Agenda packet — Pinole City Council, April 26, 2022

PINOLE CITY COUNCIL

SPECIAL MEETING AGENDA

CITY COUNCIL
Vincent Salimi, Mayor
Devin Murphy, Mayor Pro Tem
Anthony Tave, Council Member
Maureen Toms, Council Member
Norma Martínez-Rubin, Council Member

TUESDAY
April 26, 2022
6:00 P.M
Please note: HYBRID MEETING FORMAT
Attend in person : PINOLE CITY COUNCIL CHAMBERS - 2131 PEAR STREET OR
Attend VIA ZOOM TELECONFERENCE – Details provided below Please note: Updated COVID-19 safety protocols will be posted outside the City Council Chambers. Please review this information before entering the Council Chambers.

How to Submit Public Comments:

In Person: Attend meeting at the Pinole City Council Chambers, fill out a yellow public comment card and submit it to the City Clerk.

Via Zoom:

Members of the public may submit a live remote public comment via Zoom video conferencing. Download the Zoom mobile app from the Apple Appstore or Google Play. If you are using a desktop computer, you can test your connection to Zoom by clicking here. Zoom also allows you to join the meeting by phone.

From a PC, Mac, iPad, iPhone or Android:
https://us02web.zoom.us/j/89335000272
Webinar ID: 893 3500 0272
By phone: +1 (669) 900-6833 or +1 (253) 215-8782 or +1 (346) 248-7799 • Speakers will be asked to provide their name and city of residence, although providing this is not required for participation.
• Each speaker will be afforded up to 3 minutes to speak (subject to modification by the Mayor)
• Speakers will be muted until their opportunity to provide public comment.

When the Mayor opens the comment period for the item you wish to speak on, please use the “raise hand” feature (or press *9 if connecting via telephone) which will alert staff that you have a comment to provide and press *6 to unmute. To comment with your video enabled, please let the City Clerk know you would like to turn your camera on once you are called to speak.

CORONAVIRUS ADVISORY
INFORMATION:

CLICK HERE for City Updates
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Written Comments: All comments received before 3:00 pm the day of the meeting will be posted on the City’s website on the agenda page (Agenda Page Link) and provided to the City Council prior to the meeting. Written comments will not be read aloud during the meeting.

Email comments to [email protected] Please indicate which item on the agenda you are commenting on in the subject line of your email.

Please note: Updated COVID-19 safety protocols will be posted outside the City Council Chambers. Please review this information before entering the Council Chambers.

OTHER WAYS TO WATCH THE MEETING
LIVE ON CHANNEL 26. They are retelecast the following Thursday at 6:00 p.m. The Community TV Channel 26 schedule is published on the city’s website at www.ci.pinole.ca.us.

VIDEO-STREAMED LIVE ON THE CITY’S WEBSITE, www.ci.pinole.ca.us. and remain archived on the site for five (5) years.

If none of these options are available to you, or you need assistance with public comment, please contact the City Clerk, Heather Bell at (510) 724-8928 or [email protected] .

Americans With Disabilities Act: In compliance with the Americans With Disabilities Act of 1990, if you need special assistance to participate in a City Meeting or you need a copy of the agenda, or the agenda packet in an appropriate alternative format, please contact the City Clerk’s Office at (510) 724-8928. Notification at least 48 hours prior to the meeting or time when services are needed will assist the City staff in assuring that reasonable arrangements can be made to provide accessibility to the meeting or service.

Note: Staff reports are available for inspection on the City Website at www.ci.pinole.ca.us. You may also contact the City Clerk via e-mail at [email protected] .

Ralph M. Brown Act. Gov. Code § 54950. In enacting this chapter, the Legislature finds and declares that the public commissions, boards and councils and the other public agencies in this State exist to aid in the conduct of the people's business. It is the intent of the law that their actions be taken openly and that their deliberations be conducted openly. The people of this State do not yield their sovereignty to the agencies, which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created.
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1. CALL TO ORDER & PLEDGE OF ALLEGIANCE IN HONOR OF THE US MILITARY TROOPS

2. LAND ACKNOWLEDGMENT
Before we begin, we would like to acknowledge the Ohlone people, who are the traditional custodians of this land. We pay our respects to the Ohlone elders, past, present, and future, who call this place, Ohlone Land, the land that Pinole sits upon, their home. We are proud to continue their tradition of coming together and growing as a community. We thank the Ohlone community for their stewardship and support, and we look forward to strengthening our ties as we continue our relationship of mutual respect and understanding.

3. ROLL CALL, CITY CLERK’S REPORT & STATEMENT OF CONFLICT An official who has a conflict must, prior to consideration of the decision: (1) publicly identify in detail the financial interest that causes the conflict; (2) recuse himself /herself from discussing and voting on the matter; and (3) leave the room until after the decision has been made, Cal. Gov't Code § 87105.

4. CITIZENS TO BE HEARD (Public Comments)
Citizens may speak under any item not listed on the Agenda. The time limit is 3 minutes for City Council items and is subject to modification by the Mayor. Individuals may not share or offer time to another speaker. Pursuant to provisions of the Brown Act, no action may be taken on a matter unless it is listed on the agenda, or unless certain emergency or special circumstances exist. The City Council may direct staff to investigate and/or schedule certain matters for consideration at a future meeting.

5. WORKSHOP ITEMS
A. Fiscal Year (FY) 2022/23 General Fund Baseline Budget [Action: Receive Report and Provide Direction (Guillory)]
B. Preliminary Proposed Long-Term Financial Plan for Fiscal Year (FY) 2022/23-FY 2026/27 [Action: Receive Report and Provide Direction (Guillory)] C. Overview of Proposed Projects for FY 2022-23 Through 2026-27 Five-Year Capital Improvement Plan [Action: Receive Report and Provide Direction (Mishra)]

6. ADJOURNMENT to the Regular City Council Meeting of May 3, 2022 in Remembrance of Amber Swartz.

I hereby certify under the laws of the State of California that the foregoing Agenda was posted on the bulletin board at the main entrance of Pinole City Hall, 2131 Pear Street Pinole, CA, on the City’s website, not less than 72 hours prior to the meeting date set forth on this agenda.

POSTED: April 21, 2022 at 5:00 P.M.
_________________________________
Heather Bell, CMC
City Clerk
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CITY COUNCIL
REPORT
DATE: APRIL 26, 2022
TO: MAYOR AND COUNCIL MEMBERS
FROM: MARKISHA GUILLORY, FINANCE DIRECTOR
SUBJECT: FISCAL YEAR (FY) 2022/23 GENERAL FUND BASELINE BUDGET

RECOMMENDATION
City staff recommends that the City Council receive a report on the fiscal year (FY) 2022/23 General Fund baseline budget, and direct staff to evaluate Council Member requests for potential budget additions/deletions.

BACKGROUND
The City operates on an annual budget cycle. Through the budget, the City Council approves revenue estimates and authorizes City staff to expend the City’s financial resources. City staff is responsible for preparing a proposed budget for City Council’s consideration, modification, and adoption.

The purpose of this agenda item is to provide the City Council with an overview of the FY 2022/23 General Fund baseline budget and to receive requests from the City Council for staff to research potential additions or deletions to the baseline to be included in the adopted FY 2022/23 budget.

The baseline budget for the upcoming fiscal year contains all of the ongoing revenue and expenditure items of the current budget adjusted based on known or anticipated changes due to economic conditions, contractual agreements, etc. It is the starting point from which staff prepares the proposed budget for the upcoming fiscal year and the status quo long-term financial forecast. As we move through the budget process, the baseline budget will be modified and refined until the final proposed budget is adopted by the City Council in June 2022. The baseline budget includes the General Fund (including Measure S 2006 and 2014) only and does not include non-General Funds (i.e., special revenue funds, capital projects funds, and enterprise funds). 5A
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REVIEW AND ANALYSIS
Budget Development Process
As noted above, the City goes through an annual process of developing a budget for the upcoming fiscal year. The City’s budget development process is considered an “incremental” budget process, meaning that the budget for the upcoming year is developed based on the current year’s budget and includes incremental changes. City staff takes the following steps to create the Preliminary Proposed budget:
• Finance Department will use the current FY 2021/22 budget, which incorporates any mid-year changes approved by the City Council, as the starting point;
• Finance Department creates a “baseline budget” for FY 2022/23 by taking the ongoing revenues and expenditures included in the current FY 2021/22 budget and factoring in known or assumed changes, which departments confirm, to ongoing revenues and expenditures for FY 2022/23 (i.e., forecasted changes to different revenue streams, general inflation, known changes to debt service, etc.);
• Departments submit requests for changes from the baseline budget to address proposed special projects or increased service levels; and • Finance Department and City Manager consider department requests for changes to the baseline budget and prepare a Preliminary Proposed budget for the City Council’s consideration.

City staff presented the FY 2022/23 General Fund baseline budget to the Finance Subcommittee on April 14, 2022. The only change made was to the FY 2021/22 Baseline Budget in Table 1 below. A one-time revenue of $600,000 in the “Other Revenues” category was removed to show the true baseline to baseline comparison for FY 2021/22 and FY 2022/23.

Fiscal Year (FY) 2022/23 General Fund Baseline Budget
The FY 2022/23 General Fund baseline budget includes recurring General Fund revenues, such as the tax revenues, public safety charges, other revenues, and transfers in. Revenues have been adjusted to reflect growth rate assumptions.

Recurring General Fund expenditures have also been adjusted. This includes increases in the salaries/wages to account for contract salary increases, increases in benefits consistent with updated rates, and inflationary increases in operations and maintenance. The baseline budget assumes no change in the staff levels or programs.

The baseline budget illustrates whether, if the City maintains its current revenue mechanisms and staffing and service levels, the budget would be balanced or not. It is a public finance best practice, and a goal of the City’s Financial Policy on a Structurally Balanced Budget, to create a proposed General Fund operating budget that is structurally balanced, meaning that ongoing revenues equal or exceed ongoing expenditures.
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Components of the FY 2022/23 Baseline Budget
The FY 2022/23 baseline budget projection indicates that the City’s ongoing revenues are sufficient to cover its ongoing expenditures and the City will be able to continue to fully fund the General Reserve.

Following are the components that are included in the FY 2022/23 baseline budget.

Table 1 below compares the FY 2021/22 baseline budget to the FY 2022/23 baseline budget.

Table 1 – Comparison of FY 2021/22 and FY 2022/23 General Fund Baseline Budgets FY 2021/22 FY2022/23 $ Change % Change
Baseline Baseline

SOURCES
PROPERTY TAX 4,230,122 4,642,585 412,463 10%
SALES TAX 4,483,848 4,582,095 98,247 2%
MEAS S 2006 & 2014 LOCAL SALES TAX 4,840,000 4,902,000 62,000 1% UTILITY USERS TAX 1,915,000 1,934,150 19,150 1%
FRANCHISE TAX 779,000 786,790 7,790 1%
INTERGOVERNMENTAL TAX - VLF 2,082,883 2,215,948 133,065 6% TRANSIENT OCCUPANCY TAX 418,000 440,000 22,000 5%
BUSINESS LICENSE 382,000 400,000 18,000 5%
CHARGES FOR SERVICES 1,339,796 1,428,005 88,209 7%
OTHER REVENUES 518,140 523,321 5,181 1%
Total Revenues 20,988,789 21,854,894 866,105 4%
TRANSFERS IN 853,686 1,434,048 580,362 68%
Total Sources 21,842,475 23,288,942 1,446,467 7%
USES
SALARIES & WAGES 10,553,426 10,870,029 316,603 3%
BENEFITS - PERS Retirement 3,447,080 3,688,376 241,296 7% BENEFITS - OTHER 3,374,993 3,543,743 168,750 5%
OPERATIONS AND MAINTENANCE 3,082,147 3,174,611 92,464 3% CAPITAL OUTLAY 157,186 161,902 4,716 3%
DEBT SERVICE 576,107 596,150 20,043 3%
Total Expenditures 21,190,939 22,034,811 843,872 4%
TRANSFERS OUT 1,418,455 1,418,455 - 0%
Total Uses 22,609,394 23,453,266 843,872 4%
Net Surplus/(Deficit) (766,919) (164,324)
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Revenues
Property Tax
Property tax is an ad valorem tax imposed on real property (land and permanently attached improvements such as buildings) and tangible personal property (movable property). The fixed statutory rate is 1% of assessed valuation. Assessed value is based on the 1975 property values with subsequent increases limited to 2% or CPI growth, whichever is less. However, when there is a change in property ownership, property renovation, or new construction, property is reappraised at its full current market value.

Property tax is made up of four components—secured (basic and Redevelopment Property Tax Trust Fund (RPTTF); unsecured; supplemental; and property transfer tax. The 10% growth rate is due to an increase in the residual RPTTF revenue as a result of gradually declining payments due on former Redevelopment debt.

Sales Tax
The overall sales tax rate on purchases made in Pinole is 9.75%. Of that amount, the City receives the statewide standard 1% (referred to as the Bradley Burns sales tax) plus 0.5% due to Measure S 2006 and 0.5% due to Measure S 2014. The FY 2022/23 baseline budget assumes a 2% growth rate in the City’s sales tax revenue, consistent with projections provided by HdL, the City’s sales tax consultant.

Utility Users Tax
Utility Users’ Tax (UUT) is an 8% tax levied on the consumption of telecommunication, gas, and electricity. The FY 2022/23 baseline budget assumes a 1% growth rate based on financial and industry trend analysis.

Franchise tax
Franchise tax is levied at an average of 5% on public utilities and other corporations that furnish gas, electric, water, Cable TV, refuse or similar services to citizens living within city boundaries. The various fees are delineated in franchise agreements and are paid directly to the city by these franchisees. Estimates are based on historical experience considering contract amendments which impact future years. The FY 2022/23 baseline budget assumes a 1% growth rate.

Intergovernmental Taxes
Motor vehicle in-lieu fee (VLF) is the City’s share of motor vehicle license fees levied, collected and apportioned by the State. VLF is a tax on the ownership of registered motor vehicles which takes the place of taxation of this personal property. The VLF is paid annually at the time vehicle licenses are renewed based on current value 7 of 65
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adjusted for depreciation. The FY 2022/23 baseline budget assumes a 6% growth rate, consistent with projections provided by HdL, the City’s property tax consultant.

Transient Occupancy Tax
Transient occupancy tax (TOT) is a 10% tax levied by the City for the privilege of occupying quarters on a transient basis in accordance with Chapter 3.24 of Municipal Code. This tax is imposed upon persons staying 30 days or less in a motel or lodging facility. The FY 2022/23 baseline budget assumes a 5% growth rate based on industry trends.

Business License Tax
Business license tax is assessed on all businesses doing business within City limits in accordance with Municipal Code Title 5. The City charges business license tax in accordance with the provisions of Government Code 37101. Pinole’s tax is computed based on a flat tax (currently $152) per year combined with a variable tax component based on number of employees engaged in each business. The FY 2022/23 baseline budget assumes a 5% growth rate based on trends.

Public Safety Charges
Public safety charges are received for dispatch services provided to the cities of Hercules and San Pablo under an Intergovernmental Service Sharing agreement. A portion of the costs of this activity are reimbursed by the City of Hercules and City of San Pablo. Under the current agreement, the City’s recovers approximately 67% of the activity’s budget. The FY 2022/23 baseline budget assumes a 7% increase based on the established formula.

Other Revenues
Other revenues is made up of all other revenue sources, such as fees, permits, interest income, grants, reimbursements, and other miscellaneous revenue. These revenues are projected primarily using historical trend analysis. The FY 2022/23 baseline budget assumes a 1% growth rate and was adjusted to exclude a $600,000 one-time revenue that was expected in FY 2021/22.

Transfers In
The transfer in comes from the Pension Section 115 Trust to offset the increase in pension costs in the General Fund. The amount transferred is based on the difference between the City’s base year (FY 2018/19) contribution toward employee pensions and the forecasted required City contribution in future years. 8 of 65
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Expenditures
Salaries & Wages
Salaries and wages expenditures in the baseline budget are computed based on the City’s current staffing level (123 FTEs) and agreed-upon changes to salaries and wages for different classifications. It should be noted that the baseline budget captures several new positions that were added to the budget in FY 2021/22. These critical positions were added as a result of the City’s organizational assessment, the fire service delivery study, and operational needs. The FY 2022/23 baseline budget assumes the standard 3% growth rate. The same growth rate is assumed for annual salary increases for the new labor agreement that is underway with the Pinole Police Employees Association (PPEA).

