Agenda packet — Finance Committee, March 20, 2023 (part 2 of 2)

budget adjustment will align the project budgets with the funding held in deferred revenue.

DISCUSSION:

Every year, the Stanislaus Council of Governments (StanCOG) distributes within their jurisdiction approximately $24.5 million in LTF and State Transit Assistance funds as required by the Transportation Development Act (TDA). TDA funds are primarily intended for transit needs, however, the TDA mandates that 2% of the LTF funds be apportioned for non-motorized (bicycle and pedestrian) purposes.

On February 15, 2023, StanCOG apportioned $297,316 for non-motorized purposes for FY 2022-2023 to be allocated between several jurisdictions in the county. The City of Modesto was allocated $234,769 for the bicycle and pedestrian projects. In addition, the City will receive $62,547 in supplemental funding from FY 2021-2022. (StanCOG Resolution 21-40 is attached).

This funding will be used for the Virginia Corridor Phase VII project to continue development of the trail from Woodrow Avenue to the Hetch-Hetchy Trail (CIP 100813) FISCAL IMPACT:

This claim for Local Transportation Funds for non-motorized purposes is the formal request by the City to StanCOG to release its apportionment of LTF funds for non-motorized projects and non-motorized interest during the current fiscal year. In addition, the City is also claiming a total of $62,547 in supplemental LTF funds for FY2021-22, allocated to the City of Modesto under StanCOG’s resolution 22-35 (attached).

Apportionments for non-motorized 2% LTF
FY 2022-2023 Award $234,769
FY 2021-2022 Supplemental Award $ 62,547
Total $297,316
The revenue shall be allocated to the following CIP projects:
100813 – Virginia Corridor Phase VII $297,316
Total $297,316
Additionally, $369,066 of accumulated interest and prior year claim funds are being recognized and allocated to the Virginia Corridor Phase VII project. The total increase is $666,382.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion approving the submission of the City’s Local Transportation Funds Fiscal Year 2022-2023 Claim for Non-Motorized and Other Purposes (bike lanes and pedestrian pathways) in the amount of $297,316 to the Stanislaus Council of Governments (StanCOG) and amending the Fiscal Year 2022-2023 Capital Improvement Program Budget to fund project 100813 – Virginia Corridor Phase VII in an amount not to exceed $666,382 and forwarding to Council for approval.

Approved by:

Laurie A. Smith, Director
Parks, Recreation & Neighborhoods Department
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Finance Committee, March 20, 2023
Local Transportation Funds FY 2022/2023 for other purposes

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Joseph P. Lopez, City Manager
Attachments:

1. FY22/23 LTF claim

2. StanCOG Resolution 21-40

3. StanCOG Resolution 22-35
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TO: Stanislaus Council of Governments
1111 I Street, Suite 308
Modesto, CA 95354
FROM: Applicant: City of Modesto
Address:

City Zip:

Contact Person: Phone:

E-mail Address: Fax:

The City of Modesto hereby requests, in accordance with the Transportation Development Act and applicable rules and regulations, that its claim for other purposes be approved in the amount of for fiscal year 2022/23, to be drawn from the Local Transportation Fund.

When approved, please transmit this claim to the County Auditor for payment. Approval of the claim and payment by the County Auditor to this applicant is subject to such monies being on hand and available for distribution, and to the provisions that such monies will be used only in accordance with the terms contained in the approving resolution to the Stanislaus Council of Governments.

The claimant certifies that this Local Transportation Fund claim and the financial information contained therein is reasonable and accurate to the best of my knowledge and conforms with the requirements of the Transportation Development Act and applicable rules and regulations.

Submitted by:

Title:

Date:

StanCOG Board of Directors:

Date of approval:

Resolution #:

StanCOG Approving Authority

LOCAL TRANSPORTATION FUND
CLAIM FOR FISCAL YEAR 2022/23 OTHER PURPOSES

TRANSPORTATION DEVELOPMENT ACT
$ 297,316.00

Page 1 ends

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CLAIMANT: City of Modesto

1. Planning, Local
--PUC 99262/99402 $ -

2. Planning, Local Transit
_______________________ * $ -

3. Streets and Roads
--PUC 99400 (a)

4. Nonmotorized - 2% LTF funds
--PUC 99233.2/99234 $ 297,316.00

5. Nonmotorized - Other LTF funds
--PUC 99233.2/99234 $ -

6. TOTAL CLAIM $ 297,316.00
City of Modesto
Total LTF available to be claimed for other purposes:

FY 2021/22 Nonmotorized Supplemental $ 62,547
FY 2022/23 Nonmotorized Apportionment $ 234,769
Total 2% Nonmotorized $ 297,316.00
Total available to be claimed at this time $ 297,316.00 * If you have proposed transit expenditures, please fill in the appropriate PUC Code.

This table is to be filled out by StanCOG staff

LOCAL TRANSPORTATION FUND

CLAIM FOR OTHER PURPOSES
TABLE 1
FY 2022/23

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CLAIMANT: City of Modesto

ACTUAL /
B P P PROJECT PROJECT 2020/21 2021/22 2022/23 ESTIMATED

I E L IN IN ACTUAL ESTIMATED CLAIM EXPENDITURES
K D A StanCOG's CITY/CO EXPENDITURES EXPENDITURES FOR 3 YEAR

E N BIKE BIKE PERIOD
ID PROJECT TITLE PLAN * PLAN *
100692 Bike Lane Striping x YES $317.10 $1,058.23 $60,456.85 $61,832.18 100813 Virginia Corridor Phase VII x x YES $285,568.84 $708.38 $1,541,891.62 $1,828,168.84 101232 TRRP Riverwalk Prjct: Gateway to Legion x x YES YES $0.00 $0.00 $189,759.00 $189,759.00 $0.00 $0.00 $0.00 $0.00
$285,885.94 $1,766.61 $1,792,107.47 $2,079,760.02
2018/19 2019/20 2020/21 2021/22 2022/23 5 Year
Actual Actual Actual Estimate Claim Total
Bicycle facilities $155,089.23 $65,150.60 $143,101.52 $1,412.42 $926,282.16 $1,291,035.93 Pedestrian facilities $154,154.89 $65,150.60 $142,784.42 $354.19 $865,825.31 $1,228,269.41 Preparation of Bicycle Plan $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $309,244.12 $130,301.20 $285,885.94 $1,766.61 $1,792,107.47 $2,519,305.34 YES
StanCOG 50% bicycle expenditure requirement: The 5 year bicycle expenditures must be 50% or greater. 2019/20 2020/21 2021/22 2022/23
Fiscal year beginning fund balance $1,227,691.45 $1,326,784.30 $1,230,461.24 $1,494,791.47 Plus fiscal year 2% nonmotorized claim $184,975.00 $189,759.00 $265,431.27 $0.00 Plus interest $44,419.05 ($513.22) $665.57 $0.00
Minus nonmotorized expenditures ($130,301.20) ($285,568.84) ($1,766.61) $0.00 $1,326,784.30 $1,230,461.24 $1,494,791.47 $1,494,791.47

1. Prior year(s) LTF carryover held by jurisdiction applied towards FY 2022/23 Nonmotorized claim (TABLE 4)

3. FY 2022/23 Nonmotorized 2% funds applied towards FY 2022/23 projects (must match Page 2, Line 4)

4. FY 2022/23 Other LTF funds applied towards Nonmotorized claim (must match Page 2, Line 5)

5. FY 2022/23 Nonmotorized 2% funds to be held at StanCOG

6. Total of lines #1 through #5 above
$0
* SEE PAGE 3b FOR NONMOTORIZED REGULATIONS/POLICIES AND NOTES $0
$297,316
$1,792,107
$0

2. Interest earned on previously paid LTF funds held by jurisdiction (required by State law) (TABLE 4) $1,494,791

NONMOTORIZED PROJECTS
(Use additional forms if necessary)
BRIEFLY DESCRIBE PROJECTS AND EXPENDITURES INCLUDED IN THE 3 YEAR PERIOD BELOW FY 2022/23

RECORD LTF FUNDS ONLY
TABLE 3

TOTAL AMOUNT OF BIKE/PED EXPENDITURES
% of Total
TABLE 4
TABLE 2

FOR BIKE PROJECTS ONLY

BREAKDOWN BY PROJECT

BREAKDOWN BY CATEGORY

TOTAL FUNDS APPROPRIATED TO PROJECTS
Fiscal year ending fund balance
MODE
Expenditures

51.25%

48.75%

0.00%
DOES THIS CLAIM MEET THE MINIMUM 50% BICYCLE EXPENDITURE STANCOG PERFORMANCE STANDARD?

RECORD LTF FUNDS ONLY

FUNDS HELD IN RESERVE AT JURISDICTION

Page 3 ends

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CLAIMANT: City of Modesto
NONMOTORIZED REGULATION/POLICY REMINDERS:

D. All funds must be spent within five years of receipt. Over the five-year period shown in Table 3, at least 50% of funds must be spent for bicycle purposes. StanCOG will not allocate funds to any jurisdiction which is in violation of these policies.

NOTES:
* By StanCOG policy, all bike projects must appear in either StanCOG's Bicycle Action Plan, or in a City or County bicycle plan, to be eligible for LTF funding. ** Beginning with FY 2003/04, nonmotorized funds will only be allocated by StanCOG for specific projects.

If no project is identified, funds will be held in reserve at StanCOG for eventual use by that jurisdiction. salary of any one person (PUC 99233.3).

A. State law allows a jurisdiction to use LTF to update a Bicycle Action Plan once every five years (PUC 99234(h)).

B. State law allows a jurisdiction to use up to 20% of the amount available each year to restripe Class II bicycle other sources to fund bicycle safety education programs, but the funds shall not be used to fully fund the

NONMOTORIZED PROJECTS
FY 2022/23
(Continued)
C. State law allows a jurisdiction to use up to 5% of the amount available each year to supplement moneys from lanes (PUC 99234(h)).

Page 3 ends

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CLAIMANT: City of Modesto

ANNUAL PROJECT AND FINANCIAL PLAN

PROJECTS FOR OTHER PURPOSES
FY 2022/23
(Use additional forms as necessary)
TABLE 5
Will this Project Will this Project Is this Project Total LTF add new use Federal consistent with Project Funds
travel lanes? Funds? the RTP Cost Utilized
Yes or No Yes or No Yes or No

TOTAL - -

1. LTF carryover applied towards FY 2022/23 Other Purposes

2. Interest earned on LTF carryover (required by State law)

3. FY 2022/23 apportionment applied towards FY 2022/23 Other Purposes

4. Total of Lines 1, 2 and 3 above -
Project Title & Brief Description
Briefly describe all proposed projects and indicate proposed project expenditures

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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 20, 2023
Date: February 23, 2023
TO: Finance Committee:

David Wright, Chair
Rosa Escutia-Braaton, Vice Chair
Nick Bavaro, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Bill Sandhu, Director of Public Works
SUBJECT: SB1 Projects Proposed for Fiscal Year 2023-2024 CONTACT: John Sphar, Streets Manager, [email protected], 209-342-2235 DESCRIPTION:

Consider approving a list of projects to be funded with Road Repair and Accountability Act Tax Proceeds for Fiscal Year 2023-2024 and forwarding to Council for approval. (Funding Source:

Senate Bill 1 Funds)
STRATEGIC PLAN ELEMENT:

This recommended action supports the City’s Strategic Plan Area of Focus: “Quality of Life”:
engage partners across the community to ensure the safety, resilience, and attractiveness of Modesto; Goal D: ensure safe, efficient, and reliable infrastructure through proactive community investment, maintenance, and sustainability efforts; Strategy 1: create and implement a comprehensive street and road maintenance plan.

