Table 1—Multiple Year Actual – General Fund ($)
Component
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Budget
Revenues 1,774,821 2,369,044 2,213,109 2,407,899
Expenditures 1,322,480 1,720,933 2,380,281 2,394,641
Prior Period adj.
Net Operating Income/(Loss) 452,341 648,111 (167,172) 13,258 Beginning Total Fund Balance 3,597,047 4,049,388 4,697,499 4,530,327 Ending Total Fund Balance 4,049,388 4,697,499 4,530,327 4,543,585 Beginning Unassigned Fund
Balance 1,694,106 2,198,843 3,051,788 2,674,751
Ending Unassigned Fund
Balance 2,198,843 3,051,788 2,674,751 2,688,009 Est
Cash Balance (unrestricted) 2,113,715 3,207,006 2,967,569 2,980,827 Est One area that Citygate would recommend be changed relating to the General Fund is utilizing a more complete designation of the fund’s unassigned fund balance. Per the FY 2019 audit, the City had approximately $2.7 million in unassigned fund balance in the General Fund. This is a healthy balance, representing approximately 112 percent of FY 2019 General Fund expenditures. The Government Finance Officer Association (GFOA), a nationally recognized organization relating to municipal finance operations, recommends a minimum of 17 percent (two months’ operations).1 The City has a very well-written reserve policy that establishes the unassigned fund balance at a minimum level of 20 percent. However, the City’s reserve policy also lays out a policy for unassigned fund balance in excess of a 20 percent minimum, which is also typical in other governmental jurisdictions. Per the City’s policy, the components of distribution of excess unassigned fund balance include:
◆ Offsetting projected future deficits
◆ Addressing anticipated intergovernmental fiscal impacts ◆ Addressing one-time funding, non-recurring needs
◆ Addressing capital improvement projects
◆ Paydown of long-term debt
1 GFOA fund balance guidelines: https://www.gfoa.org/fund-balance-guidelines-general-fund.
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◆ Other
Citygate was told by staff that the City intends to complete a Master Plan and various specific plans, which will further identify the City’s future capital needs. Based on the interviews conducted by Citygate, this process will likely result in major capital costs that should be reflected at some amount in reservations of unassigned fund balance. The General Fund is typically the support fund for all operations of the City, even though there may not be a legal support requirement. This has been the case in the City before, as evidenced by the approximately $1.9 million advance made from the General Fund to the Water and Sewer Funds in FY 2017.2 The advance agreement calls for repayment of principle at 1.5 percent annual interest over a 29-year period. Per City staff, the purpose of this advance was to address project cost overruns for water and sewer improvements.
Additionally, a plan identifying potential impacts relating to the current COVID-19 crisis should be developed to identify where reserves may be necessary to postpone immediate reductions in service levels. Consequently, as recommended by the GFOA, fund balance reserves should be specified, where possible, to address the risks of the previously mentioned areas. Citygate recommends that some portion of the unassigned fund balance in excess of the minimum required by the City’s fund balance reserve policy be designed as committed for some or all the items listed.
1.2.2 Water Funds
The FY 2020 Water Operations and Capital Improvement Projects Funds revised budgeted revenues of approximately $1.1 million and revised budgeted expenditures of approximately $1.3 million result in an anticipated operating deficit of approximately $200,000. This deficit is caused by the timing difference between fees that were collected in prior years anticipated to be spent in FY 2020.
Approximately 98 percent of Water Operations Fund revenues consist of revenues related to utility rates, which are comprised of connection fees (10 percent), commercial utility fees (13 percent), residential utility fees (76 percent), and water meter maintenance fees (1 percent). Over the last three fiscal years, the City has experienced spikes in operating and capital revenues due to two large housing projects. The City has not had and currently does not have independent structured fiscal analysis of projects, which has resulted in underestimated operating revenues in the Water Funds. Based on the prior three fiscal years, operations revenues estimates have been understated by approximately $195,000 per year when compared to actual collections. For the most part, this is due to one-time connection fee revenues related to development projects that were not included in original budget estimates. It is a budgeting best practice to strive to minimize budget-to-actual variances to those things that are unforeseen to ensure that the initial budget plan is as accurate as 2 City of San Juan Bautista FY 2019 audited financial report, page 27.
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possible. Significant fiscal impacts that were unforeseen at the time the budget was produced and adopted should be addressed in formal budget amendments as soon as possible to ensure budget accuracy.
The FY 2020 budget estimate for operating revenue of $979,000 is approximately 16 percent above prior actual collections due to development.
FY 2020 budgeted expenditures in the Water Operations Fund total approximately $940,900. This represents an approximate 44 percent increase over prior year actuals. The increase is caused by a combination of factors: the anticipated increase in personnel costs of approximately 20 percent due to allocation of City Manager changes, the FY 2020 budget estimate for debt service that includes payment of principal that is capitalized in the prior year audit per generally accepted accounting principles, and the added payment of approximately $190,000 for contractual services needed related to projects where fees were collected in prior years. Expenditures for personnel (21 percent), debt service (51 percent), and contractual (9 percent) comprise 81 percent of overall expenditures.
If revised budget estimates are realized, FY 2020 will end with an operating deficit of approximately $181,000.
Water-related capital activity is reflected in the Water Capital Improvements Projects Fund. Over the previous three fiscal years, the City has collected approximately $2 million in revenues and expended approximately $1.5 million related to its capital program. For FY 2020, the City anticipates receiving $100,000 in revenue and expending approximately $350,000. The shortfall of approximately $250,000 will be addressed by funds received in prior years.
The City does not budget for depreciation during the budget process; however, the Government Accounting Standards Board (GASB) Statement 34 requires that depreciation expense be calculated and recorded as a use of resources in the audited financial statements. This requirement does not impact cash, but it does reduce the fund’s net position. Per generally accepted accounting principles, fund balance is called “net position” or “net assets” in proprietary funds such as Water Funds and Sewer Funds. Depreciation expense for FY 2019 was calculated at approximately $327,000.
The City should have a structured and comprehensive multiple-year capital projects improvement plan to identify accurate capital improvement needs in the future and to determine potential funding mechanisms to meet the need.
The net position in the Water Operations and Capital Funds total approximately $2.9 million per the FY 2019 audited financial statements. However, only approximately $1.8 million is supported by cash. Additionally, roughly $863,000 of the approximately $1.8 million cash balances is restricted because it is required to meet the debt service reserve requirements of the City’s bonded debt through the Statewide Community Infrastructure Program. Per the FY 2019 audit, after Mr. Reynolds
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accounting for year-end payables, approximately $687,000 is reflected as unrestricted net position.
The City’s reserve policy calls for three separate reserves as follows:
◆ Emergency Operating Reserve – equivalent to 90 days of operations ◆ Emergency Capital Reserve – budgeted at $57,000 per year until $171,000 is attained
◆ Rate Stabilization Fund Reserve – equivalent to five percent of the prior year’s water operating revenues, which would equate to approximately $67,000 for FY 2020
At a ratio of approximately 70 percent, or approximately 13 months of normal operations (excluding one-time expenditures and capital), the FY 2019 ending unrestricted net position (reserves) meets both the GFOA-recommended levels (90 days operations) and the City’s reserve policy as previously outlined. If FY 2020 budget estimates are achieved, the ending unrestricted net position (reserves) will also meet the City’s reserve policy requirements.
However, Citygate believes that this level of unrestricted net position will not be enough to address large capital needs that may be identified from completion of the Master Plan and other capital needs analyses. The City should explore rate increases and other revenue options to better position itself to address future essential water capital needs.
The following table reflects Water Operating and Capital Funds using the information retrieved for the audited financial statements.
Table 2—Multiple-Year Water Funds ($)
Component
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Revised
Budget
Revenues 956,761 2,277,458 1,382,582 1,079,000
Expenditures 982,610 920,025 977,971 1,260,287
Prior Period adj.
Net Operating Income/(Loss) (25,849) 1,357,433 404,611 (181,287) Beginning Total Net Position 1,119,840 1,093,991 2,451,424 2,856,035 Ending Total Net Position 1,093,991 2,451,424 2,856,035 2,674,748 Beginning Unrestricted Net
Position 499,608 424,829 662,012 686,973
Ending Unrestricted Net
Position 424,829 662,012 686,973 505,686 Est
Cash Balance (unrestricted) 756,725 1,227,891 895,507 714,220 Est Mr. Reynolds
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The large jump in revenues from FY 16/17 to FY 17/18 reflected in the previous table resulted from increased impact fees and operating revenues related to the construction of the Rancho Vista (85 lots) and Copperleaf (45 lots) housing projects. Increased impact fees represent approximately $1 million of the revenue increase.
Details of the revenues and expenditures for the Water Funds are reflected in Appendices 3 and 4 of this report.
1.2.3 Sewer Funds
Sewer Operations and Capital Funds revenues and expenditures for FY 2020 are budgeted at approximately $1.6 million and $2.3 million, respectively, resulting in an anticipated deficit of approximately $678,000. This deficit is due primarily to the budgeted capital improvements of approximately $638,000 and anticipated one-time funding of approximately $130,000 for rate and Master Plan studies, which will be funded through available net position (reserves).
Approximately 98 percent of Sewer Operations Fund revenues consist of utility-related fees. These utility-related fees are comprised of commercial utility fees (18 percent) and residential utility fees (80 percent). As was the case in the Water Operations Fund, Sewer Operations also experienced a spike in revenues in FY 2018 due to the construction of the two major housing projects discussed previously.
Over the last three fiscal years, the City has underestimated revenues in the Sewer Funds collected by approximately $244,000 per year. A partial explanation for the underestimation, as mentioned in the Water Operations Fund discussion, could be the two large housing developments currently being constructed. However, the FY 2020 estimate for operating revenue of $1,010,600 is in line with prior year actual collections.
Sewer Operations Fund expenditures for FY 2020 are budgeted at approximately $1.6 million, which includes a one-time transfer to the Sewer Capital Improvement Projects Fund of $500,000.
