfolio and restrictions on maturity provisions.
Recommendation. The Government Finance Officers Association (GFOA) recommends that state and local governments diversify their investments to reduce portfolio risk through such means as:
· limiting investments to avoid over concentration in securities from a specific issuer or business sector, excluding U.S. Treasury securities;
· limiting investments ins securities that have higher credit risks; · investing in securities of varying maturities; and
· continuously investing a portion of the portfolio in readily available funds, such as local government investment pools (LGIPs), money market funds, or maintained to meet ongoing obligations.
GFOA Recommended Practice
−22−
Governmental Relationships with Securities Dealers (1986 and 1988) Background. State and local governments represent one of the largest sources of investment funds available to purchase U.S. Government Securities. Without broad participation by state and local government investors, the government securities market would lack liquidity and the U.S. Treasury’s cost of borrowing would increase. At the same time, governmental investors are expected to protect public funds from losses arising from default and to ensure that securities are purchased and sold at the best price available in the competitive marketplace.
Recommendation. The Government Finance Officers Association (GFOA) makes the following specific recommendations to state and local government investors in selecting depositories and securities dealers for the purpose of investment transactions in government securities:
1. Select or qualify depositories, custodians, and dealers through competitive procedures, including requests for proposals for banking services. All securities purchases should be made through competitive bidding. In the event that a governmental unit does not obtain competitive price bids, investors are urged to obtain written documentation of price markups prior to completing the transaction.
2. Require securities dealers conducting transactions with governmental entities to comply with the Federal Reserve Bank of New York’s capital adequacy guidelines as a condition of doing business. Before investing public funds, government investors should obtain compliance certifications from the dealer and an independent auditor.
3. Secure acknowledgment from depositories and dealers that they have received written copies of their investment policies, portfolio risk constraints, and investment trading requirements.
4. Be aware of reasonably foreseeable risks of market price loss, illiquidity, nonmarketability, or default of investment instruments before they are purchased. Additionally, securities dealers have a responsibility to disclose unreasonable risks.
GFOA Recommended Practice
−23−
Market Risk (Volatility) Rating (1995)
Background. State and local government have long relied on credit ratings as an independent analytical source to gauge the credit risk of an investment option. However, credit risk analysis alone is not sufficient to safeguard against the assumption of other risk components, including market, interest rate, and liquidity risks. Through the securitization and structuring process, AAA rated securities and funds also may carry extreme market and other risks that are wholly unaddressed by credit ratings. Rating agencies now provide market risk ratings that evaluate the volatility of the security under a wide range of potential interest rate and mortgage prepayment scenarios.
Risk components, such as interest rate, prepayment, credit, spread and liquidity, and currency risks are analyzed to assess how aggressively a fund uses derivatives and leveraging, and what risks their use presents to fund managers and investors in the fund. Results indicate the degree of potential variability in the prospective fund performance. Historical performance and volatility of funds returns relative to appropriate benchmarks also are evaluated.
When applied to individual collateralized mortgage obligations (CMOs), market risk rating provided a useful benchmark to governmental entities as they establish guidelines for prudent management of derivative investments.
Recommendation. The Government Finance Officers Association (GFOA) encourages state and local governments to augment information they receive from brokers, dealers, or advisers with independent research when conducting due diligence of potential investments. Information sources include historical trading ranges, trend and volume data, brokerage firm research, cash flow and present value analysis, and credit ratings and research.
GFOA encourages investment in only those CMOs and funds that seek market risk ratings from rating agencies to provide comprehensive disclosure of risks to public investors. Although volatility ratings currently are not mandatory, public investors may wish to consider limiting their investments to CMOs and funds that have received favorable volatility ratings from a nationally recognized rating agency.
GFOA Recommended Practice
−24−
Mark-to-Market Practices for State and Local Government Investment Portfolios and Investment Pools (1995)
Background. As the investment portfolios of state and local governments are subjected to increased scrutiny, it is essential that reporting standards be enhanced so that investors, governing bodies, and the public remain informed of the current market value of the portfolio.
Regular disclosure of the value of a governmental entity’s investments is an important step to furthering taxpayer and market confidence in state and local government investment practices.
Recommendation. The Government Finance Officers Association (GFOA) recommends the state and local government officials responsible for investment portfolio reporting determine the market value of all securities in the portfolio on at lease a quarterly basis. These values should be obtained from a reputable and independent source and disclosed to the governing body or other oversight body at least quarterly in a written report. It is recommended that the report include the market value, book value, and unrealized gain or loss of the securities in the portfolio.
Many state and local government officials are allowed to invest in various state and local government investment pools available in their state or region. GFOA recommends that pool administrators, on at least a monthly basis, determine the market value of all securities in the pool and report this information to all pool participants on at least a quarterly basis. These values should be obtained from a reputable and independent source. This information should be included in the report to the governing body prepared on at least a quarterly basis.
GFOA Recommended Practice
−25−
Master Trust and Custodial Bank Security Lending Programs (1995) Background. The lending of securities helps to maintain an orderly market, while providing incremental income to the participant. Broker/dealers borrow primarily to cover fails (the nondelivery of a security expected to be delivered on a date certain) and short sales (the sale of a security not presently owned by the seller in order to take advantage of an expected lower market price), and to execute arbitrage transactions. Their preferred partners in these transactions are the master trust and custodial banks, since their huge portfolios basically offer “one-stop shopping.”
As part of their trust and custody management services, banks, like other money managers, offer to lend securities owned by institutional clients to brokers in exchange for collateral. The collateral, which is usually cash, is reinvested at a rate higher than the rebate rate paid to the broker. The resulting proceeds are subsequently split between the lending agent and the client.
A security lending transaction is similar to a reverse repurchase transaction, and is subject to many of the same risks. While the indemnifications offered may vary, the lending agreement may provide that broker credit risk, broker default risk, and collateral maintenance are risks undertaken by the lending agent. The degree of risk assumed by lending agent default risk and collateral reinvestment risk are undertaken by the institutional client.
Unsound collateral reinvestment practices can result in some master trust and custodial banks incurring losses on behalf of their institutional security lending program customers.
Additionally, rapidly changing interest rates, lending short and investing long, investing in speculative derivatives, and paying a fixed rebate rate while investing in floating rebate rate securities under adverse market conditions are examples of situations that can produce investment losses.
Liquidity requirements are often accepted by and guaranteed by the lending agent upon oneday’s notice, as substitution of the lending client in large lending programs is easily accomplished and essentially riskless. Programs that require the client to undertake responsibility for managing the liquidity present greater risks and require that the client place limits on the amount of the portfolio which may be put on loan. The term of the securities on loan and the reinvestment of the proceeds must be carefully established by the client and strictly managed.
Recommendation. While investment strategies that include security lending programs are not inherently risky when employed judiciously with appropriate precautions and controls, the Government Finance Officers Association (GFOA) urges state and local government officials to exercise extreme caution in their use of security lending programs. Prior to participating in a security lending program, finance officers should carefully evaluate the following:
· whether security lending is legally permissible under state statute and the jurisdiction’s written investment policy;
· the terms of the lending agreements;
· the indemnification provisions;
−26−
Master Trust and Custodial Bank Security Lending Programs (1995) con’t · the reinvestment guidelines and terms of the lending, including the maturity of loans as well as the securities purchased;
· the liquidity provisions and risks;
· the credit risks to be undertaken; and
· the resources required to monitor compliance with the agreement. −27−
GFOA Recommended Practice
Maturities of Investments in a Portfolio (1997)
Background. Securities are issued in a variety of maturities. To ensure that liquidity is maintained and to reduce interest rate risk in operating funds, most state and local governments limit the maximum maturity (the date on which payment of a financial obligation is due) on any specified purchased security and the maximum weighted average maturity (the average maturity or reset period of all securities that comprise a portfolio) of the entire portfolio.
The longer the maturity horizon that is selected, the greater the price volatility. In accordance with the Governmental Accounting Standards Board reporting requirements, the portfolio could show unrealized losses or gains for any reporting period.
Recommendation. The Government Finance Officers Association (GFOA) recommends that, to the extent possible, state and local governments should match investments with anticipated cash flow requirements. GFOA supports the following practices to achieve this objective:
1. Unless matched to a specific cash requirement, governments should not directly invest in securities maturing more than five years from the date of purchase. Reserve or other funds with longer-term investment horizons may be invested in securities exceeding five years, if the maturities of such investments are made to coincide as nearly as practicable with the expected use of funds. The intent to invest in securities with longer maturities should be disclosed in writing to the legislative body through a written investment policy.
2. Governments should adopt weighted average maturity limitations, which often range from 90 days to three years, consistent with the government’s investment objectives.
3. Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds such as local government investment pools (LGIPs), money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations.
GFOA Recommended Practice
Repurchase Agreements, Reserve Repurchase Agreements, Leveraging, and Prudent Investment Practices for Cash Management (1986 and 1995) −28−
Background. Repurchase agreements (repos) are the sale by a bank or dealer of government security with the simultaneous agreement to repurchase the security on a later date. Repos are commonly used by public entities to secure money market rates of interest and are an integral part of an investment program of state and local governments. In a reverse repurchase agreement (reverse repo), an investor owns securities, such as a Treasury note, U.S. government agency bond or other security, that a bank or dealer purchases under an agreement to sell back to the investor on a specified date, at an agreed-upon interest rate.
Reverse repos generally have two basic uses: first, reverse repos may be one way to avoid liquidating a portfolio to meet unexpected or immediate cash flow requirements. This straightforward use of the instrument is accepted by most public finance officers as a legitimate cash management practice. The second, potentially more controversial, use of the reverse repo is to enhance portfolio returns through the purchase of securities finance through repurchase transactions. The cash obtained can then be invested in another higher-yielding instrument. The conservative and prudent approach to this use of reverse repos involves short-term contracts in which the term of the reverse repo is matched with the maturity of the reinvestment. Losses of state and local government fund have occurred as the result of the inappropriate use of reverse repos in leveraging portfolios to increase investment returns and as a result of other unsound investment practices.
Recommendation. The Government Finance Officers Association (GFOA) recommends that state and local government finance officers develop policies and procedures to insure the safety of repos and reverse repos. The following actions are recommended:
1. Government entities and investment officers should exercise special caution in selecting parties with whom they will conduct repurchase transactions and be able to identify the parties acting as principals to the transaction.
2. Proper collateralization practices are necessary to protect the public funds invested in repurchase agreements. Risk is significantly reduced by delivery of underlying securities through physical delivery or safekeeping with the purchaser’s custodian. Overcollateralization, commonly called “haircuts,” or marking-to-market practices should be mandatory procedures.
3. Master repurchase agreements should be employed, subject to appropriate legal and technical review. Governments using the prototype agreement developed by the Public Securities Association should include appropriate supplemental provisions regarding delivery, substitution, margin maintenance, margin amounts seller representations, and governing law.
GFOA Recommended Practice
Repurchase Agreements, Reserve Repurchase Agreements, Leveraging, and Prudent Investment Practices for Cash Management (1986 and 1995) −29−
4. Reverse repo proceeds generally should not be invested in securities whose maturity does not match the term of the reverse repo. For example, borrowing short to lend long can produce losses in adverse markets. Further, the possibility exists that other factors can go wrong, such as default by the dealer or adverse market changes that erode the value of the underlying securities.
5. The use of reverse repos should be considered only by entities that have the expertise and resources required to successfully engage in the technique. Additionally, state statutes may prohibit or discourage the use of reverse repos. Government officials who engage in reverse repos should verify whether such uses of reverse repos are legally sanctioned.
6. Public officials should not engage in investment practices, such as purchasing securities on margin (by borrowing funds from a counterparty), selling securities short (by borrowing the security from a third party and selling in anticipation of higher interest rates), purchasing long-term bonds with short-term funds, and trading futures contracts without an exact offsetting cash market position.
GFOA Recommended Practice
Selection of Investment Advisers (1992)
−30−
Background. Some state and local governments have augmented their investments programs by retaining investment advisers to perform various portfolio services, ranging from advice-only consultation to fully discretionary management. In many cases, the results of these engagements have been favorable but there also have been cases of reported investment losses resulting from governmental units transacting business with certain investment advisers. Unlike the highly regulated bank trust and mutual fund sectors, federal regulatory inspection of independent investment advisers is infrequent and relatively superficial.
Recommendation. The Government Finance Officers Association (GFOA) has recommended consistently that state and local governments exercise caution in their selection of investment advisers and implement an ongoing risk control management program. The association urges state and local governments considering or retaining independent investment advisers to carefully review the credentials, procedures, and controls of firms offering investment advisory services. Recommended precautionary measures include:
· delivery versus payment,
· third-party custody arrangements,
· prohibitions against self-dealing,
· independent auditors,
· timely reconciliations, and
· other appropriate internal control measures.
GFOA Policy Statement
State and Local Laws Concerning Investment Practices (1997) −31−
(Amends State Statutes Concerning Investment Practices approved in 1992) Background. The authority of state and local governments to invest in public funds is derived through the power of state and local legislative bodies and state statutes and local laws that reflect public policies. Some state and local laws and practices may permit investments that are inappropriate for local government, while others may be overly restrictive with regards to permissible instruments or eligible financial entities. Many state and local governments have modified their cash management and investment laws and policies to improve the safety of their investments while obtaining a favorable rate of return on invested public funds.
GFOA Position. The Government Finance Officers Association (GFOA) encourages state and local legislative bodies to remove artificial restrictions upon the efficient investment of public funds by:
1. Amending state and local laws regulating local government investment authority to permit prudent investment of public funds in prime money market instruments and investment securities, such as:
· U.S. government obligations, U.S. government agency obligations, and U.S. government instrumentality obligations, which have a liquid market with a readily determinable market value;
· Canadian government obligations (payable in local currency); · Certificates of deposit and other evidences of deposit at financial institutions, bankers’ acceptances, and commercial paper, rated in the highest tier (e.g. A1, P1, F1 or D1 or higher) by a nationally recognized rating agency;
· Investment-Grade obligations of state, provincial and local governments and public authorities;
· Repurchase agreements whose underlying purchased securities consist of the foregoing; and
· Money market mutual funds regulated by the Securities and Exchange Commission and whose portfolios consist only of dollar-denominated securities.
Investment in derivatives of the above instruments shall require authorization by the appropriate governing authority. (See GFOA Recommend Practice on “Use of Derivatives by State and Local Governments,” 1994.)
2. Authorizing and encouraging the efficient, professional investment of public fundsin local government investment pools, either state-administered or through joint powers and other intergovernmental agreement legislation, to take advantage of portfolio diversification and liquidity.
3. Authorizing and encouraging professional investments by removing geographical restrictions on eligible financial entities.
GFOA Recommended Practice
Use and Application of Voluntary Agreements and Guidelines and Support for −32−
Written Investment Policies for State and Local Governments (1995) Background. Various participants in the investment process are seeking to clarify the relationship of parties in an investment transaction by undertaking voluntary efforts to develop model agreements and guidelines. Some of these documents contain legal assumptions that might affect the validity of a transaction. Others would require certain statements to be in writing in order to be effective. Although the enforceability of such guidelines is uncertain, state and local government investors should be aware of their existence and the possibility that their counterparties may be operating under these or similar guidelines.
Recommendation. The Government Finance Officers Association (GFOA) recommends that state and local governments consider carefully any agreement or guidelines presented for their use, because many of these documents affect a public entity’s rights and responsibilities in a given transaction. Furthermore, GFOA recommends that:
1. Governmental investors be aware of the federal, state, and local laws that govern investment contracts and agreements, as well as statutes and regulations affecting suitability obligations of broker/dealers, which require that a broker/dealer should only recommend a product after that broker/dealer has taken steps to determine that it is suitable for the customer.
2. Governmental investors use the GFOA-developed Broker/Dealer Request for Information, Sample Agreement for Securities Service and (Optional) Statement of Work in dealing with broker/dealers, modified as necessary, which have been formulated specifically by and for state and local government investors.
3. Governmental investors use the GFOA-developed Sample Agreement for Investment Advisory Services when contracting for investment advisers.
4. Governmental investors protect their existing statutory and regulatory rights by ensuring that such rights are not inadvertently waived through the use of “boiler-plate” language in contracts with counterparties.
5. Governmental investors develop written investment policies using the GFOA-developed Sample Investment Policy.
GFOA Recommended Practice
Use of Derivatives by State and Local Governments (1994) −33−
Background. Derivative products are financial instruments created from or whose value depends on (is derived from) the value of one or more underlying assets or indexes of asset values. Derivatives include instruments or features such as collateralized mortgage obligations (CMOs), interest-only (IPs) and principal-only (POs), forwards, futures, currency and interest rate swaps, options, floaters/inverse floaters, and caps/floors/collars. State and local governments may use derivatives in their roles as debt, cash, and pension fund managers.
Recommendation. The Government Finance Officers Association (GFOA) urges state and local government finance officers to exercise extreme caution in the use of derivatives and to consider their use only when they have developed a sufficient understanding of the products and the expertise to manage them. Because new derivative products are increasingly complex, state and local governments should use these instruments only if they can evaluate the following factors, among others, to determine their appropriateness:
1. Governmental entities must observe the objectives of sound asset and liability management policies that ensure safety, liquidity, and yield. Because of the risks involved, the use of derivatives by governmental entities should receive particular scrutiny. Certain derivative products may not be appropriate for all governmental investors. Characteristics of such products can include high price volatility, illiquid markets, products that are not markettested, highly leveraged products, products requiring a high degree of sophistication to manage, and products that are difficult to value.
2. Governmental entities should understand that state and local laws may not specifically address the use of derivatives and examine such considerations as:
· the constitutional and statutory authority of the governmental entity to execute derivative contracts,
· the potential for violating constitutional or statutory provisions limiting the entity’s authority to incur debt resulting from the transaction, and · the application of the governmental entity’s procurement statutes to derivative transactions.
3. Governmental entities should be aware of all the risks associated with use of derivatives, including counterparty credit, custodial, market, settlement, and operating risk.
4. Governmental entities should establish internal controls for each type of derivative in use to ensure that these risks are adequately managed. For example, · the entity should provide a written statement of purpose and objectives for derivative use;
· written procedures should be established that provide for periodic monitoring of derivative instruments;
· managers should receive periodic training and have sufficient expertise and technical −34−
Use of Derivatives by State and Local Governments (1994) con’t resources to oversee derivative programs;
· recordkeeping systems should be sufficiently detailed to allow governing bodies, auditors, and examiners to determine if the program is functioning in accordance with established objectives;
· managers should report regularly on the use of derivatives to their governing body and appropriate disclosure should be made in official statements and other disclosure documents; and
· reporting on derivative use should be in accordance with generally accepted accounting principles, and because use of these instruments is a complex matter, early discussion with public accountants is essential to determine if specialized reporting may be required.
5. Governmental entities should be aware of whether if their broker/dealer is merely acting as an agent, is an intermediary in a derivatives transaction or is taking a proprietary position.
Possible conflicts of interest should be taken into consideration before entering into a transaction.
6. Governmental entities should be aware that there may be little or no pricing information or standardization for some derivatives. Competitive price comparisons are recommended before entering into a transaction.
7. Governmental entities should exercise caution in the selection of broker/dealers or investment managers to ensure that these agents are knowledgeable about, understand and provide disclosure regarding the use of derivatives, including benefits and risks. The entity should secure written acknowledgment from broker/dealers that they have received, read, and understood the entity’s debt and investment policies, including whether derivatives are currently authorized under the entity’s investment policy, and that the broker/dealer or investment manager has ascertained that the recommended product is suitable for the governmental entity.
8. Governmental entities are responsible for ensuring this same level of safeguards when derivative transactions are conducted by a third party acting on behalf of the governmental entity.
GFOA Recommended Practice
−35−
Use of Various Types of Mutual Funds by Public Cash Managers (1987) Background. State and local government cash managers can sometimes benefit from investing public funds through mutual funds. The Government Finance Officers Association (GFOA) has endorsed the use of money market mutual funds by public cash managers through the Association’s model investment legislation for state and local governments. Portfolio diversification, liquidity, and professional management are desirable features of these investment vehicles.
Recommendation. The GFOA recommends that state and local governments using mutual funds study the funds’ prospectus and statement of additional information to determine · the integrity and experience of the investment company, · sales fees and operating expenses,
· fundamental portfolio policies, and
· portfolio composition.
State and local government cash managers should use special care when investing in bond mutual funds. Mutual funds investing exclusively in short and intermediate-term instruments may be appropriate investments in some jurisdictions. However, mutual funds investing in longterm securities should be avoided by investors of short-term funds. Market price risks could impair the safety of assets, which is the foremost objective of public cash managers.
Listing of Authorized Personnel
−36−
The following personnel are authorized to transfer funds per the investment policy:
City Manager
Administrative Services Director/City Treasurer
Finance Manager
City Clerk/Executive Assistant
Agenda Item No. 9
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: June 13, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Deanne Purcell, Administrative Services Director SUBJECT: Proposed South County Sanitary Service Rate Increases
RECOMMENDATION
1) Conduct the Proposition 218 public hearing and determine the official number of written protests received on proposed rate increase and 2) if the number of valid protests is below 50% of the number of property owners or customers authorized to vote, adopt the Resolution approving the request by South County Sanitary Service for rate increases for solid waste collection and disposal services pursuant to the City’s Franchise Agreement effective June 15, 2022, January 1, 2023 and January 1, 2024.
BACKGROUND
South County Sanitary Service (SCSS) is a private company that has been providing solid waste collection and disposal services including recycling services under a Franchise Agreement with the City of Grover Beach beginning July 7, 2008 with a term of 15 years. This agreement was amended on June 20, 2016 to extend the term of the agreement by 20 years beginning the first day of operation of a new Kompogas organics processing facility.
The Franchise Agreement allows for a base rate adjustment every three (3) years and interim rate increases in the other two (2) years. In interim periods, the operator is limited to increases resulting from inflation, tipping fee adjustments, and franchise or regulatory fee increases. On October 20,2021, SCSS submitted a base year rate increase application to be effective January 1, 2022, with an initial rate increase request of 24.65%. However, due to the complexity, concerns with pending rates increases by the Integrated Waste Management Authority (IWMA) and subsequent reviews and information exchanges, a revised application was submitted on February 18, 2022. The February 18, 2022 rate application is attached to this report and in this latest application, SCSS is requesting a rate increase of 22.19%.
The two key differences between the initial and revised application:
• Greenwaste processing costs have been reclassified as “pass-through” costs: while costs may be recovered, no profit is allowed on them.
• IWMA fees have been excluded from the fee analysis. These are approved by a separate agency and will be charged separately on customer bills.
Key cost drivers, which account for almost 90% of the cost increases are shown on the following page:
Staff Report: Proposed SCSS Rate Increases Page 2
June 13, 2022
*
*In addition, there will be a 5.12% increase to recover revenue lost due to this rate increase being delayed from May 1, 2022 to June 15, 2022. This recovery component will expire January 1, 2023, so the temporary increase of 5.12% will be added to the 22.19% increase for a total increase of 27.32%, effective from June 15, 2022 to December 31, 2022.
In addition, commencing on January 1, 2023 and January 1, 2024, rates shall be increased based on the following:
1. Changes in the Consumer Price Index (CPI) for Bureau of Labor Statistics’ CPI for Urban Consumers based on All U.S. City Average, Bureau of Labor Statistics for the month of June 2022 for January 1, 2023 and June 2023 for January 1, 2024;
2. Changes in pass-through costs (primarily landfill tipping fees, which SCSS does not control: they are set by the County Board of Supervisors);
3. An adjustment to cover increased franchise fees.
These requested rate increases are similar to requested increases in Arroyo Grande, Pismo Beach, and Oceano. Pismo Beach has already approved these increases and Arroyo Grande will consider them on June 14. At the March 9, 2022, San Luis Obispo County Integrated Waste Management Authority (IWMA) Board Meeting, a 5.4% solid waste management fee was adopted to account for operational and capital cost increases due largely to the implementation of SB 1383.
The adopted fee will be effective on July 1, 2022. The City has authorized SCSS to bill this fee on-behalf of the IWMA.
Per the Franchise Agreement with SCSS, a rate review was carried out upon submission of the rate application in accordance with the “City of San Luis Obispo Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates.” As the City has done in the past, Grover Beach joined with other South County entities in contracting with Mr. Bill Statler to provide an independent review of the rate adjustments that were set by SCSS. Mr. Statler is the former Finance Director for the City of San Luis Obispo and the author of the “City of San Luis Obispo Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates” noted above. In his review shown in Attachment 3, Mr. Statler finds the rate adjustments for all three years justified and recommends their approval based on the following findings and will be available at the Council meeting to answer questions:
• Complete Application: With its revised application, SCSS has fully provided the supporting documentation required for rate requests under the Franchise Agreements in Arroyo Grande, Oceano, Pismo Beach and Grover Beach. The revised application (Attachment 3) has been correctly prepared.
2022 Cost Increase from 2020 Amount
% of
Total
Rate
Impact
Truck Depreciation 998,708 36% 8.05%
Food and green waste recycling via Materials
Recovery Facility (MRF) operations to comply with
Senate Bill (SB) 1383 956,783 35% 7.71%
Insurance (Health & Liability) 298,612 11% 2.41%
Gas & Oil 131,422 5% 1.06%
Total Key Drivers 2,385,525 87% 19.23%
Other Costs (Labor, ongoing maintenance, disposal
costs at the landfill and MRF, and other pass-through
costs) 367,275 13% 2.96%
Total 2,752,800 100% 22.19%
Staff Report: Proposed SCSS Rate Increases Page 3
June 13, 2022
• High Level of Service at a Reasonable Cost: SCSS provides a broad level of high-quality services to these four agencies—including garbage, recycling and green waste collection and disposal as well as hauler-provided "waste wheeler" containers for all three services— at very competitive rates compared with many other communities. In fact, even with the recommended rate increase, rates in the four South County agencies will be among the lowest of those surveyed.
• “Trigger Option”: As discussed in greater detail in the SCSS Solid Waste Rate Review (Attachment 3), the rate increase exceeds the cost-of-living threshold that “triggers” the option of terminating the Franchise Agreements within nine months after rate approval. • Need for Updated Rate-Setting Methodology: The rate-setting process is based on the City of San Luis Obispo’s Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates (Rate Manual) adopted in 1994. With very minor modifications, this approach has been in place for almost 30 years. There were several issues that surfaced in the 2019 rate review that had not been encountered previously including corporate overhead, greenwaste and materials recovery facility (MRF) costs as well as rate structure concerns. As a result, Mr. Statler recommends updating the Rate Manual before the next Base Year review. Staff concurs with this recommendation and will work with other agencies on updating this Rate Manual.
The Proposition 218 notice was mailed on April 28, 2022, to all customers and owners of record of a property that receive service from SCSS for garbage, recycling and green waste collection and disposal, in compliance with the 45-day notification requirement. The City also put information about the proposed rate increase on the City’s website. Attachment 2 includes a copy of the notice which informed customers about the proposed rate increases, the June 13th public hearing and how to submit a protest. At the time of the agenda posting, 11 protests have been received out of 4,271 mailed to property owners and account holders. There are 4,311 residential customers and 447 commercial customers for a total of 4,758 accounts. The reason there were fewer notifications mailed was because some customers owned multiple properties, so the duplicate addresses were removed to prevent multiple notices going to the same address.
Any owner or customer of record that is required to pay the subject fees of a parcel subject to the proposed rates may submit a written protest against the proposed rate revisions. A written protest must contain the street address or Assessor’s Parcel Number (APN) for the parcel(s) with respect to which the protest is made. The protest must also be signed by the owner or customer who pays the fees. Protests may be mailed or hand-delivered to the City’s office. Protests may also be delivered to the City Clerk at the public hearing. To be valid, a signed written protest must be received by the City Clerk at or before the time of the protest hearing. At the end of the public hearing, the City Clerk will tally and report the qualifying written protests and the Council will then certify whether the written protests opposing the increases meet the 50% threshold required to constitute a majority protest. If a majority protest does not exist, the Council may approve the Resolution to adopt the proposed rates. If adopted, the initial rate increase would be effective on June 15, 2022. In addition, SCSS has also requested interim adjustments to be effective January 1, 2023 and January 1, 2024.
Staff Report: Proposed SCSS Rate Increases Page 4
June 13, 2022
FISCAL IMPACT
If approved, the proposed rate increase would apply to all residential and business accounts in Grover Beach. The table below shows a sample of some of the increases in monthly costs to SCSS residential customers in Grover Beach using the proposed rate increases that would become effective June 15, 2022.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act. A public hearing notice was published in New Times and posted accordingly in the locations for public notices. SCSS mailed Prop. 218 notices directly to all customers located in Grover Beach in April 2022.
Attachments
1. Resolution No. 22-_
2. Notice of Public Hearing Regarding Proposed Solid Waste Rate Increase including SCSS 2022 base year rate increases effective June 15, 2022 for the City of Grover Beach
3. SCSS Solid Waste Rate Review dated March 2022 and prepared by Bill C. Statler
4. Historical South County Sanitary Service Rate Changes Single Family
Residential -
Container
Size
Current
Monthly
Rate
Proposed
Rate
Adjustment
using May 1-
27.31%
New
Monthly
Rates
Effective
6-15-2022
32-gallon $ 17.65 $ 4.82 $ 22.47
64-gallon $ 23.85 $ 6.51 $ 30.36
96-gallon $ 30.03 $ 8.20 $ 38.23
RESOLUTION NO. 22-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GROVER
BEACH, CALIFORNIA, ADOPTING INTEGRATED SOLID WASTE RATES FOR JUNE 15, 2022, JANUARY 1, 2023, AND JANUARY 1, 2024 WHEREAS, South County Sanitary Service has submitted a rate increase application in accordance with the City's franchise agreements for solid waste, recycling, green waste, and organic waste services; and
WHEREAS, this application has been comprehensively reviewed in accordance with the City's rate-setting policies; and
WHEREAS, notices of the proposed and requested rate increase were sent to property owners and tenants and a Public Hearing was held on June 13, 2022 to consider public testimony regarding the proposed rate increase.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GROVER BEACH:
1. The request for solid waste rates set forth in Exhibit A is approved and shall become effective on June 15, 2022.
2. The request for solid waste rates increases as follows on January 1, 2023 and January 1, 2024 is also approved and the rates will be an:
a. Increase, if any, in the Consumer Price Index (CPI) for Bureau of Labor Statistics’ CPI for Urban Consumers based on All U.S. City Average, Bureau of Labor Statistics for the month of June 2022 for January 1, 2023 and June 2023 for January 1, 2024; b. Increase, if any, in pass-through costs (primarily landfill tipping fees, which SCSS does not control: they are set by the County Board of Supervisors); c. Increase, if any, adjustment needed to cover increased franchise fees.
3. Due to the reasonableness of the requested rate increase, the City will not pursue the termination option set forth in Section 8.3 of the City's Franchise Agreement with South County Sanitary Service.
On motion by ___-, seconded by ____, and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Attachment 1
Resolution No. 22-
the following Resolution was PASSED, APPROVED, and ADOPTED at the Regular Meeting of the City Council of the City of Grover Beach, California, June 13th, 2022. _________________________________
JEFF LEE, MAYOR
Attest:
______________________________
WENDI B. SIMS, CITY CLERK
**DRAFT**
Exhibit A SOUTH COUNTY SANITARY SERVICE
CITY OF GROVER BEACH
Service Description
Pickups Per
Week
Current
Monthly Rates
Effective
1/1/2021
Proposed
Rate
Adjustment
New Monthly
Rates Effective
06/15/2022
RESIDENTIAL:
32 Gallon Waste Wheeler 1 $17.65 $4.82 $22.46
64 Gallon Waste Wheeler 1 $23.85 $6.51 $30.36
96 Gallon Waste Wheeler 1 $30.03 $8.20 $38.23
TWO-64 Gallon Waste Wheelers 1 $36.24 $9.90 $46.13
ONE 64 & ONE 96 Gallon 1 $42.43 $11.59 $54.01
TWO-96 Gallon Waste Wheelers 1 $48.63 $13.28 $61.91
APARTMENTS, TRIPLEX, DUPLEX
Rates are the same as commercial rates (below).
COMMERCIAL DUMPSTERS - ALL AREAS:
1 yd dumpster 1 $82.39 $22.51 $104.90
1 yd dumpster 2 $122.52 $33.47 $155.99
1 yd dumpster 3 $166.90 $45.59 $212.49
1 yd dumpster 4 $211.28 $57.71 $268.99
1 yd dumpster 5 $249.28 $68.09 $317.37
1 yd dumpster 6 $297.91 $81.38 $379.29
1 yd dumpster 7 $363.84 $99.39 $463.23
1.5 yd dumpster 1 $95.08 $25.97 $121.05
1.5 yd dumpster 2 $150.01 $40.98 $190.99
1.5 yd dumpster 3 $211.28 $57.71 $268.99
1.5 yd dumpster 4 $274.67 $75.03 $349.70
1.5 yd dumpster 5 $335.92 $91.76 $427.68
1.5 yd dumpster 6 $399.30 $109.07 $508.37
1.5 yd dumpster 7 $485.80 $132.70 $618.50
2 yd dumpster 1 $107.75 $29.43 $137.18
2 yd dumpster 2 $177.46 $48.47 $225.93
2 yd dumpster 3 $259.85 $70.98 $330.83
2 yd dumpster 4 $342.26 $93.49 $435.75
2 yd dumpster 5 $418.29 $114.26 $532.55
2 yd dumpster 6 $500.70 $136.77 $637.47
2 yd dumpster 7 $612.25 $167.24 $779.49
3 yd dumpster 1 $128.88 $35.20 $164.08
3 yd dumpster 2 $247.20 $67.52 $314.72
3 yd dumpster 3 $342.26 $93.49 $435.75
3 yd dumpster 4 $445.77 $121.77 $567.54
3 yd dumpster 5 $530.30 $144.86 $675.16
3 yd dumpster 6 $629.58 $171.97 $801.55
3 yd dumpster 7 $801.78 $219.01 $1,020.79
RATE INCREASE EFFECTIVE JUNE 15, 2022
Residential customers must use the waste wheelers provided by the garbage company. This solid service fee for residential trash collections (container with black or gray lid) includes once a week pick-up of one greenwaste/organics container (green lid), and one recycling container (blue lid).
Exhibit A
4 yd dumpster 1 $166.90 $45.59 $212.49
4 yd dumpster 2 $283.08 $77.33 $360.41
4 yd dumpster 3 $405.63 $110.80 $516.43
4 yd dumpster 4 $530.30 $144.86 $675.16
4 yd dumpster 5 $652.84 $178.33 $831.17
4 yd dumpster 6 $777.47 $212.37 $989.84
4 yd dumpster 7 $992.32 $271.06 $1,263.38
6 yd dumpster 1 $250.36 $68.39 $318.75
6 yd dumpster 2 $424.61 $115.99 $540.60
6 yd dumpster 3 $608.44 $166.20 $774.64
6 yd dumpster 4 $795.46 $217.29 $1,012.75
6 yd dumpster 5 $979.28 $267.50 $1,246.78
6 yd dumpster 6 $1,166.21 $318.56 $1,484.77
6 yd dumpster 7 $1,488.50 $406.59 $1,895.09
8 yd dumpster 1 $333.81 $91.18 $424.99
8 yd dumpster 2 $566.17 $154.65 $720.83
8 yd dumpster 3 $811.26 $221.60 $1,032.86
8 yd dumpster 4 $1,060.62 $289.72 $1,350.34
8 yd dumpster 5 $1,305.68 $356.66 $1,662.34
8 yd dumpster 6 $1,554.95 $424.75 $1,979.70
8 yd dumpster 7 $1,984.64 $542.12 $2,526.76
The rates shown above include the monthly container rental fee and a semi-annual dumpster cleaning.
COMMERCIAL - OTHER CHARGES:
COMMERCIAL GARBAGE CANS - ALL AREAS:
32 Gallon Waste Wheeler 1 $23.24 $6.35 $29.59
64 Gallon Waste Wheeler 1 $42.26 $11.54 $53.80
96 Gallon Waste Wheeler 1 $52.83 $14.43 $67.26
Re-deliver bin to stopped acct $39.44 $10.77 $50.21
MISCELLANEOUS CHARGES - ALL CUSTOMERS:
Overstacked Garbage & extra bags
Minimum/unit each $5.51 $1.51 $7.02
Overstacked Greenwaste & extra
bags Minimum/unit each $2.76 $0.75 $3.51
Overstacked Blue Bin & extra bags
Minimum/unit each $2.77 $0.76 $3.53
In yard service (per can or
commodity) IN ADDITION TO
STANDARD GARBAGE RATES per month $13.75 $3.76 $17.51
Monthly charge for additional 32, 64 or
96-gallon green waste/organics
service per month $3.81 $1.04 $4.85
Monthly charge for additional 32, 64 or
96-gallon recycle service per month $1.56 $0.43 $1.99
Rates for all commercial customers include recycling or greenwaste/organics pickup once per week, included with the garbage service rate. Customers can choose from a 64 or 96 gallon blue commingled recycle waste wheeler or a 32 or 64 gallon organics waste wheeler included with the garbage service rate (96 gallon waste wheelers can only be used with green waste due to weight). If you need a bin for recycling there is a charge (see below).
If you need more frequent recycling, including organics/greenwaste service, it can be provided at a 50% discount from the garbage service rates for the specified level of service required.