BACKGROUND:

The Surface Transportation Fund (STF) funds the Streets and Traffic Divisions of Public Works.

These funds support the following services: Curbs, Gutters, and Sidewalks repairs; Street Maintenance; Traffic Engineering; Traffic Operations; and Traffic Electrical. The Streets Division maintains 1,400 lane miles of streets, 1,434 miles of curb and gutter, and 1,378 miles of sidewalk. The Traffic Division maintains 201 traffic signals, 13,764 streetlights, 16 flashing beacons, 26 lighted crosswalks, 32 school flashing beacons, seven warning beacons, six crosswalk beacons, six communication hubs, 17 roundabouts and 29,238 traffic signs. #4..
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Finance Committee, March 20, 2023
SB1 Projects Proposed for Fiscal Year 2023-2024

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On April 28, 2017, the Governor signed Senate Bill (SB) 11, which is known as the Road Repair and Accountability Act of 2017. The primary focus of these funds is to address basic road maintenance, rehabilitation, and critical safety needs on both the state highways and local streets and road systems. The City of Modesto received $3,727,254 in FY 19-20, $4,121,766 in FY 20-21, $4,415,700 in FY 21-22, is estimated to have received, as of January 12, 2023, $4,750,267 in FY 22-23, and is projected to receive $5,414,350 in FY 23-24.

DISCUSSION:

The objective of the local streets and roads program is to address deferred maintenance on the local streets and roads system. Prior to receiving an apportionment of Road Maintenance and Rehabilitation Account (RMRA) funds from the Controller in a fiscal year, the City must submit to the California Transportation Commission (CTC) a list of proposed projects. Listed below are the fiscal year projects identified for RMRA funding along with neighborhoods (attachment) that will receive treatment to their streets.

Projects listed above result in the following life-cycle benefits. Slurry seal projects that include crack seal and asphalt repairs will result in a five to seven-year life extension to existing pavement. Slurry seals have the added benefits of hardening existing asphalt, being effectively used in areas with high oxidation, sealing minor surface cracks and voids, retarding surface raveling, delineating different pavement surface areas and improving surface friction characteristics with proper aggregate. Traffic signal and street light maintenance will result in a ten-year extension. Traffic sign and striping maintenance will result in a five-year life extension. 1 Senate Bill 1 – Road Repair and Accountability Act of 2017 - http://rebuildingca.ca.gov/ #4..
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Finance Committee, March 20, 2023
SB1 Projects Proposed for Fiscal Year 2023-2024

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FISCAL IMPACT:

The City of Modesto estimates receiving apportionment of Road Repair and Accountability Act funding for FY 2023-24 in an amount approximating $5,414,350. In addition, the City has carryover SB1 funds from prior years that will be used to fund the amount over the estimated apportionment for FY 2023-24.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion approving the project list to be funded with Road Repair and Accountability Act Tax Proceeds in an amount up to $5,834,851 and forwarding to Council for approval.

Approved by:

Bill Sandhu, Public Works Director
Joseph P. Lopez, City Manager
Attachments:

1. Map of Project Area

2. Street Segment List (Slurry)

3. Street Segment List (Paving)

4. Traffic Signal Map
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2023 SLURRY SEAL

DISTRICT MAP

PROJECT AREAS
NEECE

WESTERN

FIRST STREET

WYCLIFF
MILLER

COLLEGE
E. ROSEBURG

LAKEWOOD
LANCEY
BOWEN

CLEVENGER

ELLISON

VERANDA

COLUMBINE
GAGAOS

MARSHAL SCHOOL
2023 SLURRY SEAL PROJECT AREAS
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City of Modesto, Streets
Division Slurry Seal Program
2023/24 Street Segment list
Street Name From To
1St Washington St Sierra Dr
2nd St Washington St Sierra Dr
3rd St Washington St Sierra Dr
4th St Washington St Sierra Dr
5th Est Sierra Dr
Aaron Ct Clevenger Dr End
Abilene Ct Clevenger Dr End
Ahwahnee Ct Smokehouse Ave End
Akeby Dr Hennings Dr Ashfield Wy
Albert Dr Orangeburg Ave Kathy Ave
Alder Creek Ct Alder Creek Dr End
Alder Creek Dr Rimrock Wy Lakewood Ave
Alisa Ct Hennings Dr End
Aloha Way Bowen Ave W Briggsmore Ave
Althoff Ct Celeste Dr End
Althoff Wy Celeste Ave Wolcott Wy
Alturas Ave Tuolumne Blvd South Ave
Amber St Columbine Dr Poinsettia Dr
Ambrosia Ln Rosebay Ln Cottonwood Dr
Americana Ct Masterpiece Dr End
Amhearst Ave Princeton Ave Roseburg Ave
Amigo Dr Buccaneer Ct Silverado Dr
Andover Ln Stafford Ln Sherwood Ave
Anna Lee Ct Clevenger Dr End
Annilane Rouse Ave Tonilane
Anson Wy Milford Ln Wolcott Wy
Aralia Ct Crocus Dr End
Ararat Ave George Ave Melgren Ave
Artistry Dr Snowfire Dr Spring Oak Dr
Arundel Ci Carlisle Ave End
Ashfield Wy Akeby Dr Felton Wy
Belbrook Pl Silverado Dr End
Belvedere Ct Veranda Wy End
Beyer Park Dr Mable Ave Inspiration Dr
Birch St Amber St Violet St
Bitlis Ct Melgren Ave End
Black Bird Wy Nightingale Dr Swallow Dr
Blackhawk Ct Gagos Dr End
Bloxham St Serena Ave Ellison Dr
Blue Bird Dr Vintage Dr Pelandale Ave
Boynton Way Lancey Dr Hagstrom Ct
Bradford Ct Rose Ave End
Brewer Wy Rose Ave Preston Ln
Bridal Veil Ct Smokehouse Ave End
Brimingham Dr Meadowood Dr Foxcroft Ln
Brixton Ln Carver Rd Longbridge Dr
Brixton Pl Brixton Ln End
Buccaneer Ct Amigo Dr End
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Street Name From To
Burlton Ct Woolston Ct End
Butternut Ct Fairfax Ave End
Cache Creek Wy Rimrock Wy Riverton Wy
Call Way Lancey Dr Hagstrom Ct
Cambria Ct Brixton Ln End
Camella Wy Encina Ave Yosemite Blvd
Cameo Wy Granger Briggsmore
Canary Dr Quail Hallow Dr End
Cardinal Ct Nightingale Dr End
Carla Ln Mills Columbia Wy
Carlisle Ave Carver Rd End
Carlisle Ct Carlisle Ave End
Carma Way Felkirk Way Thornbury Way
Cecil Wy Tully Rd College Ave
Cecil Wy College Ave Mills Ave
Celeste Ct Celeste Dr End
Celeste Dr Rose Ave Oakdale Rd
Centennial Ct Masterpiece Dr End
Chartwell Pl Lancey Dr Tunstead Ln
Cheatham Ct Roselawn End
Chicago Ave Sutter Ave Paradise Rd
Circa Dr Beyer Park Dr Tapestry Dr
Classic Ct Beyer Park Dr End
Clevenger Dr Carver Rd Tully Rd
Cliff Dr. Fairway Dr. End
Collier Ave Orangeburg Roseburg Ave
Colorado Ave Tuolumne Blvd County Line
Columbia Wy Helms Ln Harvard Ave
Columbine Dr Staniford Ave W. Union Ave
Coolidge McHenry Sunrise Ave
Cornfield Ct Synder Ave End
Corrine Ln Timahoe Dr Sybil Ln
Cottonwood Ct Crocus Dr End
Cottonwood Dr Cougar Pl Crocus Dr
Cougar Ct W Union Ave End
Cougar Pl W Union Ave Cottonwood Dr
Counts Ct Flyod Ave End
Covena Ave Encina Ave Yosemite Blvd
Creamery Wy Synder Ave Smokehouse Ave
Crocus Dr W Union Ave End
Cromwell Ct Weston Wy End
Damask Ct Ellison Dr End
Darlene Ln Satariano Ln Kara Ln
Dartmouth Ave Wildwood Dr Elmhurst Dr
Dartmouth Ct Dartmouth Ave End
Dawn Dr Collier Ave Nelson Ave
Devin Dr Bloxham St Fairfax Ave
Dixe Ln Granger Briggsmore
Don St Sunset Ave Neece Dr
Dorrington Ct Northgate Dr End
Drake Ave McHenry End
E st 5th St 4th St
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Street Name From To
Eastridge Dr Laramie Dr Orangburg Ave
Eastwick Ct Lancey Dr End
Elise Ct Sherwood Ave End
Ellison Ct. Ellison Dr End
Ellison Dr Celeste Dr Lancey Dr
Ellison Dr Celeste Ave Flyod Ave
Elmhurst Dr Whittier Ave W Briggsmore Ave
Elmo Loop Synder Ave Synder Ave
Elsie St Hudson Ln Sutter Ave
Encina Ave Covena Ave N.Conejo Ave
Encore Ct Encore Ln End
Encore Ln Inspiration Dr Encore Ct
Enfield Wy Milford Ln Wolcott Wy
Enslen Ave Bowen Ave W Briggsmore Ave
Exter Ave College Ave Wellesly Ave
F st 5th St 4th St
F st 3rd St Sierra Dr
Fairfax Ave Rose Ave Ellison Dr
Fairway Dr. Neece Dr. Cliff Dr.