Adjusting for this amount to reflect normal operating expenditures would result in normal operating budgeted expenditures of approximately $1.1 million (excluding depreciation expense), which is in line with the prior year. Although increases and decreases are for the most part offset, it should be pointed out the personnel costs increased approximately $65,000, or 57 percent, between actual FY 2019 costs and estimated FY 2020 costs. This is due to allocations of the additional costs associated with the transition related to the City Manager position. Based on the current budget estimate operating results, excluding the transfer for capital reflects a deficit of approximately $100,000.
Sewer capital activity is reflected in the Sewer Capital Improvement Projects Fund. Over the previous three fiscal years, the City has collected approximately $726,000 in revenues and expended approximately $531,000 related to the capital program. For FY 2020, the City anticipates Mr. Reynolds
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receiving $600,000 in revenue ($100,000 in connection fees and a one-time $500,000 transfer from the Sewer Operations Fund) and expending approximately $639,000. Reserve funds will be used to address any additional short fall.
Depreciation is not annually budgeted by the City, but the expense is required by the GASB to be recorded as an expense in the City’s audited financial report. In FY 2019, depreciation expenses were recorded at approximately $309,000. Given that the FY 2020 budget anticipates a large capital asset purchase, the depreciation calculation made by City staff and the auditors will be recalculated based on the revised useful life of the new assets.
Sewer capital should also be part of a comprehensive, multiple-year capital improvement plan (CIP), which is discussed later in this report.
The net position in the Sewer Operations and Capital Funds total approximately $2.05 million per the FY 2019 audited financial statements. However, only approximately $1.6 million is supported by cash. Additionally, roughly $369,000 of the approximately $1.6 million cash balances is restricted because it is required to meet the debt service reserve requirements of the City’s bonded debt through the Statewide Community Infrastructure Program. Per the FY 2019 audit, approximately $607,000 is reflected as unrestricted net position. The City’s Sewer Fund reserve policy calls for three separate reserves as follows:
◆ Emergency Operating Reserve – equivalent to 90 days of operations ◆ Emergency Capital Reserve – budgeted at $75,000 per year ◆ Rate Stabilization Fund Reserve – equivalent to five percent of the prior year’s water operating revenues, which would equate to approximately $60,000 for FY 2020
At a ratio of approximately 39 percent, or approximately 11 months of normal operations (excluding one-time expenditures and capital), the FY 2019 ending unrestricted new position (reserves) meets both the GFOA-recommended levels (90 days operations) and the City’s reserve policy as previously outlined.3If FY 2020 budget estimates are achieved, however, the Sewer Funds will not be in compliance with the City’s reserve policy due to an anticipated year-end deficit of approximately $678,000 that will bring the unrestricted net position to a negative of approximately $71,000. There would be approximately $512,000 of cash remaining due to depreciation expense not impacting cash. However, one of the purposes of reflecting depreciation is to set aside funds to replace aging capital. Also contributing to this situation are several onetime costs reflected in FY 2020, such as capital outlay for equipment of $107,000 and estimated costs for rate and Master Plan studies of $130,000.
3 GFOA Enterprise Fund Reserve Best Practice: https://www.gfoa.org/working-capital-targets-enterprise-funds.
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Even with the availability of cash at the end of FY 2020, Citygate believes that the Sewer Funds will still not be enough to address ongoing annual deficits and the large capital needs that may be identified from completion of the Master Plan and other capital needs analyses. A plan of action to address this operating issue needs to be developed as soon as possible and include potential expenditure reductions and the exploration of rate increases and other revenue options to better position the Sewer Funds to address future operation and capital needs.
The following table reflects Sewer Operating and Capital Funds using the information retrieved from the audited financial statements.
Table 3—Multiple-Year Sewer Funds ($)
Component
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Revised
Budget
Revenues 889,441 1,145,897 1,369,262 1,610,600
Expenditures 853,647 1,093,093 1,544,126 2,288,817
Prior Period adj.
Net Operating Income/(Loss) 35,794 52,804 (174,864) (678,217) Beginning Total Net Position 2,135,667 2,171,461 2,224,265 2,049,401 Ending Total Net Position 2,171,461 2,224,265 2,049,401 1,371,184 Beginning Unrestricted Net
Position 964,573 1,341,058 1,215,865 607,038
Ending Unrestricted Net
Position 1,341,058 1,215,865 607,038 (71,179) Est
Cash Balance (unrestricted) 1,408,637 1,556,460 1,189,873 511,656 Est As was the case with Water Fund operations, Sewer Fund operations also saw a significant increase in operating revenues relating to the construction of the Rancho Vista and Copperleaf housing projects.
Details of the revenues and expenditures for the Sewer Funds are reflected in Appendices 5 and 6 of this report.
1.2.4 Budget
As determined through interviews with staff, the City’s budget process is very simple. The budget process begins in February when applicable financial information is provided by the City Accountant to the respective departments to prepare budget requests. The information provided includes estimates for salary and benefits based on existing authorized positions and other lineitem, to-date financial information for the respective departments. Departments must prepare their Mr. Reynolds
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requests and submit them to the City Manager. Working with the City Accountant, the City Manager identifies necessary augmentations to the budget requests and develops a recommended budget to present to the City Council in April. Per interviews with staff, departments are presented with final recommendation before it is presented to Council. However, Citygate received some interview responses that conflicted with this. To help address the confusion, a written budget calendar could be established, including timing for when the applicable members in respective departments will be notified of the final budget recommendations before being presented to the City Council.
There are no performance measures reflected in the budget document and, per interviews with staff, performance measures are not developed by departments during the budget process.
Performance measurement is an essential element of budget development and monitoring, regardless of the size of the organization. The GFOA recommends that all organizations identify, track, and communicate performance measures to monitor financial and budgetary status, service delivery, program outcomes, and community conditions as a best practice.
The GFOA recommends that when identifying performance measurements governments should focus on making sure that measures meet the following conditions:4 ◆ Useful – measures should provide information that is helpful to decision making, understanding, or accountability efforts.
◆ Relevant – measures can be clearly linked to the service delivery/program outcomes that they are intended to measure, appropriate for the outcome being measured, and are readily understandable.
◆ Reliable – collection methods and measure definitions need to be understood so stakeholders can rely on the information.
◆ Adequate – ensure enough and an appropriate variety of measures are used to measure performance and that measures do not incentivize behavior that adversely impacts the measures, such as a quantity versus quality scenario. There is often not a single measure that can provide sufficient context and understanding. ◆ Collectible – measures are readily available and do not involve excessive time/effort to collect.
◆ Consistent – measures can be regularly collected to track outcomes over time and avoid need to continuously identify new measures.
4 GFOA Performance Measurement Best Practice: https://gfoa.org/performance-measures.
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◆ Environment – measures include variables related to externalities that impact service delivery and program performance.
◆ Responsibility – clearly identify responsibilities for collection, storage, and dissemination of the data.
◆ Systems – existing data collection capacities are leveraged appropriately, or new systems are identified to ease the burden of data collection.
Citygate is not recommending that the City establish extensive and complicated performance measures, but it is recommended that the City identified a few applicable performance measures to each department, which should be developed to reflect that the use of resources supports City goals and objectives.
It is also recommended that the multiple-year CIP be included in the budget document to help maintain a multiple-year focus on anticipated capital needs and assist in long-term planning.
1.2.5 Policies/Procedures
A GFOA best practice is the development of financial policies. The City financial policies reviewed by Citygate included the following topics:
◆ Reserves
◆ Investments
◆ Travel
◆ Purchasing
◆ Personnel
Citygate found these policies to be comprehensive and well written. However, there were some important financial policies that the City lacked. Some of the more important policies that the City should adopt include the following:
◆ Cash Handling
◆ Debt
◆ Budget
Another important financial area that could be improved is documented financial operating procedures. These procedures address how various financial operating processes are completed.
Examples include:
◆ Accounts payable
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◆ Payroll
◆ Journal voucher and other general ledger posting
◆ Accounts receivable
◆ Utility billing
◆ Business licensing
◆ Permitting
The GFOA website has many examples of best practices, including policies and procedures, that can be used by the City.5
A crucial step in developing effective financial policies and procedures is ensuring that they are readily available and understood by all City staff. The consequences for not adhering to policies and procedures should be clearly conveyed, and City staff should be held accountable.
The City should expand documented financial policies to include purchasing, cash handling, personnel, debt, and budget, per the sample information located on the GFOA website.
The City should also develop an accounting manual that includes the various financial processes identified in this report.
1.2.6 Internal Control/Auditing
Although interviews with City staff indicated that there are internal control measures that are followed, Citygate was not provided with any written procedures or policies regarding items such as cash handling, accounts payable processing, or bill processing. Given the City’s size, it is understandable that there may not be formal written procedures for some of these processes; however, this is not best practice. Strong, documented procedures are essential to minimize intentional or unintentional loss of City assets. Agencies such as the GFOA, the California Society of Municipal Finance Officers, and International City/County Management Association have extensive examples of written policies and procedures for all sizes of governmental jurisdictions that the City can use. Once established, these documented policies and procedures must include staff training and monitoring to ensure procedures are followed. One example found by Citygate of non-compliance with written procedures relates to the City’s purchasing policy.
The City’s purchasing policy is set out in a purchasing ordinance. Per the ordinance, the City Manager is designated as the City’s purchasing agent. Under the ordinance, public projects under $45,000 have no bidding requirements, public projects between $45,001 and $175,000 only require 5 GFOA best practices can be found at https://www.gfoa.org/best-practices, and GFOA financial policy examples can be found at https://www.gfoa.org/financialpolicies.