Exhibit A Extended Vacation Service per month $12.83 $3.50 $16.33 Vacant Rate per month $12.83 $3.50 $16.33
Waste wheeler cleaning each time $20.52 $5.61 $26.13
Trip charge each time $13.76 $3.76 $17.52
Non-payment downsize service each time $13.76 $3.76 $17.52 Non-payment redeliver waste wheeler each time $33.07 $9.03 $42.10 Non-payment reconnect service each time $33.07 $9.03 $42.10 Small item pickup (TV, toilet) each $32.27 $8.81 $41.08 Appliance pickup-residential each $45.51 $12.43 $57.94
Lock Charge per month $7.66 $2.09 $9.75
City Clean Up each $11.97 $3.27 $15.24
Garbage extras on your scheduled
pickup day per yard $11.61 $3.17 $14.78
Garbage extras -NOT ON YOUR
SCHEDULED PICKUP DAY per yard $32.05 $8.75 $40.80
Commercial Waste Wheeler rent per month $4.26 $1.16 $5.42 Re-deliver bin on stopped acct each time $39.44 $10.77 $50.21 Compactors per yard $15.64 $4.27 $19.91
Sunday Service (in additional to
garbage service level) per month $68.86 $18.81 $87.67
Recycle bin rental per month $47.54 $12.99 $60.53
Stand by time per hour $66.00 $18.03 $84.03
Extra bin cleaning $61.55 $16.81 $78.36
Damage/Destruction of bins or waste
wheelers
Short Term Dumpsters:
Delivery & Pickup-Bin $39.44 $10.77 $50.21
Delivery & Pickup-Waste Wheeler $13.75 $3.76 $17.51
Rental Per Day $4.26 $1.16 $5.42
Empties Per Yard $32.05 $8.75 $40.80
Mattress:
Twin PER SET $17.91 $4.89 $22.80
Double PER SET $17.91 $4.89 $22.80
Queen PER SET $17.91 $4.89 $22.80
King PER SET $17.91 $4.89 $22.80
ADDITIONAL INFORMATION ALL CUSTOMERS:
Any additional recycling, including greenwaste/organic services are charged out at 50% of the garbage rate.
2. Polystyrene (Styrofoam, Plastic #6) is not collected for recycling and should be thrown away as trash. Please bag Styrofoam packing peanuts before placing in trash container.
1. Customers requesting Temporary Bins or Roll-off Box Service can call the office for current rates replacement/repair at market price
3. It is encouraged to bag your trash in the garbage container but do not bag your recyclables or green waste in their respective containers and keep it loose.
4. Recycling, Greenwaste/Organcis and Garbage containers should spaced 3 feet apart away from any obstacles (i.e mailboxes, cars, etc) before 6:00am on collection service day.
5. The fee schedule above only includes the Garbage Company rates and does not include IWMA fees, which are separately noted on the billings.
6. Cleaning fees will be billed on a time and materials basis
7. Late Fees are imposed for residential customers over 30 days delinquent. The fee is 1.5% per month of the outstanding charge, with a minimum fee of $5.00. No prior notice is required, as this late fee policy is stated at the bottom of every bill.
8. Customers can be responsible for contamination fees
CITY OF GROVER BEACH
NOTICE OF PUBLIC HEARINGS
NOTICE IS HEREBY GIVEN that the City Council of the City of Grover Beach will conduct Public Hearings at 6:00 p.m., or soon thereafter, on Monday, June 13, 2022 in City Hall, Council Chambers, 154 South Eighth Street, Grover Beach, CA to consider the following items:
SUBJECTS:
PROPOSED RATE ADJUSTMENT REQUEST FROM SOUTH COUNTY SANITARY SERVICE – Under the terms of the Franchise Agreement with South County Sanitary Service the City Council will consider a rate adjustment request from South County Sanitary Service for properties and customers receiving solid waste, recycling, and green waste services within the City. The Proposed Rate Increase is 22.19 percent for solid waste, recycling, and green waste/organics collection services. In addition, there will be a 5.12 percent increase to recover revenue lost due to this rate increase being delayed from May 1, 2022 to June 15, 2022. This recovery component will expire January 1, 2023. Several factors contributed to this rate increase including, but not limited to: increase costs associated with the purchase and operation of collection vehicles, fuel costs, labor costs, and increased costs associated with the organics digestor facility.
For example, residential customers would see the following increase:
32-gallon container from the current rate of $17.65 to $22.47 per month; 64-gallon container from the current rate of $23.85 to $30.36 per month; 96-gallon container from the current rate of $30.03 to $38.23 per month; Two 64-gallon containers from the current rate of $36.24 to $46.13 per month; One 64-gallon and one 96-gallon container from $42.43 to $54.01 per month; and Two 96-gallon containers from $48.63 to $61.91 per month.
Commercial customers would see the following increase:
32-gallon container from the current rate of $23.24 to $29.59 per month; 64-gallon container from the current rate of $42.26 to $53.80 per month; 96-gallon container from the current rate of $52.83 to $67.26 per month; Re-deliver bin to stopped account from the current rate $39.44 to $50.21 per month.
In addition, commencing on January 1, 2023, and January 1, 2024, South County Sanitary Services is proposing that all rates shall be increased based on the following:
1. Increase, if any, in the Consumer Price Index (CPI) for Bureau of Labor Statistics’ CPI for Urban Consumers based on All U.S. City Average, Bureau of Labor Statistics for the month of June 2022 for January 1, 2023, and June 2023 for January 1, 2024;
2. Changes in pass-through costs (primarily landfill tipping fees, which SCSS does not control: they are set by the County Board of Supervisors);
3. An adjustment to cover increased franchise fees.
At the March 9, 2022, San Luis Obispo County Integrated Waste Management Authority (IWMA) Board Meeting, a 5.4% solid waste management fee was adopted to account for operational and capital cost increases due largely to the implementation of SB 1383. SB 1383 is a recent state law passed with the goal of reducing methane. Methane is a potent greenhouse gas, with more than 80 time the warming power of carbon dioxide and is a major component of decomposing organic waste. Key components of SB 1383 include implementing organic waste collection programs (including food waste), monitoring organic carts for contamination, and reporting data.
Attachment 2
The IWMA is a Joint Powers Authority (JPA) formed to plan and implement regional solid waste and hazardous waste programs mandated by State law. The JPA between the City of San Luis Obispo and the IWMA can be made available by the City upon request or on the IWMA website at www.iwma.com.
A copy of the 2022 Base Year Rate Adjustment Application, which provides additional information on the proposed rate increases, is available at the City Clerk’s Office located at Grover Beach City Hall located at 154 South Eighth Street, Grover Beach.
Where You Come In:
Any member of the public may appear at the meeting and be heard on the item described in this notice or submit written comments to the City Clerk prior to the meeting by personal delivery or by mail to: City Clerk’s Office, 154 South Eighth Street, Grover Beach, CA 93433. If you require special accommodations to participate in the public hearing, please contact the City Clerk’s office at least 48 hours in advance of the meeting by calling (805) 473-4567.
For More Information:
If you have any questions or would like more information regarding the item described in this notice, please contact: City Manager Matthew Bronson by telephone at (805) 473-4567 or send an e-mail to [email protected]
The City Council may also discuss other hearings or items of business at this meeting. The complete meeting agenda and copy of the staff report on the above item will be available at the customer service counter at Grover Beach City Hall at least 72 hours in advance of the meeting. This information will also be posted on the City website at www.groverbeach.org. Live broadcasts of City Council meetings may be seen on cable television Channel 20, as well as over the Internet at www.groverbeach.org (click on the icon “Government Access Local Channel 20” and then “Channel 20”). City Council meetings are rebroadcast throughout the week.
If you challenge the nature of the proposed action in court, you may be limited to raising only those issues you or someone else raised at the Public Hearing(s) described in this notice, or in written correspondence delivered to the City at, or prior to, the Public Hearing.
________________________________
WENDI B. SIMS, CITY CLERK
Dated: Thursday, June 2, 2022
POSTED on Thursday, June 2, 2022
PUBLISH ONE TIME: (on Thurs., June 2, 2022) GROVER BEACH CITY HALL
NEW TIMES
South County Sanitary Service
SOLID WASTE RATE REVIEW
For the Communities of
Arroyo Grande
Grover Beach
Oceano
Pismo Beach
March 2022
Attachment 3
South County Sanitary Service
Solid Waste Rate Review
March 2022
TABLE OF CONTENTS
Report Purpose 1
Summary of Findings and Recommendations 1
Findings 2
Rate Recommendations 4
Rate Summary for Single Family Residential Customers 4
Background 4
Rate Review Workscope 6
Revenue and Rate-Setting Objectives 7
Financial Overview 7
Costs by Type 7
Revenues by Source 7
Service Accounts by Type 8
Rate-Setting Process 8
Base Year and Interim Year Reviews 8
Rate Increase History 9
Rate-Setting Methodology 10
Are the Costs Reasonable? 10
Detailed Cost Review 10
Trends in External Cost Drivers 14
Rates in Comparable Communities 14
What Is a Reasonable Return on These Costs? 16
Preparing the Rate Request Application 17
Proposed Rate Summary 17
Implementation 17
Rate Differences Between Communities 18
Cost Accounting Issues 18
Cost of Living Tigger Option 20
Coordination with Other Agencies 22
Summary 22
APPENDIX
A. Base Year Rate Request Application from South County Sanitary Service B. HZI Greenwaste Digester Cost Analysis
- 1 -
South County Sanitary Service
SOLID WASTE RATE REVIEW
For the Communities of Arroyo Grande, Grover Beach,
Oceano and Pismo Beach
REPORT PURPOSE
On October 20, 2021, South County Sanitary Service (SCSS) submitted a Base Year rate increase application to be effective January 1, 2022 to the Cities of Arroyo Grande, Grover Beach and Pismo Beach and the Oceano
Community Services District (CSD). However, due
to complexity, concerns with pending rate
increases by the Integrated Waste Management
Authority (IWMA) and significant subsequent
reviews and information exchanges, a revised
application was submitted on February 18, 2022.
The final application is the focus of this report in
reviewing the SCSS rate increase request in
accordance with adopted Franchise Agreement
provisions regarding rate increase applications and
to make rate recommendations to these four
agencies as appropriate.
SUMMARY OF FINDINGS AND
RECOMMENDATIONS
In its final application, SCSS is requesting a rate
increase of 22.19% in the cities of Cities of Arroyo Grande, Grover Beach and Pismo Beach; and 21.03% for the Oceano CSD (the difference is due to a 5% franchise fee rate in the Oceano CSD versus 10% in the other agencies). This compares with an initial rate request of 24.65% for three agencies (and 23.35% in the Oceano CSD). As discussed in greater detail below, all of the concerns that surfaced in the iterations and further analysis that followed in addressing issues with proposed costs for 2022 have been resolved.
There are two key differences between the initial and revised application:
124 Cerro Romauldo Avenue
San Luis Obispo, CA 93405
805.544.5838 ◼ Cell: 805.459.6326
[email protected]
www.bstatler.com
William C. Statler
Fiscal Policy ◼ Financial Planning ◼ Analysis ◼ Training ◼ Organizational Review .
.
.
.
.
.
.
.
.
Joint Agency Review
SCSS provides similar
services to each of these
agencies under formally
approved franchise
agreements that regulate rates
and establish procedures for
considering rate increases.
Because the financial
information for SCSS is
closely related for these four
agencies, this report jointly
reviews rate requests and
provides recommendations for
each of them.
Solid Waste Rate Review
- 2 -
• Greenwaste processing costs have been reclassified as “pass-through” costs: while costs may be recovered, no profit is allowed on them.
• IWMA fees have been excluded from the fee analysis. These are approved by a separate agency and will be charged separately on customer bills.
Key cost drivers in this review include the following, which account for almost 90% of the cost increases since 2020 (last audited financial statements):
Findings
• Complete Application. With its revised application, SCSS has fully provided the supporting documentation required for rate requests under the Franchise Agreements in Arroyo Grande, Oceano, Pismo Beach and Grover Beach. The revised application (Appendix A) has been correctly prepared.
• High Level of Service at a Reasonable Cost. SCSS provides a broad level of high-quality services to these four agencies—including garbage, recycling and green waste collection and disposal as well as hauler-provided “waste wheeler” containers for all three services—at very competitive rates compared with many other communities. In fact, even with the recommended rate increase, rates in these four agencies will be among the lowest of those surveyed. In short, South County communities have the best of both worlds: high quality services at a low cost (compared with other communities). • “Trigger Option.” As discussed in greater detail below, the rate increase exceeds the cost of living threshold that “triggers” the option of terminating the Franchise Agreements within nine months after rate approval.
• Need for Updated Rate-Setting Methodology. The rate-setting process is based on the City of San Luis Obispo’s Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates (Rate Manual) adopted in 1994. In short, with very minor modifications, this approach has been in place for almost 30 years. Because of several complex issues that surfaced in the 2019 rate review that had not been encountered in the past in using this rate-setting methodology (most notably corporate overhead, greenwaste and materials recovery facility (MRF) costs as well as rate structure concerns), I recommended updating the Rate Manual before the next Base Year review. This has not occurred, and accordingly, this review is based on the current methodology. 2022 Cost Increase from 2020 Amount % of Total Rate Impact*
Depreciation 998,708 36% 8.05%
Greenwaste 956,783 35% 7.71%
Insurance 298,612 11% 2.41%
Gas and Oil 131,422 5% 1.06%
Total Key Drivers 2,385,525 87% 19.23%
Other Costs 367,275 13% 2.96%
Total $2,752,800 100% 22.19%
Solid Waste Rate Review
- 3 -
However, the need for an update is even greater now: along with the 2019 concerns, new issues have surfaced in this review. As discussed in greater detail below, these include depreciation amortization period, interim rate reviews, cost allocation methodologies, accounting for disposal costs, timeframe for submitting and reviewing applications and trigger option.
• Delayed Rate Implementation. In the past, there has been no consideration of delayed rate implementation. However, the Rate Manual does provide for this if there is a delay of more than 120 days after application if it is “no fault of the franchise hauler.” Given the initial October 20, 2021 submittal date, this would indicate rate approval by March 1. However, there are three factors that mitigate this 120-day period:
1. When the 120-day period was set, the understanding at the time was that Proposition 218 45-day notice and protest requirements did not apply to approval of private company solid waste rates. However, since then
many agencies have determined that these
provisions are applicable to approval of
rates by companies like SCSS. This alone
conceptually adds 45 days to the review
process.
2. Review was delayed pending consideration
of rate increases by the IWMA and their
possible impact on SCSS rates. These new
rates were not adopted by the IWMA until
March 9, 2022. Moreover, it was
subsequently determined that since these
rates are set by the IWMA – and not the
franchising agencies – that they did not
affect agency rate-setting. (As noted above,
this resulted in a revised application from
SCSS on February 18, 2022).
3. While SCSS has been very responsive in following-up on requests for supporting data, the scope and complexity of the 2022 application has been significantly greater, and subsequently taken longer, than envisioned in the Rate Manual.
In accounting for these factors, I recommend that delayed rate implementation apply for any rates with a May 1, 2022 effective date. In short, while these delays were “no fault” of SCSS, they were not the fault of the agencies, either. That said, SCSS believes the delayed rate implementation start period should be March 1, 2022.
Where delayed rate implementation is applicable, the following temporary rate increases would be required depending on whether the delayed rate implementation start period is March 1 or May 1. (Note: The added rate increase goes up for each month of delay to be recovered while the amortization period is shortened.) Under either start date, rates would be reset in January 2023 to the “core rate” for the Interim Year adjustment.
About Proposition 218 Notices
Not all agencies prepare and issue
“Proposition 218” notices for private
sector solid waste rate increases.
However, for those that do, the notice
sets the maximum amount that rates
can be increased at the public
hearing: rates can be approved at
lesser amounts without re-noticing.
However, agencies cannot adopt
higher rates – even if they only apply
to a few customers – without another
45-day re-noticing. As such, it is
recommended that the notices reflect
the rates requested by SCSS.
Solid Waste Rate Review
- 4 -
Temporary Delayed Implementation Rate Increase*
It should be noted that while the report recommends a May 1 start date for delayed rate implementation, a reasonable case could be made for an even later start date (such as June 1 or July 1) based on the mitigation factors discussed above.
Lastly, several of these review timeframe factors are not unique to the 2022 review. Accordingly, the application submittal and review schedule should be considered in the Rate Manual update.
Rate Recommendations
It is recommended that cities of Arroyo Grande, Grover Beach and Pismo Beach adopt rate increases of 22.19%; and 21.03% in the Oceano CSD.
As discussed below, this rate increase significantly exceeds the cost of living threshold that triggers the option of terminating the Franchise Agreements within nine months after rate approval. However, it is important to note that this “trigger” calculation does not limit the allowable rate increase that SCSS may request (or limit the amount that agencies may approve) under the methodology set forth in the Franchise Agreements.
Cost of Living “Trigger” Option. Along with establishing the rate review methodology, Section
8.3 of the Franchise Agreements provides that if the rate increase request compared with the rate in effect at the date of the agreement exceeds the cumulative cost of living increase from that same date, each agency has the option of terminating the agreement at any time within nine months following approval of the requested rate increase (assuming it was submitted in accordance with the rate-setting methodology).
This provision was subsequently amended in 2016 allowing for an added increase based on landfill rate increases (“weighted” for their proportion of total costs). It is important to note that other than a waiver for greenwaste cost increases in 2011, no other adjustments (including other pass-through costs) are allowed under the Franchise Agreements. As detailed later in this report, the calculated threshold limit is significantly less than the proposed rate increase.
Effective Date March 1 May 1 March 1 May 1
May 1 5.26% 0.00% 5.55% 0.00%
June 1 9.01% 2.63% 9.51% 3.17%
July 1 14.02% 7.01% 14.80% 7.40%
August 1 21.03% 12.62% 22.19% 13.32%
September 1 31.55% 21.03% 33.29% 22.19%
* Ends December 31, 2022
Start Period
Oceano CSD Other Agencies
Solid Waste Rate Review
- 5 -
Rate Summary for Single Family Residential Customers
Table 1 summarizes the proposed
monthly rates for single family
residential (SFR) customers. As reflected
in this summary, given the significant
cost drivers facing SCSS, the increases
will be modest under the proposed rate
increase. For example, for collection of a
32-gallon garbage container (the most
common SFR service level) as well as
separate waste wheelers for recycling
and green waste, the proposed monthly
rate will increase by about $3.80 on
average for the four agencies.
BACKGROUND
On October 20, 2021, SCSS submitted a
Base Year rate increase to be effective
January 1, 2022. As noted above, due to
several complex issues, a revised
application was submitted on February
18, 2022. This application was prepared in accordance with the rate review process and methodology formally set forth in its Franchise Agreements with Arroyo Grande, Grover Beach, Oceano and Pismo Beach.
In establishing a rate-setting process and methodology, each of these Franchise Agreements specifically reference the City of San Luis Obispo’s Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates. This comprehensive approach to rate reviews was adopted by San Luis Obispo in 1994 and establishes detailed procedures for requesting rate increases and the required supporting documentation to do so. It also sets cost accounting standards and allowable operating profit ratios.
As noted above, the financial information for Arroyo Grande, Grover Beach, Oceano and Pismo Beach is closely related. For this reason, these four agencies jointly contracted with William C.
Statler (who has extensive experience in evaluating rate requests in accordance with the adopted methodology) on October 6, 2022 to evaluate SCSS’s rate increase application.
This is the seventh Base Year analysis performed under this rate-setting methodology. The first was prepared in September 2001; second in August 2004; the third in August 2007; the fourth in December 2012; September 2015; and the last one in April 2019. As discussed below, several Interim Year rate reviews have prepared since then.
Table 1. Single Family Residential Rates
32 64 96
Current
Arroyo Grande $19.46 $25.29 $31.13
Grover Beach 17.65 23.85 30.03
Oceano 14.98 21.56 42.19
Pismo Beach 17.31 34.63 51.94
Proposed
Arroyo Grande 23.78 30.90 38.04
Grover Beach 21.57 29.14 36.69
Oceano 18.13 26.09 51.06
Pismo Beach 21.15 42.32 63.47
Increase: Proposed Rates
Arroyo Grande 4.32 5.61 6.91
Grover Beach 3.92 5.29 6.66
Oceano 3.15 4.53 8.87
Pismo Beach 3.84 7.69 11.53
Container Size (Gallons)
Solid Waste Rate Review
- 6 -
Franchise Agreement Summary
Historically, each agency has had its
own approach to determining
service levels and adopted differing
Franchise Agreements accordingly.
While these became similar
beginning in 1999, in 2008 the
Cities of Arroyo Grande, Grover
Beach and Pismo Beach adopted renewed franchise agreements, followed by the Oceano Community Service District in Summer 2010, which are the same in all key provisions:
• Each agency contracts with SCSS for garbage, green/food waste and recycling; and SCSS provides the container (waste wheelers) for each service. • As noted above, each agency has adopted the same rate-setting methodology, including the option of terminating the agreement within nine months following approval of the requested rate increase if it exceeds the cost of living threshold. • Arroyo Grande, Grover Beach and Pismo Beach have adopted franchise fees of 10%; the Oceano CSD reduced its rate to 5% in February 2020.
Each of these agreements were similarly amended in 2016 to:
• Extend the term of the agreement for 20 years in recognizing the amortization of extensive investments in food and green waste processing.
• Revise the cost of living threshold “trigger” to include prorated landfill cost increases.
RATE REVIEW WORKSCOPE
This report addresses four basic questions:
• Should SCSS be granted a rate increase? And if so, how much? • How much does it cost to provide required service levels? • Are these costs reasonable?
• And if so, what is a reasonable level of return on these costs? The following documents were closely reviewed in answering these questions:
• Franchise Agreements and any Amendments for each agency • Independently audited financial statements for SCSS for 2019 and 2020. • City of San Luis Obispo’s Rate Setting Process and Methodology Manual for Integrated Solid Waste Management Rates (Rate Manual)
• SCSS rate increase application and supporting documentation • Follow-up interviews, correspondence and briefings with agency and SCSS staff • Rate surveys of Central Coast communities
Table 2. Franchise Agreement Effective Dates
Agency Agreement Amendments
Arroyo Grande June 10, 2008 March 22, 2016
July 26, 2016
Grover Beach July 7, 2008 June 20, 2016
Oceano July 14, 2010 July 29, 2016
Pismo Beach June 3, 2008 August 3, 2016
Solid Waste Rate Review
- 7 -
REVENUE AND RATE SETTING OBJECTIVES
In considering SCSS’s rate increase request, it is important to note the revenue and rate setting objectives for solid waste services as set forth in the Franchise Agreements via the Rate Manual.
Revenues. These should be set at levels that:
• Are fair to customers and the hauler.
• Are justifiable and supportable.
• Ensure revenue adequacy.
• Provide for ongoing review and rate stability.
• Are clear and straightforward for the agency and hauler to administer.
Rate Structure. Almost any rate structure can meet the revenue principles outlined above and generate the same amount of total revenue. Moreover, almost all rate structures will result in similar costs for the average customer: what different rate structures tell us is how costs will be distributed among non-average customers. The following summarizes adopted rate structure principles for solid waste services:
• Promote source reduction, maximum diversion and recycling. • Provide equity and fairness within classes of customers (similar customers should be treated similarly).
• Be environmentally sound.
• Be easy for customers to understand.
FINANCIAL OVERVIEW
While detailed financial and service information is provided in the SCSS rate request application (Appendix A), the following summarizes costs, revenues and account information based its proposal for 2022 for all areas serviced by SCSS.
Costs by Type. Total proposed costs for
2022 (after deducting for non-allowable
and limited costs as discussed later in
this report) are 17.3 million. As
reflected in Table 3, five cost areas
accounted for 85% of total costs:
• Direct labor for collection: 23%
• Disposal: landfill, recycling and
greenwaste: 27%
• Vehicle operations and maintenance
(including depreciation): 19%
• Franchise fees: 8%
• Insurance: 8%
Solid Waste Rate Review
- 8 -
Revenues by Source. Total revenues
(without proposed rate increases) are
$15.2 million. As reflected in Table 4,
58% of SCSS’s revenues come from
single-family residential (SFR)
accounts. Services to multi-family
residential and non-residential
customers account for 42% of their
revenues, with less than 1% from other
revenues.
This significant gap between revenues
and expenses (plus allowable profit)
drives the proposed rate increase.
Service Accounts by Type. While
single-family residences account for
58% of revenues, they represent 92% of
total accounts (Table 5).
This reflects the fact that per account,
multi-family and non-residential
customers generate more solid waste
than single-family residential customers
(and thus more revenue per account).
RATE-SETTING PROCESS
Under the Rate Manual, the rate-setting
process follows a three-year cycle:
• Base Year. The first year of the cycle—the Base Year—requires a comprehensive, detailed analysis of revenues, expenses and operating data. This information is evaluated in the context of agreed upon factors in the franchise agreements in determining fair and reasonable rates. As noted above, the last Base Year analysis for SCSS under this approach was prepared in April 2019.
• Two Interim Years. In both the second and third years, SCSS is eligible for Interim Year rate adjustments that address three key change factors: changes in the consumer price index (CPIU) for “controllable” operating costs; changes in “pass-through costs” (primarily landfill tipping fees, which SCSS does not control: they are set by the County Board of Supervisors); and an adjustment to cover increased franchise fees.
The first two adjustment factors are “weighted” by the proportionate share that these costs Solid Waste Rate Review
- 9 -
represent of total costs (excluding franchise
fees). For example, in the current Base Year
analysis for recommended 2019 rates,
controllable costs account for about 75% of
total costs, with landfill disposal costs
accounting for about 25%.
The rate review for the two Interim Years
requires less information and preparation time
than the Base Year review, while still
providing fair and reasonable rate adjustments.
Rate Increase History
The following summarizes the SCSS rate review
history beginning with 2005 (last eighteen years)
based on the year of the application (which is
typically the implementation year).
Table 6. SFR Rate History: 2005 to 2022 (Last 18 Years)
1. From 2004 to 2011, the franchise fee rate in Pismo Beach was 6% compared with 10% in the other three agencies, and as such, its rate increase was slightly less. In July 2011, Pismo Beach adopted a Year Review Type
Arroyo
Grande
Grover
Beach Oceano
Pismo
Beach (1)
2005 Base Year 5.60% 5.60% 5.60% 5.30%
2006 Interim Year 3.09% 3.09% 3.09% 2.95%
2007 Interim Year 3.76% 3.76% 3.76% 3.60%
2008 Base Year 3.00% 3.00% 3.00% 2.90%
2009 Interim Year 0.00% 0.00% 0.00% 0.00%
2010 Interim Year (2) 0.00% 0.00% 0.00% 0.00%
2011 Interim Year 0.00% 0.00% 0.00% 0.00%
2012 Interim Year (2) 5.15% 5.15% 5.15% 5.15%
2013 Base Year 3.20% 3.20% 3.20% 3.20%
2014 Interim Year 2.05% 2.05% 2.05% 2.05%
2015 Interim Year 0.00% 0.00% 0.00% 0.00%
2016 Base Year 3.25% 3.25% 3.25% 3.25%
2017 Interim Year 1.10% 1.10% 1.10% 1.10%
2018 Interim Year 1.60% 1.60% 1.60% 1.60%
2019 Base Year 10.06% 10.06% 10.06% 10.06%
2020 Interim Year 1.70% 1.70% 1.70% 1.70%
2020 Franchise Fee Rdctn (3) -5.00%
2021 Interim Year 0.70% 0.70% 0.70% 0.70%
2022 Base Year (4) 22.19% 22.19% 21.03% 22.19%
Proposed Interim Year Rates
Consistent with past practice, SCSS
has proposed an interim year
approach that is slightly different from
the Rate Manual methodology. In the
interest of a more straightforward,
streamlined process, SCSS proposes
simply adjusting rates by changes in
the CPI-U in 2023 and 2024. As noted
in the past, the concept is consistent
with the Rate Manual approach, but is
simpler and allows for multi-year rate
setting. Accordingly, it is
recommended that four agencies
continue using this approach.
Given the that interim review
methodology set forth in the Rate
Manual has not been used for several
years, this is another area the update
should consider.
Solid Waste Rate Review
- 10 -
10% franchise fee, bringing it in alignment with the other three agencies (as well as most other agencies in San Luis Obispo County). In implementing the 10% rate in 2011, Pismo Beach adopted an added 3.9% increase beyond the interim year rate increase of 5.15% requested by SCSS.
2. SCSS did not request a rate increase in 2010 (which would have been the “normal” cycle to do so), and accordingly, did not submit a Base Year rate application. However, SCSS did submit a rate request in 2011 using an Interim Year methodology. The reasonableness of using the resulting “hybrid” approach was discussed in detail in the 2011 Interim Year report, which concluded that this approach was reasonable given the circumstances.
3. In February 2020, the Oceano CSD reduced its franchise fee from 10% to 5%, reducing rates by 5%.
4. Proposed rate increase.
5. As noted above, this chart reflects SFR rate increases. SCSS began charging for commercial recycle containers. These rates were set at 50% of the garbage rates at that time.
Assuming the proposed rate increases are approved, this will result in an average annual rate increase of 3.6% over the last eighteen years. While there have been notable peaks in 2019 and 2022, largely due to regulatory and external market changes for recyclables, this reflects a high level of rate stability and price containment for SCSS customers.
RATE SETTING METHODOLOGY
Are the Costs Reasonable?
The first step in the rate review process is to determine if costs are reasonable. There are three analytical techniques that can be used in assessing this:
• Detailed review of costs and service responsibilities over time. • Evaluation of external cost factors, such as general increases in the cost of living (as measured by the consumer price index).
• Comparisons of rates with other communities.
Each of these was considered in preparing this report, summarized as follows.
Detailed Cost Review
In its rate application (Appendix A), SCSS provides detailed financial data for five years:
• Audited results for the two prior years (2019 and 2020). • Estimated results for 2021.
• Projected costs for the Base Year (2022).
• Estimated costs for the following year (2023).
Solid Waste Rate Review
- 11 -
Additionally, for virtually all line items, SCSS provided supplemental detail upon request to support cost increases from 2020 to 2022.
Table 7 below provides actual costs for 2020 (most recent audit results) compared with requested and recommended cost projections for 2022. While there are significant cost increases in several categories, they are reasonable given the cost drivers facing SCSS.
The Short Story. The key drivers behind the proposed rate increases for 2022 can be summarized by four cost factors over the past two years:
• Truck depreciation.
• Food and green waste recycling.
• Insurance
• Gas and oil
All other cost increases including labor, ongoing maintenance, disposal costs at the landfill and MRF, account for less than 3% of the rate increase.
Table 7. Detail Cost Review: 2020 Compared with 2022
2020
Actual Amount Change
Direct Labor 3,614,140 3,922,681 308,541
Administrative Costs
Corporate Overhead 356,299 378,184 21,885
Office Salaries 768,706 835,736 67,030
Other Expenses -
Depreciation 535,997 1,534,705 998,708
Gas and Oil 821,425 952,847 131,422
Insurance
Medical 674,318 779,174 104,856
General Liability 388,530 582,286 193,756
Office Expense 229,923 268,409 38,486
Operating Supplies 83,727 77,820 (5,907)
Outside Services 270,687 211,251 (59,436)
Permits 67,486 97,290 29,804
Tires 127,834 151,673 23,839
Truck Repairs 642,080 606,106 (35,974)
Other Costs 323,681 353,209 29,528
Total Allowable Costs 8,904,833 10,751,371 1,846,538
Pass-Through Costs
Disposal Costs
Landfill 1,701,768 1,805,407 103,639
MRF 1,223,081 1,143,280 (79,801)
Greenwaste 824,872 1,781,655 956,783
Franchise Fees 1,629,121 1,454,123 (174,998)
Facility Rent, Related Party 170,111 181,814 11,703
Interest, Related Party 133,282 213,214 79,932
Transportation, Related Party 34,271 43,275 9,004
Total Pass-Through Costs 5,716,506 6,622,768 906,262
Total Costs $14,621,339 $17,374,139 $2,752,800
2022 Proposed
Solid Waste Rate Review
- 12 -
These costs are organized by costs where SCSS is allowed a profit (“Allowable”) and those where it can recover the cost but not earn a profit on them (“Pass-Through”).
The following describes the basis for each for the significant changes.
Allowable Costs
• Direct Labor. This reflects a two-year increase of 8.5%, or about 4.2% per year. Given the tight labor market and current increases in CPI, this increase for retention and attraction is reasonable.
• Office Salaries. This also reflect annual increases of about 4% per year. Again, given the tight labor market and current increases in CPI, this increase for retention and attraction is reasonable.
• Depreciation. The 2019 Base Year report noted that as fully depreciated trucks were replaced, significant continuing higher
depreciation costs were expected in the future
due to two factors: annual depreciation costs
on fully depreciated trucks would go from
zero to about $60,000 each; and the cost basis
for new trucks would be significantly higher
than in the past. Given replacements during
2021 and those proposed in 2022, the
increased cost is reasonable. Combined with a
possible change in amortization schedule as
noted in the sidebar, planned replacements
should result in stabilized costs in the future.
• Gas and Oil. These costs are projected to increase by about 7.5% annually. Given the volatility (both up and down) of diesel and CNG costs (especially recent cost spikes), this is a reasonable assumption for 2022 costs.
• Insurance: Health Care and Liability. These costs are projected to increase significantly by about 12.5% annually (7.5% for health care and 22.5% for liability insurance). Given increases in health care costs and current liability insurance market, these are reasonable assumptions for 2022 costs.
• All Other Allowable Costs. While there are ups and downs in the other individual line items, in total these reflect modest annual increases of about 2%.
Pass-Through Costs
• Disposal Costs: Landfill. No rate increases are reflected in the rate application ($41.00 per ton). The modest two-year increase reflects increased tonnage.
Truck Amortization
The Rate Manual calls for
depreciating trucks over seven years.
While this made sense in 1994,
manufacturing improvements since
then have resulted in longer lives, with
ten years becoming the industry
standard. As noted above, this
change should be considered as part
of the Rate Manual update.
Solid Waste Rate Review
- 13 -
• Disposal Costs: Recycling (Related Party). This cost category reflects a decrease in the tonnage rate from $96.00 to $84.59.
• Disposal Costs: Greenwaste. After depreciation, this is the largest cost increase from 2020.
These costs are incurred under an on-site agreement with HZI and reflect costs to build (via depreciation), operate and maintain the anaerobic digestion plant. The purpose of this plant is to process local food and greenwaste in meeting California regulation SB 1383. Key drivers include higher costs than initially projected for construction; ongoing operations and maintenance due to feedstock challenges; and local outbound material. The following further describes these challenges; and a cost summary is provided in Appendix B.
Construction and startup The construction of the anaerobic digester plan in San Luis Obispo was one of the first high solids digesters in the United States and the 99th overall renewable gas anaerobic plant built globally by HZI. The
construction of the anerobic digester in
California posed unique challenges but was
constructed safely and without any
environmental incidents. Given the “first-ofthe-kind” nature of the project in California, the actual cost to construct the anaerobic
digestion plant exceeded the original budget
originally set in 2014. The cost increases were
mainly driven by labor availability, prevailing
wage, civil and underground cost increases,
and equipment and material escalations.
Operation and maintenance. The anaerobic
digestion plant exceeds 95% availability
(uptime) to process waste while producing
renewable green electricity. To ensure the plant
is reliably available to process local community
waste, the operations and maintenance cost of the anaerobic digestion exceeds the original annual budget due to several factors:
1. The quantity of entrained inorganic material (such as sand and metal) entrained in the waste increases the wear and tear on the mechanical components of the plant, which inherently increases the number of staff required to operate and maintain the facility.
2. The lower than anticipated quantity of food was also increases the wear and tear on the equipment, which has mainly been driven need to continue to educate the community on organics recycling and the impacts of COVID on commercial businesses (most notably restaurants).
3. Plant labor costs have increased due to the requirements of processing the waste, maintaining the equipment, competitive labor market and inflationary costs in San Luis Obispo County and more broadly in California. Plant administrative costs such as insurance, legal and taxes continue to increase greater than was historically budgeted.
Local Benefits
It should be noted that that while
costs have increased, HZI and SCSS
believe there are substantial local
benefits to the greenwaste operation,
including:
• Powering over 600 homes with
6.2 million kWh per year of
renewable electricity.
• Diverting 72 million pounds of
organics from landfills per year
• Reducing greenhouse gas
emissions by 5,300 metric tons
per year.
Solid Waste Rate Review
- 14 -
In summary, key operation and maintenance cost increases reflect continual sand removal; increased equipment replacement and maintenance; increased labor hours and rates; and management of backend compost.
Depreciation. Plant depreciation expenses reflect the higher construction costs discussed above in addressing waste profile challenges such as sand and low food waste content.
Lower Natural Gas Production (Revenue). Due to the amount of inorganic material (like sand) and the lower than anticipated food waste content, the overall natural gas production is lower than planned. This directly limits the amount of overall natural gas production potential of the digester and ultimately electricity sales.
In the past, greenwaste contract costs have been considered “allowable” costs. However, as disposal costs, they are more like landfill and recycling costs, which are treated as “passthrough” costs that can be recovered but profit is not allowed on them. Accordingly, this is considered a pass-through cost in this rate review. However, this another area that should be reviewed as part of the rate manual update.
• Franchise Fees. This reflects the removal of IWMA fees from the cost base. • Interest (Related Party). Interest is an allowable cost under the Rate Manual. In this case, interest costs are assessed internally by Waste Connections based on a methodology that takes into account its corporate costs of borrowing and financed assets. Accordingly, this is treated as a “pass-through” cost. SCSS’s auditors have previously provided a written opinion on the reasonableness of the cost methodology; and I have reviewed the calculations underlying the projected costs in accordance with this methodology. Given the increase in financed assets as reflected in depreciation costs, I believe the projected interest costs for 2022 are reasonable.
Trends in External Cost Drivers
The most common external “benchmark” for evaluating cost trends is the consumer price index.
Over the past two calendar years (2020 and 2021), the U.S. CPI-U increased by 8.5% (about
4.2% annually). Excluding the cost drivers discussed above, all other costs over the past two years increased by 4.1% (about 2% annually).
Rates in Comparable Communities
Lastly, reasonableness of rates (and underlying costs) can also be evaluated by comparing rates with comparable communities. However, survey results between “comparable” communities need to be carefully weighed because every community is different.
Nonetheless, surveys are useful assessment tools—but they are not perfect and they should not drive rate increases. Typical reasons why solid waste rates may be different include:
• Franchise fees and AB 939 fee surcharges
• Landfill costs (tipping fees)
Solid Waste Rate Review
- 15 -
• Service levels (frequency, quality)
• Labor market
• Operator efficiency and effectiveness
• Voluntary versus mandatory service
• Direct services provided to the franchising agency at no cost, such as free trash container pick-up at city facilities, on streets and in parks
• Percentage of non-residential customers, and how costs and rates are allocated between customer types
• Revenue collection procedures: Does the hauler or the franchising agency bill for service? And what are the procedures for collecting delinquent accounts? • Services included in the base fee (recycling, green waste, containers, pick-up away from curb)
• Different rates structures
• Land use and density (lower densities will typically result in higher service costs) • Mix of residential and non-residential accounts
With these caveats, the following summarizes single family residential rates for other cities in the Central Coast area compared with the proposed rates for SCSS. As reflected below, even with the recommended or proposed rate increases, Arroyo Grande, Grover Beach, Oceano and Pismo Beach will have among the lowest rates of the agencies surveyed.