Felkirk Way Clevenger Dr Silverado Dr
Felton Wy Wareham Wy Ashfield Wy
Ferguson Ave Miller End
Fern Ct Fern St End
Fern St Columbine Dr Birch St
Fleetwood Dr Fremont Ave Kirkwood Ave
Fordham Tully Rd Amhearst Ave
Fori Ave Orangeburg Roseburg Ave
Founders Wy History Wy Legend Dr
Foxcroft Ln Brimingham Dr Kings Point Dr
Fremont Ave Leveland Ln Joaquin St
Fuchsia Ln Grace Ave W. Union Ave
Gagos Dr Vintage Dr Pelandale Ave
Gagosian Ct Gagos Dr End
Gainsboro Pl Ellison Dr End
Gardena Rd Granger Briggsmore
Gareth Ln Quail Hallow Dr Nightingale Dr
Garnet Dr Sapphire Dr Laramie Dr
George Ave Gagos Dr Ararat Ave
Gil Ct Quail Hallow Dr End
Ginger Wy Crocus Dr Lindenwood Ct
Glacier Point Ct Smokehouse Ave End
Glendower Ct Carlisle Ave End
Gold Ct Vicksburg St End
Golden Eagle Ln Honey Creek Rd Pheasant Ln
Grace Ave Columbine Dr Fuchsia Ln
Grafton Wy Preston Ln Ellison Dr
Granger McHenry Sunrise Ave
Gwyn Ct Devin Dr End
Habor Town Ln Mount Pleasant Dr Mount Airy Ln
Haddon Ave Covena Ave N.Conejo Ave
Hagstrom Ct Boynton Way End
Hamden Ln Stafford Ln Sherwood Ave
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Street Name From To
Harcourt Ave Northgate Dr Fleetwood Dr
Hartman ct Wycliff Dr End
Harvard Ave College Ave Columbia Wy
Hawthorne College Ave Elmhurst Dr
Heirloom Ct Veranda Wy End
Helms Ln Mills Columbia Wy
Hennings Dr Setrok Dr Janeen Wy
History Wy Preservation Dr Snowfire Dr
Holcombe Wy Vicksburg St Luck Dr
Honey Bee Ct Honey Creek Rd End
Honey Creek Rd Pelendale Ave End
Honeysuckle Dr Granger Briggsmore
Hudson Ln Rouse Ave End
Hummingbird Ct Honey Creek Rd End
Hummingbird Ln Black Bird Wy Honey Creek Rd
Ichord Wy Jill Ln Laramie Dr
Ila wy Coolidge Ave Drake Ave
Inspiration Ct Beyer Park Dr End
Inspiration Dr Mount Pleasant Dr Beyer Park Dr
J st 5th St Washington St
Jackellen Ln Jane Way Shawntele Way
Jane Way Clevenger Dr Jackellen Ln
Janeen Wy Madeline Wy Hennings Dr
Jean St Sunset Ave Neece Dr
Jill Ln Ichord Wy Lillian Dr
Joaquin St W Briggsmore Ave Enslen Ave
Jonquil Ct Crocus Dr End
Josilane Rouse Ave Tonilane
K st 5th St Washington St
Kara Ln Kathy Ave Laramie Dr
Kathy Ave Satariano Ln Lillian Dr
Kenmor Ct Northgate Dr End
Kings Point Ct Kings Point Dr End
Kings Point Dr Meadowood Dr Foxcroft Ln
Kingsland Ln Thistlewood Way Longbridge Dr
Kirkland Ct Longbridge Dr End
Kirkwood Ave Fleetwood Dr Northwood Dr
Krishawn Way Ramar Way End
La Villa Rose Ct Sherwood Ave Sherwood Ave
Lancey Ci Lancey Dr End
Lancey Dr Rose Ave Oakdale Rd
Landing Ct Landing Dr End
Landing Dr History Wy Landing Ct
Legend Ct Rose Parade End
Legend Dr Rose Parade Founders Wy
Lema Ave Colorado Ave Snead Dr
Leon Ave Tuolumne Blvd South Ave
Leona Ct Hennings Dr End
Lifetime Dr Rose Ave Ellison Dr
Lilian Dr Orangeburg Ave Laramie Dr
Lindenwood Ct Ginger Wy End
Liongate Ct Gagos Dr End
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Street Name From To
Lionudakis Ct Lifetime Dr End
Longbridge Dr Standiford Ave End/Canal
Lorene Ct Clevenger Dr End
Lotus Ln Aloha Way End(s)
Luck Dr Rouse Ave Holcombe Wy
Madeline Wy Merrifield Ave Janeen Wy
Mamilane Rouse Ave Tonilane
Manzanita Dr Bloxham St Lancey Dr
Marble Dr Topaz Wy Mica Wy
Marcus Dr Rose Ave Pridmore Ave
Marigold Ln Grace Ave Cottonwood Dr
Marymar Dr Kathy Ave Laramie Dr
Masterpiece Dr History Wy Mable Ave
Mayflower St Columbine Dr Birch St
Meadowood Dr Scencic Dr Kings Point Dr
Medicine Bow Dr Eastridge Dr Rimrock Wy
Melgren Ave Ararat Ave Gagos Dr
Melinda Ln Mills Columbia Wy
Melissa Ln Satariano Ln Kara Ln
Melrose Ave Granger Roseburg Ave
Merifield Ave Timahoe Dr Hennings Dr
Mesrob Ct Setrok Dr End
Mica Wy Marble Dr Medicine Bow Dr
Middlecolff Ave Lema Ave Snead Dr
Milestone Cl Veranda Wy Veranda Wy
Milford Ln Anson Wy Enfield Wy
Miller Ave Covena Ave N.Conejo Ave
Mills Ave Roseburg Ave Harvard Ave
Mount Airy Ln Harbor Town Dr Myrtle Beach Wy
Mount Pleasant Dr Mable Ave Inspiration Dr
Myrtle Ave Harvard Ave Coldwell Ave
Myrtle Beach Wy Mount Airy Ln Mount Pleasant Dr
Neece dr Sunset Ave Tuolumne Blvd
Nelson Ave Orangeburg Roseburg Ave
New Castle Ct Kings Point Dr End
New Castle Wy Kings Point Dr Wycliff Dr
Nightingale Ct Nightingale Dr End
Nightingale Dr Blue Bird Dr Dale Rd
Northgate Dr Fremont Ave End
Northwood Dr Fremont Ave Kirkwood Ave
Nostalgia Ln Mable Ave Legend Dr
Notre Dame Princeton Ave Trinity Ave
Notre Dame Princeton Ave End
Notre Dame Trinity Ave Yale Ave
Oriole Dr Nightingale Dr End
Paioni Ct Honey Creek Rd End
Peacock Ln Nightingale Dr Golden Eagle Ln
Pelton Ave Colorado Ave Roselawn Ave
Penridge Ct Kingsland Ln End
Penrose Ci Brixton Ln End
Pheasant Ln Golden Eagle Ln Synder Ave
Phelps Ave College Ave Bowen Ave
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Street Name From To
Pinewood Ct Kathy Ave End
Placid Ln Rouse Ave Elsie St
Poinsettia Dr Amber St W. Union Ave
Preservation Dr Veranda Wy History Wy
Preston Ln Brewer Wy Grafton Wy
Presvervation Ct History Wy End
Pridmore Ave Flyod Ave Lifetime Dr
Princeton Ave Tully Rd College Ave
Princeton Ave College Ave Virgnia Ave
Pristine Ct Veranda Wy End
Pumphouse Ct Blue Bird Dr End
Purdue Ave Tully Rd Amhearst Ave
Quail Hallow Dr Nightingale Dr Gareth Ln
Quarry Dr Eastridge Dr Garnet Dr
Ralston Ct La Villa Rose Ct End
Ramar Way Clevenger Dr Krishawn Way
Regent Ct Joaquin St End
Ridgewood Ct Northgate Dr End
Rimrock Ct Rimrock Wy End
Rimrock Wy Orangeburg Ave Laramie Dr
Riverton Wy Alder Creek Dr Cache Creek Wy
Roble Ave Covena Ave Rosina Ave
Rosalina Ct Starlight Dr End
Rosalina Dr Splendor Wy Starlight Dr
Rosanne Ln Timahoe Dr Sybil Ln
Rose Ave E Briggsmore Ave Celeste Dr
Rose Parade Veranda Wy Legend Dr
Rose Walk Ct Rose Walk Ln End
Rose Walk Ln Woodbury Dr Rose Walk Ct
Rosebay Ln Merigold Ln Ambrosia Ln
Rosedale Ave Tuolumne Blvd South Ave
Roselawn Ave Rouse Ave Colorado Ave
Roselawn Ave Tuolumne Blvd South Ave
Roselawn Ct Roselawn End
Roselawn Ct Roselawn Ave End
Rosewood Ct Sherwood Ave End
Rosina Ave Encina Ave Yosemite Blvd
Roxbury Ln Yukon Dr Sherwood Ave
Sage Ct Celeste Dr End
Sanctuary Ct Veranda Wy End
Sandgate Dr Gainsboro Pl Sharilyn Dr
Sandpiper Ct Hummingbird Ln End
Sansome Ct Wildwood Dr End
Sapphire Dr Eastridge Dr Garnet Dr
Sarah Jane Ct Akeby Dr End
Satariano Ln Orangeburg Ave Laramie Dr
Serena Ave Fairfax Ave Celeste Dr
Setrok Ct Setrok Dr End
Setrok Dr Blue Bird Dr End
Severin Ave Encina Ave Yosemite Blvd
Sharilyn Dr Sandgate Dr Ellison Dr
Shawntele Way Jackellen Ln Clevenger Dr
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Street Name From To
Sheridan St Paradise Rd Vicksburg St
Sherwood Ct Sherwood Ave End
Sierra Dr. Rosedale Ave 5th
Signature Ct Sunset Ave End
Silver Ct Vicksburg St End
Silverado Dr Longbridge Dr Amigo Dr
Smokehouse Ave Blue Bird Dr Honey Creek Rd
Snead Dr Lema Ave ColoradoAve
Snowfire Dr Artistry Dr Splendor Wy
Somerset Dr Whittier Ave Dartmouth Ave
South Ave Sutter Ave Roselawn Ave
Sparrow Ct Synder Ave End
Splendor Wy Snowfire Dr Rosalina Wy
Spring Oak Dr Artistry Dr Mable Ave
Stafford Ln W Rumble Rd Leveland Ln
Stanford Ave College Ave Columbia Wy
Starlight Dr Snowfire Dr Rosalina Wy
Sterling Ct Sterling Dr End
Sterling Dr Masterpiece Dr Sterling Ct
Sugar Bear Ct Honey Creek Rd End
Sullivan Ct Sisk Rd End
Sunset Ave Rouse Ave Neece Dr
Swallow Dr Blue Bird Dr Black Bird Wy
Sybil Ln Rosanne Ln Merrifield Ave
Synder Ave Blue Bird Dr Dale Rd
Taos Ct Luck Dr End
Tapestry Dr Mable Ave Circa Dr
Tenby Way Krishawn Way Brixton Ln
Thistlewood Way Wakebridge Dr Kingsland Ln
Thornbury Way Carma Way Silverado Dr
Timahoe Dr Akeby Dr Merrifield Ave
Titon Pl Milford Ln End
Tonilane Vicksburg St Hudson Ln
Topaz Wy Medicine Bow Dr Marble Dr
Topiary Ct Veranda Wy End
Tradewinds Ct Celeste Dr End
Trellis Ct Rose Parade End
Tribute Ct Beyer Park Dr End
Trillium Ave Zinnia Wy Crocus Dr
Trinity Ave Tully Rd Yale Ave
Trombetta Ave Orangeburg Roseburg Ave
Tunstead Ln Chartwell Pl Woolston Way
Valerie Ln Mills Columbia Wy
Veranda Ct Preservation Dr End
Veranda Wy Mable Ave Preservation Dr
Vicksburg St Rouse Ave Hudson Ln
Vintage Cove Synder Ave End
Vintage Dr Sisk Rd Blue Bird Dr
Violet St Columbine Dr Poinsettia Dr
W Union Ave Mchenry Ave R/R Crossing
Wakebridge Dr Longbridge Dr Thistlewood Way
Wareham Wy Weston Wy Felton Wy
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Street Name From To
Wellesly Ave Roseburg Ave Stanford Ave
Western Wy Sutter Ave Roselawn Ave
Weston Wy Ashfield Wy Wareham Wy
Whitfield Way Brixton Ln Carlisle Ave
Whittier Ave Phelps Ave Elmhurst Dr
Wildwood Dr Phelps Ave Dartmouth Ave
Windmill Dr Blue Bird Dr End
Windom Ct Woodglen Dr End
Windrose Ct Woodglen Dr End
Winslow Ct Brewer Wy End
Wolcott Wy Ellison Dr Enfield Wy
Woodbury Dr Brewer Wy Lifetime Dr
Woodglen Dr Windom Ct End
Woodwind Ct Woodglen Dr End
Woolston Ct Lancey Dr End
Woolston Way Tunstead Ln Lancey Dr
Wycliff Ct Wycliff Dr End
Wycliff Dr Scencic Dr Scencic dr
Yale Ave Tully Rd College Ave
Yale Ave College Ave Columbia Wy
Yosemite Ave Tuolumne Blvd South Ave
Yukon Dr W Rumble Rd Roxbury Ln
Zakessian Ct Setrok Dr End
Zinnia Wy Crocus Dr Trillium Ave
#4..
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PCI Begin End Location SQFT ADA Ramps

14.00 Kansas Doker 31,080 5

10.00 Raymond Panama 33,208 4

10.00 RimRock E Orangeburg Laramie 37,290 2
City of Modesto, Streets Division 2023-2024 SB1Paving List Street Name
Reno
Houser
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2023-2024 PAVING PROJECT AREAS
District 1
District 5
District 6
District 3
District 4
District 2 2023-2024 PAVING DISTRICT MAP
RENO AVE.

