CITY OF POMONA
COUNCIL REPORT
April 21, 2025
To: Honorable Mayor and Members of the City Council
From: Anita D. Scott, City Manager
Submitted By: Andrew Mowbray, Finance Director/City Treasurer SUBJECT: RECOMMEND AND APPROVAL OF THE use of THE FUND BALANCE IN THE REFUSE FRANCHISE FEE funded PROGRAMS RECOMMENDATION:
It is recommended that the City Council adopt the following resolution:
RESOLUTION NO. 2025-46 – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, APPROVING THE USE OF THE FUND BALANCE IN THE REFUSE FRANCHISE FEE FUNDED PROGRAMS AND AMENDING THE FISCAL YEAR (FY) 2024-25 FRANCHISE FEE FUNDED PROGRAMS BUDGET BY APPROPRIATING $2,023,583 TOWARDS SECTION 115 TRUST CONTRIBUTION, EQUIPMENT REPLACEMENT RESERVE AND CAPITAL IMPROVEMENT RESERVE FUND EXECUTIVE SUMMARY:
Approval of Resolution 2025-46 approves and authorizes $2,023,583 of the fund balance in the Refuse Franchise Fee Funded Programs be used towards Section 115 Trust, CIP funding and Reserves for Equipment Replacement as identified in the City’s Consolidated Fiscal Policies and Administrative Procedures. In April 2024 the City Council approved and authorized $4.4M of the General Fund fund balance towards these same 3 areas per the Consolidated Fiscal Policies and Administrative Procedures. The City doesn’t have a surplus of funds from FY 2023-24, as was the case in FY 2022-23. However, with this balance of funds remaining in the Franchise Fee Funded Programs Fund as result of Franchise Fees collected prior to the City entering into the Athens contract in December 2022, staff is recommending use of these funds in a similar manner. Another reason staff is recommending is the annual contribution to these areas in the formation of FY 2025-26 Proposed General Fund budget will most lilkely not occur as result of projected fiscal challenges, most notably the addition of an approximate transer of $7M to the Children and Youth Fund.
FISCAL IMPACT:
The adoption of Resolution 2025-46 (Attachment No.1) approves the use of $2,023,583 of fund balance in the Refuse Franchise Fee Funded Programs and amends the FY 2024-25 Budget to be used towards following uses:
Use of Fund Balance
Account Number
Appropriations
Section 115 Trust
587-2505-59930-00000
$1,011,792
Equipment Replacement
587-2505-89921-00000
505,896
CIP Funding
587-2505-89987-00000
505,895
Total
$2,023,583
Resulting from the above appropriations are corresponding increase in revenues in the following funds:
Transfer In
Account Number
Revenues
Equipment Replacement Fund
434-2505-80723-00000
$505,896
Capital Improvement Prj Fund
428-2590-80723-67010
$505,895
SB1439/GOVERNMENT CODE §84308 APPLICABILITY:
☐ When this box is checked, it indicates the agenda item is subject to the Levine Act SB1439 requirements. Councilmembers are reminded to check their campaign contributions and determine whether they have received a campaign contribution of $500 or more that would require disclosure and/or recusal from discussing or acting on this agenda item. Campaign contributions of $500 or more made 1) by any person or entity who is identified in the agenda report as the applicant or proposer; or 2) on behalf of the applicant or participant, including a parent, subsidiary or otherwise related business entity; or 3) by any person who has a financial interest in the agenda item requires a councilmember to comply with SB1439.
PREVIOUS RELATED ACTIONS:
On December 5, 2022, the City Council adopted Ordinance No. 4323 awarding an exclusive franchise agreement to Arakelian Enterprises, Inc., DBA Athens Services for residential and commercial solid waste, recyclable materials, and organic waste collection services.
On February 6, 2023, the Pomona City Council adopted via Resolution 2023-06, City of Pomona’s Updated Consolidated Fiscal Policies and Administrative procedures.
On June 5, 2023, the City Council adopted the FY 2023-24 Operating Budget, which includes appropriations to implement City of Pomona’s Fiscal Policies for establishing Section 115 Trust, setting aside funds for CIP funding and creating Reserves for Equipment Replacement and Catastrophic Events.
On April 15, 2024, the City Council approved and authorized s $4.4M of the $13.3M Fiscal Year (FY) 2023-24 General Fund Unassigned Fund Balance be used towards Section 115 Trust for $2,188,250, CIP funding for $1,094,125 and Reserves for Equipment Replacement for $1,094,125 as identified in the City’s Consolidated Fiscal Policies and Administrative Procedures.
On June 6, 2024, the City Council adopted the FY 2024-25 Operating Budget, which includes appropriations to implement City of Pomona’s Fiscal Policies for establishing Section 115 Trust, setting aside funds for CIP funding and creating Reserves for Equipment Replacement and Catastrophic Events.