Table 8. Single Family Residential Rate Survey
Single Family Residential Monthly Trash Rates
30-40 60-70 90-101
Atascadero $28.55 $44.50 $55.77
Morro Bay 22.88 45.76 68.64
Paso Robles 30.90 51.12 57.25
San Luis Obispo* 22.51 45.03 67.56
Santa Maria na 30.69 34.81
San Miguel 28.23 44.48 61.06
Templeton 31.40 45.01 44.48
Proposed: South County Sanitation Service Area
Arroyo Grande 23.78 30.90 38.04
Grover Beach 21.57 29.14 36.69
Oceano CSD 18.13 26.09 51.06
Pismo Beach 21.15 42.32 63.47
* Proposed 2022 rates scheduled for review in April 2022 Container Size (Gallons)
Solid Waste Rate Review
- 16 -
Summary: Are the costs reasonable? Based on the results of the three separate cost-review techniques—trend review, external factor analysis and rate comparisons—the proposed cost assumptions for 2022 are reasonable.
What Is a Reasonable Return on these Costs?
After assessing if costs are reasonable, the next step is to determine a reasonable rate of return on these costs. The rate-setting method formally adopted by Arroyo Grande, Grover Beach, Oceano and Pismo Beach in their Franchise Agreements with SCSS includes clear criteria for making this assessment. It begins by organizing costs into three main categories, which will be treated differently in determining a reasonable “operating profit ratio:” Allowable Costs (Operations and Maintenance): Reasonable Operating Profit Allowed • Direct collection labor • Fuel
• Vehicle maintenance and repairs • Depreciation
• Insurance • Billing and collection
Pass-Through Costs: Can be Recovered but No Profit Allowed • Disposal costs (landfill, recycling, greenwaste)
• Franchise fees
• Payments to affiliated companies (such as facility rent, interest and trucking charges) Excluded and Limited Costs: No Revenues Allowed
• Charitable and political contributions • Non-IRS approved profit-sharing plans • Entertainment • Fines and penalties
• Income taxes • Limits on corporate overhead
After organizing costs into these three categories, determining “operating profit ratios” and overall revenue requirements is straightforward:
• The target is an 8% operating profit ratio on “allowable costs.” • Pass-through costs may be fully recovered through rates but no profit is allowed on these costs.
• No revenues are allowed for any excluded or limited costs.
In the case of SCSS, about 60% of their costs are subject to the 8% operating profit ratio; and 40% are pass-through costs that may be fully recovered from rates but no profit is allowed. No recovery is allowed for excluded costs. The overall operating profit ratio after allowable and pass-through costs is 5%.
Solid Waste Rate Review
- 17 -
Preparing the Rate Request Application
Detailed “spreadsheet” templates for preparing the rate request application—including assembling the required information and making the needed calculations—are provided in the Rate Manual. SCSS has prepared their rate increase application in accordance with these requirements (Appendix A); and the financial information provided in the application for 2019 and 2020 ties to its audited financial statements.
Proposed Rate Summary
The following summarizes the calculations that support the requested and recommended rate increases:
Table 9. Proposed Rate Increase Summary
As reflected in this summary, all the rate-setting factors are the same for all four agencies are the same except for the franchise fee adjustment (which reflects that higher franchise fees will be required with the rate increase): 5% for the Oceano CSD and 10% for the other three agencies.
Implementation
The following summarizes key implementation concepts in the adopted rate-setting model:
• The “8%” operating profit ratio is a target; in the interest of rate stability, adjustments are only made if the calculated operating profit ratio falls outside of 10% to 6%. • On the other hand, if past ratios have been stronger than this target, then the revenue base is re-set in the Base Year review.
Oceano Others
Allowable Costs 10,751,371 10,751,371
Allowable Profit (8% Operating Ratio) 934,901 934,901
Pass-Through Costs
Disposal
Landfill 1,805,407 1,805,407
MRF (Recycling) 1,143,280 1,143,280
Greenwaste 1,781,655 1,781,655
Franchise Fees 1,454,123 1,454,123
Related Party Costs 438,303 438,303
Total Pass-Through Costs 6,622,768 6,622,768
Allowed Revenue Requirements 18,309,041 18,309,041
Revenue without Rate Increase 15,260,678 15,260,678
Revenue Requirement: Shortfall (Surplus) 3,048,363 3,048,363 Rate Base Revenue 18,309,041 18,309,041
Percent Change in Revenue Requirement 19.98% 19.98%
Allowed Revenue Increase * 21.03% 22.19%
* Adjusted for 5% franchise fee in Oceano and 10% in others Solid Waste Rate Review
- 18 -
• Special rate increases for extraordinary circumstances may be considered.
The result of this process is a proposed rate increase of 22.19% (21.03% in the Oceano CSD).
RATE DIFFERENCES BETWEEN COMMUNITIES
If costs for Arroyo Grande, Grover Beach, Oceano and Pismo Beach are so similar, why are the residential rates so different?
The short answer: history and different approaches to rate structure philosophies.
History
Until 1999, service levels under the Franchise Agreements with SCSS between these four agencies were significantly different. The rates in place at that time became the basis for subsequent rate reviews.
Rate Structure Principles
Most significantly, each agency has adopted different rate structure principles to recover similar costs. For example, Pismo Beach has adopted a rate structure for its residential customers that more closely reflects a “pay-as-you-throw” philosophy under which the “per gallon” costs for 32, 64 and 96 gallon containers are the same (for example, a 64-gallon container costs twice as much as a 32-gallon one.) This results in lower monthly costs for 32-gallon customers and relatively higher rates for 64 and 96-gallon customers.
On the other hand, Arroyo Grande has adopted rates that do not have as much difference between container sizes (but still offer an incentive for smaller containers over larger ones), recognizing collection economies of scale for larger versus smaller containers. In this case, 32- gallon containers in Arroyo Grande are more expensive than in Pismo Beach, but 64-gallon containers are less.
Both rate structures have their strong points: in the case of Pismo Beach, rates are more reflective of disposal costs, whereas in Arroyo Grande they are more reflective of collection costs. But the important point is that the revenue generating capability is the same even though the rates are different.
Multi-Family and Non-Residential Rates
Lastly, multi-family and non-residential rates (which account for about 40% of SCSS revenues) are similar in all four agencies: it is only in single family residential rates that there are significant differences between communities.
COST ACCOUNTING ISSUES
As noted above, SCSS’s financial operations for Arroyo Grande, Grover Beach, Oceano and Pismo Beach are closely related. Keeping costs and revenues segregated is further complicated Solid Waste Rate Review
- 19 -
by the fact that SCSS is a subsidiary of Waste Connections US (which acquired the parent company in April 2002), which shares ownership with the following local companies:
• San Luis Garbage Company
• Mission Country Disposal
• Morro Bay Garbage Service
• Coastal Roll-Off Service
• Cold Canyon Land Fill
• Cold Canyon Processing Facility
Additionally, within the South County, SCSS’s service area includes:
• City of Arroyo Grande
• City of Grover Beach
• City of Pismo Beach
• Oceano Community Services District
• Nipomo Community Services District
• Avila Beach Community Services District
• Other unincorporated areas in the South County such as rural Arroyo Grande Cost Accounting System
Audited financial statements are prepared for each company within Waste Connections’ central coast operations by an independent certified public accountant; and SCSS’s auditors have consistently issued “clean opinions” on its financial operations. However, only direct labor hours for collection (and related compensation), liability insurance, franchise fees and revenues are directly accounted for each company (like SCSS); and then within each agency serviced by it. As summarized below for major cost categories, all other costs are allocated between companies based on apportionments using generally accepted accounting principles:
Table 10. Cost Allocation Bases
Allocation Basis Major Cost Categories
Customer counts • Region and division overhead
• Office salaries
• Office expense
• Legal and accounting
Direct labor hours • Truck depreciation
• Truck repairs and tires
• Mechanic labor
• Gas and oil
Tonnage Disposal costs
• Landfill
• MRF/recycling
• Greenwaste
Solid Waste Rate Review
- 20 -
Revenue • Corporate overhead (adjusted for Rate Manual limitations) • Bad debt expense
• Other taxes
Containers • Container depreciation
• Container labor
• Container repairs
Gallons • Diesel fuel
These allocation bases seem reasonable. However, they are subject to periodic change as determined by Waste Connections. Since these apportionments are a key basis for rate setting, the bases of allocation for each cost category (including allocations of regional and district overhead and accounting for direct costs) should be established in an updated Rate Manual.
COST OF LIVING “TRIGGER OPTION”
As noted above, Section 8.3 of the Franchise Agreements provides that if the rate increase request compared with the rate in effect at the date of the agreement exceeds the cumulative cost of living increase from that same date, each agency has the option of terminating the agreement at any time within nine months following approval of the requested rate increase. While this provision does not directly limit rate increase requests by SCSS to an amount that may be less than that allowed under the rate-setting methodology, subjecting the Franchise Agreement to possible termination if the rate request is greater than the cost of living threshold provides a strong incentive for SCSS to do so, if possible.
Calculation of the Cost of Living Threshold
As recommended in the 2013 Interim Year rate review for consistency and clarity, the CPI-U rate increases used in calculating Interim Year increases and the “trigger” threshold are based on changes from June to June (given application submittal targets, this was the most recent date that would consistently be available).
Along with the adjustment for the “weighted” greenwaste rate increase in 2012 of 1.7% previously approved, the 2016 Franchise Agreement amendments provided for adjustments to the threshold “trigger” of landfill rate increases, weighted by the ratio of landfill costs to total costs (assumed at 25% based on recent trends).
• Table 11(a) provides the threshold calculation compared with actual rate increases and those recommended for 2022.
• Table 11(b) provides landfill rates since 2008.
As reflected in Table 11(a), the cumulative changes in the cost of living (with adjustments for greenwaste and landfill cost increases) is 34.87%. This compares with cumulative rate increases, including those recommended of 22.19% for 2022 (21.03% for Oceano CSD) of 61.76%. This would result in exceeding the “trigger” by 26.89%.
Solid Waste Rate Review
- 21 -
Table 11(a). Trigger Threshold Calculation
Table 11(b). Landfill Rates Per Ton
Increase
Prorated
@
Year Actual Amount Percent 25%
2008 29.25 - 0.00% 0.00%
2009 29.25 - 0.00% 0.00%
2010 29.25 - 0.00% 0.00%
2011 34.25 5.00 17.09% 4.27%
2012 34.25 - 0.00% 0.00%
2013 34.25 - 0.00% 0.00%
2014 36.50 2.25 6.57% 1.64%
2015 38.75 2.25 6.16% 1.54%
2016 41.00 2.25 5.81% 1.45%
2017 41.00 - 0.00% 0.00%
2018 41.00 - 0.00% 0.00%
2019 41.00 - 0.00% 0.00%
2020 41.00 - 0.00% 0.00%
2021 41.00 - 0.00% 0.00%
2022 41.00 - 0.00% 0.00%
Note: Under long-term rate increases approved by the County, Cold Canyon Landfill was eligible for annual rate increases of $2.25 per ton from 2017 to 2022, with a resulting rate of $54.50 by 2022, However, it chose not to do so.
Rate Rate
June Index Amount Percent Greenwaste Landfill (1) Threshold Year Increase (2) 2009 215.693
2010 217.965 2.272 1.05% 4.27% 5.33% 2011 0.00%
2011 225.722 7.757 3.56% 1.70% 0.00% 5.26% 2012 5.15%
2012 229.478 3.756 1.66% 0.00% 1.66% 2013 3.20%
2013 233.504 4.026 1.75% 1.64% 3.40% 2014 2.05%
2014 238.343 4.839 2.07% 1.54% 3.61% 2015 0.00%
2015 238.638 0.295 0.12% 1.45% 1.58% 2016 3.25%
2016 241.018 2.380 1.00% 0.00% 1.00% 2017 1.10%
2017 244.955 3.937 1.61% 0.00% 1.61% 2018 1.61%
2018 251.989 7.034 2.79% 0.00% 2.79% 2019 10.06%
2019 256.143 4.154 1.62% 0.00% 1.62% 2020 1.70%
2020 257.797 1.654 0.64% 0.00% 0.64% 2021 0.70%
2021 271.696 13.899 5.12% 0.00% 5.12% 2022 22.19%
Cumulative Total 56.003 25.96% 1.70% 8.91% 34.87% 61.76% Requested Rate Increase Above Trigger Threshold 26.89%
1. Landfill rate increases prorated at 25% of total costs
2. Recommended rate for 2022, except for Oceano (21.03%) US CPI-U Increase Allowed Adjustments
Solid Waste Rate Review
- 22 -
However, it is important to note that this “trigger” calculation does not limit the allowable rate increase that may be requested under the methodology set forth in the Franchise Agreements or approved by the agencies.
Accordingly, if the proposed rate increases are approved, I recommend that the agencies consider (as they did in as part of the 2019 Base Year review) adopting findings that they will not pursue the “trigger” option.
Rate Manual Update. The merit of continuing with the “trigger option” is another area that should be considered with the Rate Manual update.
COORDINATION WITH OTHER AGENCIES
SCSS has submitted similar rate requests to the three other agencies that regulate rates and services in the other South County areas that it serves: County of San Luis Obispo, Avila Beach Community Services District and the Nipomo Community Services District. These agencies are likely to act on the requested rate increases within the same time frame as the four agencies covered in this report.
Waste Connections (as San Luis Garbage Company) has also submitted a rate increase application to the City of San Luis Obispo of 17.75%, which is scheduled for Council review on April 19, 2022. As Mission County Disposal, it has also submitted initial rate applications for Los Osos and the north coastal areas of about 40%.
SUMMARY
Based on the rate-setting policies and procedures formally adopted by Arroyo Grande, Grover Beach, Oceano and Pismo Beach in their Franchise Agreements, this report concludes that:
• SCSS has submitted the required documentation required under its Franchise Agreements with the four agencies.
• This results in a recommended rate increase of 22.19% in the cities of Arroyo Grande, Grover Beach and Pismo Beach; and 21.03% in the Oceano CSD.
ATTACHMENTS
Appendix A: Base Year Rate Request Application from South County Sanitary Service Appendix B: HZI Greenwaste Digester Cost Analysis
Appendix A
BASE YEAR RATE REQUEST
APPLICATION
1. Base Year Application Summary
• City of Pismo Beach
• City of Arroyo Grande
• City of Grover Beach
• Oceano Community Services District
2. Supporting Schedules
• Financial Information: Cost and Revenue Requirements Summary • Revenue Offset Summary
• Cost Summary for Base Year
• Base Year Revenue Offset Summary
• Operating Information
• Rate Survey
South County Sanitary Service
2022 Base Year Rate Adjustment Application
Summary CITY OF PISMO BEACH
Requested Increase
Digester Expense 6.2%
Capital Purchases 5.9% Market Rate Wage Adjustment 5.6% Commingle Processing Fee 1.9% Other 2.6%
1. Rate Increase Requested 22.19%
Rate Schedule
Current Increased Adjustment New
Rate Schedule Rate Rate (a) Rate
Single Family Residential
2. Economy Service (1 - can curb) $17.31 $3.84 $21.15
4. Standard Service (2- can curb) $34.63 $7.69 $42.32
5. Premium Service (3 - can curb) $51.94 $11.53 $63.47
(a) Calculated rates are rounded up to the nearest $0.01.
6. Multiunit Residential and Non-residential Rate increases of 22.19% will be applied to all rates in each structure
with each rate rounded to the nearest $0.01
Certification
To the best of my knowledge, the data and information in this application is complete, accurate, and consistent with the instructions provided by the Rate Setting Manual.
Name: Jeff Clarin Title: District Manager
Signature: Date: 10/20/21
Revised 2/18/22
Fiscal Year: 1-1-2022 to 12-31-2022 Pg. 1 of 6
South County Sanitary Service
2022 Base Year Rate Adjustment Application
Summary CITY OF ARROYO GRANDE
Requested Increase
Digester Expense 6.2%
Capital Purchases 5.9% Market Rate Wage Adjustment 5.6% Commingle Processing Fee 1.9% Other 2.6%
1. Rate Increase Requested 22.19%
Rate Schedule
Current Increased Adjustment New
Rate Schedule Rate Rate (a) Rate
Single Family Residential
2. Economy Service (1 - can curb) $ 19.46 $4.32 $23.78
4. Standard Service (2- can curb) $ 25.29 $5.61 $30.90
5. Premium Service (3 - can curb) $ 31.13 $6.91 $38.04
(a) Calculated rates are rounded up to the nearest $0.01.
6. Multiunit Residential and Non-residential Rate increases of 22.19% will be applied to all rates in each structure
with each rate rounded to the nearest $0.01
Certification
To the best of my knowledge, the data and information in this application is complete, accurate, and consistent with the instructions provided by the Rate Setting Manual.
Name: Jeff Clarin Title: District Manager
Signature: Date: 10/20/21
Revised 2/18/22
Fiscal Year: 1-1-2022 to 12-31-2022 Pg. 1 of 6
South County Sanitary Service
2022 Base Year Rate Adjustment Application
Summary CITY OF GROVER BEACH
Requested Increase
Digester Expense 6.2%
Capital Purchases 5.9% Market Rate Wage Adjustment 5.6% Commingle Processing Fee 1.9% Other 2.6%
1. Rate Increase Requested 22.19%
Rate Schedule
Current Increased Adjustment New
Rate Schedule Rate Rate (a) Rate
Single Family Residential
2. Economy Service (1 - can curb) $ 17.65 $3.92 $21.57
4. Standard Service (2- can curb) $ 23.85 $5.29 $29.14
5. Premium Service (3 - can curb) $ 30.03 $6.66 $36.69
(a) Calculated rates are rounded up to the nearest $0.01.
6. Multiunit Residential and Non-residential Rate increases of 22.19% will be applied to all rates in each structure
with each rate rounded to the nearest $0.01
Certification
To the best of my knowledge, the data and information in this application is complete, accurate, and consistent with the instructions provided by the Rate Setting Manual.
Name: Jeff Clarin Title: District Manager
Signature: Date: 10/20/21
Revised 2/18/22
Fiscal Year: 1-1-2022 to 12-31-2022 Pg. 1 of 6
South County Sanitary Service
2022 Base Year Rate Adjustment Application
Summary OCEANO COMMUNITY SERVICE DISTRICT
Requested Increase
Digester Expense 6.2%
Capital Purchases 5.9% Market Rate Wage Adjustment 5.6% Commingle Processing Fee 1.9% Other 1.4%
1. Rate Increase Requested 21.03%
Rate Schedule
Current Increased Adjustment New
Rate Schedule Rate Rate (a) Rate
Single Family Residential
2. Economy Service (1 - can curb) $ 14.98 $3.15 $18.13
4. Standard Service (2- can curb) $ 21.56 $4.53 $26.09
5. Premium Service (3 - can curb) $ 42.19 $8.87 $51.06
(a) Calculated rates are rounded up to the nearest $0.01.
6. Multiunit Residential and Non-residential Rate increases of 21.03% will be applied to all rates in each structure
with each rate rounded to the nearest $0.01
Certification
To the best of my knowledge, the data and information in this application is complete, accurate, and consistent with the instructions provided by the Rate Setting Manual.
Name: Jeff Clarin Title: District Manager
Signature: Date: 10/20/21
Revised 2/18/22
Fiscal Year: 1-1-2022 to 12-31-2022 Pg. 1 of 6
South County Sanitary Service
2022 Base Year Rate Adjustment Application
Current
Financial Information Base Year
2019 2020 2021 2022 2023
(from Pg. 4)
6. Direct Labor $3,258,214 $3,614,140 $3,638,218 $3,922,681 $4,040,361
7. Corporate Overhead $350,343 $356,299 $359,149 $378,184 $389,529
8. Office Salaries $688,788 $768,706 $758,312 $835,736 $859,332
9. Other General and Admin Costs $4,482,056 $4,990,560 $5,899,433 $5,614,771 $7,809,122 10 Total Allowable Costs $8,779,401 $9,729,705 $10,655,112 $10,751,372 $13,098,345
11. Operating Ratio 97.3% 98.2% 103.6% 92.0% 92.0%
12. Allowable Operating Profit $245,196 $179,075 ($366,502) $934,902 $1,138,986
13. Tipping Fees $2,754,458 $2,924,849 $3,012,594 $4,730,341 $2,978,173
14. Franchise Fees $1,482,198 $1,629,121 $1,652,070 $1,454,123 $1,497,747
15. AB939 Fees $0 $0 $0 $0 $0
16. Payments to Affiliated Companies* $281,020 $337,664 $377,981 $438,302 $477,779
17. Total Pass Through Costs $4,517,676 $4,891,634 $5,042,645 $6,622,767 $4,953,699 * Affiliate Payments include interest, lease payments, and transportation
18. Revenue Requirement $13,542,273 $14,800,414 $15,331,255 $18,309,041 $19,191,030
19. Total Revenue Offsets $13,542,273 $14,800,414 $15,331,255 $15,260,678 $15,413,625 (from Page 3)
20. Net Shortfall (Surplus) $3,048,363
21. Total Residential and Non-residential Revenue without increase Oceano Nipomo in Base Year (pg.5, line 76) $15,260,678 $15,260,678 $15,260,678
22. Percent Change in Residential and Non-residential Revenue Requirement 19.98% 19.98% 19.14%
23. Franchise Fee Adjustment Factor (1 - 6 percent) 90.000% 95.000% 90.000%
22.19% 21.03% 21.27%
Limitation due to cumlative increases
24. Percent Change in Existing Rates 22.19% 21.03% 21.27% Fiscal Year: 1-1-2022 to 12-31-2022 Pg. 2 of 6
Section III-Pass Through Costs
Historical Projected
Section I-Allowable Costs
Section II-Allowable Operating Profit
Section III-Pass Through Costs
Section III-Pass Through Costs
South County Sanitary Service
2022 Base Year Rate Adjustment Application
Revenue Offset Summary
Current
Base Year
2019 2020 2021 2022 2023
Residential Revenue (without increase in Base Yr.)
28. Single Family Residential $7,924,043 $8,627,550 $8,780,617 $8,769,933 $8,857,632 Multiunit Residential Dumpster
29. Number of Accounts
30. Revenues
31. Less Allowance for Uncollectible Resi Accounts $0 $0 $0 $0 $0
32. Total Residential Revenue $7,924,043 $8,627,550 $8,780,617 $8,769,933 $8,857,632 Non-residential Revenue (without increase in Base Yr.)
Account Type
Non-residential Can
33. Number of Accounts 11 11 12
34. Revenues $5,513 $5,568 $5,624
Non-residential Wastewheeler
35. Number of Accounts 508 503 513
36. Revenues $544,220 $549,662 $555,159
Non-residential Dumpster
37. Number of Accounts 1,592 1,576 1,608
38. Revenues $5,613,237 $6,171,381 $5,983,795 $5,917,531 $5,976,706
39. Less: Allowance for Uncollectible Non-resid $0 $0 $0 $0 $0
40. Total Non-residential Revenue $5,613,237 $6,171,381 $6,533,528 $6,472,761 $6,537,488
45. Interest on Investments $0 $0 $0 $0 $0
46. Other Income $4,993 $1,483 $17,111 $17,984 $18,505
47. Total Revenue Offsets $13,542,273 $14,800,414 $15,331,255 $15,260,678 $15,413,625 Fiscal Year: 1-1-2022 to 12-31-2022 Pg. 3 of 6
Section VII - Revenue Offsets
Historical Projected
South County Sanitary Service
2022 Base Year Rate Adjustment Application
Cost Summary for Base Year
Description of Cost BASE YEAR
2019 2020 2021 2022 2023
Labor $3,020,612 $3,353,557 $3,377,752 $3,642,382 $3,751,654 Payroll Taxes $237,602 $260,583 $260,466 $280,299 $288,708
48. Total Direct Labor $3,258,214 $3,614,140 $3,638,218 $3,922,681 $4,040,361
49. Corporate Overhead $370,263 $387,844 $460,472 $484,877 $499,423 Less limitation (enter as negative) ($19,920) ($31,545) ($101,323) ($106,693) ($109,894) Total Corporate Overhead $350,343 $356,299 $359,149 $378,184 $389,529 Office Salaries $642,368 $722,755 $701,402 $773,471 $795,199 Payroll Taxes - Office $46,420 $45,951 $56,910 $62,265 $64,133
50. Total Office Salaries $688,788 $768,706 $758,312 $835,736 $859,332 Bad Debt $12,541 $12,182 $15,064 $15,064 $15,064
Allocated expenses $0 $0 $0 $0 $0
Bonds expense $6,877 $5,221 $5,153 $5,426 $5,589
Depreciation $406,756 $535,997 $1,129,264 $1,534,705 $1,827,206 Drive Cam fees $21,242 $19,353 $20,599 $21,690 $22,341
Dues and Subscriptions $20,483 $5,793 $19,974 $21,033 $21,664 Facilities $59,584 $43,035 $29,218 $30,766 $31,689
Gas and oil $914,400 $821,425 $947,541 $952,847 $980,712 Insurance $860,855 $1,062,848 $1,225,897 $1,361,460 $1,402,304 Laundry (Uniforms) $33,527 $29,461 $29,837 $31,418 $32,361 Legal and Accounting $43,392 $46,291 $51,310 $53,890 $55,428 Miscellaneous and Other $7,943 $5,614 $5,144 $5,416 $5,579 Office Expense $211,414 $229,923 $254,048 $268,409 $276,461 Operating Supplies $59,319 $83,727 $73,903 $77,820 $80,155 Other Taxes $37,649 $40,287 $39,285 $41,236 $42,399
Outside Services $1,128,991 $1,244,791 $1,231,253 $328,750 $2,120,266 Public Relations and Promotion $5,119 $8,013 $7,639 $7,654 $7,663 Postage $21,635 $8,711 $12,894 $13,578 $13,985
Permits $60,344 $67,486 $92,393 $97,290 $100,208
Relocation $18,530 $30,701 $22,040 $22,040 $22,040
Rent $3,000 $2,250 $11,023 $12,497 $12,872
Telephone $13,294 $36,444 $36,121 $38,035 $39,176
Tires $100,399 $127,834 $144,039 $151,673 $156,223
Travel $27,991 $8,712 $12,431 $13,091 $13,483
Truck Repairs $389,414 $492,848 $464,015 $488,608 $503,266 Utilities $17,357 $21,613 $19,349 $20,375 $20,986
51. Total Other Gen/Admin Costs $4,482,056 $4,990,560 $5,899,433 $5,614,771 $7,809,122
52. Total Tipping Fees $2,754,458 $2,924,849 $3,012,594 $4,730,341 $2,978,173
53. Total Franchise Fee $1,629,121 $1,652,070 $1,454,123 1,497,747.16 1,482,198.00
54. Total AB 939/Regulatory Fees $0 $0 $0 $0 $0
55. Total Lease Pmt to Affil Co.'s $142,332 $170,111 $172,663 $181,814 $187,268 55a. Interest Expense (to affiliate) $87,922 $133,282 $162,043 $213,214 $247,236 55b. Total Transportation to Affil Co.'s $50,766 $34,271 $43,275 $43,275 $43,275
56. Total Cost $13,297,077 $14,621,339 $15,697,757 $17,374,139 $18,052,043 Fiscal Year: 1-1-2022 to 12-31-2022 Pg. 4 of 6
South County Sanitary Service
2022 Base Year Rate Adjustment Application
Base Year Revenue Offset Summary For Information Purposes Only Description of Revenue Overall Franchise Refuse Collection Non-franchise Total Total Arroyo Pismo Grover Unincorporated Total
Residential Revenue
(without increase in Base Year)
57. Single Family Residential $8,769,933 $8,769,933 $1,826,861 $1,185,972 $1,173,008 $4,584,092 Multiunit Residential Dumpster
58. Number of Accounts 0 0
59. Revenues $0 $0
60. Less Allowance for Uncollectable $0 $0
61. Total Residential Revenue $8,769,933 $8,769,933 $1,826,861 $1,185,972 $1,173,008 $4,584,092 $0 Non-residential Revenue (without increase in Base Year) Account Type
0.34% 0.35% 33.05% 15.36% 0.00% 0.00%
Non-residential Can
62. Number of Accounts 11 11 5 1 4 2
63. Revenues $5,568 $5,568 $1,416 $280 $1,033 $2,840
Non-residential Wastewheeler 3.4% 0.0%
64. Number of Accounts 503 503 139 136 98 131
65. Revenues $549,662 $549,662 149,429 195,948 84,569 119,716 Non-residential Dumpster 96% 17% 38% 3%
66. Number of Accounts 1,576 1576 402 229 321 625 0
67. Revenues $5,917,531 $5,917,531 $1,577,642 $1,333,364 $828,238 $2,178,286
68. Less: Allowance for Uncollectible
Non-residential Accounts $0 $0
69. Total Non-residential Revenue $6,472,761 $6,472,761 $1,728,486 $1,529,592 $913,840 $2,300,842 $0
74. Interest on Investments $0 $0 $0 $0 $0 $0 $0
75. Other Income $17,984 $0 $0 $0 $0 $0 $17,984
76. Total Revenue Offsets $15,260,678 $15,242,694 $3,555,347 $2,715,564 $2,086,848 $6,884,935 $17,984 Fiscal Year: 1-1-2022 to 12-31-2022 Pg. 5 of 6
Section VII-Revenue Offsets
South County Sanitary Service
2022 Base Year Rate Adjustment Application
Operating Information
Percent Percent Percent Base Year Percent
2019 Change 2020 Change 2021 Change 2022 Change 2023
Residential
Accounts
77. Arroyo Grande 5,827 1.1% 5,890 0.6% 5,924 1.0% 5,983 1.0% 6,043 Grover Beach 4,216 0.4% 4,233 0.4% 4,249 1.0% 4,291 1.0% 4,334 Pismo Beach 3,816 0.1% 3,819 0.2% 3,828 1.0% 3,866 1.0% 3,905 Oceano CSD 1,863 0.4% 1,870 1.6% 1,899 1.0% 1,918 1.0% 1,937 Nipomo CSD 4,066 0.8% 4,097 0.9% 4,135 1.0% 4,176 1.0% 4,218 County 6,881 2.2% 7,034 1.4% 7,130 1.0% 7,201 1.0% 7,273 26,669 1.0% 26,943 0.8% 27,165 1.0% 27,437 1.0% 27,711
78. Routes-Garbage 7 26.5% 9 -13.9% 8 0.0% 8 0.0% 8
79. Routes-Recycling 6 26.5% 8 -13.9% 7 0.0% 7 0.0% 7
80. Direct Labor Hours 28,522 26.5% 36,082 -13.9% 31,059 0.0% 31,059 0.0% 31,059 Non-residential Garbage
Accounts
80. Arroyo Grande 490 0.2% 491 0.6% 494 1.0% 499 1.0% 504 Grover Beach 438 0.7% 441 0.5% 443 1.0% 447 1.0% 452
Pismo Beach 386 1.8% 393 -0.5% 391 1.0% 395 1.0% 399
Oceano CSD 190 0.5% 191 0.5% 192 1.0% 194 1.0% 196
Nipomo CSD 214 -2.3% 209 0.0% 209 1.0% 211 1.0% 213
County 508 -5.9% 478 2.5% 490 1.0% 495 1.0% 500
2,226 -1.0% 2,203 0.7% 2,219 1.0% 2,241 1.0% 2,264
81. Routes-garbage 8 26.5% 10 -13.9% 8 0.0% 8 0.0% 8
Routes-recycling 3 26.5% 4 -13.9% 4 0.0% 4 0.0% 4
82. Direct Labor Hours 22,871 26.5% 28,933 -13.9% 24,905 0.0% 24,905 0.0% 24,905 Recyclable Materials - All areas-Commingled Recycling (in tons) Accounts
83. Tons Collected 13,275 -4.0% 12,740 3.0% 13,123 3.0% 13,516 1.0% 13,651 Recyclable Materials - All areas-Greenwaste Recycling
Routes 5 26.5% 7 -13.9% 6 0.0% 6 0.0% 6
Tons Collected 13,631 -0.9% 13,511 3.0% 13,916 3.0% 14,334 1.0% 14,477 Direct Labor Hours 10,934 26.5% 13,833 -13.9% 11,907 0.0% 11,907 0.0% 11,907 Garbage Tons Collected 43,020 -3.5% 41,507 3.0% 42,752 3.0% 44,034 1.0% 44,475 Fiscal Year: 1-1-2022 to 12-31-2022 Pg. 6 of 6
Historical Current Projected
Section IX-Operating Data
Rate Comparisons for Garbage Service
Service Size
Pismo
Beach 1
South County
Urban 1
Arroyo
Grande 1 Atascadero Templeton San Miguel
Paso
Robles2
City of Santa
Maria 3,4
Santa Barbara
County (Northern)4 City of Santa Barbara
20 Gallon
35 Gallon $ 17.31 $ 25.60 $ 19.46 $ 28.55 $ 31.40 $ 28.33 $ 30.90 $ 25.84 $ 45.30 65 Gallon $ 34.63 $ 34.04 $ 25.29 $ 44.50 $ 45.01 $ 44.48 $ 51.12 30.69 $ 27.89 $ 56.15 95 Gallon $ 51.94 $ 47.46 $ 31.13 $ 55.77 $ 45.95 $ 61.06 $ 57.25 34.81 $ 29.86 $ 67.00 2 yard (1X WK) $ 120.91 $ 129.25 $ 122.10 $ 146.79 $ 129.54 $ 103.98 $ 168.68 166.72 $ 167.72 $ 248.79 Notes:
1 Scheduled increases in 1/1/2022
2 Paso Robles does 40 gallon cart pricing
3 65 gallon Scheduled to increase to $32.70 in 1/1/22 and $34.71 in 7/1/22, and 95 gallon Scheduled to increase to $38.07 in 1/1/22 and $41.34 in 7/1/22 4 Weekly Trash pick-up but every other week recycling and green waste pick-up.
HZI Cost Increase Summary Appendix B
Original
Cost Category Plan 2021 2022 Amount % Comment
Staffing and Administrative Cost
1,090$ 1,592$ 1,706$ 616$ 57%
Staff operation requirements increased from 3 to 6 team members due to feedstock profile, increased maintenance, equipment change out and operational demands. Additionally salary increases have been necessary to meet CA labor market demands. Administratively pollution insurance was added and audit and legal fees were increased to meet reporting requirements.
O&M Expense
495$ 1,747$ 1,439$ 944$ 191%
Increased cost due to CHP maintenance increases related to gas cycling, dosing feeder erosion, screw feeder premature erosion, shredder blade erosion and damage due to contamination, digestate pump rebuild frequency due to sand, premature wear and replacement of the decanter, and continued vacuum truck clean out of the sand build-up. Added +250K/year for management of backend products and front end peak loading; Capital Expense
1,487$ 1,945$ 1,946$ 459$ 31%
Added Capital cost includes Feed Bunker Wall extension, Speed Screen, Fat, Oils, and Grease system, and redundant pumps related to decreased food waste and sand issues in the CA environment Total Cost 3,072$ 5,284$ 5,091$ 2,019$ -
Total Service Fee 1,749$ 1,779$ 3,861$ 2,082$ 119%
Increase requested equates closely to cost increase seen since original plan of monthly service fees Change (1,323)$ (3,505)$ (1,230)$ 63$
Variance
18 Year Historical South County Sanitary Services Rate Changes Date Increase Comments
7/1/2004 5.30%
6/1/2005 2.95%
5/1/2006 3.60%
2007 0.00%
1/1/2008 2.90%
2009 0.00%
2010 0.00%
9/1/2011 9.05% City increases Franchise Fee from 6% to 10%.
Approved rate is
additional3.9% beyondthe 5.15% rate request.
2012 0.00%
2/1/2013 3.20%
7/1/2014 2.05%
1/1/2016 3.25% Includes additional 1.1% for Organics program, Franchise Agreement amendment: extendingthe contractby20 years,with the new Kompogas
organicsprocessingfacility and exclude tipping fee
increases, approved bytheCounty Board of
Supervisorsin 2014 for landfill improvements, in
calculation of SCSS rates
1/1/2017 1.10%
1/1/2018 1.60%
7/1/2019 10.06% Proposed 10.06% increase includes 1) 4.4% for increased vehicle costs, 2)(-3.92%) savings on net
result of improvements in the cost of operation,
3)3.1% Organics Program implemented by the
State and 4)6.48% cost to process recyclable
materials
1/1/2020 1.7%
1/1/2021 .70%
6/15/22 22.19% Proposed 22.19% increase includes 1) 8.05% for truck depreciation, 2) 7.71% for food and green
waste recycling to comply with SB 1383, 3) 2.41%
for health and liability insurance costs, 4) 1.06% for
gas and oil, 5) 2.96% for all other cost increases
including labor, ongoing maintenance, disposal
costs at the landfill, and other pass-through costs
Attachment 4
Agenda Item No. 10
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: June 13, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Deanne Purcell, Administrative Services Director Kristin Eriksson, Deputy City Manager
SUBJECT: FY 2022-23 Proposed Revised Budget
RECOMMENDATION
Conduct a public hearing to review the FY 2022-23 Proposed Revised Budget and provide direction to staff to finalize the budget for adoption on June 27, 2022.
BACKGROUND
The FY 2021-23 Budget was approved by Council on June 28, 2021. As we approached the second year of the two-year budget cycle (FY 2022-23), staff reviewed revenue and expenditure budgets to recommend revisions to the original budget. Staff recommends the Council conduct a public hearing to take public comment on the proposed revised budget and provide staff direction prior to the adoption of the FY 2022-23 budget scheduled for June 27, 2022.
The total proposed revised citywide budget for FY 2022-23 is $34.8 million, including $18.7 million in the City’s General Fund, $5.2 million in Enterprise Funds including Water and Wastewater Funds, and $1.8 million in Special Revenue Funds. The budget includes a five-year capital improvement program (CIP) of $9.2 million in funding in FY 2022-23 for key capital projects or 26% of the total proposed citywide budget. Highlights and major changes to the budget are identified in the City Manager’s Letter of Transmittal which is included in the first section of the Proposed Revised Budget document and information on the City’s revenues and expenditures is incorporated throughout the document.