HOUSER LN.

RIMROCK WAY.
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 20, 2023
Date: February 22, 2023
TO: Finance Committee
David Wright, Chair
Rosa Escutia-Braaton, Vice-Chair
Nick Bavaro, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Bill Sandhu, Public Works Director
SUBJECT: Authorize Staff to apply for the CalRecycle Organics Grant Program CONTACT: Rosene Salmo, Integrated Waste Program Manager, [email protected], 209-577-5453
DESCRIPTION:

Consider authorizing the submittal of application(s) to CalRecyle for the Organics Grant, and forwarding to Council for approval. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

The recommended action is consistent with the Council’s Strategic Plan Area (2020-2025) - Quality of Life: “Engage partners across the community to ensure the safety, resilience, and attractiveness of Modesto;” Goal D: “Provide safe, efficient, and reliable infrastructure through proactive community investment, maintenance, and sustainability efforts.” BACKGROUND:

The CalRecycle Organics Grant Program is opening a $78 million competitive grant for Composting Projects.1 The purpose of this grant program is to lower overall greenhouse gas emissions by diverting organics out of landfills and by investing in facilities that process organics into compost. There is no match requirement for this grant.

DISCUSSION:

CalRecycle is offering this Organics Grant Program as part of California’s Climate Investment to reduce greenhouse gas emissions and improve public health and the environment. As mentioned in earlier grant application requests, California’s Senate Bill (SB) 1383 mandates the diversion of organics out of landfills and into recovery and recycling programs to reduce methane gas emissions into the atmosphere. There is a need for recycling and composting programs to expand to process more organics with technologies sources that are non-polluting. The Solid Waste 1 https://www.calrecycle.ca.gov/climate/grantsloans/organics #5..
- 192 -
Finance Committee, March 20, 2023
Authorize Staff to apply for the CalRecycle Organics Grant Program

Page 2 of 2 ends

Division is challenged with funding and grant opportunities that offer a way to reduce the liability to its citizens.

This proposal aligns with the stated goals of the Organics Grant, which include:
 Reducing organics disposed in landfills;
 Expanding organics material processing facilities;
 Using material processing equipment that is electric and pollution free; and  Incentive to improve disadvantaged and low-income communities for a cleaner and healthier environment.

FISCAL IMPACT:

Applying for this CalRecycle grant does not commit the City to a financial obligation or to accept the grant, if awarded. This item is administrative in nature and has no fiscal impact.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion authorizing the submittal of application(s) to the CalRecycle Organics Grant Program, and authorizing the City Manager, or his designee, to sign Grant Applications and related forms, and forwarding to Council for approval.

Approved by:

Bill Sandhu, Public Works Director
Joseph P. Lopez, City Manager
#5..
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 20, 2023
Date: February 22, 2023
TO: Finance Committee
David Wright, Chair
Rosa Escutia-Braaton, Vice-Chair
Nick Bavaro, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Bill Sandhu, Public Works Director
SUBJECT: Authorize Staff to apply for the Environmental Protection Agency – Climate Pollution Reduction Grant Program
CONTACT: Rosene Salmo, Integrated Waste Program Manager, [email protected], 209-577-5453
DESCRIPTION:

Consider authorizing the submittal of application(s) to the Environmental Protection Agency for the Climate Pollution Reduction Grant and forwarding to Council for approval. (Funding Source:

Not Applicable)
STRATEGIC PLAN ELEMENT:

The Environmental Protection Agency (EPA) Climate Pollution Reduction Grant Program is opening a two-staged nationwide $250 million non-competitive planning grants and $4.6 billion competitive implementation grants.1 Successful applicants will be awarded grant funds for clean air and energy projects that support pollution emission reductions. There is no match requirement for this grant.

DISCUSSION:

New state and federal grant opportunities are being introduced in conjunction with California’s Senate Bill (SB) 1383 and President Biden’s $5 billion Inflation Reduction Act which targets climate pollution and emissions, et.al. California’s SB 1383 mandates the diversion of organics 1 https://www.epa.gov/inflation-reduction-act/climate-pollution-reduction--grants #6..
- 194 -
Finance Committee, March 20, 2023
Authorize Staff to Apply for the Environmental Protection Agency Climate Pollution Reduction Grant Program

Page 2 of 2 ends

out of landfills and into recovery and recycling programs to reduce methane gas emissions into the atmosphere. There is a need for recycling and composting programs to expand to process more organics with technologies sources that are non-polluting. The Solid Waste Division is challenged with funding and grant opportunities that offer a way to reduce the liability to the citizens.

This proposal aligns with the stated goals of the Climate Pollution Reduction Grant, which include:
 Expanding organics material processing,
 Using material processing equipment that is electric and pollution free, and  Using the finished product -compost- on farms, landscaping projects and back yard gardening which provides nutrients to the soil and reduces water use.

FISCAL IMPACT:

Applying for this EPA grant does not commit the City to a financial obligation or to accept the grant, if awarded. This item is administrative in nature and has no fiscal impact.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion authorizing the submittal of application(s) to the Environmental Protection Agency Climate Pollution Reduction Grant Program, and authorizing the City Manager, or his designee, to sign Grant Applications and related forms, and forwarding to Council for approval.

Approved by:

Bill Sandhu, Public Works Director
Joseph P. Lopez, City Manager
#6..
- 195 -

CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 20, 2023
Date: February 21, 2023
TO: Finance Committee
David Wright, Chair
Rosa Escutia-Braaton, Vice Chair
Nick Bavaro, Member

THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: Standby Certificate Purchase Agreement Supporting the Water Refunding Revenue Certificates of Participation, Series 2008A
CONTACT: DeAnna Christensen, Director of Finance, [email protected], 209-577-5387
DESCRIPTION:

Consider approving a three-year Standby Certificate Purchase Agreement (SCPA) with BMO Harris Bank N.A. (formerly Bank of the West) supporting the Water Refunding Revenue Certificates of Participation, Series 2008A (Water Bonds) authorizing certain other related actions to substitute the Agreement for the existing Letter of Credit (LOC) and forwarding to Council for approval. (Funding Source: Water Fund)
STRATEGIC PLAN ELEMENT:

This item advances the City of Modesto 2020-2025 Strategic Plan Area: Governance and Service Delivery: “build community trust in City government through responsive, transparent and efficient service delivery”; Goal J: “build a high-performance organization”.

BACKGROUND:

The Water Bonds had an original outstanding with a par amount of $47,625,000. The Water Bonds are variable rate bonds that reset on a weekly basis and require a liquidity facility. The current obligations due on these bonds is $42,390,000 with a final maturity date of October 1, 2036.

The bonds are variable rate bonds, with interest rate being reset every seven days. Due in part to this feature, the bondholders have a right to tender the bonds back for repurchase if the holder elects to sell its bonds. The liquidity facility ensures that there is sufficient money to pay the purchase price if, due to a market disruption or other unusual circumstances, the City’s remarketing agent is unable to remarket the tendered bonds. Draws under the liquidity facility, not City funds, pay the purchase price for unremarketed bonds. These liquidity facility draws must subsequently be repaid, primarily by remarketing/reselling the bonds to new investors in #7..
- 196 -
Finance Committee, March 20, 2023
Standby Certificate Purchasing Agreement Supporting the Water Refunding Revenue Certificates of Participation, Series 2008A

Page 2 of 3 ends

exchange for cash or, if no new investors can be found after a specified number of weeks, repaid in annual installments from City funds to the liquidity facility provider over a specified period of years (“term out” period).

On May 26, 2020 under Resolution 2020-241, Council approved a three-year extension of the irrevocable direct pay Letter of Credit (LOC) issued by JP Morgan which supports the 2008 Water Refunding Revenue Certificates of Participation (Water Bonds) which will expire on June 15, 2023. The Water Bonds are also supported by a financial guaranty insurance policy issued by Assured Guaranty Corp.

DISCUSSION:

On January 5, 2023, the City’s Municipal Advisors, PFM Financial Advisors LLC (PFM) submitted a Request for Proposals (RFP) for liquidity facility services for the Water Bonds on behalf of the City. The RFP was distributed to 26 financial bank institutions. Three (3) proposals were received offering three to five-year liquidity facilities with a three to five-year term out period which included BMO Harris Bank N.A. (formerly Bank of the West1), PNC Bank and JP Morgan.

All three proposals came from national financial banking institutions that have strong credit ratings. BMO Harris Bank N.A. included two proposals, offering either aa Letter of Credit or a Standby Certificate Purchase Agreement. Based on the cost comparison, City staff is recommending to move forward with entering into a new Standby Certificate Purchase Agreement for a three-year term with BMO Harris Bank N.A. One reason this SCPA option is more appealing than the LOC option, in addition to the lower annual liquidity fee, is that it allows the City to retain the existing Assured Guaranty Corp. bond insurance associated with the Water Bonds, which further minimizes risk to the City (compared to terminating the bond insurance as part of the legal documentation process for pursuing the BMO Harris Bank N.A. LOC option). BMO Harris Bank N.A. has presented a significant reduction in the fee structure with their proposed fee at 30 basis points (bps) which is significantly lower compared to the other two proposals ranging from 42 to

72.5 bps. In addition, the three-year term is being recommended to ensure it aligns with the expiration date of the banking services agreement in May 2026.

With the change in banking institution from JP Morgan to BMO Harris Bank N.A., there will be significant one-time fees due to having to issue a new disclosure document to investors but there is still an overall savings with the significant reduction in the bps.

In connection with the replacement of the Letter of Credit, the City has also determined to facilitate the remarketing of the Water Bonds in the most timely and cost-effective manner and upon the advice of its municipal financial advisor, PFM, to continue with our current remarketing agent JP Morgan.

All bond documents will also be reviewed by the City’s Bond Counsel, Norton Rose Fulbright US LLP to ensure all legal requirements are met under this bond transaction. On March 12, 2019 under Resolution 2019-111, Council approved the Third Amendment for outside Legal Bond Counsel for bond transactions in the amount not to exceed $415,000.

FISCAL IMPACT:

By lowering its liquidity fee from 57.5 bps to 30 bps, the City will be reducing its liquidity costs 1 https://www.bmo.com/en-us/main/bank-of-the-west-joins-bmo/ #7..
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Finance Committee, March 20, 2023
Standby Certificate Purchasing Agreement Supporting the Water Refunding Revenue Certificates of Participation, Series 2008A

Page 3 of 3 ends

between $100,000 and $125,000 annually. However, the process of replacing the current LOC with a SCPA comes with one-time upfront legal and consultant costs estimated at $145,000.

Therefore, the net effect to the City will be a total savings of $200,000 compared to paying the

57.5 bps rate it is currently paying on its LOC for another 3 years.

Fiscal
Year
Liquidity Fee Savings
(57.5bps vs. 30bps)
One-time
Costs
BMO Net
Savings
2024 $124,591 ($145,000) ($20,409)
2025 116,977 - 116,977
2026 104,664 - 104,664
Total $346,233 ($145,000) $201,233
RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion approving a three-year Standby Certificate Purchase Agreement with BMO Harris Bank N.A. (formerly Bank of the West) supporting the Water Refunding Revenue Certificates of Participation, Series 2008A (Water Bonds) authorizing certain other related actions to complete substitution of the Agreement for the existing Letter of Credit and forwarding to Council for approval.

