CITY OF POMONA
COUNCIL REPORT
February 27, 2023
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Rene Guerrero, Public Works Director
SUBJECT: APPROVE THE EXCHANGE OF $4.2 MILLION OF PROPOSITION A LOCAL RETURN FUNDS FROM THE CITY OF POMONA FOR $3.15 MILLION OF GENERAL FUNDS FROM FOOTHILL TRANSIT RECOMMENDATION:
It is recommended that the City Council take the following actions:
Approve a Fund Exchange Agreement between the City of Pomona (City) and Foothill Transit exchanging $4,200,000 of the City’s Proposition A Local Return Funds for $3,150,000 of Foothill Transit’s General Funds; and Authorize the City Manager to execute the agreement and amendments/revisions subject to review and approval as to form by the City Attorney.
EXECUTIVE SUMMARY:
Approval of the recommended actions will allow the City to enter into a Fund Exchange Agreement (Attachment No. 1) with Foothill Transit to transfer $4,200,000 of the City’s Proposition A Local Return Funds to Foothill Transit in exchange for $3,150,000 of Foothill Transit’s General Funds to the City. Proposition A funds are typically more restrictive and can limit the completion of City projects, while General Funds have fewer restrictions and will allow the City to continue work on projects.
FISCAL IMPACT:
Currently, there is no fiscal impact to the recommended actions. Once the agreement is approved by Council and signed by the City Manager, it will then go to Foothill Transit’s Board (Board) for their approval. Upon the Board’s approval, Staff will bring back to Council proposed projects from which a portion of the $4.2 million of Proposition A funds will be unappropriated (the remainder shall be exchanged from fund balance reserves) and the $3.15 million of General Funds to be received from Foothill Transit will be appropriated to those projects. On December 19, 2022, the City Council adopted the City’s updated Consolidated Fiscal Policies and Administrative Procedures. This document outlines the City’s commitment to appropriate one-half to one percent of annual Operating Revenues to CIP projects without an identified funding source. This transfer of Proposition A Local Return Funds in exchange for General Funds helps towards this annual commitment.
PREVIOUS RELATED ACTION:
On June 6, 2022, City Council adopted Resolution No. 2022-94 adopting the City’s FY 2022-23 Capital Improvement Program budget.
DISCUSSION:
Proposition A was approved by voters in 1980 to levy a half-cent sales tax in Los Angeles County. This funding is administered by Los Angeles County Metro (MTA) to be used to improve and expand public transit within Los Angeles County. The funding flows through the MTA and is allocated annually to itself and other agencies on a per capita basis.
The City receives approximately $3,500,000 to $4,000,000, annually. Nearly $1,000,000 of this funding is expended at the City’s two transit stations for maintenance and security, and to fund transit subsidies, including Get About Tickets, bus passes, and Metrolink subsidies. The remaining funding is then transferred to various Capital Improvement Program (CIP) projects or reserved as fund balance.
Through recent discussions with MTA, the City has been advised that several of the City’s CIP projects the Proposition A funding is appropriated to do not meet the guidelines for this funding. While the projects have a nexus with public transit, they do not specifically improve the transit stations, provide bus stops, or bus lanes. Further, these funds cannot be used to renovate or rehabilitate streets and roads unless it is on the property of a transit station, and much of the $4.2 million in Proposition A funding being proposed to be transferred is for projects that renovate streets and roads near the transit stations, but not at the transit stations. Given the limited and very specific uses that Proposition A funds can be used for, City Staff have determined that it is financially prudent to exchange Proposition A funds for General Funds, which have fewer restrictions and will allow the City to continue work on projects that are currently limited by the Proposition A funding.
MTA has approved the City’s plan to pursue this exchange of funds. The City reached out to many agencies, and Foothill Transit was willing to exchange their General Funds for Proposition A Local Return Funds for 75% of the Proposition A value. The ability to exchange Proposition A Local Return Funds for less restrictive General Funds will be something the City will continue to examine on an ongoing basis.
COUNCIL PRIORITIES & GOALS:
This item supports the June 21, 2021 City Council Priorities and Goals, Priority 1: Fiscal and Operational Responsibility – Goal C: Obtain additional grant funding and other revenues to help achieve City goals.
Prepared by:
Shandy Dittman
Public Works Fiscal and Project Manager
ATTACHMENT(S):
Attachment No. 1 – Proposition A Fund Exchange Agreement Approve the Exchange Agreement of $4.2 Million of Proposition A Local Return Funds from the City of Pomona for $3.15 Million of General Funds from Foothill Transit.