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informal bidding, and public projects over $175,000 require a formal bidding process. All other purchases not considered public projects as defined in the ordinance can be authorized by the City Manager for amounts up to $20,000. Purchases in excess of $20,000 must be approved by City Council, as recommended by the City Manager. The purchasing ordinance also requires that all real property acquisitions or real property lease contracts, regardless of term or amount, shall be approved by the City Council. The City’s purchasing ordinance is similar in structure to that of other jurisdictions reviewed by Citygate. Citygate was told during interviews that the City did not use purchase orders for procurement. However, section 2-8-07 of the purchasing ordinance states that “purchases of supplies, services, and equipment shall be made by purchase order.” Consequently, the City is not operating in compliance with its purchasing ordinance in these instances. Utilization of a formal purchase order document is an essential practice to help strengthen internal control. Citygate recommends that a formal purchase order approval process be developed, monitored, and enforced.
Per the California Government Code section 12410.6.(b), commencing with the 2013-14 fiscal year, a local agency shall not employ a public accounting firm whose lead audit partner or coordinating audit partner having primary responsibility for the audit, nor shall the audit partner responsible for reviewing the audit have performed audit services for that local agency for six consecutive fiscal years. The City’s current audit firm has conducted the City’s audit since FY 2014 and, as of the FY 2019 audit, will have conducted the City’s audit for six years. Consequently, the City will be required to change audit firms unless the current firm is large enough to assign a different partner lead or the City gets a waiver from the State Controller based on no other eligible public accounting firm being available to perform the audit.
1.2.7 Succession Planning / Cross-Training
It is always difficult to address the need for succession planning and cross-training in small jurisdictions like San Juan Bautista. However, smaller jurisdictions are impacted more severely than larger jurisdictions by the sudden loss of staff because individual staff members tend to be responsible for numerous operational tasks that are taken on out of necessity and with little training. Consequently, the loss of any single staff member has the potential of causing a major disruption in operations until a new staff member is hired and trained. Larger jurisdictions with larger staffs can usually absorb a sudden loss of a staff member. Citygate recommends that the City identify its critical operational areas, such as finance, water, sewer, etc., for continuity weaknesses and develop a succession plan, including structured cross-training to help address unanticipated operational disruption due to loss of staff.
1.2.8 Long-Range Financial Planning
An essential component of the operations of any organization is the development of a financial forecast. The budget is an example of a financial forecast; however, most budgets are for periods Mr. Reynolds
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of one or two years. It is also important to keep a focus on a five- to 10-year window when developing revenue and expenditure estimates so that the achieved results are not short-sighted.
An example of this is using current resource windfalls without considering critical needs that will materialize in three to five years. This long-range resource collection and use should be identified to the extent possible and included in a formal plan document. This document can be used by the City to maintain a long-range operational focus to help identify potential issues early to allow sufficient time to develop effective plans to address any issues.
Based on Citygate’s review, the City does not conduct organized or comprehensive long-range financial planning. Although the City produces a CIP document, Citygate was informed by City staff that it is not very comprehensive or valid. With issues facing municipal government, such as the current COVID-19 crisis, comprehensive long-range planning is essential to development of plans to minimize service reductions and maintain fiscal stability.
Financial Forecasting Model
Citygate has developed a basic financial plan model that can be used by the City. The basic purpose of the model is to assist the City in maintaining a long-term focus when developing strategies and implementing financial decisions. The model provides financial operational information relating to previous years, the current year, and projections for the next five years. The model is developed using Microsoft Excel and can be amended by the City as needed. The City will create financial assumptions based on past activity and known or anticipated activity and input them into the model. Based on the assumptions input, a summary of operational results and effects on operational reserves will be calculated automatically. A sample of the model’s summary pages based on basic assumptions developed by Citygate for the General, Water, and Sewer Funds are included as Appendices 7 through 9 of this report. The actual model consists of numerous spreadsheets reflecting assumptions and the estimated impact of those assumptions on both revenues and expenditures on a line-item detail level. The model also reflects the operational results impact on fund balance in the General Fund and net position in the Water and Sewer Funds.
This model and instructions on how it is used will be provided to the City as a part of this engagement.
For the purposes of this model, Citygate utilized various general assumptions based on basic financial information gathered through staff interviews and high-level research as of early March 2020. Due to the uncertainty regarding impacts of COVID-19, the model does not reflect any potential COVID-19 impacts, positive (state and federal assistance) or negative. The City will need to update the model assumptions based on its in-depth knowledge of City operations and history and as COVID-19 impacts become clearer.
The following are the estimated operational results for FY 2021 through FY 2025 based on Citygate’s high-level review for the City’s General Fund, Water Operations and Capital Funds, and Sewer Operations and Capital Funds. This information was relayed to Citygate by City staff Mr. Reynolds
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and incorporated into the financial forecast model. Although this information provided by staff seems reasonable, Citygate did not independently validate this information.
Development Information Provided by City Staff
A total of 130 (85 plus 45) new single-family homes have been sold in the past 12 months, with only a few remaining to be built and sold. The average sale price is $760,000.
Based upon the number of development units, equaling an increase of 18 percent in total units in the City, City staff anticipate revenues for property tax and utility revenue to grow significantly.
With this said, staff think it would be fair to increase residential utility revenue in FY 2021 by 18 percent over the FY 2020 budget. Based on staff estimates, sewer residential revenue should grow by $140,000 in FY 2021 and water residential revenue should grow by $145,000.
Property taxes are not linear but are based on property values that are greatly higher than the historical values of the existing properties. City staff believe that, for Citygate’s projections, the property tax revenues should be $100,000 higher for the FY 2021 base year.
Although not an urgent need, given the City’s size and infrequency of major projects, consideration should be given to a process to engage consultants to perform an independent fiscal analysis of projects that would have short- and long-term fiscal impacts on City operations. This will provide the City with a more realistic and unbiased estimate of a project’s cost versus benefits to the City.
This information should also be used to update the following financial forecast models.
General Fund Five-Year Financial Forecast
Based on high-level assumptions, the model results in a continuation of operational surpluses in the General Fund over the next five years. The surpluses range from approximately $250,000 in FY 2021 to approximately $341,000 in FY 2025. The ratio of unassigned fund balance to expenditures increases from 133 percent in FY 2021 to 171 percent in FY 2025, indicating a continuing strong financial position. However, as stated previously, the model results will change based on fine-tuned assumptions developed by City staff relating to future expected fiscal impacts such as those resulting from the COVID-19 crisis that are placed into the model.
Water Funds Five-Year Financial Forecast
Based on high-level assumptions, the model results in a continuation of operational surpluses in the combined Water Funds over the next five years. The surpluses begin in FY 2021 at approximately $280,000 and increase to approximately $294,000 in FY 2025. The ratio of net position to expenditures increases from 105 percent in FY 2021 to a high of 249 percent in FY 2025. This model assumes a capital investment of $200,000 as a general estimate based on highlevel staff interviews. Although the model indicates a fairly stable financial condition, it must be emphasized that the assumptions made in developing this model do not account for major capital improvements that will more than likely be identified with future Master Plans and other studies Mr. Reynolds
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the City plans to initiate that exceed the $200,000 amount included in the current model, as well as other fine-tuning as discussed previously.
Sewer Funds Five-Year Financial Forecast
Based on high-level assumptions, the model results in a continuation of operational deficits in the combined Sewer Funds over the next five years. The deficits begin at approximately $29,000 in FY 2021 and increase to a deficit of approximately $71,000 in FY 2025. The ratio of net position to expenditures begins at -8 percent in FY 2021 and becomes -23 percent in FY 2025. This pattern reflects a weak financial condition relating to sewer operations that should be addressed. One of the assumptions included in this model was CIP expenditures of $200,000 per year beginning in FY 2021. This assumption will change based upon the results of the various studies that will be initiated by the City over the next couple of years. However, the study results could recommend a CIP contribution of more than $200,000 per year. Additionally, this model does not reflect any negative impact that may result from fine-tuning by staff.
Options that should be considered for these potential capital improvements include debt financing, grants, joint powers agreements, etc. However, any plan will need to include some amount of rate increase to ensure adequate service provision.
Use of this five-year financial forecast model with revised assumptions and other financial information available to City staff will help the City maintain a long-range focus on its financial condition and help identify issues early to provide time to develop plans to address them.
Capital Improvement Plan (CIP) Model
Citygate has also developed a CIP model that can be used by the City to identify and plan for capital needs using a long-term focus. Although the City does prepare a five-year CIP, it is more of a summary. Additionally, the process used to develop the plan could be improved with more structure to increase overall understanding. The CIP model provided by Citygate includes a recommended CIP development process that includes document forms that can be used to consolidate the various project costs, potential funding sources, and other pertinent project information, such as project history description, using a six-year window into a single document.
This CIP document includes a project cost and funding summary supported by the detail for each identified and recommended project. A sample CIP document has been provided as Appendix 15.
The CIP Model Summary and Project Detail Sheet are included as Appendices 10 and 11, respectively.
As is the case with the financial plan model, the CIP process and documents will assist the City in making informed decisions to maintain good financial health and stability. The current CIP document located on the City’s website does not represent the City’s anticipated capital project needs over the next five years, per interviews with City staff. The projects listed and the anticipated amounts are incorrect and need to be updated. Based on staff interviews, the City is facing major Mr. Reynolds
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capital needs in the future, especially in the areas of water, sewer, and streets. The City does not currently have a formal process for identifying long-term capital needs, such as the process provided and recommended by Citygate with this engagement. Citygate’s CIP process recommendations can be customized to fit the City’s size and capabilities. Citygate will provide the City with a written process, supporting forms, and instructions as a part of this engagement.
1.3 SUMMARY OF FINDINGS AND RECOMMENDATIONS
1.3.1 Findings
Finding #1: Due its size, City staff must perform many duties that would be performed by separate staff in larger jurisdictions.
Finding #2: The General Fund is fiscally healthy.
Finding #3: The departments do not prepare performance measures to document effective use of resources on City and department goals.
Finding #4: The City lacks a succession plan to ensure City operational continuity.