Approved by:

DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
Attachments:

1. 2023 Modesto LOC RFP Summary 3-6 (Water)
#7..
- 198 -
City of Modesto
2008 Water Certificates of Participation ‐ Letter of Credit Proposals BankContactMaximum Term
Long‐Term Ratings
Short‐Term RatingsDocumentsCredit ApprovalOther RequirementsBank LegalFees and RatesUpfront Fee LOC Fee 34 bps 3‐year/3‐year term out 30 bps 3‐year/3‐year term out 72.5 bps 3‐year/5‐year term out 42 bps 3‐year/5‐year term out 35 bps 4‐year/3‐year term out 32 bps 4‐year/3‐year term out 75.0 bps 4‐year/5‐year term out requires >$100M depository relationship 39 bps 5‐year/3‐year term out 34 bps 5‐year/3‐year term out 77.5 bps 5‐year/5‐year term out 53 bps 3‐year/5‐year term out requires >$25M depository relationship
Bank Counsel FeeAnnual Admin FeeAmendment/Transfer FeeDraw Fee Bond Counsel FeeFinancial Advisor Fee
Other NotesEstimated 3‐year Costs
Max Rate
Assumed LOC Fee
Trading SpreadOne Time Fees
Annual FeesLOC Fees
6/30/20236/30/20246/30/2025
6/15/2026
Total
$0 $0 $0 $0
3‐year
$491,587
5‐year
Aa3/A/A+
P‐1/A‐1/F1
10 business days
‐Proposing to offer a Standby Certificate
Purchase Agreement if the Assured
Guaranty policy remains‐Termination events in line with present market standards and acceptable to the
rating agencies
N/A
‐Rate covenant (125% of DS), ABT (125% of MADS) as set forth in the Master Installment Purchase Agreement are acceptable
‐Substantially same reporting covenants as existing Reimbursement Agreement for 2008 LRB
‐Bank Rate: Day 1‐90: Base Rate +1.0%; Day 91+: Base Rate +3.0% ‐Base Rate: higher of (a) Bank’s Prime Rate (b) Federal Funds Rate +1.0% ‐Default Rate: Base Rate +5.0%
Hawkins Delafield & Wood LLP
$532,799 $927,586 $640,222
$132,597 $282,743 $163,796$118,977 $253,701 $146,972
$116,997$104,980
$141,225 $124,610 $301,142 $174,454
$145,000
12% 12% 12%

0.340% 0.725% 0.420%
12%

0.300%
$140,000 $90,000 $155,000
$40,000 $40,000 $20,000 $40,000
N/A $250
$65,000 $65,000 $65,000
N/A
$65,000
‐each notch downgrade will result in a 0.10% increase the Annual Fee. Downgrades will commence at the A3 or A‐ level for either facility.
$5,000/$2,500 $2,500
$0
$5,000/$2,500

N/A N/A N/A
$35,000 $40,000 $5,000 $50,000
Neil Rust of Rentner Rust, PC Chapman and Cutler LLP
‐Proposing to offer a direct‐pay Letter of
Credit if the Assured Guaranty policy is
terminated‐Terms and conditions that are usual and
customary for this type of uninsured water
enterprise financing and otherwise
acceptable to the Bank
Proposed changes to the Reimbursement
Agreement:‐Add a ratings withdrawal/downgrade
below investment grade Event of Default;
and‐Add to the miscellaneous section of the
2008 Water Agreement an
“Acknowledgment Regarding Any
Supported QFCs” provision.
‐Rate Covenant of based on adjusted
annual net revenues
‐Additional Indebtedness Test of 1.25x
‐Ratings Trigger: Maintenance of
Investment Grade ratings of at least Baa3 /
BBB‐ / BBB‐
10 business days 10 business days
$0 $0
P‐1/A‐1/F1+ P‐1/A‐1/F1
[email protected]
5‐year
[email protected] [email protected]
Shawn Laljit
‐Days 1 – 30: Base Rate‐Days 31 ‐ 90: Draw Rate plus 1.0% ‐Thereafter: Draw Rate plus 2.0%
‐The “Draw Rate” equals the greatest of (i)
the PNC Prime Rate; (ii) the overnight bank
funding rate plus 0.5%; and (iii) 7.0%
‐The Default Rate equals the greatest of (i)
the PNC Prime Rate plus 3.0%; (ii) the
Overnight Bank Funding Rate plus 3.5%;
and (iii) 10.0% per annum
Bank of the West (LOC) JP Morgan PNC
James Millard An Tran
Michelle Roberts
[email protected]
Aa2/A+/AA A2/A/A+
Bank of the West (SCPA)
Daniel Campbell
[email protected]
Ted Neu
[email protected]
#7..
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 20, 2023
Date: February 21, 2023
TO: Finance Committee
David Wright, Chair
Rosa Escutia-Braaton, Vice Chair
Nick Bavaro, Member

THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: Extension of the Letter of Credit with Bank of the West Supporting the Lease Revenue Bonds, Series 2008 (Bonds)
CONTACT: DeAnna Christensen, Director of Finance, [email protected], 209-577-5387
DESCRIPTION:

Consider approving a three-year extension of the irrevocable direct pay Letter of Credit (LOC) with BMO Harris Bank N.A. (formerly Bank of the West) supporting the Lease Revenue Bonds, Series 2008 (Bonds) authorizing the distribution of a Supplemental Official Statement, and authorizing certain other related actions to complete the three-year extension to the Lease Revenue Bonds LOC and forwarding to Council for approval. (Funding Source: General Fund, Redevelopment Successor Agency and Various Funds)
STRATEGIC PLAN ELEMENT:

BACKGROUND:

These 2008 Bonds were issued to refund the Series 1998 and Series 2007 Lease Revenue Bonds (referenced together as the “Prior Bonds”) in the amount of $65,170,000. The Prior Bonds were issued to assist in the financing of certain public capital improvements in the City which consist of the following: (i) the former Redevelopment Agency’s parking garage, (ii) the City’s one-half interest in the City-County Joint Power Agency’s administration building, (iii) the City’s police headquarters building and police operations building, (iv) certain miscellaneous City properties and (v) the City’s one-half undivided interest in the Communications Dispatch Center. The current obligation due on these bonds is $41,770,000 with a final maturity date of September 1, 2033. #8..
- 200 -
Finance Committee, March 20, 2023
Extension of the Letter of Credit with BMO Harris Bank N.A. (formerly Bank of the West) Supporting the Lease Revenue Bonds, Series 2008 (Bonds)

Page 2 of 3 ends

The bonds are variable rate bonds, with the interest rate being reset every seven days. Due in part to this feature, the bondholders have a right to tender the bonds back for repurchase if the holder elects to sell its bonds. The Letter of Credit ensures that there is sufficient money to pay the purchase price if, due to a market disruption or other unusual circumstances, the City’s remarketing agent is unable to remarket the tendered bonds. Draws under the Letter of Credit, not City funds, pays the purchase price for unremarketed bonds. These Letter of Credit draws must subsequently be repaid, primarily by remarketing/reselling the bonds to new investors in exchange for cash or, if no new investors can be found after a specified number of weeks, repaid in annual installments from City funds to the Letter of Credit provider over a specified period of years (“term out” period).

In November 2018, the City solicited proposals through a Request for Proposals (RFP) process for banking services and the LOC for the Bonds. City staff recommended to award to Bank of the West, Monterey Park, CA. On May 7, 2019 under Resolution 2019-224, Council approved a Reimbursement Agreement with Bank of the West, the City of Modesto and Modesto Public Financing Authority to establish an irrevocable direct pay LOC. The current LOC agreement has a four-year term with an expiration date of June 13, 2023.

DISCUSSION:

On January 5, 2023, the City’s Municipal Advisors, PFM Financial Advisors LLC (PFM) submitted a Request for Proposals (RFP) for Letter of Credit services for the Bonds on behalf of the City.

The RFP was distributed to 26 financial bank institutions. Three (3) proposals were received offering three to five-year LOCs with a three to five-year term out period which included BMO Harris Bank N.A. (formerly Bank of the West1), Bank of America and JP Morgan.

All three proposals came from national financial banking institutions that have strong credit ratings. Based on the cost comparison, City staff is recommending to move forward with extending the LOC for a three-year term with BMO Harris Bank N.A. BMO Harris Bank N.A. has presented a reduction to their LOC fee from the current 37.5 to 34 basis points (bps) which is significantly lower compared to the other two proposals ranging from 50 to 77.5 bps. In addition, the three-year term is being recommended to ensure it aligns with the expiration date of the banking services agreement in May 2026.

In connection with the extension of the Letter of Credit, and upon the advice of our municipal financial advisor, PFM, the City is recommending, to continue with our current remarketing agent Raymond James & Associates, Inc. in order to facilitate the remarketing of the Bonds in the most timely and cost-effective manner.

FISCAL IMPACT:

By lowering its LOC fee from 37.5 bps to 34 bps, the City will be reducing LOC costs by $11,000 to $14,000 annually. However, the process of extending the LOC comes with one-time upfront legal and consultant costs estimated at $45,000. Therefore, the net effect to the City will be a total 1 https://www.bmo.com/en-us/main/bank-of-the-west-joins-bmo/ #8..
- 201 -
Finance Committee, March 20, 2023
Extension of the Letter of Credit with BMO Harris Bank N.A. (formerly Bank of the West) Supporting the Lease Revenue Bonds, Series 2008 (Bonds)

Page 3 of 3 ends

cost that is $7,000 higher than if it had been able to continuing paying the 37.5 bps rate it is currently paying on its LOC for another 3 years; however, continuing to pay the 37.5 bps rate under the current LOC is not an option because the current LOC expires on June 13, 2023.

Fiscal
Year
LOC Fee Savings
(37.5bps vs. 34bps)
LOC Extension
One-time Costs
Net
Savings
2024 $14,002 ($45,000) ($30,998)
2025 12,919 - 12,919
2026 11,215 - 11,215
Total $38,137 ($45,000) ($6,863)
RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion approving a three-year extension of the irrevocable direct pay Letter of Credit (LOC with BMO Harris Bank N.A. (formerly Bank of the West) supporting the Lease Revenue Bonds, Series 2008 (Bonds) authorizing the distribution of a Supplemental Official Statement, and authorizing certain other related actions to complete the three-year extension to the Lease Revenue Bonds LOC and forwarding to Council for approval.

Approved by:

DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
Attachments:

1. 2023 Modesto LOC RFP Summary 3-6 (LRB)
#8..
- 202 -
City of Modesto
2008 Lease Revenue Refunding Bonds ‐ Letter of Credit Proposals BankContactMaximum Term
Long‐Term RatingsShort‐Term RatingsDocumentsCredit ApprovalOther RequirementsBank Legal Fees and RatesUpfront FeeLOC Fee 34 bps 3‐year/3‐year term out 50 bps 3‐year/3‐year term out 77.5 bps 3‐year/5‐year term out 35 bps 4‐year/3‐year term out 80.0 bps 4‐year/5‐year term out 39 bps 5‐year/3‐year term out 82.5 bps 5‐year/5‐year term out Bank Counsel Fee
Annual Admin Fee
Amendment/Transfer Fee
Draw FeeBond Counsel FeeFinancial Advisor Fee
Other NotesEstimated 3‐year Costs
Max Rate
Assumed LOC Fee
Trading SpreadOne Time Fees
Annual Admin Fees
LOC Fees
6/30/20236/30/20246/30/2025
6/13/2026
Total $415,865 $632,890 $937,855
$22,500$40,000
$125,525 $184,596 $286,124
$109,290 $160,720 $249,116$136,050 $200,074 $310,115
$0 $0 $0
$45,000 $87,500 $92,500
12% 12% 12%

0.340% 0.500% 0.775%
$20,000 $40,000
each notch downgrade will result in a 0.10%
increase the Annual LOC Fee. Downgrades
will commence at the A3 or A‐ level foreither facility. pricing is subject to the maintenance of the
current ratings of A/A+. Fee shall increase
based on the rating then in effect
N/A $300
$12,500 $22,500
$0 $0
$5,000/$2,500 $2,500

N/A N/A N/A
$12,500 $25,000 $30,000
10 business days Has received with conditions 10 business days ‐The existing requirements are adequate ‐Governing Law will be defined as in The Prior Agreement.‐Bank will also include its standard language regarding compliance with Law including
The U.S. Resolution Stay Regulation.