Benefits – PERS Retirement
Retirement benefits are the City’s annual required contribution as determined by the most recent actuarial valuation reports as of July 2020 provided by the California Public Employees’ Retirement System (CalPERS). The FY 2022/23 baseline budget reflects the cost net of the required employer contribution minus employee contributions. As a result of recent negotiations between the City and most of the unions representing City employees, City employees’ contribution toward their pension benefit was reduced in FY 2021/22. This reduced employee contribution is included in the FY 2022/23 baseline budget per the labor memorandums of understanding (MOUs).

Benefits – Other
Other benefits costs include employee medical/dental/vision care, workers’ compensation, general liability, and others. The benefits cost in the FY 2022/23 baseline budget is based primarily on rate schedules provided by outside agencies, such as CalPERS. The FY 2022/23 baseline budget assumes a 5% growth rate.

Operations and Maintenance
Operations and maintenance is primarily discretionary and non-personnel related expenditures, such as professional services, utilities, and materials and supplies. FY 2022/23 baseline budget assumes a 3% increase to account for anticipated increases in the price of goods and services.

Several non-recurring budget additions (professional services) that were previously included in the budget projection and funded by the General Fund Measure S are not reflected in the FY 2022/23 baseline budget.
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Capital Outlay
Capital outlay includes non-major asset acquisition and improvements, such as computer equipment and furniture. The FY 2022/23 baseline budget assumes a 3% growth rate to account for anticipated increases in the price of goods and services.

Major capital improvements that were previously included in the budget projection and funded by the General Fund and Measure S are not reflected in the FY 2022/23 baseline budget. Though they may span multiple fiscal years, capital projects are nonrecurring in nature and are not accounted for in the baseline budget.

Debt Service
This category includes the payment of principal and interest on the 2006 pension obligation bonds (POBs) that were issued to finance the City’s unfunded accrued actuarial liability with CalPERS. The future years are forecasted based on the longterm debt obligation schedule. This debt will be fully paid and retired in FY 2035/36.

Transfers Out
Transfers out includes the transfer of funds from the General Fund and Measure S to other funds to support Recreation and Pinole Community Television (PCTV) operations. The transfer helps to stabilize the budgets in those areas as the operating costs are not fully recoverable. The FY 2022/23 baseline budget assumes a flat dollar amount consistent with past practice.

City Council Directed Initiatives (Budget Additions)
During City Council deliberations on the FY 2021/22 Operating and Capital Budget in June 2021, the Council included some specific appropriations requested by Council Members. Staff recommends that as part of the FY 2022/23 budget development process, the Council share their ideas on potential additions and deletions to the budget early in the process (the April 26, 2022 special City Council meeting) so that staff can analyze the costs, benefits, and feasibility of the requests.

Following are the appropriations that the City Council directed staff to add to the FY 2021/22 Operating and Capital Budget. The items were funded mainly by the General Fund and Measure S unassigned fund balances. See Table 2 for the status of those items.
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Table 2 – Status of Council Directed Initiatives (Budget Additions) City Department Presentations
City departments work collaboratively to develop the annual operating and capital budget, which serves as the operational and financial plan for the fiscal year. An important part of understanding the budget is being familiar with the activities of City departments. Therefore, staff from each City department will present an overview of their department’s major services and functions, key accomplishments in FY 2021/22, and major projects planned for FY 2022/23.

Next Steps
City staff will return to the City Council on May 3, 2022 to present its analysis of the costs, benefits, and feasibility of the Council Members’ ideas on additions and deletions to the baseline budget and to present the Preliminary Proposed FY 2022/23 Operating and Capital Budget and the FY 2022/23 Five-Year Capital Improvement Plan (CIP).

FISCAL IMPACT
The presentation of the FY 2022/23 baseline budget does not itself have any fiscal impact to the City.

ATTACHMENTS
None
Recurring Amount Status
Change two Community Services Officers from part-time to full-time 100,000 Ongoing Economic development support 80,000 Ongoing
Non-Recurring
Active transportation plan 75,000 Planned for FY 2022/23 Beautification projects recommended by Ad Hoc Committee 60,000 Planned for FY 2022/23 Brandt Court street improvements 170,000 Planned for FY 2022/23 Business development/community help reserve 10,000 No activity Car show 15,000 Completed
City Hall planting/landscaping improvements 20,000 In progress Emergency power for critical failures 200,000 Planned for FY 2022/23 Installation of high capacity trash bins (Non-General Fund) 425,000 Planned for FY 2022/23 Management compensation study 20,000 Completed
Municipal broadband planning 60,000 Planned for FY 2022/23 On-call consultants for capital projects 150,000 In progress Other City events 100,000 In progress
Recycled water master planning 200,000 Planned for FY 2022/23 Revitalization reserve 10,000 No activity
Weatherization/energy efficiency program 250,000 No activity 11 of 65

CITY COUNCIL
REPORT
DATE: APRIL 26, 2022
TO: MAYOR AND COUNCIL MEMBERS
FROM: MARKISHA GUILLORY, FINANCE DIRECTOR
SUBJECT: PRELIMINARY PROPOSED LONG-TERM FINANCIAL PLAN FOR FISCAL YEAR (FY) 2022/23 - FY 2026/27

RECOMMENDATION
Review the Preliminary Proposed Long-Term Financial Plan for Fiscal Year (FY) 2022/23 - FY 2026/27 and provide direction to staff for changes to incorporate into the next draft of the document, the Revised Proposed version.

BACKGROUND
In February 2020, the City Council adopted the City of Pinole Strategic Plan 2020 – 2025. The Strategic Plan identified four goals for the City (safe and resilient, financially stable, vibrant and beautiful, and high performance), and 22 individual strategies (special projects) to complete over a five-year timeframe.

One of the strategies under the goal of a financially stable Pinole is to “develop a longterm financial plan (LTFP) and use it to guide budget and financial decisions (including policies regarding reserves and management of liabilities).” The City developed its first Long-Term Financial Plan, for Fiscal Year (FY) 2021/22 - FY 2025/26, in spring 2021 to address this Strategic Plan strategy. As an ongoing practice, staff will update the LTFP periodically.

Staff has created the attached Preliminary Proposed Long-Term Financial Plan for Fiscal Year (FY) 2022/23 - FY 2026/27. One important element of a LTFP is a longterm financial forecast. City staff presented the Status Quo Financial Forecast for FY 2022/23 - FY 2026/27 to the Finance Subcommittee on April 14, 2022. The Finance Subcommittee discussed the forecast and asked questions of staff. Staff has incorporated the Status Quo Financial Forecast for FY 2022/23 - FY 2026/27 into the Preliminary Proposed Long-Term Financial Plan for Fiscal Year (FY) 2022/23 - FY 2026/27.

The Preliminary Proposed Long-Term Financial Plan for Fiscal Year (FY) 2022/23 - FY 2026/27 is a hybrid document. Some of the sections, such as the background and 5B
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forecast, are in near-final form, whereas other sections, such as the major challenges and opportunities, policy alternatives, and optimal service levels and revenues, are draft, and need community and Council review and direction to finalize.

REVIEW AND ANALYSIS
The LTFP identifies any major economic or demographic trends that might impact future requests for City services or City revenues. As noted above, it includes a fiveyear forecast of all City funds, including the General Fund and Non-General Funds, based on the City’s current services and revenue sources and assumptions about the future. The forecast anticipates that the General Fund will be essentially balanced throughout the five-year timeframe. The Preliminary Proposed Long-Term Financial Plan for Fiscal Year (FY) 2022/23 - FY 2026/27 recommends that the City maintain current service and staffing levels, and look for new funding sources to address deferred capital needs and unfunded liabilities.

FISCAL IMPACT
The Long-Term Financial Plan for Fiscal Year (FY) 2022/23 - FY 2026/27 adopted by the City Council will be a valuable resource for City leaders when they make future financial and operational decisions. The LTFP does not itself require or authorize any expenditure of City funds, and therefore does not itself have any fiscal impact to the City.

ATTACHMENTS
A - Preliminary Proposed Long-Term Financial Plan for Fiscal Year (FY) 2022/23 - FY 2026/27
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City of Pinole
Long-Term Financial Plan for Fiscal
Year (FY) 2022/23 - FY 2026/27
Preliminary Proposed Version

ATTACHMENT A
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Table of Contents i

TABLE OF CONTENTS
Table of Contents................................................................................................................... i Elected Officials and Department Heads............................................................................... iv Strategic Plan 2020 – 2025 Vision, Mission, and Goals............................................................ v Executive Summary ............................................................................................................... 1 Introduction .......................................................................................................................... 2 Background.................................................................................................................................. 2 Purpose........................................................................................................................................ 2 Scope ........................................................................................................................................... 2 Development Process.................................................................................................................. 2 Long-Term Financial Forecast................................................................................................. 4 Introduction................................................................................................................................. 4 Forecast Methodology ................................................................................................................ 4 Major Economic and Demographic Trends................................................................................. 4 Demographic and Cultural Changes........................................................................................ 4 Economic Changes................................................................................................................... 5 Status Quo Forecast .................................................................................................................... 6 Revenues ................................................................................................................................. 8 Expenditures.......................................................................................................................... 10 Fund Balance ......................................................................................................................... 11 Non-General Funds ................................................................................................................... 12 Gas Tax Fund.......................................................................................................................... 12 Restricted Real Estate Maintenance Fund ............................................................................ 13 Public Safety Augmentation Fund ......................................................................................... 13 Traffic Safety Fund................................................................................................................. 14 Supplemental Law Enforcement Service Fund...................................................................... 14 Storm Water Fund ................................................................................................................. 14 Recreation Fund..................................................................................................................... 15 Building and Planning Fund ................................................................................................... 15 16 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Table of Contents ii
Refuse Management Fund .................................................................................................... 16 Solid Waste Fund................................................................................................................... 16 Measure C/J Fund.................................................................................................................. 17 Rate Stabilization Fund.......................................................................................................... 17 American Rescue Plan Act (ARPA) Fund................................................................................ 18 Parkland Dedication Fund ..................................................................................................... 18 Growth Impact Fund.............................................................................................................. 19 Housing Assets Held for Resale Fund .................................................................................... 19 Landscape & Lighting District Fund ....................................................................................... 19 City Street Improvements Fund ............................................................................................ 20 Arterial Streets Rehabilitation Fund...................................................................................... 20 Sewer Enterprise Fund .......................................................................................................... 20 Pinole Community Television Fund ....................................................................................... 21 Information Systems Fund..................................................................................................... 21 Major Challenges and Opportunities Over the Next Five Years............................................. 23 Major Challenges....................................................................................................................... 23 Major Opportunities.................................................................................................................. 24 Policy Alternatives - Additional Discretionary Expenditures ................................................. 26 Unfunded/Deferred Liabilities .................................................................................................. 26 Unfunded Liabilities............................................................................................................... 26 Deferred Maintenance and Renewal .................................................................................... 28 Service and Program Expansion................................................................................................ 29 Expansion of Existing Services............................................................................................... 29 New Services.......................................................................................................................... 30 Capital Expansion................................................................................................................... 31 Additional Reserves............................................................................................................... 31 Policy Alternatives – Additional Revenue and Expenditure Reduction Options ..................... 33 Additional Revenue ................................................................................................................... 33 New Local Revenue ............................................................................................................... 33 New Federal Funding............................................................................................................. 37 Additional Cash from Debt .................................................................................................... 37 17 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Table of Contents iii
Expenditure Reductions............................................................................................................ 38 Optimal Service Levels and Revenues .................................................................................. 39 Recommendations .............................................................................................................. 40 Summary and Next Steps..................................................................................................... 41

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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Elected Officials and Department Heads iv

ELECTED OFFICIALS AND DEPARTMENT HEADS

ELECTED OFFICIALS
Mayor Vincent Salimi
Mayor Pro Tem Devin Murphy
Council Member Norma Martinez-Rubin
Council Member Anthony Tave
Council Member Maureen Toms
Treasurer Roy Swearingen

DEPARTMENT HEADS
City Manager Andrew Murray
City Attorney (Contract) Eric Casher
City Clerk Heather Bell
Community Development Director Lilly Whalen
Community Services Director Vacant
Finance Director Markisha Guillory
Fire Chief Chris Wynkoop
Human Resources Director Stacy Shell
Police Chief Neil Gang
Public Works Director Sanjay Mishra
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Strategic Plan 2020 – 2025 Vision, Mission, and Goals v STRATEGIC PLAN 2020 – 2025 VISION, MISSION, AND GOALS
In February 2020, the City of Pinole adopted a Strategic Plan 2020 – 2025. The Strategic Plan established the following vision, mission, and goals for the City, as well as 22 specific “strategies” (special projects), to be completed over a five-year timeframe, that would help the City achieve the goals.

VISION
Pinole is safe, vibrant, and innovative community with small town charm and high quality of life.

MISSION
Pinole will be efficient, ethical, and effective in delivering quality services with community involvement and fiscal stewardship.

GOALS

1. Safe and Resilient Pinole: Develop and communicate resilience through quality public safety service delivery, property maintenance policies and practices, and disciplined investment in community assets.

2. Financially Stable Pinole: Ensure the financial health and long-term sustainability of the City.

3. Vibrant and Beautiful Pinole: Facilitate a thriving community through development policies and proactive relationship building.

4. High Performance Pinole: Build an organization culture that is efficient, ethical, and effective in delivering quality services with community involvement and fiscal stewardship.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Executive Summary 1

EXECUTIVE SUMMARY
The City of Pinole’s Long-Term Financial Plan (LTFP) for Fiscal Year (FY) 2022/23 - FY 2026/27 has been created to help implement the City’s Strategic Plan 2020 – 2025. It has been developed in conformance with public finance best practices.

The LTFP identifies the major economic and demographic trends that might impact future requests for City services and City revenues. It includes a five-year forecast of all City funds, including the General Fund and Non-General Funds, based on the City’s current services and revenue sources and assumptions about the future. The forecast anticipates that the General Fund will be essentially balanced throughout the five-year timeframe.

The LTFP identifies the major challenges and opportunities that the City will likely face over the planning horizon, as well as the main discretionary service level/expenditure options and new revenue options that the City can consider and should bear in mind as it makes future financial and operational decisions.

This LTFP does not recommend any specific new service levels or programs for the City, nor identify specific matching revenue sources to support them. Rather, this LTFP forecasts the City’s budget condition over the next five years and identifies a number of revenue and expenditure options the City Council can consider implementing in the future. City staff anticipates creating an updated LTFP on a biennial basis going forward, and expects that future LTFPs will have more specific recommendations on service levels and programs and associated funding sources. 21 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Introduction 2

INTRODUCTION

One of the strategies under the goal of a financially stable Pinole is to “develop a long-term financial plan (LTFP) and use it to guide budget and financial decisions (including policies regarding reserves and management of liabilities).” The City of Pinole’s inaugural Long-Term Financial Plan (LTFP) for Fiscal Year (FY) 2021/22 - FY 2025/26 was adopted in June 2021 to address this Strategic Plan strategy.

PURPOSE
The purpose of the LTFP is to inform the City’s financial and operational decision making. The LTFP can be used as a guide to many planning and decision-making processes, such as the development of future budgets and Capital Improvement Plans (CIP). The LTFP also marks the beginning of the FY 2022/23 annual budget development process.

SCOPE
The Long-Term Financial Plan (LTFP) for Fiscal Year (FY) 2022/23 - FY 2026/27 covers the revenues and expenditures of the City’s General Fund and Non-General Funds over a five-year period.