General Fund Revenue
The original adopted budget for FY 2022-23 was reviewed and compared to FY 2021-22 estimated year-end projections, along with any updated projections from outside consultants. This includes the following significant revenue sources:
• Sales Tax projections were determined using the most recent report from the City’s sales tax consultant estimating an additional $250,000 in sales tax revenues for FY 2021-22 and an updated FY 2022-23 budget with a 4% increase of $354,000. • Property Tax projections for FY 2021-22 year-end are in line with the estimates provided by San Luis Obispo County Tax Assessor’s Office. The FY 2022-23 original budget assumed that the City’s property tax revenues would increase by 3% in FY 2022-23 from the current FY 2021-22. The most recent estimates provided in January 2022 by San Luis Obispo County Tax Assessor’s Office project a 4% increase for next fiscal year 2022-23 or an increase of $75,000 from the original FY 2022-23 budget.
Staff Report: FY 2022-23 Proposed Revised Budget Page 2 June 13, 2022
• Cannabis Tax projections for FY 2021-22 are estimated to be $1,600,000 or $848,000 lower than the $2,448,000 originally budgeted based on revenues received through the third quarter. The FY 2022-23 update amount is based on this $1,600,000 year-end estimate with a 2% increase or $1,632,000. This will decrease the original budget for FY 2022-23 by $816,000. These estimates represent resetting expectations for cannabis tax revenues given continued uncertainty in the cannabis industry as cannabis businesses begin operating in nearby cities and the industry in general continues to face significant pressure from an illegal market that is not taxed or regulated. • Transient Occupancy Tax (TOT) projections are based on the added short-term rental and increased travel activity that has picked up considerably in the current FY 2021-22 compared to the last two years that were impacted by the pandemic. The projections assume $850,000 for FY 2021-22 and $750,000 for FY 2022-23. FY 2021-22 included a one-time collection effort of $95,000 from prior years where some STRs were not paying required revenues in a timely manner. Staff has worked with these individuals to make sure they are staying current and is currently conducting a TOT audit for both hotels and STRs which has not been conducted since 2011.
General Fund Expense
For the FY 2022-23 revised proposed budget, there is an increase to salaries and benefits of $81,000 or a 1% increase from the FY 2022-23 original budget which was based on a 2% increase.
This revised budget is consistent with labor agreements with employee groups which includes a 3% cost of living adjustment for FY 2022-23. In addition, there is a 1.7% or $128,000 increase to the total FY 2022-23 supplies and services budget for the General Fund. The original budget was based on a 2% inflationary factor, although inflation rose to 7.5% in January 2022 but is forecast to come down to more normal levels over the coming fiscal year. The adjustment was needed to cover the inflationary increases of $59,000 including office supplies, fuel, vehicle maintenance and utility cost. Other large items that needed to be adjusted included $14,000 for computer replacements and $55,000 for police body cameras.
The revised budget for FY 2022-23 includes a General Fund contribution of $2.1 million to the capital improvement program (CIP). The original budget included $2.3 million to CIP, but the difference is due to projects with a modified scope or carryover amounts available from the prior year. The revised budget for FY 2022-23 represents a significant investment in City resources to implement Council Goals and address community needs while maintaining sufficient reserves.
The revised General Fund budget for FY 2022-23 is balanced with a projected surplus of $239,000 and ending reserves of approximately 40% of operating expenditures compared with the Council’s reserve goal of 25% to provide sufficient reserves for emergencies or unforeseen events or needs.
Staff recommends caution with these reserves given potential economic uncertainties in this next fiscal year along with significant improvements needed for parks and City facilities along with other City infrastructure. Staff will bring further information about these needs to the Council during this next fiscal year in preparation for the FY 2023-25 two-year budget.
American Rescue Plan Act of 2021
The City has been allocated a total of $3.2 million from the American Rescue Plan Act (ARPA) with the first disbursement of $1.6 million already received in FY 2021-22. The revised budget for FY 2022-23 includes the second disbursement of $1.6 million to be received in FY 2022-23. With the adoption of the original FY 2021-23 budget, Council provided direction to use City Council Goals as a roadmap in allocating ARPA funding with a particular focus on the following priorities:
Staff Report: FY 2022-23 Proposed Revised Budget Page 3 June 13, 2022
• Housing and homelessness
• Public safety needs
• Economic development and business/nonprofit assistance • Rental and utility assistance
• Unfunded water or sewer projects
This direction was incorporated into the FY 2021-23 budget adopted in June 2021 with ARPA funding allocated to five general categories shown below. Staff presented updated allocation recommendations for the five categories to the Council in September 2021 which Council concurred with:
• Homelessness services and facilities - $800,000
• Non-profit assistance - $150,000
• Rental and utility assistance -- $50,000
• Business assistance/economic development -- $300,000
• Water and sewer projects - $300,000
Staff is seeking further Council consideration of these or other potential uses of these one-time ARPA funds to incorporate as part of the FY 2022-23 revised budget. Staff recommends Council approve the general ARPA allocations in the chart below. These allocations include the second $1.6 million disbursement as well as approximately $500,000 in unexpended and uncommitted funding from this year’s initial disbursement. Staff would note that these allocation categories are now based on ARPA terminology consistent with updated guidance from the U.S. Treasury.
Category Total Allocation
Homelessness Services and Programs $1.3 million
Enhancing Government Services $432,000
Aid to Local Businesses/Support for Tourism $215,000
Assistance to Households $158,000
Assistance to Nonprofits $50,000
The largest allocation would be for homeless services and programs and include funding 5Cities Homeless Coalition operations at the future non-congregate shelter site on South 4th Street purchased for this purpose in March 2022 along with funding to support the winter warming center and other homeless programs. $432,000 is proposed for enhancement of governmental services by using ARPA funds to backfill revenue losses resulting from the COVID-19 pandemic. This backfill of revenues will allow the City to improve and enhance governmental services and allow the City to be more prepared for future events by partially funding a new Enterprise Resource Planning system for the City organization among other improvements. Staff is proposing an allocation of just over $215,000 to continue the City’s initiatives in supporting local businesses and enhancing tourism marketing for economic development. An allocation of over $158,000 would support childcare needs for providers and families and to continue the City’s utility assistance program. Finally, an allocation of $50,000 is recommended to fund the FY 2023-24 Community Grants program for non-profit agencies.
Staff would note that the ARPA funding of $1.6 million in the upcoming FY 2022-23 budget has been incorporated in the General Fund budget as both a grant revenue and non-departmental expenditure. As a result, Council direction on potential uses of ARPA funding will not change the actual budget but rather provide policy guidance to staff in developing and implementing the most appropriate uses of these one-time funds intended to help communities recover and rebuild from the COVID-19 pandemic. Upon policy direction from the Council, staff will report back to the Staff Report: FY 2022-23 Proposed Revised Budget Page 4 June 13, 2022
Council on expenditures and project approval items and continue to bring applicable agenda items related to implementation of ARPA funding to the Council at future meetings.
FISCAL IMPACT
There is no direct fiscal impact from this action. The FY 2022-23 Proposed Revised Budget contains comprehensive financial information at the fund level (Fund Information section) and departmental and program information (Department Budgets).
ALTERNATIVES
The Council has the following alternatives to consider:
1. Conduct a public hearing to review the FY 2022-23 Proposed Budget and provide direction to staff to finalize the budget for adoption on June 27, 2022; or
2. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act. A public hearing notice was published in New Times on June 2, 2022 and posted accordingly in the locations for public notices.
Attachments
1. FY 2022-23 Proposed Revised Budget (Printed copies provided to City Council under separate cover). An electronic copy is available on the City website.
Revised Budget
Fiscal Year 2022-23
Grover Beach CITY OF
Attachment 1
Table of Contents
CITY OVERVIEW
City Manager’s Letter of Transmittal 6
City Council Goals 18
Major City Goals Work Programs 21
City Government 29
Profile of Grover Beach 31
FINANCIAL TRENDS
Financial Trends 34
Employer Pension Contribution Rates 41
BUDGET OVERVIEW
City Operating Budget 46
CIP Project Budget 53
Schedule of Interfund Transfers 54
Full Time Equivalents Personnel 56
DEPARTMENT BUDGETS
Administrative Services 62
City Manager’s Office 66
Community Development 70
Parks & Recreation 73
Police 76
Public Works 81
Non-Departmental 86
FUND INFORMATION
General Fund 90
Capital Projects Fund 93
Special Revenue Funds 94
Enterprise Funds 107
CAPITAL PROJECTS
Capital Improvement Program 112
APPENDIX
Financial Policies 118
Gann Appropriation Limit 124
CITY
OVERVIEW
City Overview
6 CITY MANAGER’S LETTER OF TRANSMITTAL
Honorable Mayor and Council Members:
I am pleased to present the total revised budget of $34.8 million for the City of Grover Beach for the upcoming fiscal year 2022-23 including a General Fund budget of $18.7 million. FY 2022-23 represents the second year of our two-year budget cycle and the budget for FY 2022-23 reflects revisions from the twoyear FY 2021-23 budget adopted in June 2021. As we close our current fiscal year 2021-22, I’d like to take a moment to recognize the challenges we have faced in this past year along with our substantial progress and accomplishments in addressing community needs and implementing the Council’s policy direction.
Over the past year, our world continued to endure the COVID-19 pandemic which was the most significant public health crisis since the influenza pandemic over a century ago. The COVID-19 pandemic began in March 2020 with unprecedented “stay at home” orders in California and elsewhere to slow the spread of the pandemic which was beginning to spread throughout the world. These orders made a significant public health impact in slowing the spread but caused significant societal and economic impacts in keeping residents at home except for going to essential businesses such as grocery stores or pharmacies and working in essential services. These impacts affected children of our community as well given the change to distance learning at home which required many parents to work at home while helping their children with school. The City of Grover Beach also pivoted in March 2020 to focus our service delivery on essential services while transitioning our employees to work remotely in the interest of public health and safety while continuing to provide services to the best of our ability.
When this fiscal year began in July 2021, pandemic conditions had changed dramatically from 2020 as case numbers and hospitalizations had decreased considerably from a peak in January 2021 with 3,500 active cases in San Luis Obispo County with nearly 50 hospitalizations. The availability of a vaccine along with compliance with public health guidance enabled our community to return to more normal activities including outdoor events like our Summer Concert Series. However, new highly transmissive strains of the COVID virus including the Delta variant in fall 2021 and Omicron variant in winter 2022 caused case numbers and hospitalizations to increase again and led to an all-time high of 649 in the 14-day average number of new cases in January. But the Grover Beach community persevered once again and when COVID numbers subsequently dropped rapidly, restrictions and limitations were lifted in February including the indoor mask mandate and normal business activities and events resumed in our community. The City had previously reopened the City Hall front lobby to in-person transactions in summer 2021 and subsequently resumed City Overview
7 in-person City Council and Commission meetings in March. The City organization is still working with a flexible work environment that allows most employees to work remotely for part of the week which not only addresses continued challenges with childcare provision, but also reflects changing workforce interests in seeking flexibility in schedules and workspaces.
Over the past year, the City has continued to be a leader in supporting local businesses during difficult times in partnership with the South County Chambers of Commerce. Building on the business microgrant assistance program that provided over $700,000 in grants to 92 businesses, the City completed a “Buy Local” program in July 2021 to encourage spending at local businesses. This program generated $278,000 in funding for local businesses from February through July 2021 with nearly $4 in customer spending for every $1 in public funds invested. The City worked with the Chamber to carry out a second iteration of the Buy Local program in February 2022 to continue this local support. Through our partnership with the Chamber, the City has strengthened its ties to the business community and is widely seen as a community that cares deeply about its local businesses and their owners and employees.
Despite the challenging and ever-changing conditions this past year, the City of Grover Beach has made significant strides in building an even stronger and better community in alignment with Council Goals.
Approximately 90% of the tasks identified for FY 2021-22 Major City Goals at mid-year were completed or in progress. Streets continue to be repaired throughout the city as we have improved over 60% of local streets (259 blocks) through Measure K-14 bond funding approved by voters in 2014 and completed the South Oak Park Boulevard rehabilitation project in March. We have continued to install new water and sewer lines, sidewalks, bike lanes and ADA accessible corner ramps to continue improving infrastructure in our community. The Council opened a new playground at 16th Street Park in August and approved a pilot program in February to co-locate pickleball courts at the Mentone Park tennis court. Economic development continues to be one of the City’s top goals and in addition to the business support mentioned earlier, the City continued its partnership with the South County Chambers of Commerce on economic development services including business attraction and retention. The City also added a Deputy City Manager position whose job responsibilities include economic development initiatives. The hotel project located at 950 El Camino Real is in building plan review with groundbreaking slated to occur in late 2022.
The developer of the Grover Beach Lodge also continues their work to prepare construction plans for submission to State Parks and the developer of the hotel project at 1598 El Camino Real is working on their construction plans for submission to the City.
City Overview
8 With regards to housing, the City has worked diligently this year on updating our Development Code and Land Use Element to implement the updated Housing Element approved in 2020 and to enhance housing production in Grover Beach. These updates have been a substantial work effort with extensive public input and review by the Council and Planning Commission with final approval anticipated in June. The City’s commitment to affordable housing was illustrated this fiscal year through approval of a development application for a 53-unit affordable housing project on vacant City-owned and private property near the corner of South 13th Street and West Grand Avenue. Addressing homelessness is also a top priority for the City with substantial progress this year on creating additional shelter space for unhoused individuals along with cleaning encampment areas and removing trash and debris. Lastly, public safety is a core responsibility of local government and we have made significant strides this past year in filling vacant positions for Police Officers and a Police Commander, upgrading and expanding our Community Camera Program, and continuing our investment in a well-maintained and equipped fire and emergency medical service.
In addition to these achievements, the City has worked hard at building a strong financial foundation over this past year despite the challenges posed by COVID-19. The City’s revenues continue to be strong overall particularly with sales tax, property tax, and transient occupancy tax the latter of which has doubled to $850,000 this fiscal year. For the second year in a row, sales tax is projected to be the City’s highest revenue source due in large part to passage of the Measure F-20 1% sales tax in November 2020. Cannabis revenues have decreased given continued uncertainty in the cannabis industry from State regulation and taxation and extent of illegal cannabis businesses and are projected to be approximately $800,000 lower than expected. However, this tax will still produce $1.6 million in general revenue to support City projects and services and is generated through 13 current commercial cannabis businesses operating in a safe and responsible way. The City’s revenues coupled with the strong fiscal management of City departments are projected to produce a year-end General Fund surplus of approximately $600,000 with ending reserves totaling $5.7 million or 39% of operating expenditures. This level of reserves is higher than the Council’s policy goal of 25% of operating expenditures and provide sufficient reserves for emergencies or unforeseen needs given continued uncertainty in the economy. As we complete this fiscal year, revenues continue to be strong given the strength of the local housing market and level of local and visitor spending at local businesses including cannabis businesses and position the City to make significant investments in this upcoming budget. This positive financial outlook is augmented by the second and final year of receiving federal funding through the American Rescue Plan Act (ARPA) to further assist our community in recovering from the COVID-19 pandemic.
City Overview
9 City Council Goals
Since 2017, the City Council has conducted an annual goal-setting process to determine the highest priorities for the City organization to implement in the upcoming fiscal year. On March 8, 2021, the Council adopted a set of Council Goals for FY 2021-23, following a goal-setting workshop on February 26, 2021. On March 7, 2022, the Council held another Council Goals workshop at which staff provided highlights from the updated long-term financial forecast, implementation of Council Goals, and input on potential goals from the community through an online survey and virtual forum. The Council was asked for input and direction regarding two questions: 1) Are there any changes that Council would like to make to the current goals?; and 2) Are there any key items to particularly focus on in FY 2022-23 in implementing Council Goals? After consideration of public comment and deliberation, the Council directed staff to add Water Resiliency as an “Other Important Goal”; revise the existing Environmental Sustainability “Address as Resources Permit” Goal to remove the Central Coast Blue project; and to move the Pedestrian, Bicycle and Traffic Safety Goal from “Other Important Goals” to the “Address as Resources Permit” category. On March 14, 2022, the Council adopted a highly focused set of collective goals organized into three priority categories:
• Major City Goals. These represent the most important, highest priority goals for the City to accomplish over the next two years, and as such, resources to achieve them should be included in the FY 2021-23 budget.
o Economic Development
o Housing and Homelessness
o Public Safety
o Street Improvements
• Other Important Goals. These goals are important for the City to accomplish and resources to achieve them should be made available in the FY 2021-23 budget where feasible. o Building and Facility Improvements
o City Beautification and Public Art
o Community Engagement
o Water Resiliency
• Address as Resources Permit. While it is desirable to achieve these goals, doing so over the next two years is subject to resource availability.
o Environmental Sustainability
o Code Compliance
o Pedestrian and Bicycle Safety
o Recreation and Community Programs
City Overview
10 In staff’s perspective, these updated Council Goals represent an affirmation and “fine tuning” of the earlier Council Goals to reflect current and future conditions such as greater focus on water resiliency and the Central Coast Blue project as a Council priority. The Council is to be commended for its continued strategic focus on key priority areas to drive City resources and investments to best address community needs.
Building on the Council’s updated goals for FY 2022-23, staff has developed work programs for each of the four Major City Goals to specify what will be done over the next year in carrying out the goal. Adoption of the revised FY 2022-23 budget will serve as the approval of these work programs which staff will begin implementing in the new fiscal year and providing progress reports to Council throughout the year.
FY 2022-23 Budget Overview
The revised budget for fiscal year 2022-23 reflects the continued strength of the local economy emerging from the COVID-19 pandemic with a positive economic outlook given the extent of fiscal stimulus funding and level of pent-up consumer demand. The revised budget for the second year of the two-year budget cycle is balanced with significant community investments made possible by projected General Fund revenues as highlighted below:
• Sales Tax (the largest revenue source over the next year at 32%) projection includes $2.3 million in FY 2022-23 from Measure F-20 approved by voters in November 2020. The revised FY 2022-23 budget assumes a 4% increase in FY 2022-23. These estimates were determined with the assistance of the City’s sales tax consultant using historical data and trend analysis and an additional $354,000 was added to the revised budget for FY 2022-23. • Property Tax (the second largest revenue source at 29%) projection is in line with the estimates provided by San Luis Obispo County Tax Assessor’s Office in January 2022. The revised FY 2022- 23 budget assumes that the City’s property tax revenues will increase by 4% in FY 2022-23 from FY 2021-22 and the revised budget adds an additional $75,000 based on the most current estimate. • Cannabis Tax (the third largest revenue source at 9%) projection was initially assumed at $2.4 million including a 2% annual inflationary increase in FY 2022-23. However, based on FY 2021-22 actual revenue through the third quarter, cannabis tax revenues have decreased and are expected to end the year $800,000 below the initial projection. This decrease in revenue is a reset of expectations for cannabis tax revenues and a recognition of continued uncertainty in the cannabis industry which continues to face significant pressure from an illegal market that is not taxed or regulated.
Due to the current trends and actual revenue collected for FY 2021-22, FY 2022-23 revised numbers have been reduced by $816,000 to approximately $1.6 million.
City Overview
11 • Transient Occupancy Tax (the fourth largest revenue source at 4%) projections are based on the added short-term rentals (STRs) and increased travel activity that has picked up considerably in FY 2021-22 compared to the last two years that were impacted by the pandemic. The projections assume $850,000 for FY 2021-22 and $750,000 for FY 2022-23. FY 2021-22 included a one-time collection effort of $95,000 from prior years where some permitted STRs were not paying required revenues in a timely manner. Staff has worked with these STR permit holders to make sure they are staying current.
• Franchise Fees (the fifth largest revenue source at 3%) projection includes the new fiber optic cable which will add an additional $100,000 to FY 2022-23. This new revenue was delayed and not collected in FY 2021-22 but expected to be received in FY 2022-23, therefore no adjustment was needed to the revised budget.
In terms of expenditures, the revised budget for FY 2022-23 continues to make significant investments in addressing community needs in alignment with the Council Goals. The budget includes a General Fund contribution of $2.3 million in FY 2022-23 for the City’s Capital Improvement Program (CIP) as presented to the Council on March 28, 2022. The Council provided direction to incorporate these amounts into the final CIP included with the adopted budget which will enable the City to carry out additional capital projects along with funding from Measure K-14 street bonds, Water and Wastewater Enterprise Funds, and other funds. The CIP also includes funding from the Water Fund for the City’s share of costs for the Central Coast Blue regional recycled water project to provide sustainable water supplies for years to come. The adopted budget includes General Fund operating budget recommendations of $950,000 in net expenses after revenue offsets for FY 2022-23 compared with the budget in FY 2020-21 including six new positions that were added in FY 2021-22. These funds are proposed to be allocated with a continued focus on helping our community recover and rebuild from the impacts of COVID-19 with low-income utility assistance, economic development and business assistance, and homelessness services and facilities.
Below is a summary of notable items included in the adopted budgets over the next fiscal year listed by each of the four Major City Goals:
Economic Development
• Business Retention and Attraction. The revised budget for FY 2022-23 includes $70,000 in contract funding with the South County Chambers of Commerce to continue to provide economic development services including business retention, business attraction, tourism marketing, and workforce development services. This partnership which started in January 2020 has been City Overview
12 beneficial for the City in working with the leading business organization in our region to help promote and expand our economic vitality. The FY 2022-23 budget also includes ongoing General Fund funding for a new Deputy City Manager position in the City Manager’s Office to provide an additional resource for economic development activities. Additionally, the budget for FY 2022-23 includes additional funding for community, childcare, and business assistance grants to continue the City’s response to the COVID-19 pandemic.
• Tourism development. While not a specific budget item, staff will begin oversight and construction management for a permitted hotel project at 950 El Camino Real and will continue to invest time to support the permitting process related to an approved hotel project at 1598 El Camino Real as well as the Grover Beach Lodge project with the lodge permitting process led by State Parks given its location at Pismo State Beach. These projects will add approximately 400 new rooms to the city.
The Council previously approved limited funding support for the 1598 El Camino Real project consistent with the City’s policy on providing financial assistance for catalyst economic development projects. The City does not include the projected revenues from hotel developments in financial forecasts until construction begins. Lastly, the City will work with the Chamber to enhance Visit Grover Beach tourism marketing over the next year to promote Grover Beach as a desirable coastal destination. Visit Grover Beach was recognized as one of the top tourism marketing brands in California in 2021 by Visit California. • Commercial cannabis regulatory costs. Approximately $400,000 in ongoing costs in the Community Development, Police, and other departments is recommended in FY 2022-23 to provide staff capacity and resources to effectively regulate the growing commercial cannabis industry in Grover Beach as part of our economic development work. With 14 businesses currently operating and several others expected to be operating in the next fiscal year, the City will continue to carry out needed activities to help ensure a safe and regulated commercial cannabis industry with these regulatory costs covered by commercial cannabis permit revenue. • West Grand Avenue Improvements. The FY 2022-23 budget includes $2.4 million in General Fund dollars for a street repair and streetscape improvement project on West Grand Avenue between 4th and 8th Streets. Additionally, staff will use the budgeted contract with the South County Chambers of Commerce to provide outreach and marketing to businesses along West Grand Avenue to enhance economic vitality of the corridor.
City Overview
13 Housing and Homelessness
• Development Code update implementation. A key focus of the work program for the Housing and Homelessness Major City Goal is implementing the Development Code and Land Use Element updates anticipated to be approved in June and processing related development applications particularly for West Grand Avenue projects such as a mixed-use project at 402 West Grand Avenue.
This implementation work includes obtaining Coastal Commission approval of the Local Coastal Program amendments related to the updates, development of applicant checklists, updating the City’s website with new materials and documents, training staff, and conducting developer outreach.
• Affordable housing development. An important aspect of this work program is advancing an affordable housing project on City-owned land on South 13th Street near West Grand Avenue. This property was deeded to the City in 1990 for a park use and the City spent considerable effort in seeking outside grant funding to develop a park or community center. The City worked with the trustee of the deed to support using this property for affordable housing to address housing needs within the community and help meet the City’s Regional Housing Needs Assessment requirements for low and very-low-income units. The Council previously selected People’s Self-Help Housing (PSHH)/Housing Authority of San Luis Obispo County (HASLO) as the developer and approved the development application for the site in December 2021. Staff will oversee the start of the building permit process with PSHH/HASLO as this project comes forward to the City. • Homelessness support. The City will continue its efforts to partner with the 5Cities Homeless Coalition (5CHC), the County of San Luis Obispo, and other agencies and stakeholders on addressing homelessness in our community. In recent years, the City has secured over $1,000,000 in Community Development Block Grant (CDBG) funding for Eviction Prevention and Security Deposit programs administered by 5CHC to prevent homelessness in our community and an additional $450,000 in additional CDBG funding from the federal CARES Act to support the South County winter warming center and provide assistance to homeless individuals including mental health services. In FY 2021-22, the Council approved the purchase of property on South 4th Street using funds from the City’s ARPA allocation and staff is working on a land lease with 5CHC to develop a homeless housing facility. The City will continue to partner with 5CHC and other local agencies on efforts to address homelessness in South County including exploring temporary or permanent shelter spaces to help unhoused individuals find housing and connect to services. In addition to creating shelter space, the City will continue to pursue encampment cleaning and trash removal work along with outreach at affected locations such as the El Camino Real area.
City Overview
14 Public Safety
• Fire and emergency medical services. The work program for fiscal year 2022-23 includes continuing the implementation of the amended Joint Powers Authority (JPA) agreement for the Five Cities Fire Authority (FCFA) approved in June 2020 that adjusted the level of service and cost allocation for member agencies for a two-year period based on the 2019 revised funding formula. This two-year window is tied to re-consideration of a tax measure in Oceano in June 2022 to fund fire services following the narrow defeat of a previous measure in 2020. The results of this election will factor prominently in work among FCFA member agencies on the future service delivery and governance structure of fire and emergency medical services. Lastly, the City is also committed along with other member agencies to fund the replacement of the wildland fire vehicle beginning in FY 2022-23. • Police improvements and needs. The revised budget for FY 2022-23 continues the additional funding for the Police Department that began in FY 2021-22 to address community safety needs including the addition of two Police Officer positions and a Community Services Technician positions. The FY 2022-23 budget includes an update to the City’s Emergency Operations Plans and implementing staff and Council training and collaboration with other agencies on emergency preparedness and response.
Street Improvements
• Measure K-14 street projects. The FY 2022-23 budget includes $3.4 million in Measure K-14 funding to carry out two street projects totaling 35 blocks on numerous streets. The first project (CIP 2295- 14) is a 16-block section of streets that includes portions of Trouville, S. 7th Street, Ocean View, Nacimiento, Mono, Owens, Margarita and Angello Terrace. The second project (CIP 2295-15) is a 19- block project that includes portions of S. 7th Street, S. 10th Street, Manhattan Avenue, Seabright Avenue, Charles Street, N. 2nd Street and N. 6th Street. The first project is due to begin construction in August and the second is due to begin construction in February 2023. • Improvements to major streets. The revised budget for FY 2022-23 includes $2.4 million for completing design and beginning construction of the West Grand Avenue Streetscape project from 4th Street to 8th Street. This project follows this year’s completion of the South Oak Park Boulevard street improvement project which was the City’s first major streets project in many years. Staff will continue to advance major streets projects as funding and workload allows in addition to Measure K-14 street projects and other infrastructure improvements. The five-year Capital Improvement Program identifies the annual investment the City is making in improving these major streets traveled upon by residents, businesses, and visitors.
City Overview
15 • Sidewalk improvements. Sidewalk repairs and infill is also funded in this adopted budget to improve pedestrian accessibility in our community. The budget includes $50,000 in new funding in FY 2022- 23 for constructing infill sidewalks through private-public partnerships in conjunction with the Measure K-14 street projects CIP 2295-14 and 2295-15.
Overall, the revised General Fund budget for FY 2022-23 will be balanced with revenues of $18.9 million and expenditures of $18.7 million for a surplus of approximately $249,000 and ending reserves of approximately 40% of operating expenditures in FY 2022-23 compared with the Council’s reserve goal of 25%. This level of reserves reflects the City’s cautious financial management and provides sufficient reserves for emergencies or unforeseen needs given economic uncertainties. Anticipated budget surpluses in future years are projected to add to these reserves over time.
Table 1 -- Updated General Fund Projections
As expressed throughout this letter, the revised budget for FY 2022-23 represents a significant investment in City resources to implement Council Goals and address community needs while maintaining sufficient reserves. The community’s investment as expressed through passage of Measure F-20 in November 2020 and the Council’s leadership in establishing the commercial cannabis industry to create jobs and generate tax revenue have positioned the City to carry out an extensive list of improvements that support and enhance the quality of life in our community. This is a positive financial position for the City to be in while continuing to demonstrate fiscal discipline and prudent cost management. There continue to be uncertainties and challenges facing the City described below including the overall economic environment, continued uncertainties with cannabis revenue, and fostering a continued sense of community in a time of change and uncertainty.
FY 2020-21
Actual
FY 2021-22
Original
FY 2021-22
Estimated
FY 2022-23
Budget
FY 2022-23
Update
FY 2022-23
Revised
Beginning Reserves $ 4,704,830 $ 5,344,745 $ 5,073,745 $ 5,564,926 $ 5,564,926 REVENUES:
Revenues/Transfers In 14,801,082 19,228,267 18,833,127 19,123,083 (174,500) 18,948,583 EXPENDITURES:
Operating Expenditures 13,534,588 16,677,294 16,417,516 15,998,524 209,000 16,207,524 Debt Service 154,620 205,828 205,828 181,425 181,425
CIP/Transfers Out 329,959 2,301,750 1,576,602 2,455,600 (145,000) 2,310,600 TOTAL EXPENDITURES 14,019,167 19,184,872 18,199,946 18,635,549 64,000 18,699,549 ANNUAL SURPLUS (GAP) $781,915 $43,395 $633,181 $487,534 ($238,500) $249,034 Ending Reserves $ 5,486,745 $ 5,388,140 $ 5,706,926 $ 6,052,460 $ 5,813,960 Percent of Operating Expenditures 41% 36% 39% 43% 40%
City Overview
16 Overall Economic Environment
The City’s budget has recovered well from the economic impacts of the COVID-19 pandemic and the City did not experience a significant degree of revenue loss during the pandemic given our residential property tax base and the diversification of the City’s revenue sources. The City also experienced a sizeable influx of tourists to Grover Beach along with other coastal communities which led to the City’s highest level of transient occupancy tax revenue received in FY 2021-22. The generally positive economic conditions and the degree of fiscal stimulus in the economy such as ARPA funds will position the City and other communities to use public funding to make significant improvements to quality of life. However, there are significant regional economic changes on the horizon that we must plan for including the pending closure of the Diablo Canyon Power Plant, Phillips 66 refinery, and off-highway vehicle usage at the Oceano Dunes State Vehicular Recreation Area. There are also numerous economic uncertainties to navigate such as global economic impacts from the war in Ukraine and the continued high rate of inflation that affects the cost of living along with supplies and equipment. We also need to be mindful that some members of our community are still struggling given the depth of specific economic impacts in certain industries and may need financial assistance for housing, utilities, transportation, childcare, and other needs. The City has demonstrated a high degree of empathy and support for community members and this effort is important to continue in our recovery from the pandemic and economic impacts.
Continued Uncertainties with Commercial Cannabis Revenue This is a continued area of uncertainty for the City given the nature of the commercial cannabis industry as it continues to transition to a fully legal and stable industry statewide. The City’s relatively stable financial outlook is due in part to the revenues from the commercial cannabis industry along with inherent stability in one of the City’s largest revenue sources (property tax revenues). The commercial cannabis tax is expected to generate $1.6 million in revenues in FY 2022-23 and cannabis-related sales tax revenues also contribute to the City’s financial position. Grover Beach is a leader in establishing a successful commercial cannabis industry and the annual tax revenues continue to outperform initial estimates prior to establishing the industry. However, there are numerous uncertainties with these revenues given the tenuous nature of the legal cannabis industry and market implications with nearby cities establishing cannabis businesses which point to the need to consider opportunities such as onsite consumption lounges. The City continues to take a cautious approach with the use of additional general revenues largely generated from cannabis taxes with these funds primarily used for one-time needs such as capital projects rather than ongoing programs or services.
City Overview
17 Fostering a Sense of Community in a Time of Change and Uncertainty Lastly, this past year has continued to be extraordinary and unprecedented as we have endured a global pandemic, uncertainty economic conditions, and political and societal divisions. This period of time has exposed divisions in our country that are deep-seated and will take time and effort to overcome as a society.
I am proud that Grover Beach has remained a strong and vibrant community that has supported each other and modeled civility and respect as exemplified by the actions and conduct of your City Council. It is imperative for all of us who are part of this great city to continue fostering a continued sense of community to build an even stronger Grover Beach and deepen the level of confidence in local democracy, governance, and civic leadership. This will be particularly important given the upcoming transition to district-based elections for City Council beginning this November to retain a focus on citywide priorities while enhancing accessibility to public office.
Conclusion
Grover Beach is a vibrant, resilient, and caring community. The COVID-19 pandemic was a once-in-ageneration crisis that we all experienced and through these difficult times, our community has supported one another while demonstrating the “can do” spirit that exemplifies the city. Grover Beach also does not shy away from bold ideas and uncharted waters but rather embraces opportunities that can lead to a better community and improved quality of life. The revised budget for FY 2022-23 embodies this sense of opportunity and investment to help our community continue to flourish and prosper as a beautiful community on the Central Coast to live, work, and play. I would like to recognize the outstanding work of our City staff in putting the revised FY 2022-23 budget together particularly our Administrative Services Director Deanne Purcell. We will continue to address challenges and pursue opportunities with the City Council’s leadership and City staff’s execution and work with our community to create an even stronger Grover Beach for years to come.
Respectfully submitted,
Matthew Bronson
City Manager
City Overview
18 CITY COUNCIL GOALS
MAJOR CITY GOALS
Economic Development
Develop and implement economic development initiatives that include COVID-related economic recovery strategies, business retention and attraction, effective and timely permit processing, and tourism promotion including marketing, attracting hotels along Grand Avenue, and ensuring compatible beach uses.
Housing and Homelessness
Update City codes and standards to encourage housing construction to meet diverse needs; collaborate with developers and non-profits in efforts to increase overall housing stock with a priority on affordable City Overview
19 housing availability; and partner with regional agencies and organizations to address homelessness and sheltering issues in the city and region.
Public Safety
Champion contemporary public safety services (police, fire, emergency medical services) by providing leadership and adequate resources, including training, to meet service demands and growing challenges in such areas as homelessness, mental health, vagrancy, and social justice.
Street Improvements
Continue improvements to major arterials and local streets, incorporating where feasible related improvements, such as utility upgrades and “complete streets” - medians, sidewalks, bicycle lanes, bulbouts, street trees and other related improvements.
OTHER IMPORTANT GOALS
Building and Facility Improvements
Provide for improvements and enhancements to City buildings, parks, and other facilities through a condition assessment, including disability access needs, followed by a funding and implementation plan to ensure that these public assets meet current and future needs; identify and plan for added facilities where our existing inventory falls short.
City Beautification and Public Art
Enhance the appearance of the City by improving major entryways, ensuring high signage standards, preserving “legacy trees” and partnering with the community to pursue new public art projects, such as murals.
Community Engagement
Continue a strong commitment to transparency and public participation in City government through programs, initiatives, and event to encourage citizen engagement in key community decisions; and formalize our practices by adopting a public participation plan and policy.
Water Resiliency
Partner with communities throughout the South County to achieve sustainable water resources through initiatives such as the Central Coast Blue recycled water project and other opportunities, as well as through water conservation efforts.
City Overview
20 ADDRESS AS RESOURCES PERMIT
Code Compliance
Continue to strengthen the code compliance program and related code sections to be more proactive in inspecting and addressing such issues as short-term rental violations, illegal advertising/business signage, overgrown landscaping, and conflicting right-of-way encroachments; continue monitoring the cannabis industry.
Environmental Sustainability
Integrate environmentally sustainable principles, practices and projects into City operations and new development plans and standards; increase resource conservation and reduce carbon emissions through initiatives such as Central Coast Community Energy and other technology opportunities to address and off-set climate impacts.
Pedestrian, Bicycle and Traffic Safety
Continue efforts to make Grover Beach a more pedestrian and bicycle friendly community by adding and/or enhancing bicycle lanes, sidewalks, streetlights, street and crosswalk striping and enhancements, and other traffic calming and safety measures.
Recreation and Community Programs
Provide viable recreation, youth, childcare, and special event programs designed to meet current and emerging needs, both directly and in partnership with other providers.
City Overview
21 MAJOR CITY GOALS WORK PROGRAMS
ECONOMIC DEVELOPMENT
Goal Statement
Develop and implement economic development initiatives that include COVID-related economic recovery strategies, business retention and attraction, effective and timely permit processing, and tourism promotion including marketing, attracting hotels along Grand Avenue, and ensuring compatible beach uses.
STAFF LEAD: Matthew Bronson, City Manager; Kristin Eriksson, Deputy City Manager; Bruce Buckingham, Community Development Director
TASK DATE
Business Retention and Attraction
1. Work with Chamber to enable businesses to improve their marketing through digital marketing bootcamps in partnership with SLO Partners
2. Work with Chamber to conduct outreach with local businesses on key issues facing Grover Beach businesses including periodic meetings and surveys
3. Continue to collaborate with regional partner agencies to identify economic development strategies to support regional economy
4. Work with Digital West to promote citywide broadband expansion as part of Digital West implementation
Tourism Development
1. Begin oversight and construction management for hotel site at 950 El Camino Real
2. Process building permits for 1598 El Camino Real hotel project upon submittal by developer
3. Continue involvement in Grover Beach Lodge project in conjunction with lead agency State Parks and issue City permits for initial offsite construction upon plan submittal and approval
4. Work with Chamber to enhance tourism marketing efforts to promote Grover Beach as a desirable coastal destination for a variety of beach uses
June 2023
July 2022
July 2022
September 2022
January 2023
January 2023
July 2022
July 2022
City Overview
22 Commercial Cannabis Activities
1. Process additional development applications for commercial cannabis businesses
2. Process onsite consumption area applications upon submittal by retailers pending adoption of ordinance allow use
West Grand Avenue Improvements
1. Process development applications for West Grand Avenue housing and mixed-use projects upon submittal by property owners
2. Pursue streetscape and other infrastructure improvements to improve the appearance and functionality of the commercial corridor
3. Work with Chamber and businesses along West Grand Avenue on outreach and marketing to enhance economic vitality of the corridor
July 2022
July 2022
July 2022
July 2022
July 2022
Key Policy/Operational Issues
• Continuation of economic development services contract with the South County Chambers of Commerce to improve business retention, recruitment, and marketing • Continued focus on commercial cannabis industry and hotel development projects given economic activity and development opportunities along with additional tax revenues • Continue working with Digital West to maximize potential of citywide fiber broadband expansion for attraction of businesses and residents
• Continue City’s involvement in regional economic development strategies to ensure community economic vitality in the future
• Provide greater focus on West Grand Avenue improvements given the level of development interest in housing and mixed-use projects
Financial Resources Required
Economic development contractual services $ 70,000
Total $ 70,000
General Fund - ARPA $ 70,000
Total $ 70,000
FY 2022-23 Cost Summary
FY 2022-23 Funding Sources
City Overview
23 HOUSING AND HOMELESSNESS
Goal Statement
Collaborate with developers and non-profits in efforts to increase housing availability particularly affordable housing units and partner with regional agencies and organizations to address homelessness challenges in the city and region.