Finding #5: There is no formal capital improvement planning process.
Finding #6: There is no formal long-range financial planning process.
Finding #7: Cross-training is sporadic and inefficient.
Finding #8: Water and sewer operations are undercapitalized. The capital items included in the CIP online are inaccurate.
Finding #9: Internal controls could be improved through documentation.
Finding #10: Communications between departments relating to financial information and results could be improved.
Finding #11: Improvement can be made on documenting financial policies and procedures.
Finding #12: Water infrastructure is antiquated, creating customer complaints regarding water quality.
Mr. Reynolds
May 15, 2020
Finding #13: Utility rates have not been adjusted in several years. However, the average water and sewer bill is $150 per month, which is high for the average income levels of the City.
Finding #14: City technology is not utilized to its full potential and in some cases is inadequate. The City lacks an integrated financial system to reduce manual processes.
Finding #15: Sewer funds are in a weak financial position.
1.3.2 Recommendations
Recommendation #1: Formal cross-training should be increased to ensure continuity of operations, especially in finance-related areas.
Recommendation #2: A Citywide fee review is needed, including development fee deposit structure to ensure City costs are being
covered.
Recommendation #3: The City should adopt the five-year financial plan and capital improvement models presented by Citygate.
Recommendation #4: The City should expand documented financial policies to include purchasing, cash handling, personnel, debt, and budget, per the sample information located on the GFOA
website.
Recommendation #5: The City should develop an accounting manual that includes the various financial processes identified in this report.
Recommendation #6: The City should identify a few applicable performance measures to each department during the budget process
and for inclusion in the budget document, which should
be developed to reflect that the use of resources supports the overall City goals and objectives. These performance measures should be reviewed semi-annually.
Mr. Reynolds
May 15, 2020
Recommendation #7: The budget schedule should include the ability for departments to review and understand the recommended
budget prior to delivery to the City Council through the creation of a budget calendar. This will help to reduce confusion on the part of the departments regarding their respective budgets.
Recommendation #8: The multiple-year CIP should be included in the budget document to help maintain a multiple-year focus on
anticipated capital needs and to assist in long-term
planning.
Recommendation #9: The City should explore water/sewer rate increases and other revenue options to better position itself to address future capital needs. This exploration should include
evaluation of the water/sewer infrastructure to determine condition.
Recommendation #10: Some portion of the General Fund unassigned reserve in excess of the minimum required in the City’s reserve
policy should be designated as committed for some or all the items listed in the policy.
Recommendation #11: Although not an immediate issue, the City should explore acquiring an integrated financial system to reduce manual processes and reduce the potential for input errors
regrading financial information. The system should be
cloud-based to allow staff from other departments inquiry access to financial information to help them with making decisions regarding their respective operations.
Recommendation #12: A formal purchase order approval process should be developed, monitored, and enforced to enhance internal
control and comply with the existing City purchasing
ordinance.
Mr. Reynolds
May 15, 2020
Recommendation #13: The City should consider implementation of a process to engage consultants to perform an independent fiscal
analysis of projects that would have short- and long-term fiscal impacts on City operations. This will provide the City with a more realistic and unbiased estimate of each project’s cost versus benefits to the City.
Mr. Reynolds
May 15, 2020
SECTION 2—ORGANIZATIONAL ASSESSMENT
Citygate interviewed thirteen personnel associated with City operations, including the City Manager. Of these thirteen persons, three currently serve as contracted personnel from outside agencies. Of the ten City-employed personnel, two served in part-time positions (Lead Librarian and City Clerk).
Citygate observed the following themes:
◆ With the advent of the current City Manager and through the assistance of staff members, the City organization is working hard to address a variety of inherited, chronic, long-standing issues facing the City. These issues include:
➢ Deferred maintenance of City streets, water, and sewer infrastructure systems.
➢ Fines and/or penalty assessments from state and federal agencies regarding regulatory compliance shortfalls associated with water and/or sewer operations.
➢ Immediate repairs associated with the City streets, water, and sewer infrastructure systems, and dysfunctional equipment needed to make repairs.
➢ Resident concerns, calls, and service requests associated with various street, water, and sewer functionality issues.
◆ City staff exhibited a united and high desire to be of service in San Juan Bautista by interacting with residents, responding to their concerns, and wanting to secure the City’s economic well-being and quality of life in the future. ◆ Both City staff and elected officials expressed a desire to improve communication inside and outside of the City organization, along with a desire to help residents understand where the City stands with regards to services and service levels, and a desire to be responsive to citizen requests and needs.
◆ The high number of issues being juggled by a small staff can be overwhelming, especially when many of those issues can only be solved through capital improvement projects, capital equipment purchases, and/or operational changes beyond the capacity of any single staff member.
Mr. Reynolds
May 15, 2020
2.1 BUILDING ON STRATEGIC PLANNING PRIORITIES
At the City Council strategic planning session February 15, 2020, the Council worked through a process of arriving at initial strategic objectives. The initial objectives were to:
1. Create, promote, and nurture partnerships within our community. ➢ Public
➢ Private
➢ Community based
➢ Governmental
➢ Non-profit
➢ Business
➢ Schools
➢ Agriculture
2. Preserve, protect, promote our community assets and economic vitality while maintaining historical and cultural charm.
3. Invest, maintain, strengthen, plan, and renew our vital infrastructure:
➢ Water
➢ Power
➢ Sewer
➢ Streets
➢ Sidewalks
➢ Stormwater
➢ Facilities
➢ Open Space
4. Promote public amenities:
➢ Parks
➢ Trail system
➢ Recreation
Mr. Reynolds
May 15, 2020
➢ Cultural Arts and Activities
5. Quality of Life
➢ Enforce ordinances maintaining quality of life, promoting health and safety for the community.
Finding #16: The City organization can improve focus. The community faces a wide range of issues, with a small cohort of staff and resources from which to respond. The sense that every issue/problem is “urgent” tends to erode both elected official policy maker and staff member effectiveness. It leads to chaotic start and stop attempts that do not resolve objectives and projects.
The City Council and staff have taken a significant and wise first step in prioritizing needs by going through the steps to establish the initial strategic objectives.
Recommendation #14: To continue the Council’s prioritization efforts, decisions about how best to spend the City’s human and financial
resources should be made around its Strategic Objectives, both as budgets are developed and adopted, and in everyday project delivery.
Suggested practices that can help both elected officials and staff members spend the City’s human and financial resources for strategic outcomes include:
1. Use of annual work plans for each department, outlining major work areas with accompanying performance outcome measures. Example: Initiate a Public Works parts inventory methodology in the first quarter of FY 2021 and implement by fourth quarter FY 2021.
2. New ideas, new projects, and requests for information from City Council members not included within the current budget year work plans can be “parked” for consideration in the future year budget. If considered necessary for the current year, the Council can establish a procedure for requiring three votes before asking staff to move forward on items not included in the annual work plans.
3. The City Council can adopt a practice of receiving staff “best estimates” for the time impacts of new projects, research, and/or requests before staff is asked to proceed on items that are not contained within the annual work plans.
Mr. Reynolds
May 15, 2020
4. In establishing annual work plans and performance goals, less may be more. Avoid lining up a long list of items that cannot realistically be accomplished. Instead, use disciplined lists that reflect a reasonable use of time and staff resources within the realities of the high level of day-to-day demands the City faces to deliver services.
Choosing to accomplish a series of achievable small steps will build Council, community, and staff confidence in lieu of making long lists of items, none of which receives enough care and attention to be completed.
2.2 BUILDING ON STAFFING EXPERTISE AND SKILLS
Finding #17: The City has a strong set of current personnel and leadership. Within this group is powerful expertise and experience from which the community benefits.
Recommendation #15: Maximize the use of staff resources and skill sets to determine if and when to outsource tasks, examine
procurement processes for efficiency opportunities, and examine where routine staff reports can be standardized.
Draw upon the expertise of current staff members to:
1. Determine what tasks in each service area are best conducted with “in town” staff and City resources, and which tasks can most successfully be conducted through contracted services and personnel. Criteria for “in town” service responses can be:
➢ Events that require immediate responses, immediate assistance, immediate repair, and/or temporary mitigation.
➢ Events for which City staff are trained and equipped to respond.
Criteria for contracted services can be:
➢ Events, repairs, and/or improvements that can be anticipated and/or scheduled and require a specialized work force and/or equipment. ➢ Work that lends itself to annual or longer contracts for services available within the region through a competitive procurement process.
2. Examine where procurement of annual and/or multi-year goods and/or services can reduce routine staff report writing and procurement processes as part of developing a written procurement policy.
Mr. Reynolds
May 15, 2020
3. Examine where routine staff reports can be standardized, delivered on a quarterly and/or semi-annual basis, thus lessening the month-to-month work impacts for both City staff in preparation of the reports, and focus Council attention on larger scale objectives.
2.3 DESIGNING A PATH FOR INFRASTRUCTURE RENEWAL AND UPKEEP Finding #18: City street, water, and sewer infrastructure is in a state of deferred maintenance. These conditions cannot be blamed and/or wished away and must be addressed for the sake of the community’s future sustainability.
Recommendation #16: Design a path forward for infrastructure renewal and upkeep.
The City Manager and staff have already begun some of this work by initiating Master Plan studies and by initiating routine maintenance activities, such as regular water pipe flushing. Elements of a path forward for Water and Sewer Funds include:
1. Resolving outstanding fine and regulatory oversight issues for the Sewer and Water systems.
2. Conducting Master Plan studies to organize and illuminate the capital needs in the sewer and water systems.
3. Examining, by a third party, if there are financially and physically feasible alternative operations opportunities with larger water and/or sewer systems and/or operators within the region.
4. Conducting a fee schedule study and progressive fee increments over an extended period to fund necessary capital improvements identified in the Master Plan studies.