DEVELOPMENT PROCESS
City staff (the City Manager, Finance Director, Finance Department staff, and other department heads and staff) began developing the LTFP in winter 2021/2022. The LTFP was created using public finance best practices. Best practices are well summarized in the key publication on municipal long-term financial planning, the Government Finance Officers Association’s (GFOA) Financing the Future: Long-Term Financial Planning for Local Government. GFOA, one of the leading professional associations in the public finance field, defines financial forecasting and long-term financial planning as follows:
• Financial forecasting is the process of projecting revenues and expenditures over a longterm period, using assumptions about economic conditions, future spending scenarios, and other salient variables.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Introduction 3
• Long-term financial planning is the process of aligning financial capacity with long-term service objectives. Financial planning uses forecasts to provide insight into future financial capacity so that strategies can be developed to achieve long-term sustainability in light of the government’s service objectives and financial challenges.

The main tasks required to create the LTFP were the following:
• Forecast revenues and expenditures using key assumptions about the City’s operating environment;
• Identify the major challenges and opportunities that the City will face over the next five years;
• Identify policy alternatives, including changes to revenue sources and expenditures, that will result in a sustainable, long-term balance between desired service levels and City financial resources; and
• Gather feedback on a draft LTFP and gain Council approval of the final LTFP.

City staff has completed the necessary tasks using best practices. This has resulted in a LTFP that is consistent with GFOA’s Long-Term Financial Planning best practice, which requires that a longterm financial plan:
• Use a planning horizon of at least five years;
• Include an analysis of the financial environment, revenue and expenditure forecasts, debt position and affordability analysis, strategies for achieving and maintaining financial balance, and plan monitoring mechanisms; and
• Be visible.

The original LTFP development process was structured to support participation from a variety of stakeholders. Staff shared information and received input from Council Members and the public at multiple Finance Subcommittee and City Council meetings in spring 2021. Staff also gathered input from interested stakeholders through an online survey that specifically focused on identifying the most important challenges and opportunities that the City will face over the fiveyear planning period. The participatory development process resulted in a LTFP that reflects the interests of the City Council and community. City staff used similar mechanisms to create the LTFP for FY 2022/23 - FY 2026/27.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 4

LONG-TERM FINANCIAL FORECAST

INTRODUCTION
One of the key steps in creating a LTFP is to create a long-term financial forecast. A long-term financial forecast estimates future revenues and expenditures based on assumptions about the City’s future operating environment. Over the past few years, the City has included a long-term financial forecast covering the General Fund, including the Measure S funds, in the annual budget.

FORECAST METHODOLOGY
As noted above, City staff followed public finance best practices when creating the LTFP, including when designing the forecast methodology. Staff reviewed the City’s past forecasting work, the work of peer jurisdictions and other leading municipalities, and academic and professional materials on the topic. Staff used the FY 2021/22 revised mid-year budget as the base year of the five-year forecast and applied quantitative and qualitative methods. Quantitative methods involve using historic numerical data to forecast future numeric values. As an example, staff looked at average annual historic growth rates for various revenues and expenditures, then used those average growth rates to forecast future values for those revenues and expenditures.

Qualitative forecasting methods involve using information other than historic numerical data to conduct forecasting. This might involve factoring into a forecast the opinions of experts regarding issues such as future economic conditions and changes in the regulatory environment. Staff incorporated some qualitative forecasting into the LTFP.

MAJOR ECONOMIC AND DEMOGRAPHIC TRENDS
Forecasting future conditions requires identifying the major current trends that will shape the future. The primary determinants of a city’s financial sustainability are the demands for city services, the city’s revenues, and service delivery methods. These are primarily driven by demographic and cultural changes as well as economic changes.

Demographic and Cultural Changes
City staff is not anticipating any significant changes to the demographics or cultural characteristics of Pinole’s population over the five-year period covered by the LTFP. The City’s total population has remained very stable over the past decade, growing less than 1% annually on average, and there are a limited number of sites available for significant new housing development, which would allow for a population increase. The Association of Bay Area Governments (ABAG) projects that Pinole’s population will increase by 1,775 residents between 24 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 5
2020 and 2040, to a total of 21,280, which represents an annual growth rate of 0.44%. According to the 2020 American Community Survey (latest available), the City’s median age is 43.2 years.

According to the 2020 Decennial Census, its race and ethnic composition are as follows: White alone (42%), Asian alone (25%) Black or African American alone (11%), American Indian and Alaska Native alone (1%), Native Hawaiian and Other Pacific Islander alone (0.4%), Hispanic or Latino (may be of any race, so also are included in applicable race categories) (24%), and two or more races (10%). The female to male ratio is 53.2% to 46.8%. There are approximately 6,792 households with an average of 2.83 persons per household. Pinole’s median household income is $104,904.

The City has received applications for some new housing projects at infill sites, but it is not possible at this point to forecast how many new housing units might be created as a result, nor to forecast how such projects, if constructed, might impact the City’s population and service demands. The City’s demographics have also remained fairly stable, and staff is not anticipating any significant changes to demographics over the five-year planning horizon that would impact long-term financial planning.

Economic Changes
Prior to the onset of COVID-19 in early 2020, the City was experiencing a steady, modest economic expansion, similar to that experienced by many other cities in the aftermath of the Great Recession. COVID-19 created an unanticipated shock to the national economy. Many of Pinole’s businesses were significantly impacted by the shelter-in-place health orders, which disrupted many retail, restaurant, entertainment, and personal service activities. Due to public health interventions and the availability of vaccines, the local and national economies have largely recovered and are expected resume the steady, modest growth of the pre-COVID period.

Therefore, City staff is not anticipating any economic changes during the five-year planning horizon that would significantly influence the City’s finances.

City staff expects that City operations will generally experience modest productivity gains consistent with those realized in the economy generally over the next five years. The federal government has made a significant new investment in infrastructure. City staff does not have a precise sense of how that might impact the cost of City capital projects, and therefore has not included any related increased cost in the LTFP. Forthcoming CIPs will incorporate the City’s estimate of any increase in the cost of capital projects due to additional federal investment.

Inflation has significantly increased over the course of the last year. Since spring 2021, inflation has steadily grown from around 3% annually to around 8% annually. It is unclear how inflation will change over the five-year planning horizon of the LTFP. Staff has assumed a 3% rate of inflation in the LTFP.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 6

STATUS QUO FORECAST
The following five-year forecast is a “status quo” forecast. A “status quo” forecast assumes that the City continues current (status quo) staffing levels, service levels, and programs in the future and that the City does not establish any new revenue-generating mechanisms.

City staff has created an updated status quo five-year forecast for the General Fund, including Measure S funds, for FY 2022/23 through FY 2026/27. This forecast will be used as the basis of the development of the FY 2022/23 budget. For the status quo forecast, staff assumed that future City service levels would remain at the levels of FY 2021/22. Staff then forecasted revenues and expenditures for the five succeeding years by applying assumptions about future changes in economic conditions that impact revenues and expenditures.

Based on specific assumptions, detailed below, the City forecasts that the General Fund and the Measure S funds will be essentially structurally balanced over the five-year planning horizon, with small surpluses or deficits. Although the City’s revenues are sufficient to cover normal operating costs, the revenues and reserves are not sufficient to cover the City’s two large unfunded liabilities, deferred maintenance of capital assets (streets, sidewalks, parks, City buildings, etc.) and other postemployment benefits (OPEB), primarily retired City employee medical coverage.

If the City and community would like to invest in these areas, they will need to identify new revenue sources in the future.

It is important to note that the status quo forecast includes organizational changes that were made in FY 2021/22. The City had conducted various analyses, including the Organizational Assessment, and City staff recommended the addition of new City positions in staff’s proposed FY 2021/22 budget. The new positions included a Human Resources Director, Community Services Director, Community Development Director, Administrative Fire Captain and Fire Prevention Captain, among others.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 7
Table 1 – General Fund Status Quo Financial Forecast

GENERAL FUND SUMMARY
INCLUDES MEASURE S 2006 & 2014
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUE
PROPERTY TAX 3,837,167 4,514,755 4,091,345 4,230,122 4,642,585 5,649,469 5,801,568 5,959,970 6,138,769 SALES TAX 3,994,720 3,788,080 4,303,800 4,483,848 4,582,095 4,695,271 4,803,262 4,913,737 5,026,753 MEAS S 2006 & 2014 LOCAL SALES TAX 4,286,328 3,901,837 4,623,561 4,840,000 4,902,000 5,022,000 5,122,440 5,224,889 5,329,387 UTILITY USERS TAX 1,812,844 1,809,832 1,939,726 1,915,000 1,934,150 1,953,492 1,973,026 1,992,757 2,012,684 FRANCHISE TAX 735,311 750,001 751,598 779,000 786,790 794,658 802,604 810,631 818,737 INTERGOVERNMENTAL TAX 1,836,501 1,952,717 2,034,203 2,082,883 2,215,948 2,317,376 2,421,681 2,531,220 2,645,775 TRANSIENT OCCUPANCY TAX 485,499 444,453 446,105 418,000 440,000 453,200 466,796 480,800 495,224 BUSINESS LICENSE TAX 399,258 382,051 349,733 382,000 400,000 412,000 424,360 437,091 450,204 CHARGES FOR SERVICES 967,318 1,260,013 1,345,588 1,339,796 1,428,005 1,498,155 1,571,813 1,649,154 1,731,612 OTHER REVENUE 2,367,313 1,116,846 833,313 518,140 523,321 528,555 533,840 539,179 544,570

ONE-TIME REVENUE -
Total Revenue 20,722,259 19,920,585 20,718,971 20,988,789 21,854,894 23,324,175 23,921,392 24,539,427 25,193,715 TRANSFERS IN 6,290,688
PENSION TRANSFER IN (FY 19/20 alloc) 667,859
PENSION TRANSFER IN 476,366 853,686 1,434,048 1,553,724 1,709,302 1,807,316 1,908,271 Total Sources 27,012,947 19,920,585 21,863,196 21,842,475 23,288,942 24,877,898 25,630,693 26,346,743 27,101,985

EXPENDITURES
SALARIES 8,593,887 9,184,283 9,683,813 10,553,426 10,870,029 11,304,830 11,757,023 12,227,304 12,716,396 BENEFITS - PERS RETIRE 1,792,051 2,451,619 2,771,676 3,447,080 3,688,376 3,909,678 4,144,259 4,392,914 4,656,489 BENEFITS - OTHER 3,079,527 2,864,038 2,720,468 3,374,993 3,543,743 3,720,930 3,906,976 4,102,325 4,266,418 OTHER OPERATING EXPENSES 2,056,418 3,460,467 2,685,146 3,082,147 3,174,611 3,238,104 3,302,866 3,401,952 3,504,010 DEBT SERVICE 590,433 606,553 558,607 576,107 596,150 611,150 677,150 677,150 677,150 CAPITAL OUTLAY 211,292 429,470 1,397,824 157,186 161,902 166,759 171,761 176,914 182,222 TRANSFERS OUT 21,732,833 1,255,058 1,588,652 1,418,455 1,418,455 1,461,009 1,504,839 1,549,984 1,596,484 Total Expenditures 38,056,441 20,251,487 21,406,186 22,609,394 23,453,265 24,412,459 25,464,874 26,528,543 27,599,169 Surplus/Deficit (11,043,494) (330,902) 457,010 (766,919) (164,323) 465,440 165,819 (181,801) (497,184) Fund Balance, July 1 23,478,448 12,434,954 12,104,052 12,726,083 11,009,449 10,194,202 10,546,160 10,610,863 10,324,408 Preliminary Fund Balance, June 30 12,434,954 12,104,052 12,561,062 11,959,164 10,845,126 10,659,641 10,711,979 10,429,062 9,827,224 General Reserves Adjustment - (949,715) (650,925) (113,481) (101,116) (104,654) (108,825) Fund Balance, June 30 12,434,954 12,104,052 12,726,083 11,009,449 10,194,202 10,546,160 10,610,863 10,324,408 9,718,400 Pension Fund Balance, July 1 16,287,510 19,432,089 19,655,464 19,321,433 18,848,352 18,202,255 17,420,670 Revenues - Interest 924,669 1,010,988 2,566,660 1,127,061 1,140,017 1,120,643 1,093,204 1,055,731 1,010,399 Expenditure - Transfers Out 1,144,225 853,686 1,434,048 1,553,724 1,709,302 1,807,316 1,908,271 Expenditures 52,921 81,434 79,159 50,000 40,000 40,000 30,000 30,000 30,000 Pension Fund Balance, June 30 17,159,258 18,088,812 19,432,089 19,655,464 19,321,433 18,848,352 18,202,255 17,420,670 16,492,798 Fund Balance, July 1 7,457,116 7,492,770 8,517,413 9,395,369 9,771,183 10,162,031 10,568,512 Revenues - Interest 35,654 74,928 227,031 262,333 289,731 301,827 313,916 Revenues - Transfer In 949,715 650,925 113,481 101,116 104,654 108,825 General Reserve Balance, June 30 7,137,963 7,457,116 7,492,770 8,517,413 9,395,369 9,771,183 10,162,031 10,568,512 10,991,252 27 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 8
Revenues
As shown in Table 1 above, the status quo forecast anticipates that General Fund revenue, including the Measure S funds, will grow by 22% from $22.3 million in FY 2022/23 to $27.1 million in FY 2026/27, approximately 5% annually, primarily due to increases in the property tax and sales tax categories.

Property Tax
Property tax is an ad valorem tax levied on real property. The fixed statutory rate is 1% of assessed valuation. The City receives approximately 19% of the total property tax levied on property located within its boundaries.

Property tax is made up of four components—secured (basic and Redevelopment Property Tax Trust Fund (RPTTF); unsecured; supplemental; and property transfer tax. The 22% growth in property tax forecasted for FY 2023/24 is primarily due to an increase in the residual property tax revenue resulting after outstanding Redevelopment bonds are retired in the prior year.

Sales Tax
The overall sales tax rate on purchases made in Pinole is 9.75%. Of that amount, the City receives the statewide standard 1% (referred to as the Bradley Burns sales tax) plus 0.5% due to Measure S 2006 and 0.5% due to Measure S 2014. The forecast assumes an average 2% growth rate in the City’s sales tax revenue, consistent with projections provided by HdL, the City’s sales tax consultant.

The City’s sales tax rate comprises the following components: State/County (7.75%); local Bradley-Burns (1%); Measure S 2006 local sales tax (0.5%); Measure S 2014 local sales tax (0.5%).

Utility Users Tax (UUT)
The City levies an 8% utility users’ tax (UUT) on the value of public utilities services consumed within the City limits for electricity, gas, and telecommunications. The forecasted growth rate averages 1% per year. The growth rate aligns with the trend of very low to flat growth in UUT, notably in the telecommunications subcategory.

Franchise Fees
The City levies a franchise fee on organizations that use the public right of way to furnish gas (PG&E) (1%) and electricity (PG&E) (2%), refuse (Republic Services) (10%), and cable television (Comcast and AT&T) (5%) services to citizens living within the City’s boundaries. The fees are defined in the franchise fee agreements and are paid directly to the City by these franchisees.

The forecasted growth rate averages 1% per year. While franchise fee revenue has grown collectively, one of the major services, cable, has had flat to low growth. One factor is the change in consumer preference from traditional cable to streaming services. 28 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 9
Intergovernmental Tax
Motor vehicle in-lieu fee (VLF) is the City’s share of motor vehicle license fees levied, collected and apportioned by the State. VLF is a tax on the ownership of registered motor vehicles which takes the place of taxation of this personal property. The VLF is paid annually at the time vehicle licenses are renewed based on current value adjusted for depreciation. The forecast assumes an average 6% growth rate, consistent with projections provided by HdL, the City’s property tax consultant.

Transient Occupancy Tax
Transient occupancy tax (TOT) is a 10% tax levied by the City for the privilege of occupying quarters on a transient basis in accordance with Chapter 3.24 of Municipal Code. This tax is imposed upon persons staying 30 days or less in a motel or lodging facility. The forecast assumes a 5% growth rate based on industry trends.

Public Safety Charges
Public safety charges are received for dispatch services provided to the cities of Hercules and San Pablo under an Intergovernmental Service Sharing agreement. A portion of the costs of this activity are reimbursed by the City of Hercules and City of San Pablo. Under the current agreement, the City’s recovers approximately 67% of the activity’s budget. The forecast assumes a 7% increase based on the established formula.