STAFF LEAD: Bruce Buckingham, Community Development Director; Matthew Bronson, City Manager
TASK DATE
1. Process development applications for West Grand Avenue housing and mixed-use projects upon submittal by property owners.
2. Oversee the start of the building permit process for the development of affordable housing project on South 13th Street (Cleaver property)
3. Work with 5Cities Homeless Coalition (5CHC), on the development of a homeless housing facility on City-owned property on South 4th Street
4. Continue to work with 5CHC and surrounding cities to increase the supply of supportive and transitional housing and programs to assist the homeless
5. Continue periodic homeless encampment outreach and cleaning activities at affected locations
6. Receive Coastal Commission approval of the Local Coastal Program amendments related to the Land Use Element and Development Code updates
7. Implement Development Code and Land Use Element including development of checklists, website update, staff training and developer outreach
8. Apply for “Pro-Housing Designation” from the State Department of Housing and Development to assist with securing State grant assistance
July 2022
July 2022
July 2022
July 2022
July 2022
October 2022
October 2022
June 2023
Key Policy/Operational Issues
• Housing availability is a significant challenge throughout the region and the City has limitations in responding to this need given staffing and funding, as well as the extent to which local government can address the housing market. Changes in housing will take time given the work involved in private sector housing production along with the development of the People’s Self-Help Housing/HASLO affordable housing project on South 13th Street.
City Overview
24 • Homelessness is one of the most difficult issues facing local government and is an issue that extends beyond the role of cities in addressing it. However, additional funding and City and County focus on homelessness initiatives could lead to tangible results despite difficulty with the complexity and regional nature of this issue.
Financial Resources Required
Homeless Support Services $ 400,000
Total $ 400,000
General Fund - ARPA $ 400,000
Total $ 400,000
FY 2022-23 Cost Summary
FY 2022-23 Funding Sources
City Overview
25 PUBLIC SAFETY
Goal Statement
Champion contemporary public safety services (police, fire, emergency medical services) by providing leadership and adequate resources, including training, to meet service demands and growing challenges in such areas as homelessness, mental health, vagrancy, and social justice.
STAFF LEAD: John Peters, Chief of Police; Stephen Lieberman, Five Cities Fire Chief
TASK DATE
1. Continue exploration of more unified approach between public safety departments, County agencies, and homeless service providers on outreach for homeless individuals with mental health issues
2. Work with Five Cities Fire Authority member agencies on future service delivery and governance structure for fire and emergency medical services to implement beginning July 1, 2023
3. Expand the Police Department Community Services Technician program through vacant position reclassification to enhance use of non-sworn personnel on certain tasks
4. Enhance the City’s emergency management efforts through updating the City’s Emergency Operations Plans, implementing staff and Council training and collaborating with other agencies on emergency preparedness and response
July 2022
July 2022
October 2022
December 2022
Key Policy/Operational Issues
• Importance of working with member communities for long-term planning related to the Five Cities Fire Authority and the future service delivery needs and governance structure. • Need for coordination with other agencies on outreach services to those individuals with mental health issues and homelessness.
• Need to bolster citywide emergency management and preparedness work. • Finding opportunities to expand Police Department services within existing budget allocation.
City Overview
26 Financial Resources Required
STREET IMPROVEMENTS
Goal Statement
Continue improvements to major arterials and local streets, incorporating where feasible related improvements, such as utility upgrades and “complete streets” - medians, sidewalks, bicycle lanes, bulbouts, street trees and other related improvements.
STAFF LEAD: Greg Ray, Public Works Director/City Engineer; Erin Wiggin, Capital Improvement Program Project Manager; Gabriel Munoz-Morris, Senior Engineer
TASK DATE
1. Complete application package to PG&E for the Street Lighting Project (CIP 2003 with a first phase for North Oak Park Boulevard.
2. Complete construction of the sidewalk infill with the cost sharing program with the two Measure K-14 projects (CIP 2295-14 and 2295-15) listed below (CIP 2274).
3. Complete design and begin construction of the West Grand Avenue Streetscape project from 4th to 8th Streets (CIP 2287)
4. Complete design and begin construction of CIP 2295-14 (portions of Trouville, S. 7th St., Ocean View, Nacimiento, Mono, Owens, Margarita and Angello Terrace)
5. Complete design and begin construction of CIP 2295-15 (portions of S. 7th St., S. 10th St., Manhattan Avenue, Seabright Avenue, Charles Street, N. 2nd St. And N. 6th St.)
July 2022
June 2023
January 2023
August 2022
February 2023
Emergency Operations Plans Update and Training $ 50,000 Total $ 50,000
General Fund - NPP $ 50,000
Total $ 50,000
FY 2022-23 Cost Summary
City Overview
27 Key Policy/Operational Issues
• Continuing to achieve accelerated pace of projects within the City’s relatively small footprint of approximately two square miles without significant inconvenience to residents and with limited field staff available to provide project utility support.
• Improved funding availability for improving arterials and major streets given higher General Fund contribution for capital projects and increase in Local Transportation Funds derived from Gas Taxes though additional funding is still needed given the extent of arterials and major streets that need repair.
• Incorporating sidewalk infill, traffic calming, and other safety enhancements desired with street improvement work.
• Need to continue planning for street maintenance work in future Capital Improvement Programs to maintain the City’s streets rehabilitated in recent years.
Financial Resources Required
CIP 2003 (carryover from FY 2021-22) $ 100,000
CIP 2274 50,000
CIP 2287 1,874,000
CIP 2295-14 2,630,000
CIP 2295-15 750,000
Total $ 5,404,000
01 General Fund $ 1,475,000
17 Gas Tax Fund 150,000
18 Local Transportation Fund 100,000
19 Gas Tax Fund (RMRA) 299,000
20 Street Rehab Bond Fund (K-14) 3,300,000
80 Wastewater Fund 40,000
81 Water Fund 40,000
Total $ 5,404,000
FY 2022-23 Cost Summary
FY 2022-23 Funding Sources
City Overview
28 CITY COUNCIL
Jeff
Lee
Mayor
Karen
Bright
Mayor Pro Tem
Anna
Miller
Council
Member
Robert
Robert
Council
Member
Daniel
Rushing
Council
Member
City Overview
29 EXECUTIVE MANAGEMENT
Matthew
Bronson
City Manager
David
Hale
City Attorney
John
Peters
Chief of
Police
Deanne
Purcell
Administrative
Services
Director
Bruce
Buckingham
Community
Development
Director
Kathy
Petker
Parks and
Recreation
Director
Greg
Ray
Public Works
Director/City
Engineer
City Overview
30 PROFILE OF GROVER BEACH
Location
The City of Grover Beach is located in the southern part of San Luis Obispo County on California’s Central Coast. Grover Beach is bordered by Pismo Beach to the north, Arroyo Grande to the east, unincorporated Oceano to the south, and the Pacific Ocean to the west. The city is adjacent to Pismo State Beach and serves as the northern entry point to the Oceano Dunes State Vehicular Recreation Area. The city covers an area of 2.31 square miles and is midway between San Francisco and Los Angeles approximately 90 miles north of Santa Barbara and 150 miles south of Monterey. The city’s coastal location provides a temperate climate with mild and dry summers and wet winters.
The City
The City was founded as the Town of Grover in 1887 and incorporated as Grover City in 1959. The city changed its name to Grover Beach in 1992 through a vote of the people and celebrated its 60th year as an incorporated city in 2019. Grover Beach has a Council-Manager form of government with four Council Members serving at-large for four-year terms and a directly elected Mayor serving two-year terms. The Mayor and City Council serve as the legislative and policy making body of the City. The City Manager, appointed by the Council, serves as chief executive officer and is responsible for the day-to-day administration of City affairs. The City Council also appoints a City Attorney. There are three active Advisory Boards and Commissions that are appointed by the City Council: Planning Commission; Parks, Recreation, and Beautification Commission; and Citizen Oversight Committee for City Revenue Measures.
City Overview
31 Services
The City provides a full range of municipal services. These include police protection, planning, building, water, sewer, street maintenance, and general administrative services. Wastewater treatment is provided to residents by the South San Luis Obispo County Sanitation District, a special district which also includes Arroyo Grande and the Oceano Community Services District. Fire protection services are provided by the Fire Cities Fire Authority, a joint powers authority comprised of Grover Beach, Arroyo Grande, and the Oceano Community Services District. In addition, the City maintains five parks and two community recreation centers.
Community Demographics
Based on 2020 Census data, the city’s population is 12,701 which is a reduction from the population of 13,156 in the 2010 Census. The median household income for Grover Beach residents is $66,408 compared with San Luis Obispo County median of $77,948 and California median of $78,672. 8.8% of residents live below the poverty line compared with 10.6% in San Luis Obispo County and 11.5% in California. The owneroccupied housing unit rate for the City is 50.7%. The median housing value of owner-occupied housing units is $536,300 and median gross rent is $1,545.
Local Economy
Grover Beach is located on the Central Coast midway between the Bay Area and Southern California and has direct access to a major north-south highway, rail lines with freight trains and inter-city Amtrak service, and public transit routes, and is near the San Luis Obispo County Regional Airport. Grover Beach has the only train station in the South County area with daily Amtrak Pacific Surfliner train service north to San Luis Obispo and south to Santa Barbara, Los Angeles, and San Diego along with connecting bus service. The community is comprised of residential housing stock of all types and at a range of costs, commercial retail businesses along West Grand Avenue serving both local residents and tourists, and nearly 90 acres of industrial areas currently comprised of light manufacturing and service businesses. The City is working with private developers to construct three hotels including the beachfront Grover Beach Lodge and partnering with a local Internet provider on a municipal fiber broadband network initially serving industrial and commercial areas. In addition, the City has adopted ordinances allowing commercial cannabis businesses and has entitled approximately 30 retail, manufacturing, testing laboratory, and distribution businesses to date with 14 businesses currently operating and several more expected to be operational in the next fiscal year. Cannabis businesses have added over 200 jobs in the past three years and generate approximately $1.6 million in annual cannabis tax revenue for the City.
FINANCIAL
TRENDS
Financial Trends
34 FINANCIAL TRENDS
SALES TAX REVENUE: LAST TEN YEARS
Sales Tax
Sales tax is now the General Fund’s largest
revenue source at 32% of General Fund revenue.
Sales tax revenue has grown significantly in the
last year due the passing of Measure F-20, 1%
transactions and use tax, approved by voters in
November 2020, adding an additional $2.3 million
in FY 2022-23.
As shown in the chart and table, sales tax
revenue increased in 2021 by 15.9%. Sales tax
revenue has continued to increase with an
average annual increase over the last five years
of 9.3%.
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
EST
Financial Trends
35 PROPERTY TAX ASSESSED VALUATION: LAST TEN YEARS
Property Tax
Property tax has historically been one of the
General Fund’s most stable revenue sources and
comprises over 29% of General Fund revenues.
Property tax revenue is driven by changes in
assessed value as determined by the San Luis
Obispo County Assessor’s Office. As shown in the
chart and table, assessed valuation decreased in
2013 although more modestly compared with
other cities in California. Assessed valuation has
increased since then with an average annual
increase of 5.2% over the past five years. The FY
2022-23 budget assumes that the City’s property
tax revenues will increase by 4%.
Financial Trends
36 CANNABIS TAX REVENUE: LAST FOUR YEARS
Cannabis Tax
The City’s started collecting Cannabis Tax
revenues in 2018 and it is already the City’s third
largest tax revenue generator in the General
Fund at 9% in FY 2022-23. Cannabis revenue
increased significantly from FY 2017-18 through
FY 2020-21 increasing from $16,000 in the first
year of collection to $2.4 million in FY 2020-21. FY
2021-22 is showing a downturn in revenue as
cannabis businesses begin operating in nearby
cities and the industry in general continues to
face significant pressure from an illegal market
that is not taxed or regulated. The FY 2022-23
revenue amount represents a reset of expected
revenues from cannabis businesses.
Financial Trends
37 FRANCHISE FEE REVENUE: LAST TEN YEARS
Franchise Fees
This revenue source is comprised of franchises
paid to the City from utilities and private
companies such as Comcast, AT&T, etc.
Franchise fees are fairly stable and have
averaged a 2.4% annual increase over the past
five years. The new fiber optic cable or an
additional $100,000 in franchise fees that was
added in FY 2021-22 was delayed but expected to
be collected in FY 2022-23.
Financial Trends
38 TRANSIENT OCCUPANCY TAX REVENUE: LAST TEN YEARS
Transient Occupancy Tax
The City’s Transient Occupancy Tax (TOT)
revenues were stable during the recession and
began growing in 2013. Due to the passage of
Measure L-18 in November 2018 along with steady
growth in TOT, revenue for FY 2018-19 increased
by 16.7%. However, due to COVID-19 and the
related impact on the tourism industry, TOT did
not see any big increases in FY 2019-20, but has
seen significant increases in FY’s 2020-21 and
2021-22 as tourism has picked up with the waning
of the COVID-19 pandemic and additional TOT
revenue has picked up for short-term rentals.
Financial Trends
39 GENERAL FUND OPERATING COSTS: LAST TEN YEARS
General Fund Operating Costs
The average annual increase in operating costs
has been 10.2% over the last five years due to
increased revenue capacity for City projects and
services. Next year’s budget includes a General
Fund contribution of $2.3 million in FY 2022-23 to
fund capital projects. This budget follows
passage of the Measure F-20 sales tax, approved
by voters in November 2020, to address
important community needs. These needs
include infrastructure projects, economic
development, and public safety and emergency
services. Measure F-20 sales tax revenues are
estimated to bring in an additional $2.3 million in
FY 2022-23.
Financial Trends
40 GENERAL FUND RESERVES: LAST FIVE YEARS
ACTUAL COMPARED WITH 25% POLICY GOAL
General Fund Reserves
The graph depicts the ending reserves for the General Fund over the past four years and the estimate for the current year along with the amount based on the Council’s 25% current reserve policy goal. Ending reserves have remained higher than the policy level in recent years given the strong economy and prudent fiscal management focused on cost containment. This scope of reserves adheres to Council’s policy goal to ensure adequate reserves for emergencies or unforeseen circumstances or one-time needs. Ending reserves are projected to steadily increase through FY 2022-23 to 39%. The reserve policy goal increased to 25% of operating expenditures as approved by the Council as part of adopting the FY 2020-21 budget.
Financial Trends
41 EMPLOYER PENSION CONTRIBUTION RATES
Pension Cost Increases
A significant cost driver for the City and other cities in the state is pension cost increases. CalPERS has adopted a new amortization policy that shifts from a 30-year to a 20-year amortization period, which means after 20 years the increase in the unfunded liability will be fully paid off, but the increase in normal cost will continue. The chart below shows the ending of the 5-year ramp up in FY 2024-25 which will result in more level payments from year to year.
CALPERS EMPLOYER CONTRIBUTION RATES:
CLASSIC SWORN EMPLOYEES
Financial Trends
42 CALPERS EMPLOYER CONTRIBUTION RATES:
CLASSIC MISCELLANEOUS EMPLOYEES
Financial Trends
43 BUDGET
OVERVIEW
Budget Overview
46 General Fund
$16,388,949
47%
Special Revenue Fund
$830,735
2%
Transfers Out
$4,033,600
12%
Enterprise Funds
$4,375,355
13%
Capital Improvement
Program
$9,150,000
26%
FY 2022-23 REVISED - ALL FUNDS
CITY BUDGET
Overview
The City’s budget is a spending plan that is the legal authority to commit financial resources to provide services within Grover Beach. In FY 2021-22, the City shifted from an annual budget to a biennial budget for FY 2021-22 and FY 2022-23. The revised budget for FY 2022-23 total budget is $34,778,639 and includes $18,699,549 in the General Fund, $5,137,355 in Enterprise Funds, and $1,791,735 in Special Revenue Funds. The budget includes $9,150,000 in the Capital Improvement Program (CIP) consisting of funding of $2,130,000 from the General Fund, $2,800,000 from Enterprise Funds and $4,220,000 from Special Revenue Funds. The City’s General Fund budget is approximately 54% of the total revised budget in FY 2022-23 and provides most of the services commonly associated with City government such as Public Safety, Recreation, Planning, and Public Works. The revised FY 2022-23 General Fund budget includes $1.61 million in American Rescue Plan Act (ARPA) federal stimulus funds to support community needs in recovering from COVID-19.
FY 2022-23 REVISED
TOTAL EXPENDITURES
$34,778,639
Budget Overview
47 Use of Money
and Property
$334,500
1%
Tax Revenues
$14,781,200
43%
Licenses,Fines
$453,700
1%
Other Agencies
$3,122,646
9%
Charges for
Current Services
$6,749,720
19%
Transfers In
$4,033,600
12%
*Use of Reserves
$5,303,273
15%
FY 2022-23 REVISED
TOTAL REVENUE
$34,778,639
*Reserves are used for current year
appropriations, for example,
Measure K-14 bonds issued in prior
years are used to fund current
street projects.
Budget Overview
48 Property Tax
28%
Cannabis Tax
9%
Other
10%
Charges for
Current Services
5%
Transient
Occupancy Tax
4%
Sales Tax
32%
Other Taxes
5%
Licenses &
Permits
2%
Use of Money
and Property
1%
Transfers In
4%
City Manager's
Office
7%
Administrative
Services
3%
Community
Development
Police 6%
32%
Public Works
7%
Parks and
Recreation
3%
Capital
Improvement
Plan
11%
NonDepartmental
30%
Transfers Out
1%
GENERAL FUND REVENUE BY SOURCE
FY 2022-23 REVISED - $18,699,549
GENERAL FUND EXPENDITURES BY DEPARTMENT
FY 2022-23 REVISED - $18,699,549
Budget Overview
49 DEPARTMENT BUDGET COMPARISON
FY 2022-23 REVISED - $34,778,639
SUMMARY BY DEPARTMENT
FY 2020-21
Actuals
FY 2021-22
Estimated
FY 2022-23
Revised Budget
Administrative Services $ 1,138,150 $ 1,283,185 $ 1,380,390 City Manager's Office $ 1,163,553 $ 1,200,168 $ 1,303,754 Community Development $ 1,016,662 $ 1,327,474 $ 1,154,817 Parks and Recreation $ 335,921 $ 516,162 $ 486,287
Police $ 5,522,209 $ 6,296,705 $ 6,051,067
Public Works $ 4,756,688 $ 5,627,973 $ 5,392,647
Non-Departmental $ 5,214,282 $ 5,402,097 $ 5,826,077
Capital Improvement $ 606,428 $ 9,495,346 $ 9,150,000
Transfers $ 1,185,724 $ 4,900,120 $ 4,033,600
TOTAL CITY OPERATING BUDGET $ 20,939,617 $ 36,049,230 $ 34,778,639 Budget Overview
50 CITY REVISED BUDGET BY FUND
SUMMARY BY FUND
FY 2022-23
REVISED BUDGET
Fund # General Fund
01 General Fund $ 18,464,068
71 General Fund - Capital Replacement Fund $ 235,481
TOTAL GENERAL FUND $ 18,699,549
Capital Projects Fund
11 Capital Projects $ 3,045,000
TOTAL CAPITAL PROJECTS FUND $ 3,045,000
Special Revenue Funds:
10 Parks Construction $ 9,000
16 Senior Transportation $ 1,000
17 Gas Tax $ 462,450
18 Local Transportation $ 244,500
19 Road Maintenance and Rehabilitation $ 299,000
20 Street Rehabilitation and Repair $ 3,714,158
35 COPS Grant $ 80,000
43 State Mandated ADA $ 6,000
55 Wastewater Development Impact Fee $ 85,000
56 Parks Facility Development Impact Fee $ 175,000
57 Recreation Development Impact Fee $ 51,000
58 Water Development Impact Fee $ 32,000
82 Water Conservation $ 12,627
TOTAL SPECIAL REVENUE FUNDS $ 5,171,735
Enterprise Funds:
80 Wastewater $ 3,245,166
81 Water $ 4,617,189
TOTAL ENTERPRISE FUNDS $ 7,862,355
TOTAL CITY BUDGET $ 34,778,639
Budget Overview
51 GENERAL
FUND
23%
OTHER
SRF
8% LTF
2%
STREET
REHAB AND
REPAIR FUND
36%
WASTEWATER
FUND
20% WATER FUND
11%
CAPITAL IMPROVEMENT PROJECTS FY 2022-23 REVISED BUDGET
CIP BUDGET
FY 2022-23
REVISED
BUDGET
01 General Fund $ 2,130,000
Other Special Revenue Funds (OTHER SRF) 760,000
18 Local Transportation Fund (LTF) 160,000
20 Street Rehabilitation and Repair Fund 3,300,000
80 Wastewater Fund 1,825,000
81 Water Fund 975,000
TOTAL CIP BUDGET $ 9,150,000
PERCENTAGE OF CIP BUDGET BY FUND – FY 2022-23 REVISED
Budget Overview
52 CITYWIDE SOURCES OF FUNDING
SOURCES OF FUNDING
FY 2022-23
REVISED
BUDGET
% OF
BUDGET
Property Tax $ 5,486,000 16%
Sales Tax $ 6,004,000 17%
Franchise Fees $ 723,000 2%
Transient Occupancy Tax $ 750,000 2%
Cannabis Tax $ 1,632,000 5%
Utility Users Tax $ 186,200 1%
Licenses & Permits $ 400,000 1%
Fines $ 53,700 0%
Use of Money and Property $ 334,500 1%
Other Agencies $ 3,122,646 9%
Charges for Current Services $ 6,749,720 19%
Transfers In $ 4,033,600 12%
Use of Reserves $ 5,303,273 15%
Citywide Sources of Funding $ 34,778,639 100%
Budget Overview
53 CIP PROJECT BUDGET
PROJECTED REVENUE SUMMARY
Fund #
FY 2021-22
& PRIOR
FY 2022-23
REVISED
BUDGET
01 General Fund $ 787,634 $ 2,130,000
17 Gas Tax Fund 50,000 150,000
18 Local Transportation Fund 160,000
19 Gas Tax Fund (RMRA) 299,000
20 Street Rehabilitation and Repair Bond Fund 3,300,000 55 Wastewater Development Impact Fee 85,000 85,000
56 Parks Facility Development Impact Fee 391,000 175,000 57 Recreation Facility Development Impact Fee - 51,000
80 Wastewater Fund 1,305,000 1,825,000
81 Water Fund 1,822,761 975,000
Total: $ 4,441,395 $ 9,150,000
Budget Overview
54 FY 2022-23 REVISED INTERFUND TRANSFERS IN
FUNDS OPERATING
COST
ALLOCATION
CAPITAL
TRANSFERS TOTAL
General Fund
General Fund $ 56,000 $ 515,000 $ - $ 571,000
General Fund - Capital Replacement Fund $ 220,600 $ 220,600 TOTAL GENERAL FUND $ 276,600 $ 515,000 $ - $ 791,600
Capital Projects Funds
Capital Projects Fund 3,045,000 $ 3,045,000
Underground Utilities $ -
TOTAL CAPITAL PROJECTS FUNDS $ - $ - $ 3,045,000 $ 3,045,000 Special Revenue Funds
Parks Construction $ -
Senior Transportation $ -
Gas Tax $ -
Local Transportation $ -
Road Maintenance and Rehabilitation $ -
Street Rehabilitation and Repair $ 80,000 $ 80,000
CDBG Non-Entitlement $ -
HOME $ -
COPS Grant $ -
Special Event $ -
State Mandated ADA $ -
Transportation Development Impact Fee $ -
Law Enforcement Development Impact Fee $ -
Administrative Development Impact Fee $ -
Fire Protection Development Impact Fee $ -
Stormwater Development Impact Fee $ -
Wastewater Development Impact Fee $ -
Parks Facility Development Impact Fee $ -
Recreation Development Impact Fee $ -
Water Development Impact Fee $ -
Water Conservation $ -
Trust and Agency Fund $ -
TOTAL SPECIAL REVENUE FUNDS $ - $ - $ 80,000 $ 80,000
Enterprise Funds:
Wastewater 85,000 $ 85,000
Water $ 32,000 $ 32,000
TOTAL ENTERPRISE FUNDS $ 32,000 $ - $ 85,000 $ 117,000
TOTAL INTERFUND TRANSFERS IN $ 308,600 $ 515,000 $ 3,210,000 $ 4,033,600
INTERFUND TRANSFERS
FISCAL YEAR 2022-23 REVISED
TRANSFERS IN
Budget Overview
55 FY 2022-23 REVISED INTERFUND TRANSFERS OUT
FUNDS OPERATING
COST
ALLOCATION
CAPITAL
TRANSFERS TOTAL
General Fund
General Fund $ 180,600 $ 2,130,000 $ 2,310,600
General Fund - Capital Replacement Fund $ -
TOTAL GENERAL FUND $ 180,600 $ - $ 2,130,000 $ 2,310,600 Capital Projects Funds
Capital Projects Fund $ -
Underground Utilities $ -
TOTAL CAPITAL PROJECTS FUNDS $ - $ - $ - $ -
Special Revenue Funds
Parks Construction $ -
Senior Transportation $ -
Gas Tax $ 3,000 $ 150,000 $ 153,000
Local Transportation $ 160,000 $ 160,000
Road Maintenance and Rehabilitation $ 299,000 $ 299,000 Street Rehabilitation and Repair $ -
CDBG Non-Entitlement $ -
HOME $ -
COPS Grant $ -
Special Event $ -
State Mandated ADA $ 6,000 $ 6,000
Transportation Development Impact Fee $ -
Law Enforcement Development Impact Fee $ -
Administrative Development Impact Fee $ -
Fire Protection Development Impact Fee $ -
Stormwater Development Impact Fee $ -
Wastewater Development Impact Fee $ 85,000 $ 85,000
Parks Facility Development Impact Fee $ 175,000 $ 175,000 Recreation Development Impact Fee $ 51,000 $ 51,000
Water Development Impact Fee $ 32,000 $ 32,000
Water Conservation $ -
TOTAL SPECIAL REVENUE FUNDS $ 41,000 $ - $ 920,000 $ 961,000 Enterprise Funds:
Wastewater $ 56,000 $ 165,000 $ 65,000 $ 286,000
Water $ 31,000 $ 350,000 $ 95,000 $ 476,000
TOTAL ENTERPRISE FUNDS $ 87,000 $ 515,000 $ 160,000 $ 762,000 TOTAL INTERFUND TRANSFERS OUT $ 308,600 $ 515,000 $ 3,210,000 $ 4,033,600
INTERFUND TRANSFERS
FISCAL YEAR 2022-23 REVISED
TRANSFERS OUT
Budget Overview
56 FULL TIME EQUIVALENTS PERSONNEL
DEPARTMENT 2019-20 2020-21 2021-22 2022-23
City Council 5.00 5.00 5.00 5.00
City Manager's Office 4.00 4.00 5.00 5.00
Administrative Services 8.00 8.00 9.00 9.00
Community Development 5.25 5.25 5.25 5.25
Public Works 16.38 16.38 16.38 16.38
Parks and Recreation 2.60 2.60 2.60 2.60
Police 33.60 33.60 36.60 36.60
Total 74.83 74.83 79.83 79.83
FISCAL YEAR
Budget Overview
57 GENERAL FUND OPERATING INCREASES ABOVE $25,000
APPROVED IN TWO-YEAR FY 2021-23 BUDGET
Department/Description
City Manager's Office GF Expense
1 FTE Deputy City Manager $ 123,000 Ongoing
Communications Contract 100,000 Ongoing
Total $ 223,500
Administrative Services
1 FTE Acounting Technician II (50% GF/50% Enterprise) $ 40,800 Ongoing 1 FTE Assistant IT (50% GF/50% Enterprise) 40,800 Ongoing Total $ 81,600
Community Development
Noise Element Update 60,000 One-Time
Total $ 60,000
Police
1 FTE Community Services Technician I $ 76,500 Ongoing
2 FTEs Police Officers 325,000 Ongoing
Police Drone * 35,000 One-Time
Replace Command Post Vehicle (five year lease) 71,600 Ongoing Total $ 508,100
Grand Total $ 873,200
FY 2022-23 Revised
*NEW EXPENDITURES FOR FY 2022-23.
Budget Overview
58 This page intentionally left blank
DEPARTMENT
BUDGETS
Department Budgets
62 ADMINISTRATIVE SERVICES DEPARTMENT
MISSION STATEMENT
Provide clear, accurate and timely financial information to City officials and financial management services which enhance the financial health of the City and improve the economic well-being of the community now and in the future.
SERVICES AND STRUCTURE
Operationally, the Administrative Services Department provides the following services:
Accounting and Financial Reporting
Performing the accounting for all of the City's financial transactions and coordinating the assisting in the preparation of the annual Audit and Comprehensive Annual Financial Report. The department also prepares State of California and County of San Luis Obispo required annual reports.
Budget
Coordinating the annual operating and capital budget process, including the development of the fee schedule, assisting departments with reports and analysis to ensure expenditures are maintained within budgeted appropriations.
Treasury and Revenue Management
Managing the City's cash and investment to ensure requirements are met and return on invested funds is aligned with the City's investment policy. Administering the Business Tax Certificate and Cannabis Tax programs and monitoring and enforcing collections of other revenue sources.
Accounts Payable
Administering the Accounts Payable process and ensure vendors are paid timely and accurately. Filing all required regulatory and tax-related documentation in a timely manner.
Payroll
Process bi-weekly payroll for all City's employees, reporting and paying tax obligations, and completing all regulatory reporting requirements.
Department Budgets
63 Information Technology
Work collaboratively with all City departments to deliver the highest quality IT services, infrastructure, and technology consulting possible. Manage the operation, maintenance and support of City technology infrastructure and technology assets.
Utility Billing
Provides customer account services to over 4,800 accounts for water, wastewater and stormwater services provided by the City. Utility bills are mailed every two months to all customers of the city, with one half of the city billed each month.
Debt Service
Manage the City's debt portfolio to ensure adequate funds are available to make principal, interest and other debt-related payments in a timely manner, as well as ensuring all continuing disclosure requirements.
Risk Management
Identify, evaluate, control and reduce risks inherent to City operations and services.
FY 2021-22 HIGHLIGHTS
• Prepared FY 2020-21 Annual Comprehensive Financial Report with no findings and an unqualified opinion from the independent auditors
• Completed application to Clean Water State Revolving Fund for Central Coast Blue Project • Applied to the California Water Arrearage Program and received $53,000 to assist Water customers impacted by the pandemic
• Completed cross-training of staff across programs
• Set up an investment account to diversify the City’s investment portfolio and ensure invested funds are aligned with City’s investment policy
• Prepared updated five-year General Fund Financial Forecast • Transitioned City organization to a biennial (two-year) budget • Hired an Information Technology Assistant to provide needed technology and internal support for financial services
• Received, tracked and administered the $3.2 million American Rescue Plan Act funds to support community needs
• Completed $10 million bond issue for Measure K-14 Street Rehab and Repair Projects • Implemented network security monitoring to provide network security alerts and notifications of malicious activity
• Implemented various IT projects including replacing back-up storage and core firewall to stay up-todate with current technology Department Budgets
64 • Established a private network link to City of Pismo Beach during the Police Dispatch Consolidation Project
• Attended California Society of Municipal Finance Officers conference and training FY 2022-23 KEY DEPARTMENT INITIATIVES
• Assist with process to update citywide policies and procedures, including an updated Purchasing Policy
• Assist with training for staff on updated policies
• Assist Community Development Department with development impact fee study and cost allocation plan
• Continue to track and administer the $3.2 million American Rescue Plan Act funds • Stay up-to-date with current technology through training and education of IT staff to deliver the highest quality IT services, infrastructure, and technology consulting possible • Continue to provide staff education and training for City technology systems and any other areas of needed continuing education
• Begin planning for replacement of the City’s financial system and citywide development and implementation of new Enterprise Resource Planning system • Attend conferences and training for payroll through CalPERS • Attend conferences and training through financial organizations, such as Government Finance Offers Association and California Society of Municipal Finance Officers
Department Budgets
65 ADMINISTRATIVE SERVICES DEPARTMENT
FINANCIALS
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
EXPENDITURES BY CATEGORY
Salaries and Benefits $ 858,560 $ 794,734 $ 933,600 $ 926,978 $ 1,002,840 Supplies and Services 248,930 337,431 364,600 331,207 367,550 Minor Capital 5,985 25,000 25,000 10,000
TOTAL EXPENDITURES $ 1,107,490 $ 1,138,150 $ 1,323,200 $ 1,283,185 $ 1,380,390
EXPENDITURES BY PROGRAM
Accounting (131) $ 300,607 $ 260,914 $ 312,158 $ 309,169 $ 328,539 Utility Billing (132) 646,307 669,241 702,122 690,642 757,841 Information Technology (134) 160,576 207,995 308,920 283,374 294,010 TOTAL EXPENDITURES BY PROGRAM $ 1,107,490 $ 1,138,150 $ 1,323,200 $ 1,283,185 $ 1,380,390
FUNDING SOURCES
General Fund $ 461,184 $ 468,909 $ 616,578 $ 588,043 $ 618,049 Wastewater Fund 323,031 324,699 350,912 348,286 377,293 Water Fund 323,275 344,542 351,210 342,356 380,548
Local Transportation Fund 4,500 4,500 4,500
TOTAL FUNDING SOURCES $ 1,107,490 $ 1,138,150 $ 1,323,200 $ 1,283,185 $ 1,380,390 FULL TIME EQUIVALENT (FTE) PERSONNEL FY 2021-22 FY 2022-23 Administrative Services Director 1.00 1.00
Finance Manager 1.00 1.00
Accounting Specialist 1.00 1.00
Accounting Technician II 3.00 3.00
Administrative Assistant I 1.00 1.00
IT Specialist 1.00 1.00
Assistant IT Specialist 1.00 1.00
TOTAL POSITIONS 9.00 9.00
FY 2021-22
Department Budgets
66 CITY MANAGER’S OFFICE
MISSION STATEMENT
The City Manager's Office provides leadership, support, and coordination for City departments; provides policy recommendations to the City Council and implements Council policies and priorities; represents City interests in local and regional issues; and oversees key program areas of citywide nature.
SERVICES AND STRUCTURE
The City Manager's Office consists of the following programs:
City Management
Provide citywide leadership and coordination to the City organization; provide policy development support for the City Council; implement economic development initiatives; and represent the City's interests in local and regional issues.
City Clerk
Ensure transparency of City government to the public in an ethical, professional and impartial manner regarding legislative and advisory body proceedings; maintain a complete and accurate record of City Council proceedings; preserve official legislative records; manage municipal elections; serve as compliance officer for state and local statutes; and process general liability claims.
Human Resources
Develop, implement, and support programs and processes that add value to the City and its employees; ensure organizational compliance with employment laws and regulations; coordinate employee training and development; and develop policies and procedures to ensure a safe and welcome workplace.
Department Budgets
67 FY 2021-22 HIGHLIGHTS
• Oversaw citywide implementation of FY 2021-23 Council Goals • Coordinated economic development and business assistance services in partnership with the Chamber to support economic vitality in the city
• Provided staff leadership for continued implementation of commercial cannabis ordinances and identification of potential policy changes such as onsite consumption lounges and tax rates • Coordinated organizational response to homelessness issues including encampment cleaning and purchase of property for use as homeless housing facility • Completed a cost-sharing agreement with the cities of Arroyo Grande and Pismo Beach for the Central Coast Blue recycled groundwater project
• Enhanced citywide communication and engagement efforts with assistance of outside communications firm
• Worked with survey research firm to carry out biennial community priorities survey • Coordinated Council districting process to develop and approve district maps beginning with the November 2022 election
• Provided citywide leadership in enhancing organizational performance through improving systems, processes, structures, and tools
• Improved citywide records retention processes and developed updated records retention schedule • Coordinated recruitment, selection, and orientation for new Commissioners as needed • Developed and implemented Neogov Perform Module to improve the performance evaluation process
• Promoted employee training and development and implement citywide training plan • Conducted organizational structure and staffing assessments where needed and developed recommendations for City Council approval
• Worked with the Administrative Services Department to update citywide policies and procedures • Appointed new Deputy City Manager following open recruitment process for this new position FY 2022-23 KEY DEPARTMENT INITIATIVES
• Oversee citywide implementation of FY 2022-23 Council Goals and development of updated Goals for FY 2023-25
• Coordinate economic development and business assistance services in partnership with the Chamber to support economic vitality in the city
Department Budgets
68 • Provide staff leadership for continued implementation of commercial cannabis ordinances and identification of policy changes
• Coordinate organizational response to homelessness issues such as development of homeless housing facilities
• Enhance citywide communication and engagement efforts with assistance of outside communications firm
• Provide citywide leadership in enhancing organizational performance through improving systems, processes, structures, and tools
• Coordinate November 2022 municipal election and implementation of new Council districts • Provide support for new Council Members as needed following November 2022 election • Coordinate recruitment, selection, and orientation for new Commissioners as needed • Promote employee training and development and implement citywide training plan • Implement citywide telecommuting policy to enable flexible schedules while maintaining productivity
• Conduct organizational structure and staffing assessments where needed and develop recommendations for City Council approval
Department Budgets
69 CITY MANAGER’S OFFICE
FINANCIALS
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
EXPENDITURES BY CATEGORY
Salaries and Benefits $ 591,569 $ 790,480 $ 865,846 $ 794,641 $ 850,320 Supplies and Services 327,491 347,453 520,408 379,908 427,815 Minor Capital 44,557
Debt Service 25,620 25,620 25,619 25,619 25,619
TOTAL EXPENDITURES $ 989,237 $ 1,163,553 $ 1,411,873 $ 1,200,168 $ 1,303,754
EXPENDITURES BY PROGRAM
Legislative (121) $ 268,245 $ 246,361 $ 268,677 $ 278,134 $ 300,946 City Management (122) 299,773 368,443 545,629 441,605 527,373 Human Resources (123) 139,774 165,656 189,977 185,917 201,685 Cannabis Regulatory (124) 281,445 383,092 407,590 294,512 273,750 TOTAL EXPENDITURES BY PROGRAM $ 989,237 $ 1,163,553 $ 1,411,873 $ 1,200,168 $ 1,303,754
FUNDING SOURCES
General Fund $ 989,237 $ 1,163,553 $ 1,404,373 $ 1,200,168 $ 1,303,754 Administrative DIF 7,500
TOTAL FUNDING SOURCES $ 989,237 $ 1,163,553 $ 1,411,873 $ 1,200,168 $ 1,303,754 FULL TIME EQUIVALENT (FTE) PERSONNEL FY 2021-22 FY 2022-23 Mayor & Council Members 5.00 5.00
City Manager 1.00 1.00
Deputy City Manager 1.00 1.00
City Clerk/Executive Assistant 1.00 1.00
Management Analyst 1.00 1.00
Deputy City Clerk/Administrative Analyst 1.00 1.00
TOTAL POSITIONS 10.00 10.00
FY 2021-22
Department Budgets
70 COMMUNITY DEVELOPMENT
MISSION STATEMENT
Continue to maintain a high level of customer service with responsible and accountable services for residents of the community.