5. Positioning water and sewer enterprises to receive grants and other state and federal assistance when opportunities arise by having plans and specifications prepared in advance for capital improvement projects identified within the capital improvement budgets / Master Plans. This is an “off-the-shelf” strategy that can be used successfully to become “first-in-line” for new funding opportunities.
6. Investing in improved maintenance activities, such as complete camera review of pipes and their conditions. The data yield from such activities can be used to identify system points that could most benefit from repairs/upgrade, resulting in system wide improvement as these repairs are made.
Mr. Reynolds
May 15, 2020
Elements of a path forward for Streets include:
1. Positioning the City to effectively tap any grant or state/federal assistance for street repairs by having plans and specifications for a key project(s) “shelf-ready” to take advantage of first-in-line timing that may become available.
2. Considering raising funds for street repairs through local tax initiatives.
3. Investing in modest annual repair program(s) to the extent feasible, focused on reducing pothole eruptions.
4. Following Recommendation #15, determine how pothole, street painting, and overlay projects can be accomplished using a combination of staff and City-owned equipment and contracted work services from paving companies.
2.4 DEVELOPING AN ENHANCED ROLE FOR COMMUNITY PLANNING AND DEVELOPMENT Finding #19: There is a need for the community planning and development function to play an enhanced role within the City organization.
The initial strategic goal of desired preservation, protection, and promotion of community assets and economic vitality while maintaining historical and cultural charm implies the City will have some measure and means for achieving consensus on how land use and development can be used to maintain historical and cultural charm. Implementation of the City’s General Plan, and consideration of development application projects through the Planning Commission and City Council entitlement process will play a major role in what the community looks and feels like in years to come.
Recommendation #17: Develop the ability to effectively work through both current and long-range planning efforts.
Working through current and long-range planning efforts will help to:
1. Position the City to make the highest and best use of potential development investments in the community to achieve General Plan, Master Plan, and capital project improvement objectives.
2. Use the tools of good current and long-range planning efforts to help improve local economic vitality.
➢ Achieving these will include active and knowledgeable use of in-lieu payments and contributions, early recognition of mutually beneficial Mr. Reynolds
May 15, 2020
opportunities to pursue with potential developers, well-planned use of development fees for parks and facilities, and up-to-date, ready-to-go capital projects and improvements.
3. Build the City’s reputation for being a fair processor of land use and development processes, taking the steps within the process to assure equity for all applicants, stakeholders, residents, and community members.
4. Engage the community in visioning its future by how it approaches land use and development decisions today.
* * *
Sincerely,
David C. DeRoos, MPA, CMC
President
cc: Project Team
Attachments
Appendices 1–15
APPENDICES 1 THROUGH 14
(DIGITALLY PROVIDED SEPARATELY)
TABLE OF CONTENTS DIGITALLY PROVIDED SEPARATELY
Tables and Appendices (05-15-20)
Table 1—Multi-Year Actual – General Fund.........................................................................................................Tab 1 Table 2—Multi-Year Actual – Water Funds..........................................................................................................Tab 2 Table 3—Multi-Year Actual – Sewer Funds..........................................................................................................Tab 3 Appendix 1—General Fund Revenue Detail ..........................................................................................................Tab 4 Appendix 2—General Fund Expenditure Detail.....................................................................................................Tab 5 Appendix 3—Water Funds Revenue Detail ...........................................................................................................Tab 6 Appendix 4—Water Funds Expenditure Detail......................................................................................................Tab 7 Appendix 5—Sewer Funds Revenue Detail ...........................................................................................................Tab 8 Appendix 6—Sewer Funds Expenditure Detail......................................................................................................Tab 9 Appendix 7—Sample Summary Projection of 5-Year Financial Plan Forecast – General Plan...........................Tab 10 Appendix 8—Sample Summary Projection of 5-Year Financial Plan Forecast – Water Funds...........................Tab 11 Appendix 9—Sample Summary Projection of 5-Year Financial Plan Forecast – Sewer Funds...........................Tab 12 Appendix 10—Capital Improvement Plan Model Summary................................................................................Tab 13 Appendix 11—Capital Improvement Plan Project Detail Form...........................................................................Tab 14 General Fund Financial Plan (05-15-20)
Appendix 12—General Fund Financial Plan
Water Fund Financial Plan (05-15-20)
Appendix 13—Water Funds Financial Plan
Sewer Fund Financial Plan (05-15-20)
Appendix 14—Sewer Funds Financial Plan
APPENDIX 15
SAMPLE CAPITAL IMPROVEMENT PLAN
DOCUMENT
Appendix #15
Sample Capital Improvement Plan Document
Source: City of Reno FY 17-18 budget document
Source: City of Pasadena, Ca FY 2018-19 Capital Improvement Plan document
CAPITAL IMPROVEMENT PLAN
The [insert jurisdiction here] updates its Capital Improvement Plan (CIP) each year. The responsibility for updating the plan and presenting it to the City Council rests with the CIP Committee, a Citywide group of employees representing the major departments of the City involved in the construction, improvement, operation, and financing of capital facilities. The Finance Department is the lead department and serves as chair of the Committee. The approved CIP for this year follows this report.
Process
The CIP process begins early each fiscal year when departments submit to the Committee their requests or revisions for capital projects. The requests are submitted on approved forms which include the description of the project, estimated cost, time frame, justification, and impact on operating budgets. The CIP is a 10-year plan where projects are identified in the outlying years and listed based on known conditions, estimated growth rates, the City’s [insert various jurisdiction plans such as the general plan, area specific plans, etc]. The CIP Committee uses an established set of criteria to evaluate CIP requests. The criteria include legal constraints and requirements, health and safety, project life, impact on the City’s operating budget, consistency with City Council and Management priorities, conformance with adopted plans, cost effectiveness, frequency of use and population impacted. Projects are ranked in order of program and funding priority which is explained further in this section.
While progress in repair and maintenance of City infrastructure is being made, the CIP Committee recommends that [insert recommendations and rationale].
Capital Improvement Program Definitions
The Capital Improvement Program is a planning and budgeting tool which provides information about the City’s infrastructure needs for a ten-year time frame. Each year, the list of projects is reviewed for need, cost and priority. New projects may be added, and other projects deleted. Generally, capital improvements are defined as physical assets, constructed or purchased, that have a useful life of ten-years or longer and a cost of $25,000 or more. The following are capital improvement categories included in the plan:
a. New and expanded facilities for the community
b. Large scale rehabilitation or replacement of existing facilities c. Equipment for any public facility or improvement when first constructed or acquired
d. The cost of engineering or architectural studies and services relative to the improvement.
e. The acquisition of land for a community facility such as park, road, sewer line, etc.
In addition, the City includes Capital Maintenance needs in the CIP plan. Capital Maintenance projects are generally rehabilitative maintenance on City-owned facilities that are required to maintain facilities in good operating condition. Finally, the City’s budget process includes major purchases in the CIP plan. These include major equipment, vehicles, computer hardware and computer software that, over the life of the project, cost $250,000 or more.
What are Capital Outlays?
Capital Outlays, which are budgeted within the City’s operating budget, include such things as furniture, equipment, vehicles, and motorized equipment needed to support the operation of the City’s programs. Generally, a capital outlay item may be defined as an item valued more than $10,000 with a life expectancy of less than 10 years.
What are Capital Projects?
There are two types of capital expenditures. The first deals with infrastructure projects and the second with operating programs. Capital Projects, which are addressed in the CIP and budgeted within the City’s Adopted Budget, generally include major fixed assets or infrastructure with long term value, such as buildings, roads, bridges, and parks; major equipment purchases (vehicles), computer hardware and computer software that, over the life of the project, cost $250,000 or more, and capital maintenance projects. Any of these may involve some form of financing. Capital projects costs include all expenditures related to the planning, design, construction and equipment necessary to bring a project on line.
Why have a Capital Improvement Program?
The CIP provides information on the current and long-range infrastructure and equipment requirements of the City. It provides a mechanism for balancing needs and resources and for setting priorities and schedules for capital projects. It is based on needs identified through the planning process, requests and recommendations of City departments and the concerns of citizens and elected officials. The CIP includes the identification of revenue sources which will be utilized to fund capital improvements. Projects are included even if revenues are not available to fund them. These projects are prioritized and may be funded by current revenues or by debt financing, depending on the availability of funds, the nature of the project, and the policies of the Council. The CIP strives for efficient use of capital improvement funds by identifying CIP projects and prioritizing them according to their relative importance and urgency of need. Identification assures needed projects are known, while prioritization ensures that those projects which are most urgently needed are funded first.
Why a Separate Capital Improvement Program?
The Capital Improvement Program outlines long range capital improvement expenditures. Funds budgeted through the CIP for a specific project during a specific year remain with that project until the project is completed, while the operating budget terminates at the end of the fiscal year. Each year project costs are reviewed and additional funds may be allocated to a project which, when combined with resources carried over from the prior year, result in the continuing project budget for the new year.
How are Projects Prioritized?
The City does not have enough funding to meet all of its capital needs each year. Projects are prioritized based on the effect of each project on the list and the City’s ability to meet community goals. All projects are compared based on a common set of selection criteria.
The cornerstone of this process is a worksheet which requires departments to explain anticipated funding sources, legal constraints/requirements, health and safety, project life, City Council and Management priorities, conformity with adopted plans and goals, impact on the City’s operating budget, cost effectiveness, environmental impacts, population impacted, and frequency of use. Projects are ranked in order of program and funding priority. A numerical score is assigned to each project. The projects are then ranked according to how each contributes to maintaining current service levels.
A given project is then placed within one of several categories, suggesting a final priority position. The priority categories represent a relative degree of need for any particular project and are described below.
1. A project which is needed to comply with a court order, legislative mandate, or is critical to the health, safety, and general welfare of the public or which has a dedicated funding source that cannot be used for any other project, or which would provide for a public or operational improvement.
2. A project which is needed to comply with a court order, legislative mandate, or is critical to the health, safety, and general welfare of the public or which would provide for a public or operational improvement, but there are no available funds in the current year to fund the project. Any funds that become available will be used for these priorities.