Proposed changes to the Reimbursement
Agreement:‐Modification of the form to add any
provisions in the 2008 Water Agreement
not currently captured in the 2008 LRB
Agreement‐Add to the miscellaneous section of the
2008 LRB Agreement an
Acknowledgment Regarding Any Supported
QFCs” provision.

Hawkins Delafield & Wood LLP Nixon Peabody LLP Neil Rust of Rentner Rust, PC ‐Base Rate: The greatest of: (i) Bank's Prime
Rate +1.50% (ii) Federal Funds Rate +3.00%,(iii) 7.50%‐Term Loan Rate: Base Rate + 2.00% ‐Revolving Loan Rate: Days 1‐90: Base Rate;Days 91+: Term Loan Rate; at no time shall the Revolving Loan Rate be less than the
rate on any outstanding Notes.
‐Default Rate: Base Rate +4.00%
P‐1/A‐1/F1 P‐1/A‐1/F1+ P‐1/A‐1/F1+
Bank of the West Bank of America JP Morgan
5‐year 3‐year 5‐year
Daniel Campbell Jyoti Rathore James Millard
[email protected] [email protected] [email protected] [email protected]
Ted Neu Holly Vocal Shawn Laljit
[email protected]
Aa2/A+/AA
[email protected]
Aa3/A/A+ Aa2/A+/AA
#8..
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

March 20, 2023
Date: March 13, 2023
TO: Finance Committee
David Wright, Chair
Rosa Escutia-Braaton, Vice-Chair
Nick Bavaro, Member
FROM: Joseph P. Lopez, City Manager
SUBJECT: Fiscal Year 2022-23 General Fund Mid-Year Update Report CONTACT: Steve Christensen, Budget Manager, [email protected] 209-577-5390
DESCRIPTION:

Consider accepting the informational Fiscal Year 2022-23 General Fund Mid-Year Update Report and forwarding the report and recommended adjustments to the major General Fund revenues and expenditures to Council for acceptance and approval. (Funding Source: General Fund).

STRATEGIC PLAN ELEMENT:

This item supports the City of Modesto 2020-2025 Strategic Plan focus on Governance and Service Delivery under Goal H: Achieve Financial Sustainability.

BACKGROUND:

Periodically, the Budget Division presents updates to the Finance Committee and Council on the status of the General Fund, including recommended adjustments to the Annual Operating, Capital Improvement and Multi-year Project budgets. The purpose of the update is to summarize financial results and to present any recommended adjustments to the Operating Revenue and Expense budgets as needed. In addition, the update will highlight any potential issues, concerns or items of interest.

DISCUSSION:

The attached Fiscal Year 2022-23 Mid-Year General Fund Update report focuses on the performances of the City’s General Fund major revenue sources, as well as the various expenditures across the operating departments. The revenue data gathered through February 28, 2023 begins to show important trends in the revenue and expenditure data which has provided important insight into the projections that are described within the report pertaining to the General Fund’s fiscal year-end.
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To date, the General Fund has receipted 55% of the budgeted revenues through February 28, 2023. In terms of total revenues received, this is not uncommon at this point in the fiscal year, because some revenues tend to be delayed in terms of when they are receipted. Sales Tax also falls into this category as it is receipted two months in arrears. This means that the revenue received for the month of February will reflect actual sales tax receipts for the month of December 2022. In terms of the overall percentages shown in the attached report, this lag time contributes to some of the delay in revenues being receipted.

When compared to the total amount expended as a percentage, overall expenditures show that the City departments are slightly behind in their expenditure budgets. Additionally, the General Fund has expended 64% of the total expense budget. This is slightly lower than the expected amount of 67% for this point in the fiscal year. However, there are contributing factors associated with the 3% difference as indicated. The primary reason for the variance is caused by vacant positions resulting in salary savings across several General Fund departments:

Community Economic Development Department, Police Department, and Parks, Recreation and Neighborhoods Department.

FISCAL IMPACT:

This item contains multiple recommendations from staff to increase major General Fund revenue categories to correspond with the estimated projections for the fiscal year-end. The recommended revenue increases/decreases are as follows:

Account - Description Current Budget
Increase/
(Decrease) Revised Amount Category
41101 - Property Taxes - CY Secured Taxes $ 18,638,758 $ 385,000 $ 19,023,758 Property Tax - Property 42157 - Intergov - State - VLF Swap Adjustment $ 20,149,001 $ 650,000 $ 20,799,001 Property Tax - VLF Swap 41201 - Sales and Use Taxes $ 39,270,902 $ 1,890,000 $ 41,160,902 Sales Tax 41406 - Business License - Cannabis Tax $ 5,000,000 $(1,250,000) $ 3,750,000 Cannabis Tax 41204 - Transient Occupancy Tax $ 3,338,441 $ 240,000 $ 3,578,441 Transient Occupancy Tax 41402 - Business License Tax - Mill Tax $ 12,599,354 $ 1,400,000 $ 13,999,354 Business License/Mill Tax Grand Totals $ 98,996,456 $ 3,315,000 $ 102,311,456
The total recommended increases/decreases across the major General Fund revenues totals $3,315,000 for Fiscal Year 2022-23 and are explained in more detail in the Fiscal Year 2022-23 Mid-Year General Fund Update report.

No increases/decreases are being recommended for General Fund expenditure budgets at this time. However, staff will continue to monitor the General Fund expenditure budget and will return any changes of note to Council via the monthly budget adjustment process.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendation:

Motion accepting the informational Fiscal Year 2022-23 General Fund Mid-Year Update Report and forwarding the report and recommended adjustments to the major General Fund revenues and expenditures to Council for acceptance and approval.

Approved by:

Joseph P. Lopez, City Manager
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Attachments:

1. Fiscal Year 2022-23 General Fund Mid-Year Update
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FISCAL YEAR 2022-23

MID-YEAR GENERAL FUND
UPDATE REPORT:

The Mid-Year General Fund Update Report is created by the Budget Division through the direction of the City Manager to provide a General update concerning the health of the City’s General Fund as well as any adjustments to its revenues and/or expenditures. Information contained within this report seeks to provide data on the performance of the General Fund as the revenues are collected and the expenditures continue on through February of the current fiscal year.

Please note that the expenditures and revenues reported herein are through February 28, 2023 and may not reflect final figures for the month of February.

Created by the
Budget Division
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General Fund Revenues
(Overview)
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eneral Fund revenues are classified into three categories: tax revenues, fee revenues, and other departmental revenues. Through February 28th, 2023, the total General Fund revenues receipted are $95.5 million or approximately 55% of the total budgeted revenues for Fiscal Year 2022-23. This is representative of the normal rate of receipts at this time of the year for the General Fund. The main reason for the lag in terms of the percent received at this point in the fiscal year is due to the two months that the receipt of sales tax runs behind in terms of receipt of revenues as well as the timing of some of the large payments related to Franchise Fees and the sharper increase in Construction revenues that is typically seen in the spring months.

The revenues received to date are spread across all three major revenue types and are broken down further in the chart below:

Category Current Budget Actuals (as of Feb 28, 2023) Amount Outstanding % Received to Date Tax Revenues:

Property Tax - Property $ 20,644,000 $ 12,149,194 $ 8,494,806 59% Property Tax - VLF Swap $ 20,149,001 $ 10,402,622 $ 9,746,380 52% Sales Tax $ 39,270,902 $ 16,687,825 $ 22,583,077 42%
Utility Users Tax $ 20,950,000 $ 11,278,436 $ 9,671,564 54% Transient Occupancy Tax $ 3,338,441 $ 2,007,312 $ 1,331,129 60% Business License/Mill Tax $ 14,250,000 $ 8,757,864 $ 5,492,136 61% Cannabis Tax $ 5,000,000 $ 1,816,918 $ 3,183,082 36%
Total Tax Revenues $ 123,602,344 $ 63,100,171 $ 60,502,173 51% Fee Revenues:

Franchise Fees $ 5,333,800 $ 2,569,247 $ 2,764,553 48%
Motor Vehicle Fees $ 380,000 $ 91,669 $ 288,331 24%
Construction Revenues $ 2,791,770 $ 1,686,239 $ 1,105,531 60% Total Fee Revenues $ 8,505,570 $ 4,347,154 $ 4,158,416 51% Other Revenues:

Departmental Revenues $ 37,935,682 $ 28,026,689 $ 9,908,993 74% American Rescue Plan Act Funds $ 4,500,000 $ -
Transfers In $ 628,640 $ - $ 628,640 0%
Total Other Revenues $ 43,064,322 $ 28,026,689 $ 10,537,633 65% Total Revenues $ 175,172,236 $ 95,474,014 $ 75,198,222 55% *Please note that Departmental Revenues category includes an amount of $5.6M in revenue for the Oakdale Fire Contract, $6.9M in revenue for the Ceres Fire Contract, $372k in revenue for Stanislaus Consolidated Fire contract, $352k in revenue for Turlock Fire contract, and $1.7M in revenue for Salida Fire contract which are all used to pay for offsetting expenditures.

Tax Revenues
Tax revenues represent 71% of the total General Fund operating revenue budget at $123.6 million of the total $175.2 million revenue operating budget for Fiscal Year 2022-23. As of February 28, 2023, $63.1 million of the budgeted $123.6 million has been received to date. This represents approximately 51% of the tax revenue budget being received. This is typical for this point-in-time for one main reason. There is a lag in the receipt of sales tax revenues of two months. This means that the sales tax received for the month of February is really for receipts for the month of December, two months prior. Please note that at the time of this report the amount reflected for Sales Tax receipts does not reflect what should have been received. There is an expected payment of $3M+ that has not yet been received for the month and would bring the totals up to above $20M for the point in time once received.

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Fee Revenues
Fee Revenues represent 5% of the total General Fund operating revenue budget at $8.5 million of the total $175.2 million revenue operating budget for Fiscal Year 2022-23. Many of the fee revenues are generated from Franchise Fees which are collected as “rent” paid for the use of public right of way. These are negotiated costs to allow utility companies (telecommunications, natural gas, garbage, etc.) to access structures like transmission towers, sewage systems, and roads. The City collects approximately $5.3 million in franchise fees annually. Through February 28, 2023, $2.6 million has been collected in this revenue category (48% of the budgeted amount). This amount is on track with what is expected for this time of the year and it is expected that there are some larger Franchise Fee payments that are still outstanding from areas related to the Cable Franchise Fees (which come in May, and June) and the PG&E Franchise Fee (which is receipted in April).

Construction Revenues
Construction revenues are a sub-category of Fee Revenues and include all revenues collected in the Building Safety Division and the Planning Division in the Community and Economic Development Department (CEDD). These revenues represent approximately 1.6% of the total budgeted General Fund operating revenues for Fiscal Year 2022-23. They are budgeted at $2.8 million as of February 28, 2023.

Construction revenues received through February 28, 2023, are at approximately 60% of the budgeted amount. This is trending at about the same level from the amounts collected in the previous fiscal year. This is positive news as strong construction revenues mean that there is continued activity in the building industry in the area. This is especially important as the City continues to emerge from of the economic downturn of the COVID-19 pandemic.