Other Revenue
Other revenues is made up of all other revenue sources, such as fees, permits, interest income, grants, reimbursements, and other miscellaneous revenue. These revenues are projected primarily using historical trend analysis. The forecast assumes a 1% growth rate and was adjusted to exclude a $600,000 one-time revenue that was expected in FY 2021/22.

The City is currently conducting a comprehensive fee study to determine the City’s total cost of providing certain services. The study will likely recommend changes to the City’s fees, which could potentially increase revenue generated from fees. 29 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 10
Transfers In
The transfer in comes from the Pension Section 115 Trust to offset the increase in pension costs in the General Fund. The amount transferred is based on the difference between the City’s base year (FY 2018/19) contribution toward employee pensions and the forecasted required City contribution in future years.

Expenditures
As shown Table 1 above, the status quo forecast anticipates that General Fund expenditures, including the Measure S funds, will grow by 13%, approximately 3% annually, from $24.5 million in FY 2022/23 to $27.6 million in FY 2026/27, primarily due to increases in the salaries and benefits categories.

Salaries
The forecast for salaries and wages is based on the City’s current staffing level (123 FTEs), future salary increases for different classifications already agreed upon in the City’s current labor memorandums of understanding (MOUs), and general inflationary assumptions (3% annually).

The forecast assumes a 3% annual salary increase for employees represented by the Pinole Police Employees Association (PPEA), with which the City is currently in negotiations.

Benefits-Retirement
Retirement benefits are the City’s annual required contribution as determined by the most recent actuarial valuation reports as of July 2020 provided by the California Public Employees’ Retirement System (CalPERS). The forecast reflects the net cost to the City (the required total contribution minus the employee contributions). As a result of recent negotiations between the City and most of the unions representing City employees, City employees’ contribution toward their pension benefit was reduced in FY 2021/22. This reduced employee contribution is included in the forecast per the labor MOUs.

Benefits-Other
Other benefits costs include employee medical/dental/vision care, workers’ compensation, general liability, and others. The benefits cost in the forecast is based primarily on rate schedules provided by outside agencies, such as CalPERS. The forecast assumes an average 5% growth rate.

Operations and Maintenance
Operations and maintenance is primarily discretionary and non-personnel related expenditures, such as professional services, utilities, and materials and supplies. The forecast assumes an average 3% increase to account for anticipated inflation. 30 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 11
Capital Outlay
Capital outlay in the status quo forecast includes non-major asset acquisition and improvements, such as computer equipment and furniture. The forecast assumes an average 3% growth rate to account for anticipated increases in the price of products.

Major capital improvements that were previously included in the budget projection and funded by the General Fund and Measure S are not reflected in the status quo forecast. Though they may span multiple fiscal years, capital projects are non-recurring in nature and are not accounted for in the forecast.

The City develops a separate Five-Year Capital Improvement Plan (CIP) to plan for and appropriate funds to capital improvement projects. Each year, capital needs are assessed and prioritized through the capital improvement planning process.

Debt Service
Debt service is comprised of the payment of principal and interest on the 2006 pension obligation bonds (POBs) that were issued to finance the City’s unfunded accrued actuarial liability with CalPERS. The future years are forecasted based on the long-term debt obligation schedule. This debt will be fully paid and retired in FY 2035/36.

Transfers Out
Transfers out includes the transfer of funds from the General Fund and Measure S to other funds to support Recreation and Pinole Community Television (PCTV) operations. The transfer helps to stabilize the budgets in those areas as the operating costs are not fully recoverable. The forecast assumes a flat dollar amount consistent with past practice.

Fund Balance
Fund balance is basically an accumulation of funds as a result of revenues minus expenditures.

When total revenue exceeds total expenditures at the end of a fiscal year, a surplus of funds results and increases fund balance (reserves). On the opposite end, when total expenditures exceed total revenue, a deficit results and reduces fund balance (reserves).

General Fund Balance and General Reserves
The preliminary fund balance is the estimated General Fund fund balance before any transfers out to the General Reserve as per the Reserve Policy. The Reserve Policy requires that an amount equal to 50% of total General Fund ongoing expenditures be set aside in a separate fund, the General Reserve, to maintain adequate financial resources in the event of financial distress.

If the General Reserve balance falls short of the policy requirement, funds are transferred from the General Fund unassigned fund balance in an amount equal to the difference between the General Reserve fund balance and the amount required as per the policy. As such, the ending 31 of 65
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General Fund fund balance is the result of the preliminary fund balance minus the General Reserve adjustment.

The General Reserve fund balance is forecasted to increase from $8.5 million in FY 2021/22 to $11.0 million in FY 2026/27.

Pension Trust Fund Balance
In June 2018, the Section 115 Trust was established to set aside resources to offset anticipated significant increases in the future City pension costs. The intent was to withdraw resources from the trust each year to cover the increase between the City’s contribution toward employee pensions in FY 2018/19, the baseline year, and the City’s required contribution in future years.

The pension fund balance for each fiscal year is calculated by starting with the fund balance at July 1, adding estimated interest earnings, subtracting transfers out to offset increases in pension costs, and subtracting administrative costs. The pension fund balance will continue to decrease as funds are withdrawn each year because the trust was funded with one-time proceeds as its only source of funding.

NON-GENERAL FUNDS
City staff has also created status quo five-year forecasts for the City’s Non-General Funds. These forecasts will also be used as the basis of the development of the FY 2022/23 budget. Similar to the General Fund status quo forecast, staff assumed that future City service levels would remain at the levels of FY 2020/21. Staff then forecasted revenues and expenditures for the five succeeding years by applying assumptions about future changes in economic conditions that impact revenues and expenditures. The forecasts also include projects programmed in the draft FY 2022/23 Five-Year Capital Improvement Plan.

Gas Tax Fund
The Gas Tax Fund accounts for the Highway Users Tax Account (HUTA) State imposed excise taxes on gasoline and diesel fuel sales within the City Limits. These taxes are distributed primarily on the basis of population pursuant to formulas specified in Streets and Highways Code Sections 2105, 2106, 2107, 2107.5, and Section 2103. As a result of the Road Repair and Accountability Act of 2017 (SB1 Beall), funds received as part of the Road Maintenance and Rehabilitation Account (RMRA) Section 2106 are also accounted for in this fund. Gas Tax funds are restricted for use in the construction, improvement and maintenance of public streets. These funds support both annual operating and capital projects.
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Restricted Real Estate Maintenance Fund
The Restricted Real Estate Maintenance Fund accounts for revenues resulting from the sale or rental of property owned by the former Redevelopment Agency. These resources are used to maintain properties owned by the Successor Agency within the boundaries of the former Redevelopment Agency.

Public Safety Augmentation Fund
The Public Safety Augmentation Fund (PSAF) accounts for monies allocated by the County Auditor-Controller under Prop 172 from the statewide one-half cent sales tax based on a share of statewide taxable sales. These funds are used exclusively for public safety. The receipt of these funds is conditioned on maintenance of effort using base year 1992-93.

Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES 754,674 789,998 795,113 906,667 924,800 952,544 1,010,554 981,121 1,040,871 OTHER REVENUE 5,879 18,024 10,952 12,636 12,889 13,146 13,409 13,678 13,951 TOTAL REVENUES 760,554 808,022 806,065 919,303 937,689 965,691 994,530 1,024,232 1,054,822

EXPENDITURES
OPERATIONS AND MAINTENANCE 403,541 447,320 559,471 510,283 525,591 541,359 557,600 574,328 591,558 CAPITAL OUTLAY 129,781 426 817,521 564,445 100,000 - - - - TOTAL EXPENDITURES 403,967 1,376,992 577,100 1,074,728 625,591 541,359 557,600 574,328 591,558 Surplus/(Deficit) 356,586 230,922 (570,927) (155,425) 312,098 424,332 436,930 449,904 463,264 Fund Balance, July 1 339,936 696,522 927,445 356,517 201,092 513,190 1,374,452 937,521 1,824,355 Fund Balance, June 30 696,522 927,445 356,517 201,092 513,190 1,374,452 937,521 1,824,355 2,287,620 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
FEES 1,825 475 475 3,175 3,175 3,175 3,175 3,175 3,175
OTHER REVENUE 70,833 3,787 34,150 36,816 37,921 39,058 40,230 41,437 42,680 TOTAL REVENUES 72,658 4,262 34,625 39,991 41,096 42,233 43,405 44,612 45,855

EXPENDITURES
OPERATIONS AND MAINTENANCE 19,413 24,418 20,118 26,000 26,780 27,583 28,411 29,263 30,141 TOTAL EXPENDITURES 19,413 24,418 20,118 26,000 26,780 27,583 28,411 29,263 30,141 Surplus/(Deficit) 53,245 (20,156) 14,507 13,991 14,316 14,650 14,994 15,349 15,714 Fund Balance, July 1 133,586 186,831 166,676 181,183 195,174 209,490 224,140 239,134 254,483 Fund Balance, June 30 186,831 166,676 181,183 195,174 209,490 224,140 239,134 254,483 270,197 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES 202,489 185,306 187,448 170,266 175,374 180,635 186,054 191,636 197,385 OTHER REVENUE 3,201 7,117 1,269 2,500 2,525 2,550 2,576 2,602 2,628 TOTAL REVENUES 205,691 192,423 188,717 172,766 177,899 183,185 188,630 194,237 200,012

EXPENDITURES
OPERATIONS AND MAINTENANCE 131,658 179,741 143,643 204,574 210,711 217,033 223,544 230,250 237,157 TOTAL EXPENDITURES 131,658 179,741 143,643 204,574 210,711 217,033 223,544 230,250 237,157 Surplus/(Deficit) 74,032 12,682 45,074 (31,808) (32,812) (33,847) (34,914) (36,012) (37,145) Fund Balance, July 1 279,126 353,158 365,841 410,915 379,107 346,295 312,448 277,534 241,522 Fund Balance, June 30 353,158 365,841 410,915 379,107 346,295 312,448 277,534 241,522 204,377 33 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 14
Traffic Safety Fund
The Traffic Safety Fund accounts for fines and forfeitures received by the City under Section 1463 of the Penal Code. These funds are used exclusively for official traffic control devices, the maintenance thereof, equipment and supplies for traffic law enforcement and traffic accident prevention, and for the maintenance, improvement, or construction of public streets, bridges, and culverts within the City. The fund may be used to pay the compensation of school crossing guards who are not regular full-time members of the police department of the City.

Supplemental Law Enforcement Service Fund
The Supplemental Law Enforcement Service Fund accounts for funds received from the County under AB 3229 which enacted the Citizens Option for Public Safety (COPS) Program through which funds could be annually provided in the State budget for local law enforcement jurisdictions. The minimum allocation for public agencies is $100,000, which is the amount which has been historically allocated to Pinole.

Storm Water Fund
The Storm Water Fund accounts for assessments collected by the County via property tax bills pursuant to the National Pollution Discharge Elimination System (NPDES) Regulations, a federally mandated program. Assessments are levied at $35 per Equivalent Runoff Unit (ERU). Revenue estimates are based on the number of ERU's multiplied by the adopted rate.

Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
FINES AND FORFEITURES 35,181 46,640 27,491 45,000 45,450 45,905 46,364 46,827 47,295 OTHER REVENUE 1,541 3,821 750 1,500 1,515 1,530 1,545 1,561 1,577 TOTAL REVENUES 36,722 50,461 28,241 46,500 46,965 47,435 47,909 48,388 48,872

EXPENDITURES
SALARIES AND WAGES 6,303 4,704 - 7,280 7,498 7,723 7,955 8,194 8,440 BENEFITS 977 707 209 820 869 921 1,035 977 1,097
OPERATIONS AND MAINTENANCE 395 988 356 4,661 4,801 4,945 5,093 5,246 5,403 CAPITAL OUTLAY - - - 7,500 - - - - -
TOTAL EXPENDITURES 7,674 6,399 20,261 565 13,168 13,590 14,025 14,475 14,940 Surplus/(Deficit) 29,048 44,062 27,676 26,239 33,797 33,845 33,884 33,913 33,932 Fund Balance, July 1 134,192 163,240 207,302 234,978 261,217 295,014 328,859 362,743 396,656 Fund Balance, June 30 163,240 207,302 234,978 261,217 295,014 328,859 362,743 396,656 430,588 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES 148,747 155,948 156,727 156,727 159,862 163,059 166,320 169,646 173,039 OTHER REVENUE 1,769 4,955 1,080 1,600 1,616 1,632 1,648 1,665 1,682 TOTAL REVENUES 150,515 160,903 157,807 158,327 161,478 164,691 167,968 171,311 174,721

EXPENDITURES
OPERATIONS AND MAINTENANCE 101,008 60,170 98,192 104,188 107,314 110,533 113,849 117,265 120,782 TOTAL EXPENDITURES 101,008 60,170 98,192 104,188 107,314 110,533 113,849 117,265 120,782 Surplus/(Deficit) 49,507 100,733 59,615 54,139 54,164 54,158 54,119 54,047 53,938 Fund Balance, July 1 119,096 168,603 269,337 328,952 383,091 437,255 491,413 545,532 599,579 Fund Balance, June 30 168,603 269,337 328,952 383,091 437,255 491,413 545,532 599,579 653,517 34 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 15
Recreation Fund
The Recreation Fund accounts for program fees, fundraising efforts and donations from Recreation programs. Resources are used towards staffing and maintenance costs to operate the programs on a full cost recovery basis.

Building and Planning Fund
The Building and Planning Fund accounts for fees collected for building permits and plan check fees. Fees collected are used to cover the cost involved in inspections and plan checks performed. The City is currently conducting a fee study to determine the City’s total cost of providing certain services that have a specific beneficiary. The study will likely recommend changes to the City’s building and planning fees, which is expected to result in increased revenue.

Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES 251,004 259,103 260,430 323,978 336,937 350,415 364,431 379,008 394,169 OTHER REVENUE (190) 29 51 150 152 153 155 156 158
TOTAL REVENUES 251,032 258,913 260,480 324,128 337,089 350,568 364,586 379,165 394,326

EXPENDITURES
BENEFITS 13,162 - 2,222 - - - - - -
OPERATIONS AND MAINTENANCE 291,751 289,103 272,838 437,685 285,000 293,550 302,357 311,427 320,770 TOTAL EXPENDITURES 304,913 289,103 275,059 437,685 285,000 293,550 302,357 311,427 320,770 Surplus/(Deficit) (53,881) (30,190) (14,579) (113,557) 52,089 57,018 62,229 67,737 73,556 Fund Balance, July 1 100,502 46,621 16,432 1,853 (111,704) (59,616) (2,598) 59,631 127,368 Fund Balance, June 30 46,621 16,432 1,853 (111,704) (59,616) (2,598) 59,631 127,368 200,925 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
FEES 7,823 8,307 13,361 8,000 8,240 8,487 8,742 9,004 9,274 CHARGES FOR SERVICES 628,825 379,124 128,296 377,778 389,111 400,785 412,808 425,192 437,948 OTHER REVENUE 133,569 93,253 20,743 134,144 135,485 136,840 138,208 139,590 140,986 TRANSFERS IN 307,214 522,254 632,055 1,091,962 1,108,640 984,425 1,154,738 1,202,853 1,253,083 TOTAL REVENUES 1,077,430 1,002,938 794,455 1,611,884 1,517,261 1,654,752 1,714,496 1,776,640 1,841,292

EXPENDITURES
SALARIES AND WAGES 347,167 335,372 292,236 761,237 784,074 807,596 831,824 856,779 882,482 BENEFITS 162,725 172,763 154,133 299,720 317,703 336,765 356,971 378,390 401,093 OPERATIONS AND MAINTENANCE 567,183 500,244 374,548 468,217 482,263 496,731 511,633 526,982 542,792 CAPITAL OUTLAY 897 - 2,519 12,874 13,260 13,658 14,068 14,490 14,924 TOTAL EXPENDITURES 1,077,973 1,008,380 1,542,048 823,437 1,597,301 1,654,751 1,714,497 1,776,641 1,841,291 Surplus/(Deficit) (543) (5,442) (28,982) 69,836 (80,040) 1 (0) (1) 0 Fund Balance, July 1 45,170 44,627 39,185 10,204 80,039 (0) 0 0 (0) Fund Balance, June 30 44,627 39,185 10,204 80,039 (0) 0 0 (0) (0) 35 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 16
Refuse Management Fund
The Refuse Management Fund accounts for a surcharge collected by Republic Services and remitted to the City under AB 939 of $0.83 per can per month on all residential customers in Pinole. These revenues are restricted to programs and activities that encourage and promote recycling and source reduction of solid waste.