SERVICES AND STRUCTURE
The Community Development Department has broad responsibilities included long-range planning, review of applications for new development, and maintenance of neighborhoods. The department has four divisions to carry out the department's work: Building, Code Compliance, Housing and Planning. These divisions are supported by sharing departmental administrative functions with the Public Works Department. The department provides staff support and services to the Planning Commission.
Building Division
The Building Division provides plan review and inspection of building and structures to ensure a safe community. The division regulates local and state laws related to building construction, maintenance, use, repair and habitation. This includes the enforcement of the established building codes and standards.
The division provides plan review and construction inspection services through a contract with a building services consultant.
Code Compliance
Enforces the City's municipal codes related to property maintenance, zoning, and building code violations to promote, preserve, and maintain an attractive community.
Housing
This division manages grants from federal Community Development Block Grant (CDBG) and HOME Investment Partnership Program that currently provide programs for first time homebuyer assistance, owner occupied rehabilitation loans and other programs that benefit low-income households. It also monitors the existing affordable housing inventory. Staff is augmented by using consultants to implement the grant programs.
Department Budgets
71 Planning
The Planning Division plans for the physical, social, and economic development of the City and ensures compliance with the California Environmental Quality Act (CEQA) for both public and private projects.
Together with the Building Division, the Planning Division reviews private development projects to assure consistency with the General Plan, Development Code, other policy documents, and government codes.
The division also oversees updates to the Development Code and other policy documents for the physical and economic development of the city.
FY 2021-22 HIGHLIGHTS
• Completed a Land Use Element and Development Code update to implement Housing Element programs
• Completed implementation of the sign ordinance update • Completed update to the Safety Element
• Completed Code updates to improve implementation of the code compliance program • Completed development of Accessory Dwelling Unit pre-approved building plans • Expedited permit processing for significant economic development projects including commercial cannabis and hotel projects
FY 2022-23 KEY DEPARTMENT INITIATIVES
• Implement Land Use Element and Development Code updates including development of checklists, website update, staff training, and developer outreach • Apply for “Pro-Housing Designation” from State Department of Housing and Community Development
• Oversee the start of the building permit process for the affordable housing project on South 13th Street (Cleaver property)
• Work with 5 Cities Homeless Coalition on the development of a homeless housing facility on Cityowned property on South 4th Street • Initiate and complete update to the Circulation Element to comply with SB 743 • Initiate update to the Noise Element
• Update the subdivision ordinance
Department Budgets
72 COMMUNITY DEVELOPMENT
FINANCIALS
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
EXPENDITURES BY CATEGORY
Salaries and Benefits $ 667,945 $ 712,659 $ 739,376 $ 728,049 $ 732,017 Supplies and Services 638,143 304,003 677,300 599,425 422,800 TOTAL EXPENDITURES $ 1,306,088 $ 1,016,662 $ 1,416,676 $ 1,327,474 $ 1,154,817
EXPENDITURES BY PROGRAM
Planning (141) $ 572,510 $ 547,071 $ 1,020,600 $ 948,850 $ 773,301 CDBG (142) 395,093 159,662 32,635
Building (144) 255,971 223,671 296,990 275,969 289,575
Code (145) 82,514 86,258 99,086 70,020 91,941
TOTAL EXPENDITURES BY PROGRAM $ 1,306,088 $ 1,016,662 $ 1,416,676 $ 1,327,474 $ 1,154,817
FUNDING SOURCES
General Fund $ 910,995 $ 857,000 $ 1,416,676 $ 1,327,474 $ 1,154,817 Non-Entitlement CDBG Fund 395,093 159,662
TOTAL FUNDING SOURCES $ 1,306,088 $ 1,016,662 $ 1,416,676 $ 1,327,474 $ 1,154,817 FULL TIME EQUIVALENT (FTE) PERSONNEL FY 2021-22 FY 2022-23 Community Development Director 1.00 1.00
Senior Planner 1.00 1.00
Associate Planner 1.00 1.00
Assistant Planner 1.00 1.00
Code Compliance Officer 1.00 1.00
Administrative Assistant II 0.25 0.25
TOTAL POSITIONS 5.25 5.25
FY 2021-22
Department Budgets
73 PARKS AND RECREATION
MISSION STATEMENT
The Grover Beach Parks and Recreation Department is committed to providing or facilitating quality recreational services, including programs, classes, special events, and facilities to all members of the community in a courteous and efficient manner.
SERVICES AND STRUCTURE
Operationally, the Parks and Recreation Department provides the following services:
Recreation Administration Services
Coordinates the department’s administrative services that support the operations of areas such as support to the Parks, Recreation, and Beautification Commission, park improvement planning, customer service, park and facilities reservations, marketing and budget.
Recreation/Community Center Facilities Services
Facilitate reservations in an efficient manner with utmost respect with the public for use of community centers and parks. Provides recommendations for park and facility improvements.
Recreation and Community Services
Provides programs of recreational, instructional and special event activities for the public utilizing community centers and parks.
Department Budgets
74 FY 2021-22 HIGHLIGHTS
• Worked closely with the Parks, Recreation and Beautification Commission to develop trending recreation programs and the benefits of public parks
• Worked with community partners including regional, private and nonprofit entities to enhance and develop new programs
• Continued the City’s tree planting initiative to plant more trees throughout the City public spaces FY 2022-23 KEY DEPARTMENT INITIATIVES
• Build on existing relationships and partnerships and volunteers to develop trending recreation programs, park improvements and the benefits of public parks • Continue investing in park infrastructure
• Promote the benefits of recreation programs and public parks in our community while providing innovative recreation programs, facilities, playgrounds, classes and park amenities • Work with community partners including regional, private and nonprofit entities to enhance and develop new programs
Department Budgets
75 PARKS AND RECREATION
FINANCIALS
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
EXPENDITURES BY CATEGORY
Salaries and Benefits $ 273,846 $ 247,058 $ 272,447 $ 292,512 $ 288,287 Supplies and Services 146,804 88,863 180,150 223,650 198,000 TOTAL EXPENDITURES $ 420,650 $ 335,921 $ 452,597 $ 516,162 $ 486,287
EXPENDITURES BY PROGRAM
Recreation (171) $ 190,207 $ 127,759 $ 213,937 $ 195,179 $ 215,244 Parks Facilities (172) 78,809 78,562 86,893 85,079 85,348 Community Services (173) 151,634 129,600 151,767 235,904 185,695 TOTAL EXPENDITURES BY PROGRAM $ 420,650 $ 335,921 $ 452,597 $ 516,162 $ 486,287
FUNDING SOURCES
General Fund $ 412,190 $ 327,461 $ 428,597 $ 507,662 $ 477,287 Parks Construction Fund 8,460 8,460 9,000 8,500 9,000
Parks Facilities DIF 7,500
Recreation Facilities DIF 7,500
TOTAL FUNDING SOURCES $ 420,650 $ 335,921 $ 452,597 $ 516,162 $ 486,287 FULL TIME EQUIVALENT (FTE) PERSONNEL FY 2021-22 FY 2022-23 Parks and Recreation Director 1.00 1.00
Recreation Coordinator 1.00 1.00
Administrative Assistant 0.60 0.60
TOTAL POSITIONS 2.60 2.60
FY 2021-22
Department Budgets
76 POLICE
MISSION STATEMENT
At the Grover Beach Police Department, we serve to contribute to a wholesome community environment in which individuals may work, play, prosper, raise families, and otherwise pursue their legitimate goals without fear of criminal or civil disorder.
VISION STATEMENT
We, as members of the Grover Beach Police Department, are dedicated to providing the best public safety service which reflects our community's superior quality of life. We are focused on cooperative efforts involving the individual citizen, their neighborhood, and the Department members. This is a reflection of our community's endeavor to sustain a sense of safety and security.
VALUES STATEMENT
As we focus on our vision and pursue our mission, we pledge the following values as of utmost importance for public service while not excluding other principles.
Service
To provide each individual of Grover Beach with responsive and humane law enforcement which promotes security, peace of mind, and tranquility in our Community.
Ethics
We occupy a position of public trust and base our decisions upon moral as well as practical concerns while always accepting responsibility for our actions.
Respect
For the uniqueness of each individual, holding sacred the principal of human dignity; this being a truth for each citizen of the community and each member of the Department. By nurturing a sense of family within the Department, recognizing our people are our greatest and most important asset. For diverse cultural values while fostering open communication necessary to share ideas.
Department Budgets
77 Vision
That the community maintains its satisfying quality of life including a sense of being secure while enjoying the amenities of Grover Beach, however, always anticipating the changing needs of the City and Successfully meeting those needs.
Integrity
Being the benchmark of an ethical individual and Department, in thought and deed, we adhere to sincerity and honesty, while avoiding deception, expediency, artificiality, or shallowness which encompasses the courage to perform our duties.
Courtesy
To all we come in contact within both the spoken and unspoken word, realizing conflict resolution begins with cooperation and mutual understanding.
Experience
Experience is the journey in search of excellence through training, developing the confidence to innovate, explore non-traditional methods of community service and law enforcement; and efficiently manage public resources anchored in the philosophy of community oriented policing and problem solving.
Department Motto
"Committed to Our Community"
The Grover Beach Police Department is a 24/7 comprehensive community policing department divided into two service units; Field Operations and Support Services.
Each 12-hour patrol shift is staffed with a minimum of two officers with most shifts having between three and five officers on duty at one time. Shift staffing is based on the day of the week, the time of the day and the call volume history. In 2021, Patrol completed 22,985 calls for service taking over 1,900 reports from community members.
The Support Services unit is managed by one (1) Police Commander who oversees the Detective Bureau, Records Bureau and Administration tasks. The Commander supervises 8 personnel, consisting of one (1) Detective Sergeant, two (2) Detectives, two (2) Communications Technicians, two (2) Records/Property Technicians and one (1) Police Services Analyst.
Department Budgets
78 The Grover Beach Police Department Detective Bureau consists of one full-time Detective Sergeant, two full-time Detectives and one Police Services Analyst that investigate crimes ranging from petty thefts to homicides. For 2021, the Detective Bureau investigated 205 cases. The Detective Bureau has one fulltime Detective assigned solely to the Cannabis Regulatory Program for the city.
The Records Bureau is staffed by two Full-Time Records/Property Technicians who handled over 1,900 report filings for 2021. The Records Bureau is responsible for reporting all crime statistics to various State and Federal law enforcement agencies, filing police reports with the District Attorney for prosecution and processing front counter requests for assistance from our community members.
The Grover Beach Communications Center has consolidated services with the Pismo Beach Police Department Communications Center. This consolidation combines the dispatching services for both cities into one facility located in Pismo Beach. The consolidation of these services will provide faster communication and safer community responses for police officers in the field. In 2021, the Communications Center handled 23,000 calls for service and Computer Aided Dispatch (CAD) entries.
FY 2021-22 HIGHLIGHTS
In line with the City Council's goals, the Police Department will champion contemporary public safety services (police, fire, emergency medical services) by providing leadership and adequate resources, including training, to meet service demands and growing challenges in such areas as homelessness, mental health, vagrancy, and social justice.
• Successfully transitioned three retiring employees and seven new employees • Implemented a Community Services Technician position that increased neighborhood responses to minor calls for service ad code compliance matters
• Responded to 23,000 calls for service, a 6% increase over 2020 • Reduced Part 1 Crimes (Serious/Violent) by 26% over 2020 and Reduced Part 2 Crimes (Non-Violent) by 203% over 2020
• Reduced Traffic Collision by 18% over 2020
• Continued safety protocols to protect staff and community members during the COVID-19 pandemic • Worked with other City staff and cannabis industry representatives to continue safe operations of the commercial cannabis industry in the city
• Coordinated homeless outreach and assistance with multiple non-profit and governmental agencies to reduce the vagrancy behavior in the city
Department Budgets
79 • Engaged the community on the Police Department social media platforms that consist of Facebook, Instagram, Twitter Nextdoor and Ring Neighbors allowing the department to communicate with over 12,000 followers
• Carried out a Tobacco Control grant program to deter tobacco use and sales to minors FY 2022-23 KEY DEPARTMENT INITIATIVES
• Update the City’s Emergency Operations Plans and implement staff training on the revised plans • Transition to a consolidated Computer Aided Dispatch (CAD) and Records Management Software (RMS) program with the Pismo Beach Police Department to enhance efficiency between both police departments
• Increase staffing in the Community Services Technician program in the Police Department to offer expanded services to the Community
• Ensure officers receive updated training in Crisis Intervention, De-Escalation, Implicit Bias, and Principled Policing concepts
Department Budgets
80 POLICE
FINANCIALS
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
EXPENDITURES BY CATEGORY
Salaries and Benefits $ 3,738,183 $ 4,577,141 $ 4,335,571 $ 4,288,274 $ 4,576,136 Supplies and Services 687,872 622,133 1,235,650 1,159,301 1,274,950 Minor Capital 59,364 215,743 486,000 704,149 55,000
Debt Service 108,004 107,192 144,981 144,981 144,981
TOTAL EXPENDITURES $ 4,593,423 $ 5,522,209 $ 6,202,202 $ 6,296,705 $ 6,051,067
EXPENDITURES BY PROGRAM
Support Services (191) $ 504,958 $ 500,132 $ 499,151 $ 591,081 $ 546,746 Operations (192) 2,784,896 3,813,216 3,972,961 3,776,050 3,896,271 Investigations (193) 323,545 274,921 388,730 543,805 393,210 Communications & Records (194) 980,024 933,940 1,341,360 1,385,769 1,214,840 TOTAL EXPENDITURES BY PROGRAM $ 4,593,423 $ 5,522,209 $ 6,202,202 $ 6,296,705 $ 6,051,067
FUNDING SOURCES
General Fund $ 4,391,919 $ 5,186,711 $ 5,639,721 $ 5,728,267 $ 5,826,086 Equipment Replacement Fund 73,381 73,381 474,981 474,981 144,981 COPS Grant Fund 128,123 262,118 80,000 93,457 80,000
Police DIF 7,500
TOTAL FUNDING SOURCES $ 4,593,423 $ 5,522,209 $ 6,202,202 $ 6,296,705 $ 6,051,067 FULL TIME EQUIVALENT (FTE) PERSONNEL FY 2021-22 FY 2022-23 Police Chief 1.00 1.00
Commander 2.00 2.00
Sergeant 5.00 5.00
Senior Police Officer 4.00 4.00
Police Officer 10.00 10.00
Community Services Technician I 1.00 1.00
Communications Supervisor 1.00 1.00
Lead Comm. & Records Technician 1.00 1.00
Communications & Records Technician 5.00 5.00
Records/Property Technician 2.00 2.00
Administrative Secretary 1.00 1.00
Detective 3.00 3.00
Reserve Level 1 0.60 0.60
TOTAL POSITIONS 36.60 36.60
FY 2021-22
Department Budgets
81 PUBLIC WORKS
MISSION STATEMENT
To provide reliable, cost-effective and responsive water, wastewater and storm water services; to maintain and improve city facilities, streets, parks, vehicles and equipment in order to assure their beneficial use for the community; and to provide development review services with a goal to implement City Municipal and Development Codes in a manner that encourages investment in the community while assuring adherence to adopted standards.
OVERVIEW
The Public Works Department is separated into two divisions: Maintenance and Operations, and Engineering Services. Maintenance and Operations oversees the water, wastewater and stormwater systems as well as all public infrastructure and facilities. Engineering services provides review of development applications, review and approval of all capital improvements, management of regional resources and regulatory compliance.
SERVICES AND STRUCTURE
The two divisions are responsible for various programs. The Maintenance and Operations Division operates, maintains, constructs and improves the City's streets, water, sanitary sewer and storm water systems, facilities, parks, and City vehicles and equipment. The Engineering Services Division provides for regulatory compliance, traffic engineering, design and construction management services to maintain and improve the City's sewer and storm drain systems, streets, parks and facilities as well as development review services for private developments. This division also provides coordination with regulatory agencies and management of local and regional resources.
Maintenance Operations
The Maintenance and Operations Division is responsible for the water distribution and treatment system, the wastewater collection system, the stormwater collection system and maintenance and repairs to all City infrastructure which includes streets, sidewalks, bike paths, signs and markings, parks, playgrounds, street landscaping, street trees, street sweeping contract services and contract traffic signal and street light maintenance services. The Division is also responsible for maintenance of all City vehicles and equipment.
Department Budgets
82 Engineering Services
The Engineering Services Division includes four functions: Engineering Design, Development Review, Resource management and Regulatory Compliance.
1. Engineering Design provides design and construction management services for capital improvement projects to improve the City's infrastructure including parks and facilities, streets, water, sewer and storm drain systems.
2. Development Review provides for engineering review and inspection of all privately funded public improvements within the City's right-of-way as well as regulatory compliance for private grading and drainage.
3. Resource Management involves participation in and coordination with regional resource management groups and agencies for resources such as surface water, groundwater and reclaimed wastewater.
4. Regulatory Compliance implements programs to meet regulatory requirements for wastewater collection and pretreatment, water quality, and air quality and solid waste collection and recycling.
FY 2021-22 HIGHLIGHTS
• Purchased and upgraded equipment for operations and maintenance • Initiated the Corporate Yard Master Plan process
• Increased focus on planting trees in parks and on major corridors • Continued to improve the condition of street signs and striping with a focus on bike lanes • Improved water system operation by installing additional valves and replacing water meters • Completed Mentone Basin Park parking and decomposed granite pathway construction on Trouville Avenue
• Completed the 16th Street Park Project
• Constructed Police Department vehicle storage project • Implemented changes to sidewalk infill cost-sharing program • Completed South Oak Park pavement rehabilitation (CIP 2284) • Completed construction of CIP 2295-10 Street Rehabilitation project (Manhattan Avenue, Seabright Avenue, Trouville Avenue, 10th Street, South 11th Street, Rincon Court, Malibu Court, Jalama Court and Stinson Court)
• Completed construction of CIP 2295-13 (Manhattan Avenue, Seabright Avenue, South 10th Street, South 12th Street)
• Completed agency permitting and began design of Central Coast Blue • Completed CIP 4004 Water Main Upgrades (April 2022)
Department Budgets
83 • Completed CIP 4267-2 CDBG Water Main Upgrades
• Completed CIP 5001 Highland Sewer Project
• Complete design of Front Street Lift Station upgrades (CIP 5003) • Completed Nacimiento Lift Station Upgrades (CIP 5004) FY 2022-23 KEY DEPARTMENT INITIATIVES
• Implement electronic filing system and GIS system for City asset management • Continue focus on planting trees in parks and on major corridors • Continue to improve the condition of streets and striping with a focus on bike lanes • Continue to improve department filing and record keeping systems • Begin design of first phase of Ramona Park upgrades focusing on developing construction documents
• Continue to deliver street repair and improvement projects on an accelerated schedule • Continue investment in City facilities including City Hall, Police Station, Community Centers, Parks, Fire Station, and Corporation Yard
• Continue commitment and actions to removing accessibility barriers city-wide • Implement Street Lighting project (CIP 2003)
• Construct storm water improvements for the train station project • Continue to implement pedestrian and bicycle improvements including sidewalk infill, corner ramps and bike lane improvements
• Construct West Grand Avenue Streetscape Improvements (CIP 2287) • Complete CIP 2295-14 and 15 Street Rehabilitation projects • Continue development of Central Coast Blue regional recycled water project • Complete Well Field capacity study
• Complete the addition of water main zone valves (CIP 4007) • Continue Sewer System upgrades to support both existing and future flows (CIP 5002) • Begin design of a second phase of Sewer System Upgrades to support both existing and future flows (CIP 5003)
Department Budgets
84 PUBLIC WORKS
FINANCIALS
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
EXPENDITURES BY CATEGORY
Salaries and Benefits $ 1,633,567 $ 1,651,097 $ 1,719,127 $ 1,728,359 $ 1,812,279 Supplies and Services 2,786,833 2,900,041 3,325,350 3,351,558 3,154,625 Minor Capital 234,002 76,696 292,300 211,620 144,300
Debt Service 201,013 128,854 336,436 336,436 281,443
TOTAL EXPENDITURES $ 4,855,415 $ 4,756,688 $ 5,673,213 $ 5,627,973 $ 5,392,647
EXPENDITURES BY PROGRAM
Wastewater (161) $ 289,860 $ 353,395 $ 454,949 $ 448,314 $ 306,470 Water (162) 2,331,908 2,408,233 2,613,753 2,660,791 2,724,797 Storm Water (163) 280,556 258,798 340,720 266,187 323,384 Facility Maintenance (164) 1,112,437 914,572 1,206,002 1,252,348 1,051,935 Streets (165) 794,870 765,623 1,006,028 907,113 932,483 Corporation Yard (166) 32,506 46,802 39,254 81,368 40,951 Water Conservation (167) 13,278 9,265 12,507 11,852 12,627 TOTAL EXPENDITURES BY PROGRAM $ 4,855,415 $ 4,756,688 $ 5,673,213 $ 5,627,973 $ 5,392,647
FUNDING SOURCES
General Fund $ 1,369,637 $ 1,233,232 $ 1,427,446 $ 1,569,603 $ 1,290,761 Equipment Replacement 21,808 21,808 81,828 81,828 60,000 Wastewater Fund 570,416 612,193 780,669 714,501 629,854 Water Fund 2,331,908 2,408,233 2,606,253 2,660,790 2,724,797 Gas Tax Fund 198,053 199,834 385,450 321,200 309,450
Local Transportation Fund 7,740 18,199 80,000 65,000 80,000 Water Conservation Fund 13,278 9,265 12,507 11,852 12,627 Subsidized Senior Transportation Fund 901 1,088 1,000 1,000 1,000 Street Rehabilitation and Repair Fund 341,674 252,837 268,060 202,199 284,158 Transportation DIF 7,500
Storm Water DIF 7,500
Wastewater DIF 7,500
Water DIF 7,500
TOTAL FUNDING SOURCES $ 4,855,415 $ 4,756,688 $ 5,673,213 $ 5,627,973 $ 5,392,647 FY 2021-22
Department Budgets
85 FULL TIME EQUIVALENT (FTE) PERSONNEL FY 2021-22 FY 2022-23 Public Works Director 1.00 1.00
Management Analyst 1.00 1.00
Capital Improvement Project Manager 1.00 1.00
Senior Engineer 1.00 1.00
Engineering Tech. 1.00 -
Assistant Engineer - 1.00
Public Works Supervisor 1.00 1.00
Maintenance Worker III 1.00 1.00
Maintenance Worker III (underfilled - Maintenance Worker I) 1.00 1.00 Maintenance Worker II 1.00 1.00
Maintenance Worker II (underfilled - Maintenance Worker I) 1.00 1.00 Maintenance Specialist 1.00 1.00
Maintenance Worker I 3.00 3.00
Fleet Maintenance Coordinator 1.00 1.00
Administrative Assistant II 0.75 0.75
Janitor 0.63 0.63
TOTAL POSITIONS 16.38 16.38
Department Budgets
86 NON-DEPARTMENTAL
Overview
In addition to expenditures that are directly related to departmental operations, there are also significant expenditures that are not directly attributable to a particular department. The largest of the nondepartmental expenditures is related to the City’s contract with the Five Cities Fire Authority for fire protection and suppression services. The FY 2022-23 contract totals $2.015 million and reflects no increase from FY 2021-22. Other non-departmental expenditures for FY 2022-23 include unfunded pension liability cost ($1,127,734), insurance ($399,200), and contract City Attorney legal services ($220,000). Expenditures under the American Rescue Plan Act of 2021, in which the City’s share is $1.61 million for FY 2022-23 is also included in this Non-Departmental category.
FINANCIALS
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
EXPENDITURES BY CATEGORY
Salaries and Benefits $ 995,805 $ 1,331,626 $ 1,219,504 $ 1,035,991 $ 1,214,142 Supplies and Services 2,932,757 3,882,656 4,572,325 3,931,994 4,601,110 Minor Capital 420,712
Debt Service 13,400 13,400 10,825
TOTAL EXPENDITURES $ 3,928,562 $ 5,214,282 $ 5,805,229 $ 5,402,097 $ 5,826,077
EXPENDITURES BY PROGRAM
Non-Departmental (000& 182) $ 3,928,562 $ 5,214,282 $ 5,805,229 $ 5,402,097 $ 5,826,077 TOTAL EXPENDITURES BY PROGRAM $ 3,928,562 $ 5,214,282 $ 5,805,229 $ 5,402,097 $ 5,826,077
FUNDING SOURCES
General Fund $ 3,656,289 $ 4,362,804 $ 5,392,922 $ 5,165,463 $ 5,513,214 Wastewater Fund 149,575 210,615 121,938 89,695 107,019
Water Fund 77,290 418,673 182,869 136,939 155,844
Street Rehab and Repair Fund 45,408 222,190 100,000 10,000 50,000 Fire DIF 7,500
TOTAL FUNDING SOURCES $ 3,928,562 $ 5,214,282 $ 5,805,229 $ 5,402,097 $ 5,826,077 FY 2021-22
Department Budgets
87 FUND
INFORMATION
Fund Information
90 GENERAL FUND (INCLUDES EQUIPMENT REPLACEMENT FUND)
GENERAL FUND SUMMARY
SOURCES OF FUNDING
FY 2022-23
REVISED
REVENUES
Property Tax $ 5,381,000
Sales Tax $ 6,004,000
Cannabis Tax $ 1,632,000
Transient Occupancy Tax $ 750,000
Other Taxes $ 1,014,200
Licenses & Permits $ 400,000
Fines $ 53,700
Use of Money and Property $ 227,300
Other Agencies $ 1,794,963
Charges for Current Services $ 899,820
Transfers In $ 791,600
TOTAL REVENUES $ 18,948,583
EXPENDITURES
Administrative Services $ 618,049
City Manager's Office $ 1,303,754
Community Development $ 1,154,817
Parks and Recreation $ 477,287
Police $ 5,971,067
Public Works $ 1,350,761
Non-Departmental $ 5,513,214
Capital Improvement Plan $ 2,130,000
Transfers Out $ 180,600
TOTAL EXPENDITURES $ 18,699,549
REVENUES OVER / (UNDER) EXPENDITURES $ 249,034
Fund Information
91 GENERAL FUND OPERATIONS BY DEPARTMENT
FY 2022-23 REVISED BUDGET $18,699,549
Fund Information
92 CAPITAL PROJECTS, SPECIAL REVENUE AND ENTERPRISE FUND
RESOURCES
Below is a summary table of all other funds:
10 Parks Construction Fund Special Revenue
11 Capital Projects Fund Capital Projects
15 Underground Utilities Fund Capital Projects
16 Senior Transportation Fund Special Revenue
17 Gas Tax Fund Special Revenue
18 Local Transportation Fund Special Revenue
19 Road Maintenance and Rehabilitation Special Revenue
20 Street Rehabilitation and Repair Fund Special Revenue 31 CDBG Non-Entitlement Fund Special Revenue
32 HOME Fund Special Revenue
35 COPS Grant Fund Special Revenue
43 State Mandated ADA Fund Special Revenue
50 Transportation Development Impact Fee Fund Special Revenue 51 Law Enforcement Development Impact Fee Fund Special Revenue 52 Administrative Development Impact Fee Fund Special Revenue 53 Fire Protection Development Impact Fee Fund Special Revenue 54 Stormwater Development Impact Fee Fund Special Revenue 55 Wastewater Development Impact Fee Fund Special Revenue 56 Parks Facility Development Impact Fee Fund Special Revenue 57 Recreation Development Impact Fee Fund Special Revenue 58 Water Development Impact Fee Fund Special Revenue
80 Wastewater Fund Enterprise
81 Water Fund Enterprise
82 Water Conservation Fund Special Revenue
Fund # FUND NAME FUND TYPE
Fund Information
93 CAPITAL PROJECTS
CAPITAL PROJECTS FUND (11)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ - $ - $ - $ - $ -
Revenues:
Interest $ - $ - $ - $ - $ -
Revenue from Other Agencies 339,540 107,006
Transfers In 475,595 3,749,950 2,212,911 3,045,000
Total Revenues $ - $ 815,135 $ 3,749,950 $ 2,319,917 $ 3,045,000 Expenditures:
Capital Projects $ - $ 815,135 $ 3,749,950 $ 2,319,917 $ 3,045,000 Total Expenditures $ - $ 815,135 $ 3,749,950 $ 2,319,917 $ 3,045,000 Ending Reserves $ - $ - $ - $ - $ -
FISCAL YEAR 2021-22
The Capital Projects Fund is used for all capital improvement projects, except for Fund 20 Street Rehabilitation and Repair and the Enterprise Fund capital improvement projects that are included in those respective funds. Capital transfers are made to the Capital Projects Fund to finance capital improvement projects.
UNDERGROUND UTILITIES
The Underground Utilities Fund accounts for underground utility developer fees restricted to the placement of utility lines underground in accordance with City Council priorities set by resolution.
UNDERGROUND UTILITIES FUND (15)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 222,854 $ 226,449 $ 227,521 $ 227,521 $ 228,521 Revenues:
Interest $ 3,595 $ 1,072 $ 4,000 $ 1,000 $ 4,000
Total Revenues $ 3,595 $ 1,072 $ 4,000 $ 1,000 $ 4,000
Expenditures:
Total Expenditures $ - $ - $ - $ - $ -
Ending Reserves $ 226,449 $ 227,521 $ 231,521 $ 228,521 $ 232,521 FISCAL YEAR 2021-22
Fund Information
94 PARKS CONSTRUCTION
PARKS CONSTRUCTION FUND (10)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 28,940 $ 33,820 $ 36,531 $ 36,531 $ 27,231 Revenues:
Interest $ 543 $ 167 $ 500 $ 200 $ 500
Park In-Lieu Fee 55,021 11,004 10,000 8,000 10,500
Total Revenues $ 55,564 $ 11,171 $ 10,500 $ 8,200 $ 11,000 Expenditures:
Supplies and Services $ 8,460 $ 8,460 $ 9,000 $ 8,500 $ 9,000 Capital Projects 42,224
Transfers Out 9,000 9,000
Total Expenditures $ 50,684 $ 8,460 $ 18,000 $ 17,500 $ 9,000 Ending Reserves $ 33,820 $ 36,531 $ 29,031 $ 27,231 $ 29,231 FISCAL YEAR 2021-22
This fund receives Park-In-Lieu fees from developers and is restricted to the acquisition, construction, major improvements, and rehabilitation.
SUBSIDIZED SENIOR TRANSPORTATION
The Subsidized Senior Transportation Fund accounts for expenditures related to the Senior Transportation program funded by Local Transportation Funds.
SUBSIDIZED SENIOR TRANSPORTATION (16)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 14,101 $ 18,459 $ 22,467 $ 22,467 $ 26,467 Revenues:
Interest $ 259 $ 96 $ - $ - $ -
LTF - Subsidized Senior Transportation 5,000 5,000 5,000 5,000 5,000 Total Revenues $ 5,259 $ 5,096 $ 5,000 $ 5,000 $ 5,000
Expenditures:
Supplies and Services $ 901 $ 1,088 $ 1,000 $ 1,000 $ 1,000 Total Expenditures $ 901 $ 1,088 $ 1,000 $ 1,000 $ 1,000 Ending Reserves $ 18,459 $ 22,467 $ 26,467 $ 26,467 $ 30,467 FISCAL YEAR 2021-22
Fund Information
95 GAS TAX
GAS TAX (17)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 272,119 $ 399,252 $ 450,629 $ 450,629 $ 144,107 Revenues:
Interest $ 5,530 $ 2,220 $ 5,000 $ 3,000 $ 5,000
Gas Tax 307,486 303,424 358,583 358,583 365,695
Gas Tax Loan Repayment 15,214
Total Revenues $ 328,230 $ 305,644 $ 363,583 $ 361,583 $ 370,695 Expenditures:
Supplies and Services $ 198,052 $ 199,835 $ 381,150 $ 317,200 $ 305,150 Minor Capital 4,300 4,000 4,300
Capital Projects 45
Transfers Out 3,000 54,432 223,000 346,905 153,000
Total Expenditures $ 201,097 $ 254,267 $ 608,450 $ 668,105 $ 462,450 Ending Reserves $ 399,252 $ 450,629 $ 205,762 $ 144,107 $ 52,352 FISCAL YEAR 2021-22
The Gas Tax funds are restricted in use to acquisition of rights of way, construction, maintenance, engineering, and administrative costs of the public street system. Income is derived from state excise taxes on fuel and is allocated to the City in accordance with Street and Highway Code Section 2103- 2108.
Fund Information
96 LOCAL TRANSPORTATION FUND
LOCAL TRANSPORTATION FUND (18)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 560,118 $ 867,117 $ 1,004,625 $ 1,004,625 $ 561,627 Revenues:
Interest $ 4,027 $ 1,500 $ 1,500 $ 2,000
Local transportation Fund 309,710 344,120 459,000 459,000 468,200 Grants 1,433,891
Total Revenues $ 1,743,601 $ 348,147 $ 460,500 $ 460,500 $ 470,200 Expenditures:
Supplies and Services $ 7,740 $ 18,199 $ 84,500 $ 69,500 $ 84,500 Capital Projects 1,428,862
Transfers Out 192,440 698,300 833,998 160,000
Total Expenditures $ 1,436,602 $ 210,639 $ 782,800 $ 903,498 $ 244,500 Ending Reserves $ 867,117 $ 1,004,625 $ 682,325 $ 561,627 $ 787,327 FISCAL YEAR 2021-22
The Local Transportation Fund accounts for apportioned revenue from the state and is restricted in use to acquisition of rights of way, construction, maintenance, engineering, and administrative costs associated with the public street system, as well as transit-related costs. Income derived from state and federal grants generally administered by SLOCOG and Caltrans Local Assistance and include State Highway Account Urban and Regional (USHA and RSHA) Funds.
Fund Information
97 ROAD MAINTENANCE AND REHABILITATION FUND
The Road Maintenance and Rehabilitation Fund includes funding from the recently passed SB 1 gas tax by the State of California. The fund is mandated to separately track the expenditures of the new fees.
ROAD MAINTENANCE AND REHABILITATION (19)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 331,951 $ 260,180 $ 316,641 $ 316,641 $ 424,393 Revenues:
Interest $ 4,860 $ 1,317 $ 4,500 $ 4,500 $ 5,000
Road Maintenance and Rehabilitation 234,391 244,968 264,498 264,498 333,788 Total Revenues $ 239,251 $ 246,285 $ 268,998 $ 268,998 $ 338,788 Expenditures:
Capital Projects $ 311,022 $ - $ - $ -
Transfers Out 189,824 241,000 161,246 299,000
Total Expenditures $ 311,022 $ 189,824 $ 241,000 $ 161,246 $ 299,000 Ending Reserves $ 260,180 $ 316,641 $ 344,639 $ 424,393 $ 464,181 FISCAL YEAR 2021-22
Fund Information
98 STREET REHABILITATION AND REPAIR
STREET REHABILITATION AND REPAIR (20)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 11,641,129 $ 7,047,849 $ 4,137,642 $ 4,137,642 $ 9,417,270 Revenues:
Interest $ 18,227 $ 3,928 $ 15,000 $ 15,000 $ 15,000
Miscellaneous 17,400 28,500 20,000 60,000 20,000
Proceeds of Long Term Debt 10,000,000
Transfers In 248,810 30,000 30,000 80,000
Total Revenues $ 35,627 $ 281,238 $ 65,000 $ 10,105,000 $ 115,000 Expenditures:
Salaries and Benefits $ 179,911 $ 178,583 $ 188,310 $ 197,899 $ 204,408 Supplies and Services 207,171 296,444 179,750 14,300 129,750 Capital Projects 4,241,826 2,716,418 3,930,000 4,613,173 3,380,000 Transfers Out
Total Expenditures $ 4,628,907 $ 3,191,445 $ 4,298,060 $ 4,825,372 $ 3,714,158 Ending Reserves $ 7,047,849 $ 4,137,642 $ (95,418) $ 9,417,270 $ 5,818,112 FISCAL YEAR 2021-22
The Street Rehabilitation and Repair Fund is generated by voter approved Measure K-14 bond sales and is used for the rehabilitation and repair of local streets.
Fund Information
99 COMMUNITY DEVELOPMENT BLOCK GRANT
The Community Development Block Grant (CDBG) Non-Entitlement funds may be used for economic development, housing or public service projects which primarily benefit low- and moderate-income residents.
HOME GRANT
The Home Investment Partnership Program (HOME) funds can be used for First Time Homebuyer Program, First Time Homebuyer Project, Owner Occupied Rehabilitation Program, Rental Rehabilitation, Rental New Construction Project, and Tenant-Based Rental Assistance Programs.