3. A project which would provide for a public or operational improvement that City Staff anticipates funding in the third year of the Capital Improvement Plan.
4. A project which would provide for a public or operational improvement that City Staff anticipates funding in the fourth year of the Capital Improvement Plan.
5. A project which would provide for a public or operational improvement that City Staff anticipates funding in the fifth year of the Capital Improvement Plan.
6. A project which would provide for a public or operational improvement that City Staff anticipates funding in the sixth to tenth year of the Capital Improvement Plan.
The Capital Improvement Plan represents the mutual efforts of all City departments to meet the infrastructure needs of City residents, businesses and visitors. These guidelines provide a basis for the conception and preparation of the City’s Capital Improvement Plan.
Revenue Sources
The Capital Improvement Plan indicates the Fund responsible for funding the specific projects. However, CIP’s generally include a variety of revenues that are used both for the direct funding of projects and as a source for debt service to retire bonds. This section will describe each of the major revenue sources.
Capital Projects Funds - The City has established various Capital Projects Funds. These funds are generally used for park projects, various bond projects, street impact fee projects, special assessment district projects and projects funded by the General Fund.
General Fund - In building the budget, the goal is to set aside [insert percentage goal] of prior year General Fund operating expenditures less capital outlay and debt service to fund capital projects. In addition, some of the computer hardware, software and vehicles included in the CIP will be funded through the General Fund. [insert fund name] - The [insert fund name] [insert description of revenue source(s) of the fund, how they are used and any restrictions or legal obligations] This subsection should be repeated for each potential CIP funding source Potential Revenue Sources
The City must also utilize additional revenue sources to help meet the needs of the Capital Improvement Plan. Examples of these additional revenue sources which could be used are identified below:
Bonds – [insert discussion of the types of bonds and the respective characteristics that could be used to fund CIP projects]
Other Resources - [insert discussion of other potential revenue sources such as public private partnerships, additional assessment/business improvement districts, fee increases or additions, etc.]
Types of Proposed Projects
The CIP is further organized by the type of improvement the project represents. This format enables the Council and staff to easily discuss projects on their relative merits.
The project types are assigned as follows.
• Annual Maintenance Program – this type includes the annual funding amounts for capital maintenance and annual construction projects. Items such as Parks Maintenance funding, Facilities Maintenance funding and ADA funding are included in this category.
• One-time Infrastructure Projects – this type includes projects that are one-time construction or rehabilitation of City facilities. New pools and extraordinary fire station maintenance fall into this category.
• Wastewater/Stormwater Collection and Treatment, Drainage Projects - this type includes all projects related to the sewer treatment plants, major repairs, upgrades or reconstruction of existing drainage systems, sewer separation projects, and treatment plant expansions.
• Water Projects - this type includes all projects related to the water treatment plants, major repairs, upgrades or reconstruction of existing treatment and delivery systems, and treatment plant expansions.
• Transportation Projects – this type includes all projects related to transportation needs including streets/roads, public transportation, street lights/signage, etc. • Parks. Recreation, and Municipal Facilities – this type is related to all parks, recreational projects (e.g., museum), and municipal facilities (e.g., city hall, police and fire stations)
• [insert other types specific to City]
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RESOLUTION NO. 2023-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN BAUTISTA
AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL
SERVICES AGREEMENT WITH CITYGATE TO COMPLETE A STRATEGIC PLAN,
ORGANIZATIONAL REVIEW, AND FISCAL SUSTAINABILITY UPDATE WHEREAS, it is the best interest of the City of San Juan Bautista to make the most efficient use of its limited resources, that its organization is efficient and effective in carrying out these services, and the City Council’s strategic Plan aligns and supports these shared goals; and WHEREAS, the consultant “Citygate” was founded in 1990, and provides organizational consultant and service efficiency and delivery improvements for public sector agencies having conducted over 500 studies for more than 300 different local governments; and WHEREAS, on January 21, 2020, the City adopted Resolution 2020-03A and retained Citygate to facilitate the creation of a Strategic Plan for the City, provide an assessment of the City’s organizational needs, and a fiscal review the critical General Fund and Water and Sewer Enterprise funds; and
WHEREAS, over the past three years, the 2020 Strategic Plan has been revised and updated as the City declared two different states of Emergency, began resolving its major infrastructure issues, and rebuilt its Community Development Department; and WHEREAS, the City’s General Fund has remained stable, and its water and wastewater enterprise funds have been bolstered by ambitious rate increases over a 5-year period; and WHEREAS, following the November 2022 election, the city welcomed two new Councilmembers, and will soon appoint four new Historic Resources Board and Planning Commission members; and
WHEREAS, the changes in City leadership, changes to the services needed in the City and changes to the critical funding sources in the City all justify the need for developing a new strategic plan for the City, reviewing its revenues streams and organizational capacities and needs; and
WHEREAS, the Consultant submitted a proposal to the City January 13, 2023 to perform an observational organizational and financial review for the City of San Juan Bautista; and WHEREAS, at its January 21, 2020 City Council meeting, funding was allocated and the City Council agreed to move forward with these services.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of San Juan Bautista:
1) That the Staff report submitted for the January 24th 2023 Council meeting and its conclusions are hereby deemed to be true and correct, and are made a part of this resolution by reference.
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2) That the City Council hereby authorizes the City Manager to execute an Agreement with Citygate Associates Inc. in the amount not to exceed $58,293 to perform a strategic planning workshop, organizational and financial assessment for the City.
PASSED AND ADOPTED at a regular meeting of the San Juan Bautista City Council on the 24th day of January, 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
_________________________
Leslie Q. Jordan, Mayor
ATTEST:
_____________________________
Elizabeth Soto, Deputy City Clerk
Item #7C
City Council Meeting
January 24, 2023
1 CITY OF SAN JUAN BAUTISTA
CITY COUNCIL REPORT
AGENDA TITLE: SELECT INTERIM FINANCING LENDER FOR
WASTEWATER SYSTEM COMPLIANCE PROJECT
MEETING DATE: January 24, 2023
DEPARTMENT HEAD: Don Reynolds, City Manager
RECOMMENDED ACTION(S):
It is recommended that the City Council consider RFP responses received from three different lenders and approve Resolution 2023-XX authorizing the City staff to select First Foundation Bank as the interim financing lender for the Wastewater System compliance project and commence financing negotiations and drafting of legal documents for the $14.6 million Wastewater Revenue Bond Anticipation Notes / Line of Credit to construct the sewer force-main to Hollister.
BACKGROUND INFORMATION:
Over the last three years the City has been working with the EPA and the California State Water Resources Control Board to address the wastewater discharge quality requirement violations. On August 18, 2020, the City Council adopted Resolution 2020-42, and the City and the EPA executed an Administrative Order on Consent, (“AOC”) agreeing that the City will bring its water systems into Permit compliance by December 31, 2023.
Since then, the City has completed the following tasks related to the Wastewater System’s Compliance Project (the “Project”):
• Completed Project design;
• Adopted new sewer rates to be able to pay for the Project; • Applied and was approved for three grants totaling approximately $8.3 million; • Applied and was approved for the USDA low-interest loan of approximately $10.3 million.
The City is currently in the final stages of obtaining the necessary environmental permits for the Project.
The USDA, as a part of conditions for their low-interest loan and grant, requires the City to obtain an interim financing for the Project from a third party lender, which will later be repaid by the proceeds of the USDA loan.
Item #7C
City Council Meeting
January 24, 2023
2 DISCUSSION:
To fulfil the USDA’s interim financing requirement, the City issued a Request for Proposals for a $14,600,000 – Series 2023 Tax-Exempt Wastewater Revenue Bond Anticipation Notes / Line of Credit (USDA Grant and Loan Anticipation Financing) (the “RFP”). The RFP was distributed to 28 different banks known to specialize in lending to local government agencies.
The responses to the RFP were due on January 18, 2023. The City received four (4) proposals from three (3) different banks: CoBank, First Foundation Bank, and Umpqua Bank. The key terms of the proposals are summarized in the table on page 4.
CoBank proposed a variable rate financing with the lower interest rate (calculated as Daily Simple SOFR + 0.85%, currently 5.16%), but was unable to offer the financing for the full requested amount. Their proposal is limited to the amount of the USDA loan of $10.3 million. Additional financing would need to be in the form of a separate revolving line of credit and would be subject to additional bank review / approval.
First Foundation Bank proposed a variable and a fixed rate financing alternatives:
• A variable rate of 73% of WSJ Prime - 0.25% (4.25% Floor), currently 5.29%. • A fixed interest rate of 4.93%.
First Foundation Bank’s proposals fully match the requirements of the RFP.
Umpqua Bank proposed a fixed rate financing with the lower interest rate of 4.84%, but that financing is subject to the City moving its primary banking relationship to the bank. The proposal also limited the draw-down period to 18 months and comes with a shorter rate lock than that of First Foundation Bank.
In reviewing the proposals with the City’s financial advisor, Ridgeline Municipal Strategies, the staff came to the following conclusions:
• The City would prefer to have a fixed interest rate over a variable interest rate for the following reasons:
o It is expected that there will be at least one more interest rate increase by the Federal Reserve later this month, which is likely to cause the indices for variable rate financing to rise and make the interim financing more expensive. o Even if the Federal Reserve stops raising interest rates, it will take some time before they will start lowering the interest rates.
o The fixed interest rate proposals have lower rates than the current variable interest rates.
Item #7C
City Council Meeting
January 24, 2023
3 o Therefore, the fixed rate financing is more likely to result in lower interest costs over the life of the interim loan.
• In comparing the fixed interest rate proposals from First Foundation Bank and Umpqua Bank, the City does not consider the lower interest rate offered by Umpqua Bank (lower by 0.09%) to justify the requirement of moving the banking relationship, the risk of shorter interest rate lock, and the limitation of an 18-month draw down period.