Solid Waste Fund
The Solid Waste Fund accounts for a surcharge collected by Republic Services and remitted to the City for solid waste services. These funds are set aside for future solid waste capital projects and for a rate stabilization fund.

Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES - - - 205,000 - - - - -
LICENSES AND PERMITS 386,019 310,704 264,128 487,000 511,350 536,918 563,763 591,952 621,549 FEES 315,732 417,735 239,196 900,700 945,735 993,022 1,042,673 1,094,806 1,149,547 OTHER REVENUE 12,568 19,176 13,000 (422) 13,130 13,261 13,394 13,528 13,663 TRANSFERS IN - - 192,000 374,216 - - - - -
TOTAL REVENUES 714,318 747,614 694,902 1,979,916 1,470,215 1,543,201 1,619,830 1,700,286 1,784,759

EXPENDITURES
SALARIES AND WAGES 217,029 163,594 240,134 614,251 632,679 651,659 671,209 691,345 712,085 BENEFITS 85,720 85,015 124,965 316,715 335,718 355,861 377,213 399,845 423,836 OPERATIONS AND MAINTENANCE 686,315 827,458 622,505 1,473,003 600,000 618,000 636,540 655,636 675,305 CAPITAL OUTLAY - - - 3,000 - - - - -
TOTAL EXPENDITURES 989,063 1,076,066 987,604 2,406,969 1,568,396 1,625,520 1,684,961 1,746,827 1,811,227 Surplus/(Deficit) (274,745) (328,452) (292,702) (427,053) (98,181) (82,319) (65,131) (46,541) (26,468) Fund Balance, July 1 761,594 486,849 158,397 (134,305) (561,358) (659,540) (741,859) (806,990) (853,531) Fund Balance, June 30 486,849 158,397 (134,305) (561,358) (659,540) (741,859) (806,990) (853,531) (879,998) Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES 66,161 111,950 66,635 60,060 61,862 63,718 65,629 67,598 69,626 OTHER REVENUE 7,083 7,176 1,008 6,000 6,060 6,121 6,182 6,244 6,306 TOTAL REVENUES 73,244 119,125 67,643 66,060 67,922 69,838 71,811 73,842 75,932

EXPENDITURES
OPERATIONS AND MAINTENANCE 103,347 102,639 93,143 101,970 99,000 105,029 108,180 111,425 114,768 CAPITAL OUTLAY 307,432
TRANSFERS OUT - 107,805 - - - - - -
TOTAL EXPENDITURES 410,778 210,444 93,143 101,970 99,000 105,029 108,180 111,425 114,768 Surplus/(Deficit) (337,535) (142,801) 25,983 (32,940) (34,048) (35,191) (36,369) (37,584) (38,836) Fund Balance, July 1 684,738 347,203 373,186 230,385 197,445 163,396 128,206 91,837 54,253 Fund Balance, June 30 347,203 373,186 230,385 197,445 163,396 128,206 91,837 54,253 15,417 36 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 17
Measure C/J Fund
The Measure C/J Fund accounts for special override sales tax revenues collected by the Contra Costa Transportation Authority (CCTA) and reapportioned to the cities for local street projects.

The City must submit a checklist each year to confirm compliance with a Growth Management Program. Estimates of annual funding are provided by the CCTA, and jurisdiction allocations are based on a formula split (50/50) between population and road mileage.

Rate Stabilization Fund
The Rate Stabilization Fund was created to account for the excess revenues from the solid waste post collection contract with Republic Services. Twenty-five percent (25%) of the surplus funds, generated from prior years’ rate increases, are set aside to offset year-over-year rate fluctuations; thereby, leveling the annual rates paid by consumers. Per Resolution 2013-91, the City was required to establish a rate stabilization fund, separate from the Solid Waste Fund, for the excess revenues collected.

Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
OTHER REVENUE 10,164 27,628 5,804 8,000 8,080 8,161 8,242 8,325 8,408 MISCELLANEOUS REVENUE 314,229 375,749 347,367 360,000 374,400 389,376 404,951 421,149 437,995 TOTAL REVENUES 324,392 403,377 353,171 368,000 382,480 397,537 413,193 429,474 446,403

EXPENDITURES
OPERATIONS AND MAINTENANCE 3,003 - 2,240 118,645 122,204 125,870 129,647 133,536 137,542 CAPITAL OUTLAY - - 642,800 425,000 - - - -
TRANSFERS OUT - 45,700 - - - - - -
TOTAL EXPENDITURES 3,003 47,940 - 761,445 547,204 125,870 129,647 133,536 137,542 Surplus/(Deficit) 321,390 403,377 305,231 (393,445) (164,724) 271,666 283,547 295,938 308,861 Fund Balance, July 1 1,154,754 833,364 1,558,130 1,863,361 1,469,916 1,305,192 1,576,858 1,860,405 2,156,343 Fund Balance, June 30 1,154,754 1,558,130 1,863,361 1,469,916 1,305,192 1,576,858 1,860,405 2,156,343 2,465,204 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES 379,583 405,252 390,147 475,247 494,257 514,027 534,588 555,972 578,211 OTHER REVENUE 9,353 23,857 6,297 8,000 8,080 8,161 8,242 8,325 8,408 TOTAL REVENUES 388,936 429,109 396,444 483,247 502,337 522,188 542,831 564,297 586,619

EXPENDITURES
OPERATIONS AND MAINTENANCE 124,329 82,819 160,835 199,189 205,165 211,320 217,659 224,189 230,915 CAPITAL OUTLAY 25,542 18,651 - 738,000 350,000 - - - -
TOTAL EXPENDITURES 149,871 101,471 160,835 937,189 555,165 211,320 217,659 224,189 230,915 Surplus/(Deficit) 239,065 327,638 235,609 (453,942) (52,828) 310,868 325,171 340,108 355,704 Fund Balance, July 1 1,254,870 1,493,935 1,821,573 2,057,183 1,603,241 1,550,413 1,861,281 2,186,453 2,526,560 Fund Balance, June 30 1,493,935 1,821,573 2,057,183 1,603,241 1,550,413 1,861,281 2,186,453 2,526,560 2,882,264 37 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 18
American Rescue Plan Act (ARPA) Fund
The American Rescue Plan Act Fund accounts for the $4.6 million allocated to the City from the federal government from the American Rescue Plan Act of 2021. The City received its first tranche of $2.3 million in July 2021 and will receive the second tranche one year later.

Parkland Dedication Fund
The Parkland Dedication Fund provides for the acquisition and development of parks as specified in the City’s Parkland Dedication Ordinance (PDO) (Municipal Code Sec. 16.28) which requires as a condition of approval for the subdivision of land, the dedication of park land or payment of a fee in-lieu of dedication, pursuant to California Government Code 66477 (the “Quimby Act”).

Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
MISCELLANEOUS REVENUE - - 31,171 31,483 31,798 32,116 32,437 32,761 33,089 TRANSFERS IN - - 153,505 158,110 162,853 167,739 172,771 177,954 183,293 TOTAL REVENUES - - 184,676 189,593 194,651 199,855 205,208 210,715 216,382

EXPENDITURES -

TOTAL EXPENDITURES - - - - - - - - -
Surplus/(Deficit) - - 184,676 189,593 194,651 199,855 205,208 210,715 216,382 Fund Balance, July 1 - - - 184,676 374,269 568,920 768,775 1,184,698 973,983 Fund Balance, June 30 - - 184,676 374,269 568,920 768,775 1,184,698 973,983 1,401,080 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES - - - 2,302,505 2,302,505 - - - - TOTAL REVENUES - - - 2,302,505 2,302,505 - - - -

EXPENDITURES
OPERATIONS AND MAINTENANCE - - - 400,000 1,902,505 2,302,505 - - - TOTAL EXPENDITURES - - - 400,000 1,902,505 2,302,505 - - - Surplus/(Deficit) - - - 1,902,505 (2,302,505) 400,000 - - - Fund Balance, July 1 - - - - 1,902,505 2,302,505 - - -
Fund Balance, June 30 - - - 1,902,505 2,302,505 - - - - Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
FEES 36,183 26,227 16,027 16,508 17,003 17,513 18,038 18,579 19,137 OTHER REVENUE 1,506 345 351 355 358 362 365 369 373
TOTAL REVENUES 36,528 27,733 16,378 16,862 17,361 17,875 18,404 18,949 19,510

EXPENDITURES
CAPITAL OUTLAY - 799 - - - - - - -
TOTAL EXPENDITURES - 799 - - - - - - -
Surplus/(Deficit) 36,528 26,934 16,378 16,862 17,361 17,875 18,404 18,949 19,510 Fund Balance, July 1 24,608 61,137 88,070 104,448 121,311 138,672 156,547 174,950 193,899 Fund Balance, June 30 61,137 88,070 104,448 121,311 138,672 156,547 174,950 193,899 213,408 38 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 19
Growth Impact Fund
The Growth Impact Fund accounts for development fees collected to mitigate the impact of new development. Specifically, it provides for the expansion, design, construction, or upgrade to facilities, roadways, and equipment. The City collects fees for police, fire protection, municipal, community, wastewater, roadways, and drainage.

Housing Assets Held for Resale Fund
The Housing Assets Held for Resale Fund receives tax increment funds through Redevelopment activity representing 20% set-aside for housing activities. Funds are expended for approved housing activities.

Landscape & Lighting District Fund
The Landscape & Lighting District Fund accounts for assessments to property owners to maintain median lighting and landscaping within the Pinole Valley Road North and South areas.

Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
FEES 81,747 33,716 32,090 229,834 100,000 165,000 132,500 148,750 140,625 OTHER REVENUE 1,842 733 477 1,000 1,000 1,000 1,000 1,000 1,000 TOTAL REVENUES 82,480 35,557 32,567 230,834 101,000 166,000 133,500 149,750 141,625

EXPENDITURES
CAPITAL OUTLAY - - - 258,000 108,860 320,000 200,000 - - TOTAL EXPENDITURES - - 258,000 - 108,860 320,000 200,000 - - Surplus/(Deficit) 82,480 35,557 32,567 (27,166) (154,000) (7,860) (66,500) 149,750 141,625 Fund Balance, July 1 - 82,480 118,037 150,604 123,438 115,578 (38,422) (104,922) 44,828 Fund Balance, June 30 82,480 118,037 150,604 123,438 115,578 (38,422) (104,922) 44,828 186,453 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
OTHER REVENUE 292,531 63,041 7,374 50,000 50,500 51,005 51,515 52,030 52,551 TRANSFERS IN - 44,892 1,750,000 1,683,692 862,883 - - - - TOTAL REVENUES 292,531 1,757,374 107,933 1,733,692 913,383 51,005 51,515 52,030 52,551

EXPENDITURES
OPERATIONS AND MAINTENANCE 170,110 69,688 44,092 228,798 235,662 242,732 250,014 257,514 265,240 TOTAL EXPENDITURES 170,110 69,688 44,092 228,798 235,662 242,732 250,014 257,514 265,240 Surplus/(Deficit) 122,421 1,713,282 38,245 1,504,894 677,721 (191,727) (198,499) (205,484) (212,689) Fund Balance, July 1 767,942 890,363 2,641,890 928,607 4,146,784 4,824,505 4,632,778 4,434,279 4,228,795 Fund Balance, June 30 890,363 2,641,890 928,607 4,146,784 4,824,505 4,632,778 4,434,279 4,228,795 4,016,106 39 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 20
City Street Improvements Fund
The City Street Improvements Fund receives a transfer in of $250,000 per year, as approved in the Measure S 2014 expenditure plan to fund road maintenance projects.

Arterial Streets Rehabilitation Fund
This fund receives a transfer in of $250,000 per year, as approved in the Measure S 2014 expenditure plan to fund road rehabilitation projects.

Sewer Enterprise Fund
The Sewer Enterprise Fund accounts for annual fees charged to residents and businesses for sewer utilities. Sewer user fees are charged in the amount specified by City Council Resolution (Section 13.04.040 PMC). Fees are used to operate the Pinole Wastewater Treatment Plant Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES 36,854 39,746 42,525 54,768 56,411 58,103 59,846 61,642 63,491 OTHER REVENUE 5,000 - 14,839 7,500 7,500 7,500 7,500 7,500 7,500 TOTAL REVENUES 41,854 39,746 57,364 62,268 63,911 65,603 67,346 69,142 70,991

EXPENDITURES
OPERATIONS AND MAINTENANCE 33,098 38,172 53,599 56,405 58,097 59,840 61,635 63,484 65,389 CAPITAL OUTLAY 2,346 - - 5,720 5,892 6,068 6,250 6,438 6,631 TOTAL EXPENDITURES 35,444 38,172 53,599 62,125 63,989 65,908 67,886 69,922 72,020 Surplus/(Deficit) 6,410 1,575 3,765 143 (78) (305) (539) (780) (1,029) Fund Balance, July 1 19,478 25,888 27,462 31,227 31,370 31,292 30,987 30,448 29,667 Fund Balance, June 30 25,888 27,462 31,227 31,370 31,292 30,987 30,448 29,667 28,638 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
INTERGOVERNMENTAL REVENUES 5,183 535 149,002 289,594 - - - - - OTHER REVENUE 20,609 1,417 18 - - - - - -
TRANSFERS IN 200,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 TOTAL REVENUES 225,792 250,553 400,419 539,594 250,000 250,000 250,000 250,000 250,000

EXPENDITURES
CAPITAL OUTLAY 57,421 45,622 448,469 1,528,102 250,000 250,000 250,000 250,000 250,000 TOTAL EXPENDITURES 57,421 45,622 1,528,102 448,469 250,000 250,000 250,000 250,000 250,000 Surplus/(Deficit) 168,371 204,930 (48,050) (988,508) - - - - - Fund Balance, July 1 1,137,856 969,485 1,342,786 1,294,736 306,228 306,228 306,228 306,228 306,228 Fund Balance, June 30 1,137,856 1,342,786 1,294,736 306,228 306,228 306,228 306,228 306,228 306,228 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
OTHER REVENUE 35,631
TRANSFERS IN 200,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 TOTAL REVENUES 235,631 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000

EXPENDITURES
CAPITAL OUTLAY 1,302 125,202 236,007 819,689 250,000 250,000 250,000 250,000 250,000 TOTAL EXPENDITURES 1,302 125,202 236,007 819,689 250,000 250,000 250,000 250,000 250,000 Surplus/(Deficit) 234,329 124,798 (569,689) 13,993 - - - - - Fund Balance, July 1 415,454 649,783 774,581 788,574 218,885 218,885 218,885 218,885 218,885 Fund Balance, June 30 649,783 774,581 788,574 218,885 218,885 218,885 218,885 218,885 218,885 40 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 21
which services the Pinole and Hercules areas. The cost of operations is shared between the two cities using a cost sharing formula based on sewage inflows by each city. The City’s Sewer Enterprise Fund meets the criteria to be classified as a major fund.

Pinole Community Television Fund
The Pinole Community Television (PCTV) Fund accounts for revenue received from video production charges, PEG fees, and the General Fund. PEG fees are designated for equipment purchases.

Information Systems Fund
Internal service fund used to account for activities that provide goods or services to other funds, departments, or agencies of the primary government and its component units, or to other governments on a cost-reimbursement basis. The City uses internal service funds to account for the costs of information services.

Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
CHARGES FOR SERVICES 7,210,207 7,093,734 7,414,842 7,797,500 8,187,375 8,596,744 9,026,581 9,477,910 9,951,805 OTHER REVENUE 110,630 277,807 66,300 100,000 101,000 102,010 103,030 104,060 105,101 TOTAL REVENUES 7,320,836 7,371,541 7,481,142 7,897,500 8,288,375 8,698,754 9,129,611 9,581,970 10,056,906

EXPENDITURES
SALARIES AND WAGES 1,019,018 986,229 1,029,690 1,277,035 1,315,346 1,354,806 1,395,451 1,437,314 1,480,434 BENEFITS 673,353 896,886 969,691 672,838 713,208 756,001 801,361 849,442 900,409 OPERATIONS AND MAINTENANCE 2,490,145 2,442,357 2,615,618 3,430,345 3,533,255 3,639,253 3,748,430 3,860,883 3,976,710 CAPITAL OUTLAY 565,189 544,807 816,475 2,206,855 2,310,382 2,000,000 1,040,597 3,800,000 800,000 DEBT SERVICE 215,195 612,491 621,332 1,609,506 1,611,624 1,607,476 1,612,018 1,611,192 1,609,526 TOTAL EXPENDITURES 4,930,110 5,515,558 6,052,806 9,196,579 9,483,815 9,357,536 8,597,857 8,558,832 11,767,078 Surplus/(Deficit) 2,390,726 1,855,983 1,428,336 (1,299,079) (1,195,440) (658,782) 1,023,139 531,754 (1,710,172) Fund Balance, July 1 15,538,118 17,928,844 19,784,827 21,213,163 19,914,084 18,718,643 18,059,861 18,591,615 19,614,754 Fund Balance, June 30 17,928,844 19,784,827 21,213,163 19,914,084 18,718,643 18,059,861 18,591,615 19,614,754 17,904,582 Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

REVENUES
TAXES 32,702 28,833 25,359 52,972 54,561 56,198 57,884 59,620 61,409 CHARGES FOR SERVICES 188,351 191,537 223,342 316,956 326,465 336,259 346,346 356,737 367,439 MISCELLANEOUS REVENUE 4,020 3,000 341 5,000 2,500 2,500 2,500 2,500 2,500 TRANSFERS IN 132,303 147,804 174,853 160,124 247,643 219,839 231,496 243,796 256,786 TOTAL REVENUES 357,375 371,175 423,895 535,052 631,169 614,796 638,226 662,653 688,134

EXPENDITURES
SALARIES AND WAGES 186,080 174,271 184,450 197,042 202,953 209,042 215,313 221,773 228,426 BENEFITS 103,742 121,948 137,325 147,867 156,739 166,143 176,112 186,679 197,879 OPERATIONS AND MAINTENANCE 46,491 45,328 70,017 163,161 168,056 173,097 178,290 183,639 189,148 CAPITAL OUTLAY 21,063 33,327 - 62,696 64,576 66,514 68,509 70,564 72,681 TOTAL EXPENDITURES 357,375 374,875 391,792 570,765 592,324 614,796 638,224 662,654 688,134 Surplus/(Deficit) (3,700) - 32,104 (35,713) 38,845 (0) 2 (1) (0) Fund Balance, July 1 (31,535) (31,535) (35,235) (3,131) (38,845) (0) (1) 1 0 Fund Balance, June 30 (31,535) (35,235) (3,131) (38,845) (0) (1) 1 0 (0) 41 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Long-Term Financial Forecast 22
Category
2018-19
Actual
2019-20
Actual
2020-21
Actual
2021-22
Revised
Budget
2022-23
Forecast
2023-24
Forecast
2024-25
Forecast
2025-26
Forecast
2026-27
Forecast

EXPENDITURES
OPERATIONS AND MAINTENANCE 555,995 723,886 641,766 1,035,936 1,067,014 1,099,025 1,131,995 1,165,955 1,200,934 CAPITAL OUTLAY 53,720 71,755 26,323 161,700 166,551 171,548 176,694 181,995 187,455 INTERFUND/INTERDEPARTMENTAL CHARGES (609,715) (795,641) (668,089) (1,197,636) (1,233,565) (1,270,572) (1,308,689) (1,347,950) (1,388,388) TRANSFER TO CLEAR NEGATIVE CASH - 196,169
TOTAL EXPENDITURES - - 196,169 (0) - - - - -
Surplus/(Deficit) - - 196,169 (0) - - - - -
Fund Balance, July 1 (196,169) (196,169) (196,169) (196,169) (0) (0) (0) (0) (0) Fund Balance, June 30 (196,169) (196,169) (196,169) (0) (0) (0) (0) (0) (0) 42 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Major Challenges and Opportunities Over the Next Five Years 23

MAJOR CHALLENGES AND OPPORTUNITIES OVER THE NEXT

FIVE YEARS
One of the main objectives of a LTFP is for an organization to identify significant challenges and opportunities that it is likely to face in the future such that the organization can take steps, with an adequate runway, to overcome challenges and profit from opportunities while providing desired service levels through a structurally balanced budget. The City conducted an environmental scan as part of the development of the Strategic Plan. Additionally, the City deployed an online survey in May 2021 to gather input from the community on the major challenges and opportunities that the City will face over the next five years. The findings of the environmental scan and the community survey are integrated in the content below.

MAJOR CHALLENGES
Changes in demographics and economic conditions can create significant challenges for cities. As noted above, City staff does not anticipate that demographic or economic changes over the next five years will create any significant challenges for the City. The City will nonetheless face a number of other challenges over the next five years.

The City engaged a public opinion research firm to complete a poll in November 2019 of a representative sample of likely voters to identify their top concerns and prevailing opinions. The firm completed 426 surveys, via mixed mode (telephone and web). Participants provided the following responses to the question “What do you think is the most important issue facing the City of Pinole today?”:
• Traffic/transportation (14%);
• Public services funding/spending (13%);
• Crime/policing (9%);
• City budget/policies (8%);
• Housing/overpopulation (7%);
• Infrastructure/roads/power issues (6%);
• Jobs/economy/development (6%);
• Schools/education (5%);
• Community improvements (4%);
• Wildfires/fire safety (4%);
• Homelessness (2%);
• Taxes (2%);
• None/nothing (7%);
• Other (3%); and
• Don’t know (11%).
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Major Challenges and Opportunities Over the Next Five Years 24 It is interesting to note that no single issue emerged as the most significant to a majority of respondents. Rather, different respondents felt that a wide variety of challenges were the most significant.

In addition to those listed above, City staff and the environmental scan identified the following additional items as major challenges that the City will face over the next five years:
• The City’s extensive infrastructure, which needs upgrade and replacement; • Retaining and developing staff, and succession planning; • Climate change; and
• The changing nature of retail and the related impact to the City’s sales and property tax revenues.

The City deployed a voluntary online survey specifically related to the LTFP from May 3, 2021 to May 17, 2021 using Survey Monkey. A total of 47 self-selected community members completed the survey and identified the following as the main challenges facing the City of Pinole over the next five years, some of which overlap with the major challenges identified in the environmental scan:
• Infrastructure maintenance and replacement, notably roads and parks; • Climate change;
• Public safety, including policing and fire services; and • Public transportation.

MAJOR OPPORTUNITIES
Changes in demographics and economic conditions can also create opportunities for cities. City staff does not anticipate that there will be any significant demographic or economic changes in the City over the next five years, therefore staff is not anticipating that demographic or economic changes will themselves present major opportunities. That said, the City currently faces and will continue to face a number of opportunities over the next five years.

Opportunities facing the City include the following:
• The opportunity to reimagine retail centers, potentially as mixed use or destination retail and entertainment developments, as the nature of retail changes and there is less need for large retail buildings and centers;
• The opportunity to redevelop other underdeveloped infill sites, such as vacant lots; • The City’s central location in the Bay Area, adjacent to I-80 and San Francisco Bay; • The City’s diverse population; and
• The City’s historic downtown.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Major Challenges and Opportunities Over the Next Five Years 25 Respondents to the LTFP survey of May 2021 identified the following as the main opportunities facing the City of Pinole over the next five years, some of which overlap with the major opportunities identified in the environmental scan:
• Environmental initiatives, including the use of green and renewable energy; • Economic development strategy to attract and support small businesses; • Redevelopment of areas that can be used for new businesses and housing; and • Revitalization of the historic downtown.

In April 2022, staff deployed a survey designed to gauge community members’ priorities. Staff used the results from the previous surveys, outlined above, to create the qualitative survey using the Balancing Act tool. The survey included a menu of eleven potential City initiatives to be considered for funding, and asked respondents to select items that are of the highest priority to them, then rank them in order of importance. The initiatives in the survey are as follows:
• Active transportation
• Climate and environmental sustainability
• Community services
• Community spaces and facilities
• Economic development
• Financial reserves
• Housing assistance
• Parks and facilities
• Pavement maintenance and rehabilitation
• Public safety services
• Road safety
The survey results were the following. <insert>
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives - Additional Discretionary Expenditures 26

POLICY ALTERNATIVES - ADDITIONAL DISCRETIONARY

EXPENDITURES
One goal of a LTFP is to identify the City services, and service levels, that residents desire, and can be afforded on an ongoing basis by a structurally balanced City budget.

In the United States, there are many levels of government (federal, state, county, city, and special districts), with distinct responsibilities. Cities are primarily responsible for public safety, land use, and public works. They are also often responsible for parks and recreation and sometimes responsible for providing utility services, such as clean water, wastewater, and power.

Pinole is considered a “full service” city, which means that it provides all traditional municipal services. It also provides some services, particularly fire protection and wastewater, that are provided by special districts in many other cities. Pinole provides a very broad range of services for a city of its size.

The majority of City of Pinole staff and resources are dedicated to public safety (police and fire services), land use regulation, building safety, local transportation infrastructure (streets, sidewalks, signals, bike lanes, etc.), and wastewater services. The City also invests significant staff and resources in additional public-facing services, such as outdoor recreation space and facilities, recreational and educational programs, cable television programming, and childcare and senior services. Some City staff and resources are also needed to provide internal services, such as finance, human resources, legal, information technology, records management, and facilities and equipment, to support the public-facing operations. Since having made reductions in staffing during the Great Recession, the City has been leanly staffed compared to many other cities.

Customer expectations for certain municipal services, such as wastewater, are fairly consistent across communities. Therefore, it is straightforward for a city to identify the optimal service level for that function. Customer expectations, and service levels, for other municipal services, vary significantly across communities, and are influenced by a number of factors. As noted above, the City of Pinole is leanly staffed, and provides a solid but basic level of service in most service areas.

UNFUNDED/DEFERRED LIABILITIES
The City has a number of unfunded liabilities and deferred maintenance needs that it could address, described below.

Unfunded Liabilities
The City has a number of unfunded liabilities, such as unfunded accrued compensated absences, unfunded liability for other post-employment benefits (OPEB), and unfunded retirement (pension) liabilities.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives - Additional Discretionary Expenditures 27 Unfunded Accrued Compensated Absences
City employees accrue paid vacation and sick leave. As of the end of FY 2020/21, the City had approximately $1.1 million in unfunded liability for vacation and sick leave that employees had earned but not yet taken. The City traditionally pays for paid leave out of its normal operating budget, referred to as “pay-as-you-go.” The City could choose to set aside funds to eliminate this unfunded liability. The funding source could be one-time funding, such as unassigned fund balance.

Unfunded Retirement (Pension) Liability
The City provides its employees with a defined benefit retirement program through CalPERS.

Depending on the demographic characteristics of the City’s employees, the amount of City and employee contributions to the retirement program, and the program’s return on its investments, the assets and liabilities in the City’s CalPERS account fluctuate over time. Per the most recent actuarial valuation available, as of June 30, 2020 the City had a total unfunded pension liability with CalPERS of approximately $39.4 million.

CalPERS has made several changes to its policies and procedures over the past decade that have been intended to increase the financial strength of the system, but have also resulted in significantly increased required contributions and unfunded liabilities for municipalities. CalPERS has changed key assumptions that increased unfunded liabilities, including increasing the life expectancy of beneficiaries and decreasing the expected rate of return on assets. CalPERS has also implemented new policies that require municipalities to accelerate contributions in order to achieve adequate funded status more quickly. So, despite the implementation of the less costly Public Employees’ Pension Reform Act (PEPRA) in 2013, the City’s unfunded pension liability has grown substantially over the past few years. CalPERS is unlikely to implement a comparably broad set of additional changes in the coming years, but even more modest changes, in addition to other factors, could continue to significantly increase the City’s unfunded pension liability over the next few years.

The City created a special trust fund in FY 2017/18, referred to as a “Section 115 trust,” funded with General Fund resources, to offset this significant unfunded pension liability. As of June 30, 2021, the market value of the assets in the trust fund was $19.4 million. The unfunded liability in CalPERS will fluctuate over time, as will the value of the assets in the Section 115 trust.

Unfunded Accrued Liability (UAL) for Other Post-Employment Benefits (OPEB) A pension is the primary benefit that the City provides to retired City employees. The other main benefit that the City provides to retired City employees is a contribution toward retiree medical insurance premiums during retirement. This and other ancillary, non-pension retirement benefits, are referred to as other post-employment benefits (OPEB). Until recently, employers have not been required to report OPEB assets and liabilities in the same way that they have been required to report pension assets and liabilities. Further, employers have generally not been 47 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives - Additional Discretionary Expenditures 28 required to make regular payments to pre-fund OPEB liabilities. Employers have normally paid for OPEB benefits on a pay-as-you-go basis. This has resulted in significant unfunded OPEB liability for many employers, including the City. As of June 30, 2021, the City had an unfunded OPEB liability of $46.5 million.

The City could consider creating an OPEB trust, like the Section 115 Trust that was created for pension. The City would need to determine a funding source for the trust, or it could consider using the current Section 115 Trust for both pension and OPEB. If the trust were to be used for pension and OPEB, the funds would be exhausted faster unless additional funding was put into the trust.

Deferred Maintenance and Renewal
Like many cities, Pinole has deferred investment and expenditures on capital assets and other systems, particularly in response to and in the aftermath of the Great Recession and the dissolution of redevelopment. The City’s current budget allows the City to provide essential services, but defers some investment in capital assets. This deferral of investment will lead to the deterioration of some assets and systems in the long run.

Capital Asset Renewal and Replacement
Pinole has deferred expenditures on capital asset maintenance and renewal, and many of the City’s capital assets are reaching the natural end of their useful life. The City owns a significant portfolio of capital assets, which are well described in the City’s Capital Improvement Plan (CIP).

These include buildings, roads, sidewalks, parking lots, trails, parks, open space, the wastewater treatment plant, the sewer collection system, the stormwater collection system, vacant lots, streetlights, and traffic control devices. The City’s Strategic Plan includes a strategy to conduct a citywide asset condition assessment. That effort is currently underway, addressing different asset types in phases. The City is in the process of developing a sewer system master plan and will be developing a parks master plan. The City is also implementing a new capital asset management software system. After these efforts are complete, the City will have a much clearer picture of its capital asset portfolio and the expenditures required for maintenance and renewal to achieve the lowest possible total cost of ownership of its assets.

Vehicle and Equipment Replacement
Vehicles and equipment are another significant asset that the City relies upon to provide services.

The City does not currently have an integrated, citywide vehicle and equipment management program. It acquires new vehicles and equipment when needed on a pay-as-you-go basis, and its vehicles and equipment are generally modern enough to meet current operating needs. Paying for equipment on a pay-as-you-go basis can lead to expenditure spikes when expensive equipment needs to be replaced. The City’s new capital asset management software system has a module for fleet and equipment. Once that module is implemented, the City will have a clearer 48 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives - Additional Discretionary Expenditures 29 sense of its vehicle and equipment replacement needs and the amount of funding that the City should set aside on an annual basis to address needs.

SERVICE AND PROGRAM EXPANSION
As noted above, the City provides a solid but basic level of service in most service areas. The City can spend any surplus discretionary financial resources it may have on expanding services and programs.

Expansion of Existing Services
Economic Development
The City has not had a formal economic development function since 2012, when the dissolution of redevelopment occurred, although the City has undertaken some limited economic development activities recently. One of the Strategic Plan strategies is to “develop a comprehensive economic developmentstrategy,” and several other Strategic Plan strategies also relate to economic development. The City has hired a professional services firm to develop the economic development strategy, which will include a recommendation on the appropriate form and magnitude of a City economic development program.