COMMUNITY DEVELOPMENT BLOCK GRANT (31)
Non-Entitlement FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ (78,031) $ (48,641) $ (22,230) $ (22,230) $ (54,865) Revenues:
CDBG - Non-Entitlement $ 1,575,950 $ 350,655 $ 42,993 $ 1,654,088 $ - Total Revenues $ 1,575,950 $ 350,655 $ 42,993 $ 1,654,088 $ - Expenditures:
Supplies and Services $ 395,093 $ 159,662 $ - $ 32,635 $ - Transfers Out 1,151,467 164,582 42,993 1,654,088
Total Expenditures $ 1,546,560 $ 324,244 $ 42,993 $ 1,686,723 $ - Ending Reserves $ (48,641) $ (22,230) $ (22,230) $ (54,865) $ (54,865) FISCAL YEAR 2021-22
HOME GRANT (32)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 131,872 $ (300,466) $ (300,466) $ (300,466) $ - Revenues:
Transfer In $ - $ - $ - $ 300,466 $ -
Total Revenues $ - $ - $ - $ 300,466 $ -
Expenditures:
Total Expenditures $ - $ - $ - $ - $ -
Reductions/Additions to Reserves $ (432,338) $ - $ - $ - $ - Ending Reserves $ (300,466) $ (300,466) $ (300,466) $ - $ - FISCAL YEAR 2021-22
Fund Information
100
POLICE GRANT
The purpose of the Police Grants Fund is to receive and track all Police Department State grant revenue and expenditures in accordance with prescribed regulations. Revenue for this fund is comprised of grants from the COPS/SLESF Grant. The Citizens Option for Public Safety Program's Supplemental Law Enforcement Services Fund (COPS/SLESF) grant was established in 1996.
Compliant cities are allocated a proportionate share of COPS funds by the State for the exclusively purpose of funding supplemental front-line law enforcement services. Under the standard grant program allocation, the City of Grover Beach is eligible to receive a minimum grant amount of $100,000 each year, with additional proportionate share based on population estimates determined by the California Department of Finance. Funds for this program cannot supplant existing funding and are to be used for personnel and/or equipment. While the COPS programs are intended to be on-going and permanent, there is no guarantee that continued funding will be available.
POLICE GRANTS (35)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 302,475 $ 339,885 $ 235,662 $ 235,662 $ 307,204 Revenues:
State Grants $ 160,048 $ 156,727 $ 160,000 $ 160,000 $ 165,000 Interest Income 5,485 1,168 5,000 5,000 5,000
Total Revenues $ 165,533 $ 157,895 $ 165,000 $ 165,000 $ 170,000 Expenditures:
Supplies and Services $ 90,066 $ 69,687 $ 60,000 $ 68,458 $ 60,000 Minor Capital 38,057 192,431 20,000 25,000 20,000
Total Expenditures $ 128,123 $ 262,118 $ 80,000 $ 93,458 $ 80,000 Ending Reserves $ 339,885 $ 235,662 $ 320,662 $ 307,204 $ 397,204 FISCAL YEAR 2021-22
Fund Information
101
STATE MANDATED ADA FUND
The State Mandated ADA Fund accounts for the State Mandated Disability and Education Fee (SB 1186 Steinberg). Cities are required to collect four dollars from every business license or equivalent instrument. Cities are required to transmit thirty percent of every dollar to the State. Cities keep seventy percent of every dollar to be used for ADA Certified Access Specialists Program.
STATE MANDATED ADA FUND (43)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 11,730 $ 11,565 $ 10,954 $ 10,954 $ 10,954 Revenues:
State Mandated ADA Fee $ 5,835 $ 5,389 $ 6,000 $ 6,000 $ 6,000 Total Revenues $ 5,835 $ 5,389 $ 6,000 $ 6,000 $ 6,000
Expenditures:
Transfers Out $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000
Total Expenditures $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 Ending Reserves $ 11,565 $ 10,954 $ 10,954 $ 10,954 $ 10,954 FISCAL YEAR 2021-22
Fund Information
102
TRANSPORTATION DIF
The Transportation Development Impact Fee Fund accounts for fees generated by development for the construction of transportation improvements.
LAW ENFORCEMENT DIF
The Law Enforcement Development Impact Fee Fund accounts for fees generated by development.
These funds may be used for law enforcement improvements related to expansion.
TRANSPORTATION DIF (50)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 67,858 $ 110,498 $ 131,468 $ 131,468 $ 79,169 Revenues:
Interest $ 1,491 $ 592 $ 1,200 $ 1,000 $ 1,300
Transportation DIF 41,149 20,378 30,000 30,000 30,000
Total Revenues $ 42,640 $ 20,970 $ 31,200 $ 31,000 $ 31,300 Expenditures:
Supplies and Services $ - $ - $ 7,500 $ - $ -
Transfers Out 124,500 83,299
Total Expenditures $ - $ - $ 132,000 $ 83,299 $ -
Ending Reserves $ 110,498 $ 131,468 $ 30,668 $ 79,169 $ 110,469 FISCAL YEAR 2021-22
LAW ENFORCEMENT DIF (51)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 6,909 $ 9,401 $ 10,364 $ 10,364 $ 11,514 Revenues:
Interest $ 132 $ 47 $ 150 $ 150 $ 150
Law Enforcement DIF 2,360 916 3,000 1,000 3,000
Total Revenues $ 2,492 $ 963 $ 3,150 $ 1,150 $ 3,150
Expenditures:
Supplies and Services $ - $ - $ 7,500 $ - $ -
Total Expenditures $ - $ - $ 7,500 $ - $ -
Ending Reserves $ 9,401 $ 10,364 $ 6,014 $ 11,514 $ 14,664 FISCAL YEAR 2021-22
Fund Information
103
ADMINISTRATIVE DIF
The Administrative Development Impact Fee Fund accounts for fees generated by development.
These funds may be used for Administrative improvements related to expansion.
FIRE DIF
The Fire Development Impact Fee Fund accounts for fees generated by development. These funds may be used for Fire improvements related to expansion.
ADMINISTRATIVE DIF (52)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 17,227 $ 20,727 $ 22,305 $ 22,305 $ 23,405 Revenues:
Interest $ 308 $ 103 $ 300 $ 100 $ 300
Law Enforcement DIF 3,192 1,475 3,200 1,000 3,200
Total Revenues $ 3,500 $ 1,578 $ 3,500 $ 1,100 $ 3,500
Expenditures:
Supplies and Services $ - $ - $ 7,500 $ - $ -
Total Expenditures $ - $ - $ 7,500 $ - $ -
Ending Reserves $ 20,727 $ 22,305 $ 18,305 $ 23,405 $ 26,905 FISCAL YEAR 2021-22
FIRE DIF (53)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 4,036 $ 9,145 $ 11,054 $ 11,054 $ 13,154 Revenues:
Interest $ 107 $ 48 $ 150 $ 100 $ 150
Fire DIF 5,002 1,861 5,000 2,000 5,000
Total Revenues $ 5,109 $ 1,909 $ 5,150 $ 2,100 $ 5,150
Expenditures:
Supplies and Services $ - $ - $ 7,500 $ - $ -
Total Expenditures $ - $ - $ 7,500 $ - $ -
Ending Reserves $ 9,145 $ 11,054 $ 8,704 $ 13,154 $ 18,304 FISCAL YEAR 2021-22
Fund Information
104
STORMWATER DIF
The Stormwater Development Impact Fee Fund accounts for fees generated by development. These funds may be used for Stormwater related expansion.
WASTEWATER DIF
The Wastewater Development Impact Fee Fund accounts for fees generated by development. These funds may be used for wastewater related expansion.
STORMWATER DIF (54)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 94,532 $ 114,311 $ 120,651 $ 120,651 $ 127,651 Revenues:
Interest Income $ 1,710 $ 557 $ 2,000 $ 2,000 $ 2,000
Stormwater DIF 18,069 5,783 10,000 5,000 10,000
Total Revenues $ 19,779 $ 6,340 $ 12,000 $ 7,000 $ 12,000 Expenditures:
Supplies and Services $ - $ - $ 7,500 $ - $ -
Total Expenditures $ - $ - $ 7,500 $ - $ -
Ending Reserves $ 114,311 $ 120,651 $ 125,151 $ 127,651 $ 139,651 FISCAL YEAR 2021-22
WASTEWATER DIF (55)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 565,851 $ 651,773 $ 281,484 $ 281,484 $ 214,839 Revenues:
Interest Income $ 9,730 $ 2,810 $ 500 $ 5,000 $ 5,000
Wastewater DIF 76,192 18,779 50,000 25,000 50,000
Total Revenues $ 85,922 $ 21,589 $ 50,500 $ 30,000 $ 55,000 Expenditures:
Supplies and Services $ - $ - $ 7,500 $ - $ -
Transfers Out 391,878 85,000 96,645 85,000
Total Expenditures $ - $ 391,878 $ 92,500 $ 96,645 $ 85,000 Ending Reserves $ 651,773 $ 281,484 $ 345,195 $ 214,839 $ 184,839 FISCAL YEAR 2021-22
Fund Information
105
PARKS FACILITIES DIF
The Parks Facilities Development Impact Fee Fund accounts for fees generated by development.
These funds may be used for Parks Facilities related expansion.
RECREATION FACILITIES DIF
The Recreation Facilities Development Impact Fee Fund accounts for fees generated by development. These funds may be used for Recreation related expansion.
PARKS FACILITIES DIF (56)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 521,985 $ 478,075 $ 475,128 $ 475,128 $ 371,584 Revenues:
Interest Income $ 8,405 $ 2,264 $ 8,000 $ 5,500 $ 8,000 Parks Facilities DIF 70,851 27,729 71,000 70,000 71,000 Total Revenues $ 79,256 $ 29,993 $ 79,000 $ 75,500 $ 79,000 Expenditures:
Supplies and Services $ - $ - $ 7,500 $ - $ -
Capital Projects 123,166
Transfers Out 32,940 225,000 179,044 175,000
Total Expenditures $ 123,166 $ 32,940 $ 232,500 $ 179,044 $ 175,000 Ending Reserves $ 478,075 $ 475,128 $ 321,628 $ 371,584 $ 275,584 FISCAL YEAR 2021-22
RECREATION FACILITIES (57)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 72,709 $ 86,651 $ 92,030 $ 92,030 $ 97,230 Revenues:
Interest Income $ 1,275 $ 422 $ 1,500 $ 200 $ 1,500
Recreation DIF 12,667 4,957 12,000 5,000 12,000
Total Revenues $ 13,942 $ 5,379 $ 13,500 $ 5,200 $ 13,500 Expenditures:
Supplies and Services $ 7,500 $ 51,000
Capital Projects
Total Expenditures $ - $ - $ 7,500 $ - $ 51,000
Ending Reserves $ 86,651 $ 92,030 $ 98,030 $ 97,230 $ 59,730 FISCAL YEAR 2021-22
Fund Information
106
WATER DIF
The Water Development Impact Fee Fund accounts for fees generated by development. These funds may be used for water related expansion.
WATER CONSERVATION FUND
The Water Conservation Fund provides water conservation rebates to water customers for turf removal, smart irrigation, low flow toilet installations, and energy efficient washing machines.
WATER DIF (58)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ - $ - $ 17,376 $ 17,376 $ -
Revenues:
Interest Income $ 520 $ - $ - $ -
Water DIF 60,817 17,376 39,000 31,500 32,000
Total Revenues $ 61,337 $ 17,376 $ 39,000 $ 31,500 $ 32,000 Expenditures:
Supplies and Services $ 7,500
Transfers Out 61,337 31,500 48,876 32,000
Total Expenditures $ 61,337 $ - $ 39,000 $ 48,876 $ 32,000 Ending Reserves $ - $ 17,376 $ 17,376 $ - $ -
FISCAL YEAR 2020-21
WATER CONSERVATION (82)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 393,685 $ 386,654 $ 379,202 $ 379,202 $ 367,850 Revenues:
Interest Income $ 6,247 $ 1,813 $ 3,000 $ 500 $ 3,000
Water Conservation Penalty
Total Revenues $ 6,247 $ 1,813 $ 3,000 $ 500 $ 3,000
Expenditures:
Salaries and Benefits $ 6,100 $ 6,465 $ 6,632 $ 6,827 $ 6,752 Supplies and Services 7,178 2,800 5,875 5,025 5,875
Total Expenditures $ 13,278 $ 9,265 $ 12,507 $ 11,852 $ 12,627 Ending Reserves $ 386,654 $ 379,202 $ 369,695 $ 367,850 $ 358,223 FISCAL YEAR 2021-22
Fund Information
107
ENTERPRISE FUNDS
WASTEWATER
WASTEWATER (80)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 3,173,481 $ 3,174,664 $ 3,485,145 $ 3,485,145 $ 3,289,541 Revenues:
Interest Income $ 44,766 $ 14,975 $ 16,000 $ 16,000 $ 16,000 Wastewater Fees 962,052 966,666 985,300 985,300 1,005,000 Other 301,670 367,764 316,100 316,100 321,800
Transfer In 391,878 85,000 96,645 85,000
Total Revenues $ 1,308,488 $ 1,741,283 $ 1,402,400 $ 1,414,045 $ 1,427,800 Expenditures:
Salaries and Benefits $ 653,879 $ 722,503 $ 672,253 $ 653,408 $ 697,366 Supplies and Services 333,530 423,812 559,538 477,245 416,800 Minor Capital 50,727
Debt Service 4,616 1,192 21,828 21,828
Capital Projects 26,559 71,311 776,000 196,168 1,845,000 Transfers Out 209,403 209,601 284,000 261,000 286,000
Total Expenditures $ 1,278,714 $ 1,428,419 $ 2,313,619 $ 1,609,649 $ 3,245,166 Reductions/Additions to Reserves $ (28,591) $ (2,383) $ - $ - $ - Ending Reserves $ 3,174,664 $ 3,485,145 $ 2,573,926 $ 3,289,541 $ 1,472,175 FISCAL YEAR 2021-22
The Wastewater Fund consists of the City's Wastewater collection system and the South San Luis Obispo County Sanitation District billing. The Wastewater Enterprise Fund serves approximately 5,000 customers. The South San Luis Obispo County Sanitation District (District) sets their fees for the processing of wastewater. The City provides billing services for the District and forwards the collection of fees billed to the district monthly.
In May 2021, the City adopted a 2% increase in fees to cover the costs associated with the wastewater collection system, effective July 1, 2021. This increase will fund needed improvements and upgrades to wastewater system infrastructure. Subsequent 2% increases will be scheduled to go into effect on July 1 of the following four years. FY 2021-22 and FY 2022-23 include 2% increases each year.
The City is proposing the following Wastewater Capital Projects in the FY 2022-23 Budget: FY 2022-23 Sewer Upgrade for Exisitng & Future Flows $ 1,585,000
Front Street Lift Station Upgrades 60,000
Sewer Upgrade for Exisitng Flows 200,000
Total $ 1,845,000
Fund Information
108
WATER
WATER (81)
FY 2019-20 FY 2020-21 ORIGINAL ESTIMATED FY 2022-23
ACTUALS ACTUALS BUDGET ACTUAL REVISED
Beginning Reserves $ 1,731,908 $ 7,268,106 $ 8,193,835 $ 8,193,835 $ 7,927,602 Revenues:
Interest Income $ 45,621 $ 32,760 $ 35,500 $ 35,500 $ 33,300 Water Fees 3,849,924 4,311,419 4,022,900 3,798,000 4,126,200 Proceeds of Long-Term Debt 4,456,000 *
Other 123,607 72,410 139,100 159,269 139,200
Transfers In 1,212,804 164,582 74,493 1,685,588 32,000
Total Revenues $ 9,687,956 $ 4,581,171 $ 4,271,993 $ 5,678,357 $ 4,330,700 Expenditures:
Salaries and Benefits $ 673,764 $ 1,024,022 $ 799,633 $ 784,138 $ 817,841 Supplies and Services 1,825,866 1,999,656 1,967,919 1,983,167 2,081,905 Minor Capital 57,494 51,838 80,000 80,000 80,000
Debt Service 174,589 105,854 292,780 292,780 281,443
Capital Projects 1,119,880 312,721 1,206,393 2,366,088 880,000 Transfers Out 353,203 388,210 494,000 438,417 476,000
Total Expenditures $ 4,204,796 $ 3,882,301 $ 4,840,725 $ 5,944,590 $ 4,617,189 Reductions/Additions to Reserves $ 53,038 $ 226,859 $ - $ - $ - Ending Reserves $ 7,268,106 $ 8,193,835 $ 7,625,103 $ 7,927,602 $ 7,641,113 FISCAL YEAR 2020-21
The Water Fund consists of the City's water system, including water mains, storage reservoirs and water sampling. The Water Enterprise Fund serves approximately 5,000 customers.
In May 2021, the City adopted a 2% increase in fees to cover the costs associated with the water system, effective July 1, 2021. Subsequent 2%, 3%, 4% and 4% increases will be scheduled to go into effect the following four years with Council retaining the ability to enact a lower rate on an annual basis based on expected needs. The FY 2022-23 Budget includes a 2% increase. The increase in rates will fund needed improvements to water system infrastructure along with the Central Coast Blue recycled groundwater project.
The City is proposing the Following Water Capital Projects in the FY 2022-23 Budget: FY 2022-23 Central Coast Blue $ 730,000
Water Main Zone Valves 25,000
Well Capacity Analysis and Improvements 75,000
Reservoir Maintenance 50,000
Total $ 880,000
Fund Information
109
CAPITAL
PROJECTS
Capital Projects
112
CAPITAL IMPROVEMENT PROGRAM (CIP)
The City staff prepares a CIP document annually that covers the next five fiscal years that includes a list of projects for Council consideration and approval. The CIP document acts as a guide for identifying current and future fiscal requirements. The CIP does not address all of the capital expenditures for the City, but provides a larger scale infrastructure improvements, that are permanent in nature, including transportation systems, utilities, water and wastewater systems, and municipal facilities.
The CIP document includes projects that are in excess of $50,000 with a useful life of at least ten years; or a study of at least $50,000 that will lead to such projects or add to the value or capacity of the infrastructure of the City. Projects that are considered operational or routine maintenance are excluded from this program.
The CIP proposes project funding relative to the anticipated availability of fiscal resources and the choice of specific improvements to be achieved throughout the five year plan. The Projected Revenue Summary on page 113 identifies 14 revenue sources and their use by year for FY 2022-23. The total CIP budget for FY 2022-23 is $9,150,000.
The Expenditure Summary on pages 114 and 115 identifies project expenditures in the following five categories: 1) Parks/Community Services, 2) Public Buildings/Facilities, 3) Streets/Storm Drains, 4) Water, and 5) Wastewater. The expenditure summary for FY 2022-23 indicates a total of $9,150,000 in spending within the five project categories. The detailed CIP document can be found on the City’s website which provides further information on the projects planned for FY 2023-27.
Capital Projects
113
CAPITAL IMPROVEMENT PROGRAM
2023 - 2027
Projected Revenue Summary
Fund #
FY 2022
Estimated
Actual
FY 2022
Estimated
Carryover
FY 2023
Budget FY 2024 FY 2025 FY 2026 FY 2027
01 General Fund $22,976 $862,634 $2,130,000 $2,400,000 $2,335,000 $2,435,000 $2,960,000 10 Parks Construction Fund $9,000 $0 $0 $0 $0 $0 $0
15 Underground Utilities Fund $0 $0 $0 $0 $0 $0 $0
17 Gas Tax Fund $0 $0 $150,000 $225,000 $175,000 $255,000 $100,000 18 Local Transportation Fund $59,574 $0 $160,000 $200,000 $100,000 $100,000 $100,000 19 Gas Tax Fund (RMRA) $0 $0 $299,000 $240,000 $240,000 $240,000 $240,000 20 Street Rehab and Repair Bond Fund $220,000 $0 $3,300,000 $3,810,000 $2,180,000 $2,800,000 $2,290,000 50 Transportation Development Impact Fee $0 $0 $0 $0 $0 $0 $0 55 Wastewater Development Impact Fee $0 $85,000 $85,000 $0 $0 $0 $0 56 Parks Facility Development Impact Fee $0 $225,000 $175,000 $0 $0 $0 $0 57 Recreation Facility Development Impact Fee $0 $0 $51,000 $0 $0 $0 $0 80 Wastewater Fund $120,000 $1,365,000 $1,825,000 $1,250,000 $840,000 $930,000 $878,500 81 Water Fund $75,000 $1,152,761 $975,000 $2,445,000 $370,000 $1,268,311 $1,698,123 Other Agency / District $0 $0 $0 $0 $950,000 $0 $0
TOTAL $506,550 $3,690,395 $9,150,000 $10,570,000 $7,190,000 $8,028,311 $8,266,623 Capital Projects
114
CAPITAL IMPROVEMENT PROGRAM
2023 - 2027
Expenditure Summary by Project Category
PARKS / COMMUNITY SERVICES
CIP #
FY 2022
Estimated
Actual
FY 2022
Estimated
Carryover
FY 2023
Budget FY 2024 FY 2025 FY 2026 FY 2027
1002 $0 $0 $0 $0 $0 $200,000 $0
1259 $9,000 $225,000 $226,000 $500,000 $500,000 $1,000,000 $1,000,000 SUBTOTAL $9,000 $225,000 $226,000 $500,000 $500,000 $1,200,000 $1,000,000
PUBLIC BUILDINGS / FACILITIES
CIP #
FY 2022
Estimated
Actual
FY 2022
Estimated
Carryover
FY 2023
Budget FY 2024 FY 2025 FY 2026 FY 2027
3002 $0 $270,000 $405,000 $0 $0 $0 $2,600,000
3003 $82,550 $12,634 $100,000 $0 $100,000 $0 $0
3004 $0 $0 $200,000 $0 $0 $0 $0
3005 $0 $0 $100,000 $0 $0 $0 $0
3393 $0 $0 $0 $50,000 $950,000 $0 $0
SUBTOTAL $82,550 $282,634 $805,000 $50,000 $1,050,000 $0 $2,600,000
STREETS / STORM DRAINS
CIP #
FY 2022
Estimated
Actual
FY 2022
Estimated
Carryover
FY 2023
Budget FY 2024 FY 2025 FY 2026 FY 2027
2003 $0 $100,000 $0 $0 $100,000 $0 $100,000
2004 $0 $0 $90,000 $0 $0 $0 $0
2274 $0 $0 $50,000 $100,000 $50,000 $100,000 $100,000
2285 $0 $0 $0 $1,815,000 $0 $0 $0
2286 $0 $0 $0 $0 $2,100,000 $0 $0
2287 $0 $600,000 $1,874,000 $600,000 $0 $0 $0
2288 $0 $0 $0 $0 $0 $1,730,000 $700,000
2295-14 $220,000 $0 $2,630,000 $0 $0 $0 $0
2295-15 $0 $0 $750,000 $1,250,000 $0 $0 $0
2295-16 $0 $0 $0 $600,000 $0 $0 $0
2295-17 $0 $0 $0 $2,000,000 $20,000 $0 $0
2295-18 $0 $0 $0 $0 $2,200,000 $0 $0
2295-19 $0 $0 $0 $0 $0 $2,820,000 $0
2295-20 $0 $0 $0 $0 $0 $0 $1,150,000
2295-21 $0 $0 $0 $0 $0 $0 $1,200,000
SUBTOTAL $220,000 $700,000 $5,394,000 $6,365,000 $4,470,000 $4,650,000 $3,250,000 Capital Projects
115
2022 - 2026
Expenditure Summary by Project Category - Continued
WATER
CIP #
FY 2022
Estimated
Actual
FY 2022
Estimated
Carryover
FY 2023
Budget FY 2024 FY 2025 FY 2026 FY 2027
4001 $75,000 $917,761 $730,000 $730,000 $0 $318,311 $636,623 4007 $0 $25,000 $25,000 $25,000 $0 $0 $0
4008 $0 $0 $75,000 $0 $0 $0 $0
4015 $0 $0 $0 $0 $180,000 $780,000 $0
4270 $0 $150,000 $0 $150,000 $150,000 $150,000 $150,000 4391 $0 $0 $50,000 $1,500,000 $0 $0 $0
SUBTOTAL $75,000 $1,092,761 $880,000 $2,405,000 $330,000 $1,248,311 $786,623
WASTEWATER
CIP #
FY 2022
Estimated
Actual
FY 2022
Estimated
Carryover
FY 2023
Budget FY 2024 FY 2025 FY 2026 FY 2027
5002 $90,000 $1,360,000 $1,585,000 $0 $0 $0 $0
5003 $30,000 $30,000 $60,000 $0 $0 $0 $0
5005 $0 $0 $0 $150,000 $0 $0 $0
5010 $0 $0 $200,000 $1,000,000 $740,000 $830,000 $530,000 5269 $0 $0 $0 $100,000 $100,000 $100,000 $100,000
SUBTOTAL $120,000 $1,390,000 $1,845,000 $1,250,000 $840,000 $930,000 $630,000 TOTAL $506,550 $3,690,395 $9,150,000 $10,570,000 $7,190,000 $8,028,311 $8,266,623
APPENDIX
Appendix
118
FINANCIAL POLICIES
ADOPTED BY THE CITY COUNCIL – RESOLUTION NO. 20-17
The cornerstone of municipal financial management is a sound policy that sets forth guidelines in the areas of revenues, operating expenditures, investments, reserves, financial reporting, capital improvements, and budgeting. Elected officials and appointed staff are accountable for public funds and responsible for the wise management of municipal finances. The community is entitled to reports that clearly communicate the financial health of the City. The following policies will guide and influence the financial management practices of the City of Grover Beach.
BUDGET POLICIES
The City Manager will provide a proposed Annual Budget to the City Council no later than June 1st of each year, and the City Council will review and adopt an Annual Budget no later than June 30th every year.
The City's budgetary system will be integrated and compatible with the accounting system, and the City Budget will be prepared on a basis in conformance with Generally Accepted Accounting Principles (GAAP).
The Mid-Year Budget Review will be presented no later than the first regular City Council meeting in March of each year. The Mid-Year Budget Review will include the current status of revenue collections and budget expenditures, economic trends, and state budget deliberations, as well as any proposed amendments necessary to bring the budget back into balance.
Annually, the City may seek the California Society of Municipal Finance Officers (CSMFO) award of Excellence for Municipal Budgeting.
Annually, the City may seek the Government Finance Officers Association (GFOA) Certificate of Achievement for Distinguished Budget Presentation award.
Annually, the City's Comprehensive Annual Financial Report (CAFR) will be prepared by an independent auditor in accordance with Government Auditing Standards issued by the Comptroller General of the United States.
Annually, the City may seek the GFOA Certificate of Achievement for Excellence in Financial Reporting.
Appendix
119
RESOURCES
Resources are defined as revenues collected during one fiscal year, as well as resources carried over from prior years. Revenues may be ongoing or one-time in nature, but resources from prior years are always one-time in nature. The following policies shall apply to resources:
• One-time resources will be used for one-time expenditures or enhancement of reserves rather than funding ongoing services.
• All revenue forecasts will reflect realistic assessments of future conditions. • Regular reports comparing actual to budgeted revenues will be prepared by City staff for the City Council.
• All potential grants shall be carefully reviewed for matching and/or maintenance-of-effort requirements.
• Intergovernmental grants, which are grants will be evaluated to determine the long-term operating and maintenance costs associated with the grant.
EXPENDITURES
Expenditures are payments made to employees, vendors, or contractors supplying goods or services to the City, except as provided in GBMC Section 2107.1; all expenditures must be made consistent with appropriations approved by the City Council in the Annual Appropriation Resolution. • Regular reports comparing budget expenditures to actual expenditures will be prepared by City staff for the City Council's information.
• When new operating programs or capital projects are proposed, staff will provide the City Council with an analysis of the one-time and ongoing costs associated with the program or project. • With the exception of initial expenditures for the creation of new programs or during periods of economic distress which result in reductions in local revenues or state funding for municipal activities, all ongoing costs for operating programs shall be paid from the ongoing revenues.
RESERVES
It shall be the City's policy to draw down reserves consistent with the following priorities:
• The use of reserves for one-time expenditures that generates ongoing cost savings or cost avoidance.
• The use of reserves for one-time expenditures that generates ongoing revenue enhancements. • The use of reserves for a one-time expenditure that leverages the expenditure of significant public or private investment in the City by other entities.
• The use of reserves to offset shortfalls in the collection of revenues. • The use of reserves to offset unanticipated increases in expenditures for current programs or projects.
Appendix
120
GENERAL FUND RESERVES
The General Fund Reserves for the City is established as a minimum of 15% of operating expenditures with a goal of at least 25%. The minimum reserves of 15% is comprised of a General Reserve and Emergency Reserve as described below:
GENERAL FUND-GENERAL RESERVE
The City hereby establishes a General Reserve of 10% of the current fiscal year's General Fund operating budget. The General Fund reserve should be increased to an amount greater than 10% when economic conditions warrant. The specific purpose of the General Reserve is to provide funding to meet operational appropriation requirements in the event that the City experiences shortfalls in the collection of General Fund revenues or major unanticipated increases in expenditures.
Any transfer of funds from the General Reserve may only be made upon City Council approval of an amendment to the Annual Appropriation Resolution.
GENERAL FUND-EMERGENCY RESERVE
The City hereby establishes an Emergency Reserve of not less than 5% of the General Fund operating budget. This reserve is established for the purpose of providing emergency funding as a result of a declared emergency or to fund an unanticipated urgent event affecting or threatening the public health, safety, and welfare of the City of Grover Beach.
Any transfer of funds from the Emergency Reserve may only be made upon City Council's approval of an amendment to the Annual Appropriation Resolution, subsequent to the City Council's finding that the guidelines established in the Resolution have been met.
WATER ENTERPRISE FUND-GENERAL RESERVE
The City hereby establishes a General Reserve of not less than 10% of the current fiscal year Water Fund operating budget. The Water Fund's General Reserve should be increased to an amount greater than 10% when economic conditions warrant. The specific purpose of the General Reserve is to provide funding to meet operational appropriation requirements in the event that the City experiences shortfalls in the collection of Water Fund revenues or unanticipated increases in expenditures.
Any transfer of funds from the Water Fund's General Reserve may only be made upon City Council approval of an amendment to the Annual Appropriation Resolution.
WASTEWATER ENTERPRISE FUND-GENERAL RESERVE
The City hereby establishes a General Reserve of not less than 10% of the current fiscal year Wastewater Fund operating budget. The Wastewater Fund Reserves should be increased to an amount greater than 10% when economic conditions warrant. The specific purpose of the General Reserve is to provide funding Appendix
121
to meet operation appropriation requirements in the event the City experiences shortfalls in the collection of Wastewater Fund revenues or unanticipated increases in expenditures.
Any transfer of funds from the Wastewater Fund's General Reserve may only be made upon City Council approval of an amendment to the Annual Appropriation Resolution.
APPROPRIATION TRANSFER AUTHORITY
The following criteria establish the transfer authority for appropriations as set forth in the fiscal year budget.
• Transfers between line items in the same program may be made by department heads. • Transfers between programs in the same fund may be made by department heads with City Manager approval.
• Transfer between department budgets within the same fund may only be made by the City Council. • Transfers between different funds may only be made by the City Council. • Transfers to or from employee services line items may be made by the City Manager.
CAPITAL IMPROVEMENT PROGRAM
Annually, City staff will propose a Capital Improvement Program covering the subsequent five fiscal years.
The plan will recommend specific funding of projects for the next three years and identify projects for further consideration.
The Capital Improvement Program will include a listing of projects for further consideration by the City Council. Such projects will be those which are determined to merit further study, but lacking funding sources.
Capital improvements will include Facilities and Infrastructure improvements which are valued over $50,000.
Capital Improvement Program projects will be reviewed to determine the best method of financing the project. City Council will determine whether the project is funded on a "pay as you go" basis or a debt instrument.
The City will continue imposing development impact fees which ensure that a new development pays its fair share of the increased service capacity.
CARRY OVER TO NEXT FISCAL YEAR
To the extent funds are available, any unused appropriations at the end of the fiscal year 2021-22 active capital improvement projects and multi-year programs are hereby re-appropriated for continued use in fiscal year 2022-23.
Appendix
122
Any remaining balances in approved grant programs and capital improvement projects at the end of fiscal year 2021-22 are hereby re-appropriated for continuing use in fiscal year 2022-23 and all estimated revenues from such approved grants and capital improvement projects for fiscal year 2021-22 that are not realized by fiscal year-end are authorized to be continued until the grant period ends.
To the extent funds are available, General Fund encumbrances whereby contracts remained active at the close of fiscal year 2021-22 are carried forward and any corresponding remaining balance of special one-time authorized appropriations are also carried forward with the approval of the City Manager and Administrative Services Director.
FISCAL MANAGEMENT
It is the City's policy to minimize the subsidization by the general taxpayer of the costs of services provided to the public which are of specific benefit, rather than general benefit. The City Council shall annually consider establishing specific cost-recovery policies related to such costs to be reflected in the Master Fee Schedule.
Consistent with the State Constitution, charges for services will not exceed the cost reasonably borne to deliver those services. Costs reasonably borne may include direct and in-direct costs, as well as reasonable reserves or amortization of equipment associated with the provision of the services.
The City will annually review the Master Fee Schedule to ensure that each user fee is reflective of its intended cost-recovery percentage and will revise the fees as needed or revise the cost-recovery percentage.
The City will maintain water and sewer rate structures which are adequate to ensure that these enterprise funds remain firmly and separately self-supporting, including the cost of operation, infrastructure maintenance and replacement, indirect cost recovery, and debt service.
Whenever required by bond indentures, the City will determine whether debt service coverage ratios are being met. Whenever coverage ratios are not being met, staff will recommend rate increases or expenditure reductions or some combination of the two, in order to meet coverage ratios.
An independent firm of certified public accountants will perform an annual financial and compliance audit according to General Accepted Auditing Standards (GAAS) which will be incorporated into the Comprehensive Annual Financial Report.
INVESTMENTS
The City will continue to have a written investment policy approved by City Council resolution annually.
The policy for investments in priority order are safety, liquidity and yield.
Appendix
123
The City Council will receive reports on the cash position and performance of City investments at a minimum of a quarterly basis.
CAPITAL ASSETS
Future maintenance needs for all new capital facilities will be fully costed out.
All equipment and facility maintenance needs for the next five years will be projected and updated annually.
All assets will be maintained at a level that protects capital investment and minimizes future maintenance costs.
Appendix
124
GANN APPROPRIATION LIMIT
City of Grover Beach Gann Appropriations Limit as defined in Article XIII-B of the California State Constitution
The voters of California, during a special election in 1979, approved Article XIII-B of the California State Constitution. Informally known as the "Gann Initiative," Article XIII-B provides limits regarding the total amount of appropriation in any fiscal year from "the proceeds of taxes." The State Legislature, in 1980, added Section 9710 to the Government Code, providing that the governing body of each local jurisdiction must establish, by resolution, an appropriations limit for the following year.
The appropriation limit for any fiscal year was equal to the previous year's limit, adjusted for population changes and the changes in the US Consumer Price Index (or California per capita personal income, if smaller). The necessary statistical information is provided by the California Department of Finance.
However, the original Article XIII-B (Proposition 4) and its implementing legislation were modified by Proposition 111 and SB 88 by the voters in June 1980. The changes were incorporated in the FY 1990-91 appropriations limits. Beginning with the fiscal year 1990-91 appropriations limit, a city may choose annual adjustment factors. The adjustment factors include the growth in the California per capita income or the growth in the non-residential assessed valuation due to construction within the City and the population growth within the county or the City.
The table below provides the calculation for the appropriations limit for fiscal year 2022-23, as well as the total appropriations subject to the limit. The adjustment factors utilized for the fiscal year 2022-23 calculation include the growth in California per capita income and the population growth within the City of Grover Beach. These two factors yielded the most favorable appropriations limit for the City. The City's appropriations subject to the limit ($12.07 million) are below the appropriation limit itself ($12.57 million) as shown in the calculation below.
This page intentionally left blank
Agenda Item No. 11
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: May 23, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Bruce Buckingham, Community Development Director Janet Reese, Associate Planner
SUBJECT: 2022 State Community Development Block Grant Application
RECOMMENDATION
Conduct a public hearing to consider adoption of a Resolution authorizing the submission of a 2022 Community Development Block Grant (CDBG) Public Service application for a NonCongregate Emergency Shelter Operations Program.
BACKGROUND
The U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) program authorizes the use of funds to assist low- and moderate-income families or aid in the prevention or elimination of slums or blight. There are two types of CDBG programs:
“entitlement” and “non-entitlement”. Metropolitan cities and urban counties are entitled to receive annual grants under the “entitlement” program direct from HUD. Metropolitan cities are principal cities or Metropolitan Areas (MAs) or other cities within MAs that have populations of at least 50,000. Urban Counties are within MAs that have population of 200,000 or more excluding the population of metropolitan cities within their boundaries. The “non-entitlement” program is administered by the State Department of Housing and Community Development (HCD) and the City can apply for funding under a competitive application process. The City has previously received a total of $5.8 million of CDBG funding in 2013, 2017, and 2020 for water line improvements and $1.2 million in funding for Eviction Prevention and Security Deposit programs through successful applications for the non-entitlement program. An additional $417,000 in CDBG-CV (CDBG-Coronavirus) funds was also received in 2021 for Warming Shelter Operations, a Childcare Training Program, and a Homeless Services Program.
The 2022 State Notice of Funding Availability (NOFA) involving approximately $30 million in FY 2021-22 CDBG funds was recently released. Eligible jurisdictions may apply for a maximum of three applications, with one project or program per application and total funding not to exceed $1,500,000. Applications for Public Improvements and Public Facilities projects are not being accepted under this NOFA and are not included in the list of eligible activity categories.
The City is required to conduct a public hearing to discuss potential application(s) and allow for public input. Therefore, staff requests that the Council review potential CDBG programs/activities and provide direction on the projects/activities that staff should include in the application(s).
Project/Activity Selection
In order to be considered eligible, a suggested project/activity must meet one or more of the three National Objectives listed in CDBG Federal Statutes:
Staff Report: Potential Projects for 2022 CDBG Program Page 2 June 13, 2022
• Benefit to low- and moderate-income persons;
• Prevention or elimination of slums and blight; or
• Meeting an urgent community need which poses an immediate threat to the health and welfare of the community (State designates when the “urgent need” objective is allowed for a NOFA).