Therefore, the City staff recommends that the City Council selects First Foundation Bank as the interim financing lender and authorizes the staff to commence financing negotiations and drafting of legal documents for the $14.6 million Wastewater Revenue Bond Anticipation Notes / Line of Credit to construct the sewer force-main to Hollister at the offered fixed interest rate.
The form financing documents and the resolution to enter into the interim financing will be brought to the City Council for approval at a later meeting.
Item #7C
City Council Meeting
January 24, 2023
4 CoBank Umpqua
Proposal 1 Proposal 2 Proposal 3 Proposal 4
Interest Rate:
Fixed or Variable: Variable Variable Fixed Fixed
Rate: Daily Simple SOFR + 0.85% 73% of WSJ Prime - 0.25% (4.25% Floor) 4.93% 4.84%
Current Rate: 5.16% 5.29% 4.93% banking relationship required Rate Lock: n/a n/a Thru Closing (prior to Jan 23) 2-3 weeks Payments: Semi-Annual Interest Semi-Annual Interest Semi-Annual Interest City Preference Term: 36 months 36 months 36 months 36 months
Draw Down: 36 months 36 months 36 months 18 months
Prepayment: no penalty no penalty no penalty no penalty Bank Fees:
Bank Counsel $5,000 $12,500 $12,500 $12,500
Security: Jr Lien on Revenues Revenues + USDA Proceeds Revenues + USDA Proceeds Revenues + USDA Proceeds Notes: City needs to join CRWA 1.25x DSCR 1.25x DSCR 1.25x DSCR Separate loan required for grant portion 1.05x Jr DSCR
First Foundation
Item #7C
City Council Meeting
January 24, 2023
5 FISCAL IMPACT:
None at this time. The City will incur legal and municipal advisory fees in the amount of $47,500 and $27,500, respectively, as well as a minor California Debt and Investment Advisory Commission fee, once the financing is approved (at a later City Council meeting) and closed.
ATTACHMENTS:
Resolutions, RFP and received bank proposals.
1 RESOLUTION NO. 2023-__
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SAN JUAN BAUTISTA AUTHORIZING THE CITY
MANAGER TO WORK WITH FIRST FOUNDATION BANK IN
CONNECTION WITH THE INTERIM FINANCING OF THE CITY’S
SEWER FORCE-MAIN PROJECT
WHEREAS, on February 16, 2021 the City Council (the “Council”) of the City of San Juan Bautista (the “City”), adopted Resolution No. 2021-09 (the “Resolution of Intention”) determining that it is in the public interests of the City to consider the issuing Bond Anticipation Notes (the “BANs”) to provide interim financing for the acquisition and construction of the San Juan Bautista to Hollister Force Main Development Project (the “Project”), and appointed the necessary consultants in connection therewith; and
WHEREAS, the City is authorized under the provisions of Title 5, Division 2, Part 1, Chapter 4, Article 7. 7 (commencing with Section 53859) of the California Government Code (the “Bond Law”), to issue its bond, loan or grant anticipation notes for the purpose of financing the Project; and WHEREAS, the City, with the aid of its financing team, solicited proposals from qualified financial institutions to purchase the BANs; and
WHEREAS, several qualified financial institutions submitted proposals, all of which the Council has reviewed and now desires to authorize and direct the City Manager to work with First Foundation Bank (the “Bank”) pursuant to the terms set forth in the term sheet submitted by the Bank (the “Term Sheet”); and
NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SAN JUAN BAUTISTA AS FOLLOWS:
Section 1. Recitals and Findings. The Council hereby specifically finds and declares that each of the statements, findings and determinations of the City set forth in the recitals set forth above are true and correct.
Section 2. Preliminary Intention to Proceed. The Council hereby confirms its intention to proceed with the issuance of the BANs, subject to final authorization thereof by resolution of the City at a subsequent meeting held for such purpose.
Section 3. Approval of First Foundation Bank. The Council selects the First Foundation Bank as the financial institution to be awarded the sale of the BANs in accordance with the terms and conditions set forth in the Term Sheet presented at this meeting, which is on file in the office of the City Clerk and incorporated herein by reference, and the City Manager is hereby work with the Bank to finalize the terms set forth in the Term Sheet in substantially the form hereby approved, with such additions thereto and changes therein as may be approved by the City Manager upon consultation with The Weist Law Firm as bond counsel.
Section 4. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption.
2 PASSED, APPROVED AND ADOPTED this 24th day of January 23, 2023, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Leslie Q. Jordan, Mayor
ATTESTED:
___________________________
Elizabeth Soto, Deputy City Clerk
January 18, 2023
TO: Trish Paetz
Subject: CoBank Proposal for USDA Interim Financing – Wastewater Project On behalf of CoBank, ACB (“Lender” or “CoBank”), I am pleased to present for your review the following Non-Binding Summary of Terms and Conditions.
Borrower City of San Juan Bautista
Loan Purpose Interim construction financing for USDA RD wastewater project Interim Loan Amount Up to $10,268,000 (RD Direct Loan Amount) Variable Interest Rate Option
(Multiple Advance)*
Daily Simple SOFR 5 Day Lookback plus 0.85% (currently
5.16%)
Tax-exempt Yes
Formal Credit Approval Date Up to 5 business days after financing awarded Availability & Maturity Date Up to 36 months after Closing Prepayment penalty None.
Lender Legal Fee Amount capped at $5,000.
Loan Fees to CoBank N/A, standard fees waived for current CRWA members.
Payment Frequency Semi-annual interest only paid on amount advanced due April 1 and October 1, beginning April 1, 2023.
Repayment Principal due at maturity or immediately upon receipt of USDA RD direct loan funds.
Security Junior lien on revenues.
*Interest Rates quoted are subject to interest rate changes that may occur based upon market conditions.
This Non-Binding Summary of Terms and Conditions (this “Summary”) is being presented to the Borrower by CoBank for information and discussion purposes. This Summary is not a commitment or offer to provide the credit outlined above but an expression of interest on the part of CoBank in providing the credit. A commitment to provide credit will only arise upon CoBank’s issuance, and the Borrower’s acceptance, of a formal Commitment Letter. This Summary is strictly confidential and may not be released to or discussed with any third party without CoBank’s prior written consent.
Sincerely,
Conner Carrier
Account Manager – Water Financing Division
[email protected]; 404-784-3354
Trevor Mael | SVP, Public Finance | Tel: 916.724.2423 | Email: [email protected] January 18, 2023
RE: City of San Juan Bautista - 2023 Interim Financing
Based upon your request and preliminary review of the information provided to-date, First Foundation Public Finance (“FFPF”) would like express its interest in underwriting and obtaining credit approval for the following loan to the City of San Juan Bautista, CA (“Borrower”) based on the terms outlined below. This Term Sheet is provided by FFPF for discussion purposes only. It is not intended to be binding, does not create any obligation on the part of FFPF to Borrower or any third party, and is not a commitment to lend or agreementof any kind. No obligation whatsoeveron the part of FFPF shall arise until execution and deliveryof a formal commitmentor loan documentation by a duly authorized officerofFFPF, which obligation shall be subject to allof the conditions contained therein.
Theproposedloan conditions are:
STRUCTURE: Non-revolving line of credit
PURPOSE: Interim financing for the design and construction of the Wastewater System MAX. LOAN AMT: $15,000,000
INTERESTRATE: Tax-exempt NBQ: 73% of WSJP minus 0.25% [currently 5.29%] [floor of 4.25%] TERM: 3-years
DRAWS: Up to 2-draws allowed per month
REPAYMENT: Semi-annual interest, principal due at maturity AVERAGE LIFE: 3.0-years
PRE-PAYMENT: Prepayment on any payment date at par.
COLLATERAL: Net revenue pledge of the Wastewater System, and pledge of USDA grant and loan proceeds COVENANTS: 1.25x debt service coverage
ADDITIONAL TERMS:Documents to be prepared by the Borrower’s Bond Counsel for review by FFPF’s counsel Nixon Peabody, LLP.
Legal fees and expenses of Nixon Peabody, LLP are $12,500. All other filing fees and related fees shall be paid by the Borrowerin connection with the issuance (including applicable CDIAC fees).
Periodic financial and collateral reporting by the Borrower, as well as representations and warranties of the Borrowerregarding its status and ability to repay, taxability gross-up (if applicable) and covenants and conditions that are appropriate for a loan of the scope and nature proposed above will be determined as part of FFPF’s underwriting and credit approval process.
PDF’s of all executed and other documents listed on the Closing Index shall be provided to FFPF at least 2 full business days prior to the closingdate; provided, that if any documents can only be signed after receipt of the wire, those documents shall be provided immediately after receipt of the wire.
A default rate of Interest + 3.00% will be required.
The interest rate offered pursuant to this term sheet shall expire after 3 business days if acceptance by the Borrowerof this term sheet is not communicated to FFPF.
Trevor Mael | SVP, Public Finance | Tel: 916.724.2423 | Email: [email protected] January 18, 2023
RE: City of San Juan Bautista - 2023 Interim Financing
Based upon your request and preliminary review of the information provided to-date, First Foundation Public Finance (“FFPF”) would like express its interest in underwriting and obtaining credit approval for the following loan to the City of San Juan Bautista, CA (“Borrower”) based on the terms outlined below. This Term Sheet is provided by FFPF for discussion purposes only. It is not intended to be binding, does not create any obligation on the part of FFPF to Borrower or any third party, and is not a commitment to lend or agreementof any kind. No obligation whatsoeveron the part of FFPF shall arise until execution and deliveryof a formal commitmentor loan documentation by a duly authorized officerofFFPF, which obligation shall be subject to allof the conditions contained therein.