Climate Resiliency and Environmental Programs
The City is required by the State and federal government to undertake a number of programs related to protecting the environment. For example, the City is required to comply with requirements related to effluent of the wastewater treatment plant, stormwater protection, having low emission fleet vehicles, reducing solid waste disposal, complying with the California Environmental Quality Act (CEQA), having a General Plan, and others. The City has also undertaken voluntary steps to protect the environment and to keep the City resilient to the threats of a climate crisis, such as joining a community choice energy program, Marin Clean Energy (MCE), authorizing a property-assessed clean energy (PACE) program, and participating in a local transit joint powers authority (Western Contra Costa County Transit, “WestCAT”). There are additional programs and activities that the City could undertake to further promote environmental protection. The City Council recently reviewed the various programs and activities that the City is currently undertaking related to climate change and directed staff to complete an Active Transportation Plan, a Climate Action Plan, and an energy conservation, generation, and storage assessment of all City facilities. These plans and assessments will recommend new steps the City can take to address environmental issues.

Fire Service
The City is currently in discussion with Confire about expanding fire service in Pinole through a cooperative arrangement.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives - Additional Discretionary Expenditures 30 Housing Assistance
Redevelopment was a significant tool for affordable housing development. Since the dissolution of redevelopment, the City of Pinole, and other California cities, have fewer tools and financial resources to create affordable housing. Upon the dissolution of redevelopment, the City opted to become the housing successor to the former Pinole Redevelopment Agency. In that capacity, the City monitors affordable housing units that were funded by the former agency for ongoing compliance with affordability covenants. The City also has an inclusionary housing ordinance that requires that all housing development projects with four units or more must ensure that 15% of the units are affordable. The City can expend resources remaining from the former agency’s affordable housing assets to support the creation of a limited number of new affordable housing units or to provide services to the homeless population. However, these resources are significantly less than what would be needed to provide any substantial amount of new affordable housing units in the City.

Youth Development and Support
The City supports and engages youth ages six through 17 through the activities of the Community Services Department’s Youth Center, which provides afterschool and summer enrichment programs. The Youth Center could expand services to address youth health, engagement, community service, a youth commission, workforce development, or other activities.

Cultural, Historical, and Artistic Programs
The City provides a limited number of cultural, historic, and artistic programs. These include enrichment programs through the Community Services Department’s Senior Center and Youth Center, periodic community events such as music in Fernandez Park, broadcast of some community events on Pinole Community Television (PCTV), rental of a portion of the Memorial Hall building to the Pinole Community Players theater company, and some public art. The City does not have a specific requirement that new development projects include public art or pay an in-lieu fee for public art elsewhere in the City. The community does have a number of cultural, historic, and artistic organizations and resources that the City could support or leverage to provide more cultural, historic, and artistic offerings.

New Services
Although Pinole is a “full service” city, there are some services that other cities provide that Pinole does not. These include educational support programs.

Education Support
In California, public education is provided by school districts. School districts rely on a different source of revenue than do cities. Some cities support the education of their residents by offering educational support programs or by providing financial assistance to public schools. The City does offer afterschool enrichment programs to students for a fee, but does not currently provide 50 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives - Additional Discretionary Expenditures 31 educational support programs. In the past, West Contra Costa Unified School District (WCCUSD) has provided the City with grant funding such that the City could assign two police officers to serve as school resource officers (SROs). WCCUSD eliminated that funding in FY 2020/21. The officers previously assigned as SROs have been reassigned to other public safety duties.

Capital Expansion
The term “capital expansion” refers to creating new capital assets, such as parks or plazas, opposed to simply renewing or replacing existing capital assets.

New Parks and Park Upgrades
The Contra Costa Local Agency Formation Commission (LAFCO) recently released a municipal service review (MSR) of parks and recreation services in the County. The final report found that Pinole has adequate park space based on 12.9 acres of developed parkland per 1,000 residents, but did not look in detail at the City’s specific park amenities. The City is preparing a Park Master Plan, which is a CIP project. The Park Master Plan will involve gathering community input on desired park amenities and will recommend whether any additional parks, or additional amenities within existing parks, are desirable, accessible, and feasible. Potential funding sources for consideration include grant opportunities, park development impact fees, fundraising from individuals or organizations, and new tax measures.

Other Capital Expansion Projects
New Public Spaces/Placemaking
The term “capital expansion” refers to building new capital assets, such as buildings, roads, parks, paths, bike lanes, etc., opposed to replacing existing capital assets. As noted above, the City has a substantial capital asset footprint already, and much of the City’s current capital assets have deferred maintenance that would require significant investment to eliminate. Nonetheless, it might be desirable to create some new, high-impact capital assets that would improve economic vitality or quality of life.

Additional Reserves
Pursuant to its Reserve Policy, the City is required to maintain a general reserve equal to 50% of total ongoing annual General Fund expenditures. As of June 30, 2021, General Fund unassigned fund balance exceeded the minimum required at approximately 58% of total General Fund expenditures.

The City’s formal General Fund reserve and other uncommitted General Fund fund balance have fluctuated over the years. The larger these reserves and balances, the better the City is able to address unplanned revenue reductions or expenditure increases. 51 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives - Additional Discretionary Expenditures 32 Staff performed an analysis of the City’s financial resiliency using the diagnostic tool offered by the GFOA. The tool determined that the City has a low level of financial risk based on several factors, including its revenue stability, low expenditure volatility, and high liquidity. GFOA suggests that cities with a low level of financial risk maintain a minimum general reserve of approximately 17% of total ongoing annual General Fund expenditures. (GFOA recommends that cities with moderate and high levels of financial risk maintain general reserves at a minimum of 26% and 36%, respectively.)
City staff believe that a high reserve is appropriate given the ongoing uncertainty regarding the impact of the pandemic. However, City staff may recommend reducing the required reserve to 35%, so that funds currently held in reserve greater than 35% can be invested in high-priority City needs.

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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives – Additional Revenue and Expenditure Reduction Options 33 POLICY ALTERNATIVES – ADDITIONAL REVENUE AND

EXPENDITURE REDUCTION OPTIONS
As noted above, one goal of a LTFP, and of a city’s annual budget, is to identify the City services that residents desire and to simultaneously identify an equivalent amount of funding, which results in a structurally balanced budget. The mechanisms through which cities receive revenue vary across states. In California, cities receive the bulk of their revenues for general operations through sales tax and property tax. In addition, to offset the loss of property tax revenue that cities experienced due to Proposition 13, many cities instituted other forms of taxes, such as business license tax, transient occupancy tax (TOT), utility users’ tax (UUT), and “local sales tax” (transactions and use tax). Cities have also instituted mechanisms to recoup funds that they spend to provide services that directly benefit a specific user or beneficiary through fees and assessments.

The section above identified some unfunded and deferred liabilities and service and program expansions in which the City could invest additional resources. Because the five-year forecast predicts that the City’s General Fund budget will be essentially balanced over the next five years, there are limited resources to invest in unfunded/deferred liabilities and expanded services/programs. Therefore, if the City would like to make any substantial new investments, it will need to identify additional revenue sources or reduce some other current expenditures. Both of these options are discussed below.

ADDITIONAL REVENUE
New Local Revenue
The mechanisms through which California cities can independently generate new revenue have been significantly restricted over the past few decades. There are nonetheless a few, limited mechanisms that cities can still use.

Increased Fee Revenue
Cities can establish fees for service that fully cover the cost of the service, but cannot set fees any higher than required for full cost recovery. Many cities have financial policies that state the specific intention to achieve full cost recovery for certain services. Many cities also routinely reevaluate the cost of providing services and adjust fees accordingly to achieve full cost recovery.

The City has had a decentralized process in recent years of analyzing costs and proposing fee changes. Whereas in many cities, the Finance Department leads a coordinated annual effort, as part of the budget process, to identify situations in which fees should be modified to achieve full cost recovery, in Pinole individual departments have been responsible for reviewing costs and proposing fee changes, which they have done on a periodic and irregular schedule. The Strategic 53 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives – Additional Revenue and Expenditure Reduction Options 34 Plan includes a strategy to conduct a comprehensive fee study to ensure cost recovery of current and potential service fees. The City has hired a consulting firm to create a new cost allocation plan and recommend a new master fee schedule for all City fees. The City expects to receive the consultant’s recommendations in spring 2022, after which the City can consider modifying fees to achieve full cost recovery of certain services.

Franchise Fees
Franchise fees are fees that the City charges to private parties for the private parties’ use of City right of way. The most significant franchise fee that the City charges is to the City’s solid waste collection company, Republic Services, which entitles Republic Services to use the City’s streets and right of way to perform solid waste management activities, such as refuse, recycling, and organic material pick up. The fee varies as it is adjusted annually for inflation. Another franchise agreement that the City has is with Pacific Gas and Electric (PG&E) for its use of City poles, wires, conduits, and appurtenances, to transmit electricity and gas to the public. The City levies a fee of 1% to 2% of gross receipts based on one of two formulas, whichever is greater. The City also has a franchise agreement with Comcast, as a state franchise holder, to provide video services to the City. The City levies a fee of 5% of gross revenues. Under the same agreement, the City levies a fee of 2.12% of gross revenues to go toward Public, Educational, and Government (PEG) access channel capacity. PEG fees are used to fund PCTV capital improvements. Franchise fees can be higher than what is required for full cost recovery. Most cities have a small number of franchises, with long term agreements, so the opportunity to increase franchise fees is infrequent.

Sale of Surplus Property
Cities can generate one-time revenue through the sale of surplus property, which might take the form of equipment, furniture, or real property. The sale of surplus equipment, furniture, or supplies rarely generates any significant amount of revenue, whereas the sale of surplus real property can result in significant proceeds, depending upon the characteristics of the property.

The proceeds are usually required to be returned to the fund or specific use that originally purchased the property. Many cities sold most or all of their remaining surplus real property following the onset of the Great Recession, to generate revenue to offset the loss of revenue resulting from the Great Recession.

The City did not divest of all of its real property at that time, and therefore still owns a number of real properties that could be considered surplus and sold. Real property owned by the City that is not currently being used for a core City function includes the building in which the United States Postal Service is housed on Pear Street, the vacant lot across the street, and others. As noted above, the Strategic Plan requires that the City conduct a citywide asset condition assessment. This will include cataloging all of the city’s capital assets, including real property, and assessing their condition and value. Once the City has this information, it can be reviewed in comparison to the City’s anticipated future public facility needs, and surplus properties can be 54 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives – Additional Revenue and Expenditure Reduction Options 35 identified and sold. The City is concluding the process of selling five former Pinole Redevelopment Agency properties.

New Local Tax Measures
The City has instituted a number of local taxes, such as a UUT, TOT, business license tax, and two local sales taxes, to support City services. The City can consider other new local taxes, or increase existing taxes, to generate additional revenue for critical City services.

Increased Parcel Tax and Real Property Transfer Tax (RPTT) In 2019 and 2020, the City Council considered the desirability of placing two different local tax measures on the ballot, a special parcel tax and a real property transfer tax (RPTT).

In 2019, the City Council directed City staff to take the steps necessary to place a tax measure to fund fire service on the March 2020 ballot. Subsequently, in August 2019, the City Council directed staff to specifically take steps necessary to place a special parcel tax to fund fire service on the November 2020 ballot rather than March 2020. The City hired a public opinion research firm to assess voter support for a potential special parcel tax for fire service. The firm presented its findings to the City Council in November 2019.

In 2019, the City Council also directed City staff to analyze the steps necessary to place a measure on the ballot that would increase the RPTT. A RPTT is a tax imposed on the deed, instrument, or writing by which interests in real property are transferred. Under the California Revenue and Taxation Code, general law cities, like Pinole, may impose a RPTT of no more than $0.55 per $1,000 of value on the property transferred (the County may also impose a RPTT equal to this rate). Pinole currently has a RPTT of the maximum allowed for general law cities of $0.55 per $1,000 of value. Charter cities may impose RPTTs at a rate higher than the maximum statutory rate of $0.55 per $1,000 of value. The median RPTT rate for charter cities in Contra Costa and Alameda Counties is $12.00 per $1,000 of value. Staff calculated that were the City to implement a RPTT of $12.00 per $1,000 of value, it might create new City revenue averaging approximately $1.7 million annually. In February 2020, the Council directed staff to retain a polling consultant to gather information on public opinion regarding a charter city ballot measure limited to an increase in the RPTT and directed staff to retain a communications consultant. Due to the onset of COVID-19, in April 2020, the Council directed staff to suspend all of its activities in pursuit of a November 2020 charter city and RPTT ballot measure. In July 2020, the Council also directed staff not to move forward in preparing a November 2020 ballot measure for a special parcel tax for fire service.

In early 2022, the City Council revisited placing a charter city/RPTT measure on the November 2022 ballot. It directed staff to engage a polling and community engagement consultant to gauge community interest. The City expects to receive the polling results in spring 2022. 55 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives – Additional Revenue and Expenditure Reduction Options 36 Increased Utility Users Tax (UUT)
As noted above, the City currently levies an 8% UUT on the value of public utility services consumed within the City limits for electricity, gas, and telecommunications which includes phone landline and cellular phone. The UUT was originally approved by Pinole voters in November 1998, and extended by voters in 2004, 2012, and 2018. UUTs can also be applied to water and sewer utility service. The City could consider pursuing either an increase in the amount of the levy or broaden the types of utility services to which it applies.

General Obligation Bonds
General obligation (GO) bonds are bonds that must be approved by voters and are repaid through an additional assessment (“override”) on property taxes. They include both tax and debt components, and are discussed more below.

Assessment Districts
Assessment Districts
Assessment districts are a mechanism through which property owners agree to pay an additional assessment to fund specific services or improvements within a specific geographic area. The assessment’s purpose must be defined prior to the district’s creation and the amount that each property owner pays must be proportional to the benefit the property will receive. Assessment districts can be established by a simple majority vote of the property owners. State law allows the creation of numerous specific types of assessment districts with varying authority to conduct different types of improvements and activities. The City currently has a landscape and lighting assessment district (LLAD), which generates funding for the maintenance of public spaces along portions of Pinole Valley Road. The Pinole Valley Road Landscape and Lighting Assessment District (LLAD) assesses property owners in the district approximately $500 annually per “assessment unit” (acre of developable land), which results in approximately $50,000 to invest in maintenance of traffic signals, streetlights, median landscaping, irrigation, graffiti removal, and electricity to the traffic signals and streetlights. The City could consider promoting the formation of assessment districts to fund specific improvements in different areas of the City.

Business Improvement District
A business improvement district (BID) is a special type of assessment district focused on commercial districts. BIDs can undertake infrastructure projects such as parking facilities and streetscapes improvements, cleaning and maintenance of the district, and marketing and promotion of the district and its properties/businesses. The City could consider promoting the formation a of BID for downtown or other commercial areas.

Enhanced Infrastructure Financing District
Property tax increment was the primary revenue source that redevelopment agencies used to fund their projects. Cities lost access to this tool in its traditional form when redevelopment agencies were dissolved in California in 2012. In the aftermath of dissolution, the State did create 56 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives – Additional Revenue and Expenditure Reduction Options 37 some new tools intended to mimic some of those previously available under redevelopment. One such tool is an enhanced infrastructure financing district (EIFD), which uses tax increment in a more restricted way. Whereas previously, a redevelopment agency had a right to the property tax increment generated in a redevelopment project area, under an EIFD a taxing entity must volunteer to forego receipt of the tax increment it would otherwise receive so that the increment can be used for the redevelopment project. Use of the EIFD tool requires significant collaboration between separate governmental entities, and will only be advantageous for both parties under specific circumstances. As a result, EIFDs are not yet widely used, but are nonetheless a tool that the City should keep in mind for future capital projects.