Other Revenues
Other Revenues represent 24% of the total General Fund operating revenue budget at $43.1 million of the total $175.2 million revenue operating budget for Fiscal Year 2022-23.

Other revenues include any revenue source that is received by departments and is not included in the tax or fee revenues categories as well as transfers into the General Fund from other funds.

These revenues are accounted for under the generating department and include a wide range of revenue sources such as direct charge revenue (all departments), fire inspection fees (Fire), league and facility rental fees (Parks, Recreation & Neighborhoods), and the McHenry Tax Sharing Agreement revenues (Non-Departmental).
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General Fund Revenues
(Analysis)
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Property Tax Revenues Analysis
As of February 28, 2023, the first payment has been received in one of the sub-categories that makes up the property tax revenues, Property Tax – Property. The first payment for the second sub-category, Property Tax – Vehicle License Fee (VLF) Swap has also been received. These two payments are significant indicators of how the property tax revenues for the entire fiscal year will finish for the year. With both of these payments receipted a clearer picture can start to be made for this major tax revenue category for Fiscal Year 2022-23.

Property Tax – Property
In Fiscal Year 2022-23, the first installment of property tax was received in February in the amount of $10.4 million. This first payment is receipted under current year secured property taxes and is the bulk of the property tax revenue that is received. Other revenues that fall under Property Tax – Property include, current year unsecured, delinquent, delinquent unsecured, supplemental roll, and Redevelopment Property Tax Trust Fund (RPTTF) allocation. These revenue accounts make up the total amounts that sum up to the total Property Tax – Property amount received by the City.

With the first payment received, estimates for fiscal year-end 2022-23 show that the amounts for this revenue category are on track. Year-end estimates show that a total of $21.03 million is expected to be received based off the $10.4 million first payment which is higher than the current budgeted amount for Property Tax – Property. With this in mind, it will be recommended to adjust this revenue up by approximately $385 thousand for Fiscal Year 2022-23.

Staff is recommending an increase to this category of revenue in the amount of $385,000 for Fiscal Year 2022-23.

Property Tax – VLF Swap
Property Tax – VLF Swap is the second portion of the revenues that makes up the total Property Tax category for the City. This revenue source came into effect with the passing of the State of California Budget in 2004 by then Governor Schwarzenegger. The budget included a swap of city and county vehicle license fee revenues for additional property tax share. These additional VLF backfill funds, which equate to a dollar-for-dollar like amount of property taxes, also increase annually in proportion to the growth in assessed valuation in the local jurisdictions.

The first Property Tax – VLF Swap payment for the City has been received in the amount of $10.4 million. The amount received in the first payment, is usually around 50% of the total payment that will be received for the year. With the Property Tax – Property revenue coming in higher than anticipated, staff recommends increasing this revenue by an amount of $650 thousand for the fiscal year.

Staff is recommending an increase to this category of revenue in the amount of $650,000 for Fiscal Year 2022-23.
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Property Tax Charts:

Annual Property Tax
Annual Property Tax – Property
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Annual Property Tax – VLF – Swap
The preceding property tax charts show the trends that have been occurring since fiscal year 2015.

There has been a steady growth in both the Property Tax and VLF swap categories of this revenue source. At this point, the growth is expected to continue as the housing market remains strong.

This revenue source will continue to be monitored as there is still an outstanding unknown as to what the long-term effect of the pandemic will be on the housing market in terms of possible foreclosures as well as any future rise to mortgage rates with looming talks of rising inflation and potential economic downturns.
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Sales Tax Revenues Analysis
As of February 28, 2023, Sales Tax revenues received to date are approximately $16.7 million. This represents 52% of the total Sales Tax budgeted for the fiscal year ($39.3 million). Sales Tax is received by the City on a monthly basis but is receipted with a two-month lag time, meaning that the receipts received in any particular month are for the actual sales tax receipts two months prior.

For example, sales tax revenues accounted for in the month of February are for actual sales tax receipts made in the month of December (two months prior). This continuous two-month lag time is something that is closely monitored by Budget Division staff as estimates are created for fiscal year-end.

Sales Tax categories that have been increasing in the last few quarters in Fiscal Year 2022-23 have been in the industries of food products, construction and transportation (which includes service stations). Certain sub-categories within the larger areas of industries have also seen growth in the third quarter of 2022 (covering the months of July through September). These areas included department stores, restaurants, food market, auto parts/repairs and service stations.

Countywide Pool Sales Tax
The City continues to receive a significant portion of the County Pool related to the “origin sourcing” portion of sales tax. “Origin sourcing” is a sales tax practice under which sales tax for purchases of goods that are shipped to purchasers are generally sourced to the business location of the retailer where the sale originates.

Under current California Board of Equalization (BOE) regulations, a substantial portion of local use tax collections are allocated through a countywide pool to local jurisdictions, like Modesto, where the purchased property is put to its first functional use. Under the pool system, the tax is reported by the taxpayer to the countywide pool of use and then distributed to each jurisdiction in that county on a pro-rata share of taxable sales. If there is a situation where a county of use cannot be determined, then the allocation goes to the state pool for pro-rata distribution on a statewide basis.

The City of Modesto consistently receives anywhere between 32% to 38% of the allocation of the countywide pool described above. This share of sales tax can represent anywhere between $950 thousand to $1.8 million on a quarterly basis. These amounts contribute to the total sales tax figures that are shown in the annual figures reported by the City.

At this time current year-end projections are showing stronger sales tax figures than what was initially budgeted for the fiscal year when the budget was adopted. When the initial estimates for the current year were made, they were done some uncertainty about the economy as it emerged from the COVID-19 pandemic. The City has, fortunately so far, seen little impact to sales tax figures as we move out of the pandemic economically in terms of the receipts for revenues and this has caused a revised estimate to be made for Fiscal Year 2022-23. Strong sales in certain industries mentioned above continue to bolster the sales tax receipts being seen in the City.

Staff is recommending an increase of $1,890,000 for this category for Fiscal Year 2022-23. #9..
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Sales Tax Charts
Annual Sales Tax Chart
Quarterly Sales Tax Chart
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Cannabis Tax Revenue Analysis
Cannabis Tax is the newest form of tax revenue that the City has been receiving. As this begins to be a normalized source of revenue we are now beginning to see some annualized trends in the revenues each fiscal year. When the revenue began to be receipted back in the latter half of fiscal year 2018-19, it started slowly as there were not the full amount of Council approved dispensaries up and running at the time. Over the next six to eight months the dispensaries began to gain steam and permitted dispensaries became fully operational. Revenues began to increase steadily over the next fiscal year and a half and steadily rose to a consistent $400k+ per month in receipted revenues per month to the City. Since that time, cannabis revenues have dropped to an average of $227k per month in Fiscal Year 2022-23.

As of February 28, 2023, $1.8 million in Cannabis Tax revenue have been received for Fiscal Year 2022-23. This is approximately 36% of the budgeted amount of $5 million. Currently, the Budget Division is recommending a decrease in this revenue category. The revenues have experienced downward trends the entirety of Fiscal Year 2022-23 and have not shown the usual increases that have been seen in prior fiscal years. Some of this could be caused by recent trends overall in California with the illegal market for cannabis impacting legal sales, low wholesale prices for dispensaries, and limited number of dispensaries. Staff will continue to monitor this revenue category will evaluate the amount projected for Fiscal Year 2023-24.

Staff is recommending a decrease in the amount of $1,250,000 to this category of revenue for Fiscal Year 2022-23.
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Cannabis Tax Revenue Charts
Monthly Cannabis Tax Revenues
Annual Cannabis Tax Revenues
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The preceding charts show the trends for Cannabis Tax revenues and the growth initially seen and then the declines that have been seen since annually. It is expected that Fiscal year 2022-23 will continue to see a decline in revenue for this category from the prior fiscal year but we continue to watch this revenue to see what trends in the market and how additional dispensaries coming online will impact the revenue source.

Other Tax Revenues
Two additional areas that are seeing some positive trends in terms of actuals received to date are Transient Occupancy Tax (TOT) and Business License/Mill Tax. TOT is coming in at a rate that is slightly higher than the previous fiscal year. To date, revenues received for UUT are at 60% of the total budgeted amount of $3.34 million. Revenues are estimated to be slightly higher than the actuals received from the prior fiscal year which requires an increase to this revenue category in the amount of $240,000.

Business License/Mill Tax is tracking at a similar pace to the previous fiscal year as well. To date 61% of the total budgeted revenue of $14.25 million. With Business License/Mill Tax larger total payments are typically received in the months of February and January. January in Fiscal Year 2022-23 had a similar amount that had been seen in the prior fiscal year and this revenue source will continue to be watched closely as the February/March final amounts are receipted. Due to the anticipated large payments of February/March’s receipts and any possible correction for the larger receipts in January combined with the actuals received to date, staff is recommending increasing this revenue category to prior year actual levels. This will increase the revenue for Business License/Mill Tax by $1.4M for Fiscal Year 2022-23.

Staff is recommending an increase to the budgeted revenues for Transient Occupancy Tax in the amount of $240,000 and for Business License/Mill Tax in the amount of $1,400,000 for Fiscal Year 2022-23.

Departmental Revenue Analysis
Departmental revenues are coming in slightly lower than anticipated at this time but it will be an area that we continue to monitor. There are not any major areas of concern at this time and we continue to see strong revenues in areas like the McHenry Tax Sharing agreement. If anything changes in this category, the Budget Division will bring an item through the monthly budget adjustment process and be sure to update Council on any changes in these categories.

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Summary of Recommended Revenue Changes
Category Current Budget
Recommended Increase/
(Decrease) Revised Amount
Property Tax - Property $ 20,644,000 $ 385,000 $ 21,029,000 Property Tax - VLF Swap $ 20,149,001 $ 650,000 $ 20,799,001 Sales Tax $ 39,270,902 $ 1,890,000 $ 41,160,902
Cannabis Tax $ 5,000,000 $ (1,250,000) $ 3,750,000
Transient Occupancy Tax $ 3,338,441 $ 240,000 $ 3,578,441 Business License/Mill Tax $ 14,250,000 $ 1,400,000 $ 15,650,000 Grand Totals $ 102,652,344 $ 3,315,000 $ 105,967,344
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General Fund Expenditures
(Analysis)
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eneral Fund expenditures make up the total budgets from which departments pay for costs related to one of four expenditure categories. These categories include salary and benefit costs, internal service fund costs, discretionary costs, and transfers out to other funds. In the General Fund, there are 13 Operating Departments and one category for Transfers Out of the General Fund to other funds. The 13 Operating Departments make up a total General Fund operating expenditure budget of $173.6 million with the Transfers Out having a budget of $9.2 million. Including the variance rate of a credit of $6.4M, the total current General Fund operating expenditure budget in Fiscal Year 2022-23 is $176.4 million.

The table below shows the current budget and expenditures through February 28, 2023.