On February 3, 2025 the City Council receive and file the updated Ten-Year Financial Forecast on the General Fund as it related to the recent ballot measure charter amendment, the “Pomona Kids First” initiative that was approved by the voters of Pomona in November 2024 and went into effect in January 2025.
On March 17, 2025 the City Council reviewed the Fiscal Year (FY) 2024-25 General Fund Mid-Year Budget Report and amended the FY 2024-25 General Fund budget that included discussion regarding the challenges set forth in the FY 2025-26 Budget and the funding of the Consolidated Fiscal Policies.
DISCUSSION:
On February 6, 2023, the City Council approved the Updated Consolidated Fiscal Policies, which addresses minimum General Fund balance levels and the City Manager's recommendation for using Unassigned Fund Balance be strategically allocated toward one-time uses of: 50% toward reducing long-term obligations and 50% toward infrastructure improvements, equipment purchases, and capital needs. This Policy was initially implemented to allocate a portion of FY 2022-23 surplus for the same purposes.
According to the FY 2023-24 audit results, the General Fund ended with a $2.675 million deficit, meaning there are no General Fund surpluses to allocate toward one-time uses. However, Enterprise Fund 587 (Franchise Fee Funded Programs) has a fund balance of $2.023 million, and staff proposes using those funds in the same manner prescribed in the Consolidated Fiscal Policies for unassigned fund balances. In addition, the annual contributions that has occurred the last two fiscal years per the Consolidated Fiscal Policies (Attachment No.2) will most likely not occur in the FY 2025-26 Budget as fiscal challenges have been noted via the Ten-Year Financial Forecast presented to the City Council on February 3, 2025, most notable is the fiscal impact of the Measure Y Charter Amendment which includes a transfer from the General Fund to the Children and Youth Fund as much as $7M. Including the Ten-Year Financial Forecast was a “Scenario forecast #1” which proposed a potential strategy for the City to manage and minimize the fiscal impact of the increased annual UAL payments. Scenario Forecast #1 assumes the City uses the existing Section 115 Trust funds to make two additional payments of $1.9M to CalPERS at end of FY 2024-25 and end of FY 2025-26. Scenario Forecast #1 shows the estimated beneficial impact of this UAL management strategy is increasing annual savings reaching $2.4 million in FY 2030-2031 and continuing thereafter compared to the Baseline Forecast. The result is to move the fiscal outlook for the City’s General Fund from slightly precarious to generally stable. With the recommended amount of $1M that would go into Section 115 trust per this action the Section 115 Trust balance will be approailty $5.2M, which can cover the two payments. At the February 3, 2025 City Council meeting many members of the City Council expressed they were in favor of this use of these funds.
Prior to outsourcing the City’s refuse operations to Athens, two enterprise funds accounted for refuse operation activities. One of these, Fund 587 (Franchise Fee Funded Programs), which provided oversight of the Commercial Refuse Franchise system holds a balance of $2.023 million. City staff proposes to allocate this balance according to the Fiscal Policy for unassigned fund balances: 50% ($1,011,792 million) toward Section 115 Trust, 25% ($505,896) toward equipment replacement, and 25% ($505,895) toward capital improvement funding. These strategic allocations provide benefits for the city's financial health. The $1,011,792 million contribution to the Section 115 Trust will strengthen the city's pension funding strategy, reducing long-term unfunded pension liabilities and creating future budget flexibility. The $505,896 allocation toward equipment replacement ensures future vehicle and equipment purchases and/or maintenance without requiring additional general fund appropriations. The $505,895 for capital improvement projects addresses infrastructure needs without incurring new debt or tapping into the general fund.
Staff have consulted with the City Attorney regarding this matter, and they concur that the balance in Fund 587 can legally be used for the proposed purposes.
CONCLUSION:
This allocation approach is important given the projected impact of Measure Y on City finances. According to the ten-year forecast presented on February 3, 2025, Measure Y will significantly strain General Fund resources. The Consolidated Financial Policy’s that were set forth may not have an opportunity to be utilized with these fiscal challenges. By proactively using the Franchise Fee Funded Programs fund balalnce toward long-term obligations, equipment needs, and capital improvements, the City can partially mitigate the fiscal effects of Measure Y and help maintain financial stability during this challenging period.
ALTERNATIVE(S): None.
Prepared by:
____________________________
Aleli Burgos
Deputy Finance Director
ATTACHMENT(S):
Attachment No. 1 – Resolution No. 2025-46
Attachment No. 2 – Fiscal Policies
Use of Refuse Franchise Fee Funded Programs Fund Balance – City Consolidated Fiscal Policies