New Federal Funding
American Rescue Plan Act (ARPA)
The American Rescue Plan Act (ARPA) is federal legislation passed in 2021 to provide COVID-19 relief. It builds upon the relief provided by two other significant pieces of federal legislation, the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Families First Coronavirus Response Act (FFCRA). ARPA includes $1.9 trillion in funding, program changes, and tax policies aimed at mitigating the effects of the pandemic. ARPA is the first piece of federal COVID-19 relief legislation that includes direct financial assistance to cities. The City will receive approximately $4.6 million from ARPA of which it received the first installment in July 2021. City staff recommends that the City Council consider using the allocation to backfill the loss of revenue in the General Fund.

Additional Cash from Debt
Best practices in long-term financial planning require analyzing the City’s debt position and the affordability of additional borrowing. One financial strength of the City’s is having relatively little general debt. The City has capacity, per the legal debt limit, to issue debt for City expenses. Per the City’s FY 2020/21 Annual Comprehensive Financial Report, the City’s legal bonded debt limit, which is equivalent to 3.75% of assessed property value, was $103,173,971, whereas the City only had $2,734,450 of such debt, which is the City’s pension obligation bonds. Debt financing is an option that the City could consider for significant future expenditures, such as capital projects.

Following are two of the most common debt financing options that the City could consider.

General Obligation Bonds
General obligation (GO) bonds are issued by public entities to finance large projects that acquire or improve real property. GO bonds are backed by property tax revenue, which is used to repay the bond usually over a 20-to-30-year period. Increasing the property tax to repay the debt requires two-thirds voter approval.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Policy Alternatives – Additional Revenue and Expenditure Reduction Options 38 Lease Revenue Bonds
Lease revenue bonds are issued to acquire, construct or expand public projects for which fees, charges, or admissions are charged. Because the debt service is paid from income generated by the facility or related service, such debt is considered self-liquidating and generally does not constitute debt of the issuer, subject to constitutional debt limits. These bonds do not require voter approval.

EXPENDITURE REDUCTIONS
In addition to generating more revenue, the City can create additional resources to invest in unfunded/deferred liabilities and expanded services/programs by reducing expenditures. As noted above, however, the City currently provides a leanly staffed and resourced solid but basic level of service in most service areas, with the majority of the City’s resources expended on core services. As such, the City has fewer opportunities than perhaps do some other cities to scale back some services in order to expand others. That said, there are two options that the City should consider or pursue to reduce expenditures, reducing retiree medical benefit costs and improving processes to achieve cost-saving efficiencies.

Retiree Medical Benefit
One of the City’s largest unfunded liabilities is the medical benefit that the City provides to retired City employees. The City pays for this benefit on a pay-as-you-go basis, which means that the City simply pays for retirees’ medical premiums when they are due, and does not set aside funding in advance on behalf of current employees commensurate with the normal cost of this benefit. The City instituted some changes to its retiree medical benefit offering in 2010 when it adopted a standard CalPERS benefit vesting schedule. Under the current program, the City must pay 100% of the medical premium for a retired employee and their dependents if the employee has just five years of City service and 20 years of total CalPERS service. This is a more generous retiree medical benefit than is provided by many other cities. The City could consider exploring other CalPERS program options. There has also been more discussion over the past decade about the possibility of the federal government assuming greater responsibility for retiree medical care or enacting other federal healthcare reforms, which might reduce the City’s responsibility and cost for such.

Process Improvements/Efficiencies
All organizations, including cities, use procedures and tools to provide their goods and services.

New procedures and tools are constantly emerging, which can result in improved quality, efficiency, or both. As a result, workers become more productive over time. Labor productivity has grown only modestly in the United States over the past decade. For this reason, as noted in the economic changes section above, City staff did not assume any significant productivity increases in the five-year forecast. Nonetheless, the City will likely identify some opportunities to improve procedures or tools that will result in increased efficiency, and associated expanded 58 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Optimal Service Levels and Revenues 39
service or reduced expenditures. The Strategic Plan includes a strategy to review citywide implementation of best practices and improve processes. This is an effort that City staff will be working on over the next few years, and which will likely result in at least a few improvements that will lead to greater quality, efficiency, or both.

OPTIMAL SERVICE LEVELS AND REVENUES
The City’s current service levels and program offerings have been established over time in response to factors such as regulatory requirements, best practices, community preferences, and financial capacity. Preferences and financial capacity can vary considerably from community to community and can evolve over time, as do regulatory requirements and best practices. Public officials monitor these factors and adjust service levels and programs over time accordingly. 59 of 65
Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Recommendations 40

RECOMMENDATIONS
The City should maintain its current service and staffing levels, as they are commensurate with the City’s current financial capacity and are responsive to community needs and priorities. The City should start to address its unfunded liabilities, primarily capital asset renewal and replacement and Other Post-Employment Benefits (OPEB). The City should pursue opportunities to generate new revenue and evaluate debt financing (for capital projects) as possible funding options.
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Long-Term Financial Plan for Fiscal Year (FY) 2022/23 – FY 2026/27 Summary and Next Steps 41

SUMMARY AND NEXT STEPS
The City is in a relatively strong financial position which is expected to continue through the life of the forecast. Based on the baseline forecast, the City will be able to continue to fund its status quo service levels and has the capacity to address some of the operating and capital improvement needs beyond the baseline. Should the City Council decide to appropriate funding to items not currently included in the status quo forecast, staff will develop alternative forecast scenarios to show the impact on revenues, expenditures, and reserves. 61 of 65

CITY COUNCIL
REPORT
5C
DATE: APRIL 26, 2022
TO: MAYOR AND COUNCIL MEMBERS
FROM: SANJAY MISHRA, PUBLIC WORKS DIRECTOR
SUBJECT: OVERVIEW OF PROPOSED PROJECTS FOR FY 2022-23 THROUGH 2026-27 FIVE-YEAR CAPITAL IMPROVEMENT PLAN

RECOMMENDATION
Staff recommends that the City Council receive an overview of proposed projects for the FY 2022-23 through 2026-27 Five-Year Capital Improvement Plan and provide direction.

BACKGROUND
The Capital Improvement Plan (CIP) addresses public infrastructure needs, supports community priorities, and aligns with the vision described in the General Plan and 2020- 2025 Strategic Plan. The CIP document is reviewed and updated annually to outline the City’s future investments in infrastructure and public facilities that are planned over a fiveyear period.

A variety of funding sources support projects in the CIP. The first year’s program is adopted by the City Council as the Capital Budget, as a counterpart to the annual Operating Budget. The fiscal resources are appropriated only in the first year, the subsequent four years of the CIP are important for long term planning and subject to further review and modification.

The Proposed FY 2022-23 through 2026-27 Five-Year Capital Improvement Plan is comprised of projects that fall into the following broad categories:
• Facilities
• Parks
• Sanitary Sewer
• Stormwater
• Streets and Roads
• Infrastructure Assessments
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City Council Report
April 26, 2022 2
On April 14, staff presented an overview of proposed projects for the FY 2022-23 through 2026-27 Five-Year Capital Improvement Plan (Attachment A) to the Finance Subcommittee.

REVIEW AND ANALYSIS
Many of the CIP projects currently underway are multi-year efforts have been carried over from previous years. The City has had limited staff focused on capital projects and much of staff’s attention has been the Wastewater Treatment Plant upgrade project, which limited the City’s ability to complete additional projects.

The City Council budgeted one additional position in FY 2021/2022 to help with capital projects, but that position has not been filled due to various reasons. City staff expects to fill that position in FY 2022/23 and will also be requesting two additional positions dedicated to capital projects, an Associate Civil Engineer and a Public Works Specialist, in FY 2022/23 to expedite the completion of additional capital projects.

New Projects for FY 2022/23
CAPITAL PROJECTS FOR FY 2022/23
PRJ # USES BY PROJECT Funds Source
PA2202 Pocket Park – Galbreth Ave. $65,000 Measure S 2014 SS2201 Sanitary Sewer Rehabilitation $1,500,000 Sewer Enterprise SS2202 Replacement of Diesel Tank $150,000 Sewer Enterprise SS2203 Effluent Outfall $150,000 Sewer Enterprise
INFRASTRUCTURE ASSESSMENTS FOR FY 2022/23
PRJ # USES BY PROJECT Funds Source
IN2201 Energy Audit $50,000 Measure S 2014
IN2101 Emergency Power for Critical
Facilities $30,000 General Fund
IN2102 Municipal Broadband Feasibility $60,000 Measure S 2014 IN2103 Recycled Water Feasibility $60,000 General Fund
Staff is currently reviewing drafts of the Local Road Safety Plan, Sanitary Sewer Collection System Master Plan, and Pavement Technical Assistance Program Report.

These documents will inform additional projects for the upcoming fiscal year.

FISCAL IMPACT
The proposed projects for FY 2022-23 through 2026-27 Five-Year Capital Improvement Plan includes $58,925,971 in identified projects of which, $1,770,000 are listed as unfunded. Staff will be requesting Council to adopt budget appropriations for the first year 63 of 65
City Council Report
April 26, 2022 3
of the Plan which constitutes the Proposed 2022-23 CIP Budget in the amount of $7,283,971.

Years two through five of the Plan will be used in forecasting funding needs. Staff will provide Council with updated CIP budgets for each future Plan year during the appropriate fiscal year.

ATTACHMENTS
A. Overview of proposed projects for the FY 2022-23 through 2026-27 Five-Year Capital Improvement Plan
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SOURCES BY FUND FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 5-Year Total 100 - General Fund $ 335,000 $ 310,000 $ 645,000
106 - Measure S 2014 $ 2,225,016 $ 940,000 $ 200,000 $ 100,000 $ 3,465,016 200 - Gas Tax $ 100,000 $ 100,000
214 - Solid Waste $ 425,000 $ 425,000
215 - Measure J $ 350,000 $ 350,000
276 - Growth Impact Fees $ 108,860 $ 320,000 $ 200,000 $ 628,860 325 - City Street Improvements $ 839,395 $ 4,283,000 $ 18,048,403 $ 17,830,000 $ 41,000,798 377 - Arterial Streets Rehabilitation $ 590,318 $ 590,318 500 - Sewer Enterprise Fund $ 2,310,382 $ 2,000,000 $ 1,040,597 $ 800,000 $ 3,800,000 $ 9,950,979 Sources Total $ 7,283,971 $ 7,853,000 $ 19,489,000 $ 18,730,000 $ 3,800,000 $ 57,155,971 Unfunded Total $ 800,000 $ 970,000 $ 1,770,000
Total Sources Required $ 7,283,971 $ 7,853,000 $ 20,289,000 $ 18,730,000 $ 4,770,000 $ 58,925,971 PRJ # USES BY PROJECT FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 Account # FY 2022-23 Funds Funding Source
FA2201 Public Safety Building Modernization $100,000 $100,000 $100,000 FA2202 Senior Center Modernization $100,000 $100,000
FA2002 Electric Vehicle Charging Stations $20,000 106-343-47201 $20,000 Measure S 2014 FA1901 Senior Center Auxiliary Parking Lot
formerly known as Fowler House lot reuse $748,807 106-343-47201 $748,807 Measure S 2014 FA1902 Energy Upgrades $120,811 106-343-47201 $120,811 Measure S 2014 FA1702 Citywide Roof repairs and replacement $272,000 $140,000 106-343-47201 $272,000 Measure S 2014 FA1703 City Hall Modernization
formerly known as Paint City Hall $125,000 $125,000 106-343-47201 $125,000 Measure S 2014 PRJ # USES BY PROJECT FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 Account # FY 2022-23 Funds Funding Source
PA2202 Skatepark Rehabilitation $150,000
PA2201 Pocket Park - Galbreth Ave. $65,000 106-343-47201 $65,000 Measure S 2014 PA2101 Installation of high capacity trash bins $425,000 214-345-47203 $425,000 Solid Waste Fund PA1901 Pinole Valley Park Soccer Field Rehabilitation $200,000 PA1704 Park Master Plan $100,000 106-345-47203 $100,000 Measure S 2014 PRJ # USES BY PROJECT FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 Account # FY 2022-23 Funds Funding Source
SS2203 Effulent Outfall $150,000 $3,000,000 500-641-47201 $150,000 Sewer Enterprise SS2202 Replacement of Diesel Tank $150,000 500-641-47201 $150,000 Sewer Enterprise SS2201 Sanitary Sewer Rehabilitation $1,500,000 $800,000 $800,000 $800,000 $800,000 500-642-47201 $1,500,000 Sewer Enterprise SS2101 Secondary Clarifier - Center Column Rehabilitation $350,000 500-641-47201 $350,000 Sewer Enterprise SS2102 Air Release Valve Replacements $50,000 500-641-47201 $50,000 Sewer Enterprise SS2002 Water Pollution Control Plant Lab Remodel $100,000 500-641-47201 $100,000 Sewer Enterprise SS1702 Sewer Pump Station Rehabilitation $1,200,000 500-642-47201 $0 Sewer Enterprise PRJ # USES BY PROJECT FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 Account # FY 2022-23 Funds Funding Source
SW2001 Roble Road Drainage Improvements $30,000 $320,000 276-344-47206 $30,000 Growth Impact Fees SW2002 Adobe Road Repair and Drainage Improvements $30,000 $200,000 106-344-47206 $30,000 Measure S 2014 106-344-47206 $409,070 Measure S 2014
276-344-47206 $78,860 Growth Impact Fees
SW1703 Storm Drainage Master Plan $75,000 $75,000 106-344-42101 $75,000 Measure S 2014 PRJ # USES BY PROJECT FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 Account # FY 2022-23 Funds Funding Source
RO2501 Residential Slurry Seal $890,000
RO2401 Cape Seal $560,000
RO2301 Residential Slurry Seal $890,000
RO2101 Arterial Rehabilitation $590,318 377-342-47205 $590,318 Arterial Rehabilitation RO2102 Tennent Ave. Rehabilitation $10,382 $639,000 500-641-47201 $10,382 Sewer Enterprise RO2105 Appian Way Complete Streets Project $100,000 $970,000 325-342-47205 $100,000 WCCTAC - STMP Fees RO2106 Active Transportation Plan $75,000 100-341-47205 $75,000 General Fund RO2107 Brandt St. Improvements $170,000 100-342-47205 $170,000 General Fund RO1902 Pedestrian Improvements at Tennent Ave. near R X R $23,620 $800,000 325-342-47205 $23,620 WCCTAC - STMP Fees RO1802 Hazel Street Gap Closure (Sunnyview) $200,000
325-342-47205 $45,659 WCCTAC - STMP Fees
325-342-47205 $166,150 CCTA Measure J
325-342-47205 $352,419 Caltrans - HBP
RO1708 Pinole Valley Road Improvements $100,000 200-342-47205 $100,000 Gas Tax - RMRA 325-342-47205 $22,147 City Street Improvements
215-342-47205 $350,000 MTC/OBAG2
325-342-47205 $129,400 MTC/TDA Article 3
106-344-47206 $149,328 Measure S 2014
PRJ # USES BY PROJECT FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 Account # FY 2022-23 Funds Funding Source
IN2201 Energy Audit $50,000 106-344-47206 $50,000 Measure S 2014 IN2101 Emergency Power for Critical Facilities $30,000 $170,000 100-343-47201 $30,000 General Fund IN2102 Municipal Broadband Feasibility $60,000 106-118-47201 $60,000 Measure S 2014 IN2103 Recycled Water Feasibility $60,000 $140,000 100-341-42101 $60,000 General Fund Uses by Project Total $7,283,971 $7,853,000 $20,289,000 $18,730,000 $4,770,000 RO1714 Safety Improvements at Appian Way & Marlesta Rd. formerly known as HAWK at Appian Way and Marlesta $650,875 RO1710 San Pablo Ave. Bridge over BNSF Railroad $564,228 $3,393,000 $16,940,000 $16,940,000

INFRASTRUCTURE ASSESSMENTS

CITY OF PINOLE
DRAFT FY2022-23 THROUGH 2026-27

FIVE-YEAR CAPITAL IMPROVEMENT PLAN

FACILITIES
PARKS

SANITARY SEWER

STORMWATER
SW1901 Hazel Street Gap Closure (Sunnyview) $487,930

STREETS & ROADS

ATTACHMENT A
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Pinole City CouncilApril 26, 2022

Pinole City Council
April 26, 2022