The benefit to low- and moderate-income persons is the most predominately used National Objective. In order to benefit low- or moderate-income persons, the project/activity must either benefit an area that is comprised of at least 51% low- or moderate-income households, or the program benefits individually qualified households (i.e., each participating household is income certified). In addition to meeting one of the three National Objectives, the project/activity must also fall under one of the activity categories listed below. • Public Service (maximum grant of $500,000). Examples include subsistence payments, security deposits, childcare, health care, recreation programs, fair housing counseling, drug and alcohol abuse counseling and testing, homeless services, senior services, and nutrition services benefitting low- and moderate-income persons. • Planning and Technical Assistance (maximum grant of $250,000). The product must show a connection to assisting with an eligible CDBG activity that, if implemented, meets a National Objective. Product(s) are submitted to the State at the time of completion.
Examples include studies, analysis, and data gathering. • Housing Activities:
• Homeownership Assistance Program (maximum grant of $500,000): assistance with loans for down-payment or closing costs.
• Housing Rehabilitation Program for Single Family Homes (maximum grant of $500,000): loans for repairs and improvements of owner-occupied units • Business Assistance (maximum grant of $750,000. Examples include financing of working capital, furniture, equipment, and property repairs/improvements. CDBG regulations allow up to $35,000 of assistance per job retained/created, due to underwriting requirements for business/microenterprise assistance programs, a business would generally receive about $25,000 of the $35,000. Based on the maximum award, approximately 25 jobs could be retained/created.
• Microenterprise Assistance (maximum grant of $250,000). Examples include business training, financing of working capital, furniture, equipment, and property repairs/improvements. CDBG regulations allow up to $35,000 of assistance per job retained/created, due to underwriting requirements for business/microenterprise assistance programs, a business would generally receive about $25,000 of the $35,000.
Based on the maximum award, approximately 7 jobs could be retained/created.
Potential CDBG Projects
In order to provide Council with a list of potential projects, staff has reviewed Council-adopted policies to propose the following list of potential projects. The Council may want to discuss additional activities including those that may be received during the public hearing.
Staff Report: Potential Projects for 2022 CDBG Program Page 3 June 13, 2022
Public Service
• Non-Congregate Emergency Shelter Operations Program: 5Cities Homeless Coalition (5CHC) will be operating a non-congregate emergency shelter that is under construction on a County-owned site at South 16th Street and Long Branch Avenue. While the project has funding for construction and operations through December 2022, future operations are unfunded. Therefore, 5CHC are requesting $467,300 in funding (an additional $32,700 in general administration would be included in the maximum allowable request of $500,000 for a public services activity) to continue this program. (Reference Attachment 2).
Planning and Technical Assistance
• Staff are not aware of a need for an eligible study.
Housing
• Housing Rehabilitation for sites with less than four units: The Housing Element includes goals for seeking financing for housing rehabilitation. This program can provide loans for repairs and improvements to owner- or renter-occupied units at a low interest rate, typically between 0-3%. Due to a significant sum of funds benefitting a relatively low number of beneficiaries, staff does not recommend applying for this program.
• Homeownership Assistance: The Housing Element includes goals for seeking financing for first time homebuyers. This program provides a grant to the City which loans the funds to firsttime homebuyers for down-payment or closing costs. Due to a significant sum of funds benefitting a relatively low number of beneficiaries, staff does not recommend applying for this program.
Business Assistance & Microenterprise Assistance
• This program provides a grant to the City which loans the funds to eligible businesses. The loans are typically for businesses that do not have access to conventional lending sources.
Staff is not aware of any businesses that are seeking such loans.
In conclusion, staff is requesting the Council review potential CDBG programs/activities, provide direction on the projects/activities that staff should include in the application(s), and adopt the Resolution authorizing the submission of a 2022 CDBG application.
ALTERNATIVES
1. Conduct a public hearing to consider adopting a Resolution authorizing the submission of a 2022 CDBG Public Service application for a Non-Congregate Emergency Shelter Operations Program; or
2. Provide alternative direction to staff.
FISCAL IMPACT
Adams Ashby Group, the City’s general administration consultant, estimates the cost to prepare an application to be approximately $2,500. The costs associated with the preparation of applications are an eligible expenditure of CDBG General Administration funds. Approximately 26 percent of the City’s portion of the 2020 CDBG General Administration funds have been expended, with two years remaining in the three-year State contract; therefore, there are sufficient funds to prepare the 2022 CDBG application utilizing 2020 CDBG funds. If awarded, an approved CDBG application is 100% grant funded, including the costs to administer the grant.
Staff Report: Potential Projects for 2022 CDBG Program Page 4 June 13, 2022
PUBLIC NOTIFICATION
The public hearing notice was published in New Times on June 2, 2022 and a copy of this staff report was sent to the 5Cities Homeless Coalition. The agenda was posted in accordance with the Brown Act.
Attachments
1. Resolution
2. 5Cities Homeless Coalition Request Letter
Attachment 1
Department of Housing and Community Development
Revised 10/15/21 2022 CDBG NOFA
RESOLUTION NO.__
A RESOLUTION APPROVING AN APPLICATION FOR FUNDING AND
THE EXECUTION OF A GRANT AGREEMENT AND ANY
AMENDMENTS THERETO FROM THE 2021-2022 FUNDING YEAR OF
THE STATE CDBG PROGRAM
BE IT RESOLVED by the City Council of the City of Grover Beach as follows:
SECTION 1:
The City Council has reviewed and hereby approves the submission to the State of California of one or more application(s) in the aggregate amount, not to exceed, of $500,000 for the following CDBG activities, pursuant to the April 2022 CDBG NOFA:
List activities and amounts
Activity (i.e. Public Services, Housing
Rehabilitation)
Dollar Amount Being Requested for
the Activity
Public Services $500,000
$
$
$
SECTION 2:
The City hereby approves the use of Program Income in an amount not to exceed $0 for the CDBG activities described in Section 1.
SECTION 3:
The City acknowledges compliance with all state and federal public participation requirements in the development of its application(s).
SECTION 4:
The City hereby authorizes and directs the (title of designated official) City Manager, or designee, to execute and deliver all applications and act on the City's behalf in all matters pertaining to all such applications.
SECTION 5:
If an application is approved, the City Manager, or designee, is authorized to enter into, execute and deliver the grant agreement (i.e., Standard Agreement) and any and all Department of Housing and Community Development
Revised 10/15/21 2022 CDBG NOFA
subsequent amendments thereto with the State of California for the purposes of the grant.
SECTION 6:
If an application is approved, the City Manager, or designee, is authorized to sign and submit Funds Requests and all required reporting forms and other documentation as may be required by the State of California from time to time in connection with the grant.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Grover Beach held on June 13, 2022 by the following vote:
AYES: _____ NOES: _____
ABSENT: _____ ABSTAIN: _____
__________________________________
Jeff Lee, Mayor
City Council
STATE OF CALIFORNIA
City of Grover Beach
I, Wendi Sims, City Clerk of the City of Grover Beach, State of California, hereby certify the above and foregoing to be a full, true and correct copy of a resolution adopted by said City Council on this 13th day of June, 2022.
Wendi Sims, City Clerk of the City of Grover Beach,
State of California
By: _____________________________________
**DRAFT**
GROVER BEACH CDBG 22
PROPOSAL - 5CITIES HOMELESS COALITION
DESCRIPTION OF COMMUNITY SERVICES PROVIDED BY 5CHC:
5Cities Homeless Coalition is transforming the lives of those who are homeless or facing homelessness in Southern San Luis Obispo County, with a special focus on the southern region from Avila to Nipomo. Our work goes beyond the immediate, to ensure that clients have the plan, skill sets, education and financial means to be successful and self- sufficient. We are proud to share that more than 90% of the households that we have helped to house (or prevented from eviction) remain in their home. We do this by providing intensive case management and supportive services. We work with clients to develop their own unique plans as well as the resources and skills needed for them to be successfully housed and remain housed. Programs include coordinated assessment; information and referral; pre and post case management with medical respite clients in partnership with Arroyo Grande Community Hospital and Community Action Partnership San Luis Obispo; benefits advocacy (SSI, Medicare, etc.); transitional-age homeless youth outreach and case management; winter warming shelter during inclement weather (18 clients avg); rapid re-housing search and stabilization services and homeless prevention (including budget counseling and financial literacy), and direct financial assistance for immediate needs, rents and deposits. A complete list of services provided by 5CHC is attached and described in our full-year 2020 program report.
The Coalition works closely with local government, business, community agencies and organizations to assess current homeless services and opportunities for collaboration to provide for immediate needs and to maximize our efforts without duplication to cooperatively assist those in need. With the onset of the COVID pandemic requests for assistance have increased to about 600 calls per month.
The Coalition recognizes the impact of homelessness not only to those who are displaced but the community as a whole. Our efforts are focused on preventing homelessness in addition to assisting those who have lost their homes. The cost of living here on the Central Coast for those “living on the edge” is extremely challenging.
Rental rates have increased over 50% since 2013 in San Luis Obispo County; this is the highest increase in the State – and leaves our region among the least affordable in the country.
A recent report by the National Low-Income Housing Coalition, (Out of Reach 2019) noted that a minimum wage earner would have to work 99 hours per week to afford a 2- bedroom apartment in San Luis Obispo County. This challenge has a direct effect on the City’s strategic economic development efforts to encourage development for maintaining a vibrant tourist-based economy, which is dependent on service industry workers whose wages are not keeping up with housing cost increases. These are among the community members who are seeking our assistance almost daily.
Attachment 2
HOMELESS PROGRAMS: Non-Congregate Emergency Shelter
The solution to ending homelessness lies with having sufficient housing availability.
Helping those experiencing homelessness to find permanent housing remains the core mission of 5Cities Homeless Coalition. However, there is a need to provide interim shelter and services both for the well-being of those living on the streets and for the health and safety of the broader community.
The lack of shelter in San Luis Obispo County for those experiencing homelessness is severe. San Luis Obispo County ranks 3rd in the nation for the highest unsheltered percentage (79%) of those who are homeless for a largely suburban area, per the 2019 Annual Homeless Assessment Report presented to Congress. In the southern portion of the county, there are no shelters.
In 2018 the County Board of Supervisors recognized the challenge, by declaring a homeless shelter crisis, that would enable the County to begin receiving state and federal funding to address this challenge. This crisis continues to increase. In the time since, no permanent shelter location has been identified in the south county, and housing scarcity continues to worsen due to rising rents and limited wages.
Unsheltered homelessness in San Luis Obispo County has been trending upwards since 2016, growing by 22 percent over the last five years. With the onset of the COVID-19 pandemic, providing shelter became even more challenging, as health and safety procedures required those providing congregate shelters in the county to reduce the number who could be served, and for some periods to close their doors completely due to a COVID outbreak.
Recognizing these challenges, our community is resolved to take steps to address this growing challenge with the creation and operation of a non-congregate emergency shelter in Grover Beach. Planned to open in summer of 2022, the shelter will provide temporary housing for approximately 30 participants seeking to find housing stability.
This project is a demonstration of these partnerships, involving the County of San Luis Obispo, City of Grover Beach, and 5Cities Homeless Coalition as the service provider. 5Cities Homeless Coalition has a long-standing footprint in our community providing outreach, winter shelter (warming center) and housing services.
The funds provided through this grant will enable continued operation in 2023-24, as other funding sources sunset.
How Will This Project Make A Difference?
Health and Safety: First and foremost, the project will provide a safe place for those experiencing homelessness. Those who are currently living in their car or on the street, will have a clean, safe place to sleep – enabling them to change their focus from that of living on the street to looking forward. With the stability of these temporary cabins, guests will be able to engage with services to help them to ready for permanent longterm housing and self-sufficiency.
Housing and Income: Those who are homeless experience multiple barriers to securing permanent housing, including limited or no income. Working with 5Cities Homeless Coalition and other community partners, guests will work on their individualized housing stability plan to address the individual’s barriers to permanent housing and identify opportunities. Envisioned to be a 90-day program, guests will meet regularly with their case manager and attend educational sessions to develop life-skills, money management, job training, etc. With the support of 5CHC and other service providers, guests will be connected to other community resources and benefits to help them bridge the gap of high housing costs and little or no income.
Co-location at this site with the Courts, County Drug and Alcohol, and County Public Health affords an opportunity to work more closely potentially piloting specialized services for this population.
The location of the shelter is currently unused, and therefore will not displace any other service or activity. The modular design of the project will ensure that is has limited impact to the site, with minimal change. Also, the co-location at this site with the Courts, County Drug and Alcohol, and County Public Health affords an opportunity to work more closely, potentially with pilot services specific to this program. The County of San Luis Obispo has issued a use permit to the Coalition for the site, which is currently being developed.
23-24 Non-Congregate Shelter Budget Total GB Request
Income:
County of San Luis Obispo ARPA $650,000
County of San Luis Obispo ESG $300,000
City of Arroyo Grande $300,000
City Of Pismo Beach (not- secured) $300,000
City of Grover Beach CDBG $465,000 $465,000
Private Contributions $54,909
TOTAL INCOME $2,069,909
Laundry - bedding and Towels $104,000 $28,080
Laundry - per client per week $62,400 $16,848
Utilities Per Person Estimate $72,000 $19,440
Sanitation/Cleaning $10,400 $2,808
WiFi Monthly Fee $6,000 $1,620
Food $438,000 $122,000
Outreach & Shelter Program Manager $69,000 $19,000
Shelter Supervisor $116,480 $32,000
Case Manager $104,000 $29,050
Non-Congregate Emergency Shelter Staff $898,560 $189,675 HMIS $16,000 $4,479
Insurance & Worker's Comp $5,000
Shared Indirect Expenses@ 10% $168,069 $2,300
TOTAL EXPENSE $2,069,909 $465,000
Agenda Item No. 12
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: June 13, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Jim Munro, Commander
John Peters, Chief of Police
SUBJECT: Resolution Authorizing the Purchase of Additional Unmanned Aerial Systems (Drones), Accepting a Donation of a Remote-Controlled Robot, and Updating the Police Department’s Military Equipment Policy as Required by AB 481
RECOMMENDATION
Adopt the Resolution Authorizing the Purchase of Additional Unmanned Aerial Systems (Drones), Accepting a Donation of a Remote-Controlled Robot, and Updating the Police Department’s Military Equipment Policy as required by AB 481
BACKGROUND
Assembly Bill 481 (AB 481), codified in Government Code sections 7070 through 7075 requires a law enforcement agency to obtain approval from their governing body, via adoption of a “military equipment” use policy by ordinance, prior to the agency funding, acquiring, or using military equipment. The Grover Beach Police Department seeks to purchase several new unmanned aerial systems (hereafter referred to as “drones”) and receive a donation of a ground robot to enhance officer and community safety. Though these items are publicly available to be purchased by anyone, AB 481 considers them “military equipment” if used by law enforcement.
On March 14, 2022, the City Council enacted Ordinance 22-01, approving the Police Department’s Military Equipment Policy #707. Staff has drafted amendments to the equipment listed in the policy and to include adding new drones the Police Department intends to purchase with existing funding in this current fiscal year FY 2021-22 and removing two pieces of equipment that were recently donated to other agencies. The additional drones meet different operational needs of the Police Department including crime scene/accident mapping, interior building searches, large-area searches, fireworks enforcement, and night-time searches. With these requested purchases, the Police Department will have a total of 12 drones with 7 certified FAAcertified drone pilots.
Additionally, staff is seeking Council acceptance of a donation of a remote-controlled ground robot ($25,500 value) that will assist officers in searching buildings and communicating with barricaded persons. Acquiring this equipment is an innovative approach to help keep our officers and community safe through the use of technology. This donation is from a local business with locations in other communities and thus similar donations are being offered to other law enforcement agencies in the region.
As a summary, staff requests authorization to purchase the following equipment:
Staff Report: Update to Military Equipment Policy Page 3 June 13, 2022
1. DJI Matrice 30T Combo
a. Cost: $14,000
b. Quantity: 1
c. Description: UAS that has color and infrared recording camera. Flight time is approximately 45 minutes. Primary use will be large outdoor searches and SWAT operations.
2. Brinc Lemur Tactical UAS
a. Cost: $8,999
b. Quantity: 1
c. Description: UAS that has color and infrared recording capabilities. Unit is capable of breaking windows, two-way communications, and is ideal for indoor searches.
3. Autel EVO II V2 Pro 6k UAS
a. Cost: $2,700
b. Quantity: 1
c. Description: UAS with color recording camera, measuring software and approximately 40 minutes of flight time. Primary use will be crime scene and accident scene reconstruction.
4. DJI Mavic Mini 3
a. Cost: $500 each
b. Quantity: 5
c. Description: Miniature UAS that can record video with approximately 25 minutes of flight time. Primary use is for patrol officers to assist in building searches at burglary alarms.
Staff also requests the authorization to receive a community donation of the following equipment:
1. Transcend Robotics Vantage Model
a. Cost: No cost. ($25,500 value)
b. Quantity: 1
c. Description: Radio controlled ground robot with a camera used to search for and communicate with dangerous suspects.
Pending Council approval of the above items, staff recommends the updating of equipment listed in the current AB 481 policy. Two items that were recently removed from the Police Department inventory were the 1994 Chevrolet Mobile Command Vehicle and the Mobile Military Kitchen.
Both of these items were donated to other agencies for their use and thus staff recommends the removal of these items from the AB 481 list. Staff also recommends adding language to the policy that allows for the replenishment and replacement of previously approved equipment that may have been expended or no longer in serviceable condition.
FISCAL IMPACT
The total purchase cost of the drones is $28,199 which will be funded in the existing operating budget for FY 2021-22. The remote-controlled robot would be donated and there is no fiscal impact on receiving the equipment.
Staff Report: Update to Military Equipment Policy Page 3 June 13, 2022
ALTERNATIVES
The Council has the following alternatives to consider:
1. Adopt the Resolution Authorizing the Purchase of Additional Unmanned Aerial Systems (Drones), Accepting a Donation of a Remote-Controlled Robot, and Updating the Police Department’s Military Equipment Policy as required by AB 481; or
2. Modify the Resolution and equipment acquisitions; or
3. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Resolution No. 22-XX.
2. Draft Amended Police Department Military Equipment Policy.
Attachment 1
RESOLUTION NO. 22-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GROVER BEACH,
CALIFORNIA, AUTHORIZING THE PURCHASE OF ADDITIONAL UNMANNED AERIAL SYSTEMS (DRONES), ACCEPTING A DONATION OF A REMOTECONTROLLED ROBOT, AND UPDATING THE POLICE DEPARTMENT’S MILITARY EQUIPMENT POLICY AS REQUIRED BY AB 481
WHEREAS, Assembly Bill 481 (AB 481), codified in Government Code sections 7070 through 7075 requires a law enforcement agency to obtain approval from their governing body, via adoption of a “military equipment” use policy by ordinance, prior to the agency funding, acquiring, or using military equipment; and
WHEREAS, on March 14, 2022, the City Council enacted Ordinance #22-01, approving the Police Department’s Military Equipment Policy #707; and WHEREAS, the Police Department seeks to purchase several new unmanned aerial systems (Drones), receive a donation of a ground robot to enhance officer and community safety, and make amendments to the Military Equipment Use Policy; and WHEREAS, the equipment listed in the staff report is to be purchased utilizing funding that is already available in the approved Police Department budget and the equipment to be donated, valued at $25,500, would not have a financial impact on the Police Department budget.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Grover Beach does hereby authorize the Police Department to purchase additional Unmanned Aerial Systems (Drones), accept a donation of a remote-controlled robot, and Update the Police Department’s Military Equipment Policy.
On motion by ___________, second by ____________, and on the following roll call vote, to wit:
AYES: Council Members:
NOES: Council Members:
ABSENT: Council Members:
ABSTAIN: Council Members:
the foregoing Resolution was PASSED, APPROVED, AND ADOPTED at the Regular Meeting of the City Council of the City of Grover Beach, California, this 13th day of June, 2022. ** D R A F T **
___________________________
JEFF LEE, MAYOR
ATTEST:
______________________________
WENDI SIMS, CITY CLERK
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 1 Published with permission by Grover Beach Police
Department
Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
707.1 PURPOSE
State MODIFIED
This policy establishes guidelines for the acquisition, funding, use and reporting of "military equipment", as the term is defined in Government Code section 7070. This policy is provided to fulfill the obligations set forth in Assembly Bill No. 481. These obligations include but are not limited to seeking approval on specific items deemed to be military equipment and requirements related to compliance, annual reporting, cataloging, and complaints regarding these items. 707.2 POLICY
State MODIFIED
It is the policy of the Grover Beach Police Department that there are legally enforceable safeguards, including transparency, oversight, and accountability measures in place to protect the public's welfare, safety, civil rights, and civil liberties before military equipment is funded, acquired, or used.
707.3 PHILOSOPHY
State MODIFIED
The acquisition of military equipment and its deployment in our communities may impact the public's safety and welfare. The public has a right to know about any funding, acquisition, or use of military equipment by local government officials, as well as a right to participate in any government agency's decision to fund, acquire, or use such equipment. Decisions regarding whether and how military equipment is funded, acquired, or used should give strong consideration to the public's welfare, safety, civil rights, and civil liberties, and should be based on meaningful public input.
707.4 PROCEDURE
State MODIFIED
A. DEFINITIONS
1. Governing Body – The elected entity that oversees the Grover Beach Police Department
2. Military Equipment – Any of a wide variety of items as defined by California Government Code section 7070, subsections (c)(1) through (c)(16).
Policy
707
Attachment 2
Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 2 Published with permission by Grover Beach Police
Department
B. GENERAL
1. The Department shall obtain approval of the governing body annually prior to engaging in any of the following activities:
a. Requesting military equipment made available pursuant to Section 2576a of Title10 of the United States Code.
b. Seeking funds for military equipment including, but not limited to, applying for a grant, soliciting or accepting private, local, state, or federal funds, in-kind donations, or other donations or transfers.
c. Acquiring military equipment either permanently or temporarily, including by borrowing or leasing.
d. Collaborating with another law enforcement agency in the deployment or other use of military equipment within the territorial jurisdiction of the governing body. e. Using any new or existing military equipment for a purpose, in a manner, or by a person not previously approved by the governing body pursuant to general order. f. Soliciting or responding to a proposal for, or entering into an agreement with, another person or entity to seek funds for, apply to receive, acquire, use, or collaborate in the use of, military equipment.
2. In seeking the approval of the governing body, the Department shall submit a proposed military equipment use policy, or subsequent amendments, to the City Council and the public via the law enforcement agency's internet website at least 30 days prior to any public hearing concerning the military equipment at issue.
C. MILITARY EQUIPMENT USE CONSIDERATIONS
1. The military equipment acquired and authorized by the Department is:
a. Necessary because there is no reasonable alternative that can achieve the same objective of officer and civilian safety.
b. Reasonably cost effective compared to available alternatives that can achieve the same objective of officer and civilian safety.
2. Military equipment shall only be used by a Department employee only after applicable training, including any course required by the Commission on Peace Officer Standards and Training, has been completed, unless exigent circumstances arise.
D. MILITARY EQUIPMENT REPORTING CONSIDERATIONS
1. The Department shall submit an annual military equipment report to the Governing Body that addresses each type of military equipment possessed by the Department.
2. The Department shall also make each annual military equipment report publicly available on its internet website for as long as the military equipment is available for use.
Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 3 Published with permission by Grover Beach Police
Department
3. The annual military equipment report shall, at a minimum, include the following information for the immediately preceding calendar year for each type of military equipment:
a. A summary of how the military equipment was used and the purpose of its use. b. A summary of any complaints or concerns received concerning the military equipment.
c. The results of any internal audits, any information about violations of the military equipment use policy, and any actions taken in response. d. The total annual cost for each type of military equipment, including acquisition, personnel, training, transportation, maintenance, storage, upgrade, and other ongoing costs, and from what source funds will be provided for the military equipment in the calendar year following submission of the annual military equipment report.
e. The quantity possessed for each type of military equipment. f. If GBPD intends to acquire additional military equipment in the next year, the quantity sought for each type of military equipment.
g. Within 30 days of submitting and publicly releasing an annual military equipment report, GBPD shall hold at least one well-publicized and conveniently located community engagement meeting, at which the general public may discuss and ask questions regarding the annual military equipment report and GBPD's funding, acquisition, or use of military equipment. This shall occur as a part of GBPD's presentation to the governing body.
E. CATALOGING OF MILITARY USE EQUIPMENT
All military use equipment kept and maintained by the Grover Beach Police Department shall be cataloged in a way which addresses each of the following requirements:
1. The manufacturer’s description of the equipment.
2. The capabilities of the equipment.
3. The purposes and authorized uses for which the Department proposes to use the equipment.
4. The expected lifespan of the equipment.
5. The fiscal impact of the equipment, both initially and for on-going maintenance.
6. The quantity of the equipment, whether maintained or sought.
F. COMPLIANCE
1. The Operations Commander will ensure that all Department members comply with this policy. The Operations Commander will conduct an annual audit with the assistance of the Support Services Commander. The Chief of Police or designee will be notified of any policy violations and, if needed, the violation(s) will be referred to the Internal Affairs Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 4 Published with permission by Grover Beach Police
Department
Division and handled in accordance with Policy 1014. All instances of non-compliance will be reported to City Council via the annual military equipment report.
2. Any member of the public can register a questions or concern regarding military use equipment by contacting the Grover Beach Police Department via email at [email protected]. A response to the question or concern shall be completed by the Department in a timely manner.
3. Any member of the public can submit a complaint to any member of the Department and in any form (i.e. in person, telephone, email, etc.). Once the complaint is received, it shall be routed to the Internal Affairs Division in accordance with Policy 1014 (Personnel Complaints).
G. COORDINATION WITH OTHER JURISDICTIONS
The Grover Beach Police Department participates in the San Luis Obispo County Regional Special Weapons and Tactics (SWAT) team and works closely with other local, county, state, and federal law enforcement partners. In planned or exigent circumstances, and with the approval of the Chief of Police or their designee, military equipment may be deployed by these law enforcement partners to promote the safety and security of Grover Beach community members.
The Chief of Police or their designee will provide information during the annual report on the use of military equipment within the city limits of Grover Beach by other law enforcement partners during Grover Beach Police Department operational incidents.
H. FUNDING
The Department shall seek council approval for military equipment, including, but not limited to, applying for a grant, soliciting or accepting private, local, state, or federal funds, in-kind donations, or other donations or transfers.
1. The Department has authority to apply for funding prior to obtaining council approval in the case of exigent circumstances. The Department shall obtain council approval as soon as practicable.
I. REPLENISHMENT AND REPLACEMENT
The Department, operating within its approved budget, may replenish or replace any previously approved piece of equipment that was expended or is no longer serviceable without first getting City Council approval. The Department will highlight the replenishment or replacement in the annual report to City Council.
707.5 LIST OF MILITARY USE EQUIPMENT
Agency Content
(a) Unmanned Aerial Systems (UAS)
1. Description, quantity, capabilities, and purchase cost of current UAS (a) DJI Mavic Mini
Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 5 Published with permission by Grover Beach Police
Department
1. Cost: $500 each
2. Quantity: 2
3. Description: Miniature UAS that can record video with approximately 25 minutes of flight time
(b) DJI Dual Enterprise Advanced
(a) Cost: $5,500
(b) Quantity: 2
(c) Description: UAS that has color and infrared recording camera in addition to a detachable speaker and light. Approximately 30 minutes of flight time.
(d) Projected Purchases for fiscal year 2022/23
(a) DJI Matrice 30T Combo
(a) Cost: $14,000
(b) Quantity: 1
(c) Description: UAS that has color and infrared recording camera. Flight time is approximately 45 minutes.
Primary use will be large outdoor searches and SWAT
operations.
(b) Brinc Lemur Tactical UAS
(a) Cost: $8,999
(b) Quantity: 1
(c) Description: UAS that has color and infrared recording capabilities. Unit is capable of breaking windows,
twoway communications, and is ideal for indoor
searches.
(c) Autel EVO II V2 Pro 6k UAS
(a) Cost: $2,700
(b) Quantity: 1
(c) Description: UAS with color recording camera and
approximately 40 minutes of flight time. Primary use will be crime scene and accident reconstruction.
(d) DJI Mavic Mini 3
(a) Cost: $500 each
Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 6 Published with permission by Grover Beach Police
Department
(b) Quantity: 5
(c) Description: Miniature UAS that can record video with approximately 25 minutes of flight time.
2. Purpose: To be used for aerial views of major crimes scenes, accident scenes, missing person searches, natural disaster management, SWAT or tactical missions, interior and exterior searches
3. Authorized Use: Only assigned and trained UAS Pilots are authorized to operate GBPD UAS systems. All GBPD Pilots are certified by the FAA.
4. Expected Life Span: 3-5 years
5. Fiscal Impact: Annual maintenance and battery replacement is approximately $2500
6. Training: All GBPD UAS operators are licensed by the Federal Aviation Administration for UAS operations. Additionally, each operator must complete the GBPD training course.
(b) Armored Vehicles
1. Description, quantity, capabilities, and purchase cost (a) 2008 Lenco Bearcat
1. Cost: $180,000
2. Quantity: 1
3. Description: Armored vehicle that seats 6-8 personnel with an open floor plan that allows rescue of injured personnel or community members. The armor can stop various projectiles providing great safety to the officers and community.
2. Purpose: To be used in response to critical incidents to enhance safety of the community, officers, and to improve scene containment and assist in resolving critical incidents.
3. Authorized Use: The use of the armored vehicle is limited to GBPD staff members that have received training in the use and operation of the vehicle.
Deployments of the vehicle are to be authorized by a Commander or the Chief of Police.
4. Lifespan: Estimated at 20 years
5. Fiscal Impact: Annual Maintenance of approximately $2500
6. Training: All drivers/operators shall attend training in vehicle operations and practical driving instruction.
(c) 40mm Launchers and Rounds, Bean Bags
1. Description, quantity, capabilities, and purchase cost Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 7 Published with permission by Grover Beach Police
Department
(a) Penn arms, 40mm single shot launcher
1. Cost: $850
2. Quantity: 6
3. Description: Single shot launcher that fires standard 40mm less lethal ammunition
(b) Penn arms, 40mm multi launcher
1. Cost: $2720
2. Quantity: 1
3. Description: Multiple shot launcher that fires standard 40mm less lethal ammunition
(c) 40mm rounds, CTS 4504
1. Cost: $1,057
2. Quantity: 120
3. Description: Foam projectile shot from a 40mm launcher (d) Bean Bag Rounds, Accusox Brand
1. Cost: $1,200
2. Quantity: 400
3. Description: Kevlar/Cotton sock type material filled with lead pellets
2. Purpose: To limit escalation of conflict where employment of lethal force is prohibited or undesirable
3. Authorized Use: Situations for which the launchers/bean bags may be used may include, but are not limited to:
(a) Self-destructive, dangerous, and/or combative behavior (b) Riot/crowd control and civil unrest
(c) Circumstances where a tactical advantage can be obtained (d) Potentially vicious animals
(e) Training exercised or approved demonstrations
4. Training: Sworn members using 40mm less lethal munitions are trained in their use by POST Certified instructors
5. Lifespan: 15 years
6. Fiscal Impact: Annual maintenance is estimated to be $100 annually Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 8 Published with permission by Grover Beach Police
Department
(d) Rifles
1. Description, quantity, capabilities, and purchase cost (a) Colt M-4 5.56 Cal.
1. Cost: $1300
2. Quantity: 9
3. Description: Gun that are fired from shoulder level, having a long spiral grooved barrel intended to make bullets spin and thereby have greater accuracy over a long distance (b) Colt M-16 A2.223 Cal.
1. Cost: $1000
2. Quantity: 2
3. Description: Gun that are fired from shoulder level, having a long spiral grooved barrel intended to make bullets spin and thereby have greater accuracy over a long distance
(c) Accuracy International.308 sniper rifle
1. Cost: $4,600
2. Quantity: 1
3. Description: Gun that are fired from shoulder level, having a long spiral grooved barrel intended to make bullets spin and thereby have greater accuracy over a long distance
2. Purpose: To be used as precision weapons to address a threat with more precision and/or greater distances than a handgun
3. Authorized Use: Use is limited to GBPD officers that are POST certified and trained in rifle use
4. Lifespan: 10-15 years
5. Fiscal Impact: Annual maintenance for the rifle is approximately $100
6. Training: Prior to using a rifle, officers must be trained by POST instructors and must pass an annual qualification.
(e) Distraction Devices
1. Description, quantity, capabilities, and purchase cost (a) Defense Tech 15 GM Low Roll
1. Cost: $50/each
2. Quantity: 6
3. Description: Distraction device that delivers a loud "bang" and flashing light
Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 9 Published with permission by Grover Beach Police
Department
2. Purpose: A distraction device is commonly used when trying to distract dangerous suspects during emergency situations such as hostage calls, search warrants, and violent crimes. These devices use atmospheric over-pressure and brilliant white light to temporarily distract for a tactical advantage.
3. Authorized Use: Distraction devices are only to be used by trained operators.
Use is covered by GBPD policy. These devices are commonly used in high risk situations commonly handled by a SWAT team.
4. Training: Prior to use, officers must attend and pass training provided by a POST certified instructor.
5. Lifespan: Until used.
6. Fiscal Impact: No annual maintenance.
(f) Tear Gas
1. Description, quantity, capabilities, and purchase cost (a) Defense Tech Riot Control Discharge Grenade, OC
1. Cost: $35/each
2. Quantity: 6
3. Description: Delivers large plumes of smoke and OC agent (b) Defense Tech Riot Control Discharge Grenade, CS Smoke
1. Cost: $25/each
2. Quantity: 4
3. Description: Delivers large plumes of smoke and CS agent (c) Defense Tech Triple Chaser Riot Control Discharge Grenade, CS
1. Cost: $44/each
2. Quantity: 2
3. Description: Delivers large plumes of CS agent
2. Purpose: To limit the escalation of conflict where employment of lethal force of prohibited or undesirable.
3. Authorized Use: Only officers trained in the use of chemical agents by a POST certified trainer are authorized to deploy chemical agents.
4. Training: Sworn members using chemical agents are to attend a POST certified training prior to use.
5. Lifespan: 5 years from manufacturing date
6. Fiscal Impact: No annual maintenance.
Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 10 Published with permission by Grover Beach Police
Department
(g) Mobile Command Vehicles
1. Description, quantity, capabilities, and purchase cost (a) 1994 Chevrolet Command Vehicle
1. Cost: Donated, no cost
2. Quantity: 1
(b) 2021 LDV Command Vehicle (To be acquired in 2022)
1. Cost: $372,000
2. Quantity: 1
2. Purpose: To be used as a mobile command post for large incidents, crime scenes, community events, emergencies, and tactical situations
3. Authorized Use: Only officers trained the operation of the mobile command vehicle may drive/operate the vehicle.
4. Lifespan:
(a) 1994 Chevrolet: 1 year
(b) (a) 2021 LDV MCV: 20 years
5. Fiscal Impact: Annual Maintenance of $1000
6. Training: Drivers/Operators of the MCV shall have approved GBPD training and appropriate State of California drivers license.
(h) Military Surplus Generator
1. Description, quantity, capabilities, and purchase cost (a) 2010 IPTHR Utility Trailer with Generator
1. Cost: No cost
2. Quantity: 1
3. Description: Portable generator used to create electric power
2. Purpose: To be used during situations requiring electric power.
3. Authorized Use: Users are limited to those that have been provided department training on the use and setup of the equipment.
4. Training: Training on the use and operation is provided by staff of the GBPD who are trained in the operation of the equipment.
5. Lifespan: 10 years
6. Fiscal Impact: None
Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 11 Published with permission by Grover Beach Police
Department
(i) Military Surplus Mobile Kitchen
1. Description, quantity, capabilities and purchase cost i. Unknown year Utility Trailer with Mobile Kitchen
1. Cost: No Cost
2. Quantity: 1
3. Description: Mobile kitchen and food preparation when needed in certain emergency situations. b. Purpose: To be used during situations requiring food preparation on a large scale. c. Authorized Use: Users are limited to those that have been provided department training on the use and setup of the equipment.
d. Lifespan: 10 years
e. Fiscal Impact: None
10. Riot Helmets
a. Description, quantity, capabilities and purchase cost i. Protech Helmets
1. Cost: $575 each
2. Quantity: 25
3. Description: Black strap closure helmets with ballistic protection b. Purpose: To be used during situations requiring proper head protection against objects or gunfire.
c. Authorized Use: Users are limited to those that have been provided department training on the use and setup of the equipment. d. Lifespan: 10 years
e. Fiscal Impact: None
11. Riot Shields
a. Description, quantity, capabilities and purchase cost i. Plastic Shields
1. Cost: $275 each
2. Quantity: 8
3. Description: black shield with arm and shoulder mounting straps b. Purpose: To be used during situations requiring protection of officers from objects. c. Authorized Use: Users are limited to those that have been provided department training on the use and setup of the equipment.
Grover Beach Police Department
Grover Beach PD Policy Manual
Military Equipment
Copyright Lexipol, LLC 2022/05/05, All Rights Reserved. ***DRAFT*** Military Equipment - 12 Published with permission by Grover Beach Police
Department
d. Lifespan: 10 years
e. Fiscal Impact: None
12. Riot Batons
a. Description, quantity, capabilities and purchase cost i. Batons
1. Cost: $25 each
2. Quantity: 8
3. Description: Black riot baton
b. Purpose: To be used during situations requiring protection of officers from hostile crowds.
c. Authorized Use: Users are limited to those that have been provided department training on the use and setup of the equipment.
d. Lifespan: 10 years
e. Fiscal Impact: None
13. Remote Control Robot (Projected Donation for Fiscal Year 2021/22) (a) Transcend Robotics Vantage Model
(a) Cost: No cost. ($25,500 value)
(b) Quantity: 1
(c) Description: Radio controlled ground robot with a camera used to search for dangerous suspects.
(d) Purpose: To be used for searching high-risk locations where a robot can be used to improve officer and community safety.
(e) Training: GBPD employees authorized to deploy the robot will be required to complete minimum training as required by the manufacturer. (f) Fiscal Impact: Annual maintenance and battery replacement is estimated at approximately $250.
(g) Expected Life Span: 5-7 years
(h) Authorized Use: Authorized users include any GBPD employee with required training.