General Fund Department Expenditures
Department Current Budget Actuals (as of Feb 28, 2023) % of Budget Expended Police Department $ (75,285,295) $ (47,082,126) 63%
Fire Department $ (44,664,288) $ (32,779,281) 73%
Oakdale Fire Contract Expense $ (5,532,935) $ (3,702,432) 67% Ceres Fire Contract Expense $ (6,580,123) $ (4,520,771) 69% Stanislaus Consolidated Fire Contract Expense $ (322,000) $ (164,639) 51% Turlock Fire Contract Expense $ (337,478) $ (168,527) 50% Salida Fire Contract Expense $ (1,677,016) $ (383,810) 23% Parks, Recreation, and Neighborhoods $ (16,140,789) $ (8,832,964) 55% Community and Economic Development $ (6,989,692) $ (4,379,152) 63% City Council $ (516,560) $ (339,876) 66%
City Manager's Office $ (3,326,260) $ (2,134,067) 64%
Human Resources $ (1,803,065) $ (1,225,557) 68%
City Attorney's Office $ (1,804,143) $ (946,577) 52%
City Clerk's Office $ (1,448,565) $ (835,015) 58%
Office of the City Auditor $ (485,574) $ (174,339) 36%
Finance Department $ (6,176,892) $ (3,865,835) 63%
Non-Departmental $ (473,400) $ (62,872) 13%
Total Departmental Expenses $ (173,564,076) $ (111,597,840) 64% Transfers Out $ (9,205,696) $ (438,524) 5%
Variance Rate (5%) $ 6,363,679 $ - 0%
Total Department Expenses $ (176,406,093) $ (112,036,365) 64% At the point in time that the expenditure data was collected, one could expect an estimated expenditure rate of approximately 67% (8 months elapsed out of the fiscal year). The chart shows that the overall General Fund expenditures are below this rate at 64% expended. Similar to the overall rate of expenditure last fiscal year, we are seeing salary savings in some of the departments due to vacant positions which are resulting in some of the decreased level of expenditures at this point in time. The rate of expenditure of 64% would be much lower if it was just the salary savings that were factoring in, but there are also increasing in other areas that are bringing up some costs such as the increased cost of goods, and the increased costs of contract services. These competing factors are increasing the level of expenditures at the discretionary level just not at the same rate of the vacancy savings.

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Below is a table that shows the breakdown of the expenditures from each department by appropriation unit category. As reminder the breakdown of expenditure categories is as follows:
 Appr Unit A – Salaries and Benefits
 Appr Unit AA – Intrafund Labor
 Appr Unit B – Internal Service Fund Charges
 Appr Unit C – Discretionary Charges
 Appr Unit D – Transfers Out
Department Current Budget
Actuals (as of
February 28, 2023)
Amount
Available % Expended
City Attorney's Office
Salaries and Benefits (Appr Unit A) $ 634,124 $ 418,948 $ 215,176 66% ISF Charges (Appr Unit B) $ 142,089 $ 93,337 $ 48,752 66% Discretionary Charges (Appr Unit C) $ 1,027,930 $ 434,292 $ 593,637 42% City Attorney's Office Total $ 1,804,143 $ 946,577 $ 857,565 52% City Clerk's Office
Salaries and Benefits (Appr Unit A) $ 535,245 $ 301,604 $ 233,641 56% ISF Charges (Appr Unit B) $ 53,821 $ 35,586 $ 18,235 66% Discretionary Charges (Appr Unit C) $ 859,499 $ 497,825 $ 361,674 58% City Clerk's Office Total $ 1,448,565 $ 835,015 $ 613,550 58% City Council
Salaries and Benefits (Appr Unit A) $ 331,757 $ 216,040 $ 115,717 65% ISF Charges (Appr Unit B) $ 136,235 $ 90,195 $ 46,040 66% Discretionary Charges (Appr Unit C) $ 48,568 $ 33,641 $ 14,926 69% City Council Total $ 516,560 $ 339,876 $ 176,683 66%
City Manager's Office
Salaries and Benefits (Appr Unit A) $ 2,550,902 $ 1,647,524 $ 903,378 65% Intrafund Labor (Appr Unit AA) $ - $ (280) $ 280 N/A
ISF Charges (Appr Unit B) $ 209,900 $ 138,790 $ 71,110 66% Discretionary Charges (Appr Unit C) $ 565,458 $ 348,033 $ 217,426 62% City Manager's Office Total $ 3,326,260 $ 2,134,067 $ 1,192,193 64% Community & Economic Development
Salaries and Benefits (Appr Unit A) $ 5,018,667 $ 3,081,775 $ 1,936,892 61% Intrafund Labor (Appr Unit AA) $ (199,353) $ (152,616) $ (46,737) 77% ISF Charges (Appr Unit B) $ 1,131,817 $ 751,300 $ 380,517 66% Discretionary Charges (Appr Unit C) $ 1,038,561 $ 698,693 $ 339,868 67% Community & Economic Development Total $ 6,989,692 $ 4,379,152 $ 2,610,540 63% Finance Department
Salaries and Benefits (Appr Unit A) $ 4,242,187 $ 2,692,232 $ 1,549,955 63% Intrafund Labor (Appr Unit AA) $ (55,660) $ (41,124) $ (14,536) 74% ISF Charges (Appr Unit B) $ 514,008 $ 340,151 $ 173,857 66% Discretionary Charges (Appr Unit C) $ 1,476,357 $ 874,577 $ 601,780 59% Finance Department Total $ 6,176,892 $ 3,865,835 $ 2,311,057 63% Fire Department
Salaries and Benefits (Appr Unit A) $ 38,494,545 $ 28,311,109 $ 10,183,436 74% ISF Charges (Appr Unit B) $ 1,413,903 $ 941,888 $ 472,015 67% Discretionary Charges (Appr Unit C) $ 4,755,840 $ 3,526,284 $ 1,229,556 74% Fire Department Total $ 44,664,288 $ 32,779,281 $ 11,885,007 73% #9..
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Fire Department - Ceres
Salaries and Benefits (Appr Unit A) $ 6,065,599 $ 4,168,295 $ 1,897,304 69% ISF Charges (Appr Unit B) $ 234,428 $ 156,285 $ 78,143 67% Discretionary Charges (Appr Unit C) $ 280,096 $ 196,191 $ 83,905 70% Fire Department - Ceres Total $ 6,580,123 $ 4,520,771 $ 2,059,352 69% Fire Department - Oakdale
Salaries and Benefits (Appr Unit A) $ 4,966,043 $ 3,338,818 $ 1,627,225 67% ISF Charges (Appr Unit B) $ 175,057 $ 116,705 $ 58,352 67% Discretionary Charges (Appr Unit C) $ 391,835 $ 246,909 $ 144,926 63% Fire Department - Oakdale Total $ 5,532,935 $ 3,702,432 $ 1,830,504 67% Fire Department - Salida
Salaries and Benefits (Appr Unit A) $ 1,499,716 $ 375,641 $ 1,124,075 25% ISF Charges (Appr Unit B) $ 60,000 $ - $ 60,000 0%
Discretionary Charges (Appr Unit C) $ 117,300 $ 8,170 $ 109,130 7% Fire Department - Salida Total $ 1,677,016 $ 383,810 $ 1,293,206 23% Fire Department - Stanislaus Consolidated
Salaries and Benefits (Appr Unit A) $ 322,000 $ 164,229 $ 157,771 51% Discretionary Charges (Appr Unit C) $ - $ 410 $ (410) N/A Fire Department - Stanislaus Consolidated Total $ 322,000 $ 164,639 $ 157,361 51% Fire Department - Turlock
Salaries and Benefits (Appr Unit A) $ 337,478 $ 167,406 $ 170,072 50% Discretionary Charges (Appr Unit C) $ - $ 1,121 $ (1,121) N/A Fire Department - Turlock Total $ 337,478 $ 168,527 $ 168,951 50% Human Resources
Salaries and Benefits (Appr Unit A) $ 1,553,755 $ 1,084,330 $ 469,425 70% ISF Charges (Appr Unit B) $ 188,724 $ 124,581 $ 64,143 66% Discretionary Charges (Appr Unit C) $ 60,586 $ 16,646 $ 43,940 27% Human Resources Total $ 1,803,065 $ 1,225,557 $ 577,508 68% Non-Departmental
Discretionary Charges (Appr Unit C) $ 473,400 $ 62,872 $ 410,528 13% Non-Departmental Total $ 473,400 $ 62,872 $ 410,528 13% Office of the City Auditor
Salaries and Benefits (Appr Unit A) $ 340,910 $ 69,071 $ 271,839 20% ISF Charges (Appr Unit B) $ 23,679 $ 15,669 $ 8,010 66% Discretionary Charges (Appr Unit C) $ 120,985 $ 89,599 $ 31,386 74% Office of the City Auditor Total $ 485,574 $ 174,339 $ 311,235 36% Parks, Recreation & Neighborhoods
Salaries and Benefits (Appr Unit A) $ 8,079,889 $ 4,323,961 $ 3,755,928 54% Intrafund Labor (Appr Unit AA) $ (479,389) $ (324,782) $ (154,607) 68% ISF Charges (Appr Unit B) $ 1,638,394 $ 1,090,567 $ 547,827 67% Discretionary Charges (Appr Unit C) $ 6,829,895 $ 3,743,166 $ 3,086,730 55% Transfers Out $ 72,000 $ - $ 72,000 0%
Parks, Recreation & Neighborhoods Total $ 16,140,789 $ 8,832,912 $ 7,307,877 55% Police Department
Salaries and Benefits (Appr Unit A) $ 59,312,872 $ 36,804,773 $ 22,508,099 62% Intrafund Labor (Appr Unit AA) $ (10,410) $ (189,998) $ 179,588 1825% ISF Charges (Appr Unit B) $ 4,122,107 $ 2,748,071 $ 1,374,036 67% Discretionary Charges (Appr Unit C) $ 11,860,726 $ 7,719,280 $ 4,141,447 65% Police Department Total $ 75,285,295 $ 47,082,126 $ 28,203,170 63% Public Works
Discretionary Charges (Appr Unit C) $ - $ 52 $ (52) N/A Public Works Total $ - $ 52 $ (52) N/A
Transfers Out
Transfers Out $ 9,205,696 $ 438,524 $ 8,767,172 5%
Transfers Out Total $ 9,205,696 $ 438,524 $ 8,767,172 5% Variance Rate
Variance Rate $ (6,363,679) $ - $ (6,363,679) 0%
Variance Rate Total $ (6,363,679) $ - $ (6,363,679) 0%
Grand Total $ 176,406,093 $ 112,036,365 $ 64,369,728 64% #9..
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Fiscal Year 2022-23 General Fund Mid-Year Update
18 | P a g e
The main takeaway from the information above is in the area of public safety, specifically related to overtime spending. The pandemic continues to have budgetary impacts on salary and benefit spending as it relates to overtime in public safety, specifically the Fire Department. Overtime costs continue to remain high in these areas. In the Fire Department (inclusive of the Fire Services contracts), overtime was budgeted at $3.4 million for the fiscal year. This amount has been expended beyond the budgeted amount and has reached actual expenditures of $4.56 million with 4 months in the fiscal year remaining. The Police Department has a budget of $2.66 million in overtime and has nearly reached that level with actuals of $2.51 million with 4 months remaining.

Other departments are still being impacted by costs these overtime related issues as well, but public safety is in a unique situation due to staffing requirements.

Another area that has the potential to impact the fiscal year-end are the subsidies that are provided through transfers out to the Centre Plaza, Golf Fund, and the Parking Fund. The Centre Plaza and Parking Fund continue to experience heavy losses in revenues. Due to this, the General Fund has provided subsidies to these funds in past fiscal years. Should the Parking Fund fall into a negative fund balance, which occurred last fiscal year, any subsidy would need to be funded by the General Fund. This will be closely watched by staff as we continue through the current fiscal year.

These revenues and expenditures will continue to be monitored for each of these funds in the next few months for potential impacts on the General Fund and will be reported back to Council with any potential impacts.

Expenditure Conclusions
Overall expenditures are trending slightly lower than would be expected at this time in the fiscal year. This is being driven mainly by salary and benefit savings due to vacant positions that have occurred in the current fiscal year. Overtime spending will continue to be monitored as well as the possibility of increased subsidy needs from the Centre Plaza and Parking Funds.

Staff is recommending no change to department expenditure budgets for Fiscal Year 2022-23 at this time.
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Finance CommitteeMarch 20, 2023

Finance Committee
March 20, 2023