Theproposedloan conditions are:
STRUCTURE: Non-revolving line of credit
PURPOSE: Interim financing for the design and construction of the Wastewater System MAX. LOAN AMT: $15,000,000
INTERESTRATE: Tax-exempt NBQ: 4.93% (6.75% taxable equivalent) TERM: 3-years
DRAWS: Up to 2-draws allowed per month
REPAYMENT: Semi-annual interest, principal due at maturity AVERAGE LIFE: 3.0-years
PRE-PAYMENT: Prepayment allowed on any date at par.
COLLATERAL: Net revenue pledge of the Wastewater System, and pledge of USDA grant and loan proceeds COVENANTS: 1.25x debt service coverage
ADDITIONAL TERMS:Documents to be prepared by the Borrower’s Bond Counsel for review by FFPF’s counsel Nixon Peabody, LLP.
Legal fees and expenses of Nixon Peabody, LLP are $12,500. All other filing fees and related fees shall be paid by the Borrowerin connection with the issuance (including applicable CDIAC fees).
Periodic financial and collateral reporting by the Borrower, as well as representations and warranties of the Borrowerregarding its status and ability to repay, taxability gross-up (if applicable) and covenants and conditions that are appropriate for a loan of the scope and nature proposed above will be determined as part of FFPF’s underwriting and credit approval process.
PDF’s of all executed and other documents listed on the Closing Index shall be provided to FFPF at least 2 full business days prior to the closingdate; provided, that if any documents can only be signed after receipt of the wire, those documents shall be provided immediately after receipt of the wire.
A default rate of Interest + 3.00% will be required.
The interest rate offered pursuant to this term sheet shall expire after 3 business days if acceptance by the Borrowerof this term sheet is not communicated to FFPF.
Vanessa Ryan
SVP/ Municipal Banking
Tel: 916.724-1214
Email: [email protected]
Dean Stephens
SVP/ Municipal Banking Director
Tel: 916.774-3923
Email: [email protected]
City of San Juan Bautista
USDA Interim Financing Note
Term Sheet 01.18.2023
Umpqua Bank (“Umpqua” or the “Original Purchaser”) would like to express its interest in underwriting and obtaining credit approval for the following loan (the “Credit Facility”) for City of San Juan Bautista (the “City”) on the terms and conditions outlined below.
Preface: Umpqua’s expression of interest in underwriting and obtaining credit approval for the Credit Facility is for discussion purposes only and does not constitute a commitment from Umpqua. Any commitment to lend that we might make is subject to the fulfillment of a number of conditions that include, but are not limited to, our normal credit approval process, an in-depth investigation of the purpose of the purpose of the loan, the City, and collateral the results of which are deemed satisfactory to Umpqua in our sole discretion.
Confidentiality: Except as required by law, neither this expression of interest nor its contents will be disclosed publicly or privately except to those individuals who are your officers, employees or advisors who have a need to know as a result of being involved in the proposed financing. The foregoing confidentiality provisions shall not apply to the disclosure of the federal income tax structure or treatment of the proposed financing.
Par Amount: $14,600,000 (Approximate)
Structure/Security: USDA Bond/Grant Anticipation Notes (the “BANs”) - The Interim Financings represent revenue obligations of the City, with a pledge of net revenues of the wastewater system. The City will also pledge proceeds from the long-term USDA Bonds/Grants used to refund the BANs to secure the BANs. All wastewater system revenues and fees collected by the City are pledged to the payment of the BANs. The revenues include all earnings, revenue and moneys received by the City from or on account of the operation of the system. The BANs will be issued on parity with the City’s outstanding 2015 wastewater revenue bonds.
Pledge of Wastewater revenue is subject to review of existing agreements by Bank counsel, Nixon Peabody, LLP.
Purpose: The City’s existing wastewater infrastructure is inadequate to treat wastewater in a manor the aligns with current environmental standards. To achieve environmental compliance, the City has devised a project to divert its wastewater from its current wastewater treatment plant to the City of Hollister’s wastewater treatment plant. The proposed credit facility will provide interim financing for the project, which will be repaid through a combondation of bond and grant proceeds following project completion.
Term/Amortization: 3-years. Draw-down structure allowing interest to accrue only on the outstanding balance of the BANs for the first 18-months. All outstanding principal and accrued interest due in full at maturity.
Draw Provision: Eligible to draw funds at a maximum of twice per month for the term of the BANs.
Vanessa Ryan
SVP/ Municipal Banking
Tel: 916.724-1214
Email: [email protected]
Dean Stephens
SVP/ Municipal Banking Director
Tel: 916.774-3923
Email: [email protected]
Indicative Interest Rate: 4.84% Indicative Tax-exempt, Non-Bank Qualified Fixed Rate 30/360 interest calculation
Relationship Pricing: It should be noted that indicative rate of 4.84% quoted above is dependent on the City’s migration of its full banking relationship from its current institution to Umpqua Bank within 90 days of the transaction’s closing.
Prepayment Provision: Loan can be prepaid in full anytime without penalty.
Reporting: The City shall make its audited annual financial statements available on the City’s website or sent to the Bank by no later than March 31st annually commencing on March 31, 2023, with the report for the fiscal year ending June 30th, 2022.
The City shall make each of its annual budgets, and all amendments thereto, available on the City’s website or send to the Bank within 30 days after such budget is adopted or amended.
Representations and
Warranties: Usual and customary for transactions of this type.
Rate Covenant: 1.25x
Additional Bonds: Minimum 1.25x on all parity debt. Minimum 1.05x coverage for parity plus subordinate debt.
Costs of Issuance: Documents to be reviewed by Umpqua Bank's counsel Rudy Salo – Nixon Peabody, LLP. provided that the City’s Bond Counsel shall prepare documents and tax opinions if necessary. Legal fees and related fees for Nixon Peabody, LLP are $12,500.
Additional Conditions
Periodic financial and collateral reporting by the City, as well as representations and warranties of the City regarding its status and ability to repay and related matters, taxability gross-up, if allowable, and covenants and conditions that are appropriate for a Credit Facility of the scope and nature proposed herein will be determined as part of Umpqua Bank’s normal underwriting and approval process. The proposed facility will be subject to a default rate equal to the proposed interest rate + 3.0, if allowable.
PDFs of all executed and other documents listed on the Closing Index shall be provided to the Bank no later than 24 hours before the time of the requested wire; provided, that if any documents can only be signed after receipt of the wire those documents shall be provided immediately after receipt of the wire.
Vanessa Ryan
SVP/ Municipal Banking
Tel: 916.724-1214
Email: [email protected]
Dean Stephens
SVP/ Municipal Banking Director
Tel: 916.774-3923
Email: [email protected]
Sincerely,
Vanessa Ryan
SVP, Corporate Relationship Manager
Municipal Banking Division
Please pursue underwriting and approval of a commitment for the described Credit Facility.
Borrower
By: ______________________________
Printed Name: ______________________________
Title: ______________________________
Item #7D
City Council Meeting
January 24, 2023
1 CITY OF SAN JUAN BAUTISTA
CITY COUNCIL REPORT
AGENDA TITLE: AGREEMENT FOR WATER TREATMENT AT WELL 6
WITH MICROVI BIOTECH INC.
MEETING DATE: January 24, 2023
DEPARTMENT HEAD: Don Reynolds, City Manager
RECOMMENDED ACTION(S):
That the City Council approve the attached Resolution and authorize the City Manager to execute the Agreement to use Microvi equipment and treat the drinking water at Well 6.
BACKGROUND INFORMATION:
The City invested in its newest Well 6 in 2018-2019, that went into service in October 2019, and then had to remove it from service in March 2020 due to high nitrate levels. Since then, the drinking water system has been down one well, having only two sources where three are needed.
On March 16, 2021, the City Council adopted Resolution 2021-13 and agreed to host a demonstration (“Pilot”) project with Microvi Biotech Inc, to test their technology to see if it can safely and effectively remove nitrates from Well 6. The system works, removing almost all but a trace of nitrate, from approximately 45 gallons per minute (gpm). If the treated water is blended back into Well 6 waters, the City can again access about 100 gpm from its third well.
It is critical that the city have three wells, because the volume from Well 1 fluctuates through-out the year, and can be deficient during drought. Well 5 has the capacity to serve the whole city, but we must have more than these two sources to sustain a reliable drinking water system.
DISCUSSION:
On October 26, 2022, the City submitted its application to the Regional Water Quality Control Board (RWQCB) to blend the Well 6 water with Well 5. This process has taken 6-months to complete, but the new permit is almost ready. It is important therefore to have this Agreement for the lease and operation of the Microvi equipment in place before the RWQCB acts.
The value of the Microvi equipment is estimated to be approximately $500,000. They have suggested a lease of $3,000 per month. The lease includes wear and tear on the equipment. The Item #7D
City Council Meeting
January 24, 2023
2 proposed term is one-year, with as many as 4 one-year extensions. The cost of the chemicals is estimated to be $3,000 per month, and the City can absorb this cost into the operations budget.
The City will save another $1,500 per month by doing all weekly and monthly water sampling itself. There is a small operations cost for Microvi to operate the equipment off-site, and submit monitoring reports to the RWQCB monthly. The more the City can reduce the site visits the lower the cost will be to operate the system.
FISCAL IMPACT:
The cost to operate and lease the Microvi equipment and bring Well 6 back on line is estimated to be $6,000 per month, $72,000 annually.
ATTACHMENTS:
Resolution and Agreement
RESOLUTION NO. 2023- XX
A RESOLUTION OF THE CITY OF SAN JUAN BAUTISTA EXECUTING AN AGREEMENT WITH MICROVI BIOTECH, INC. FOR WATER TREATMENT
SERVICES THAT REMOVES NITRATES FROM WELL WATER
WHEREAS, the City’s drinking water permit is based on its ability to provide drinking water from three wells, and on March 2, 2020, Well 6 had to be removed from the system due to a high concentration of nitrates; and
WHEREAS, for the past two years, the City has had to rely on only two-wells for its drinking water; and
WHEREAS, on March 16, 2021, the City Council approved Resolution 2021-13 and approved a “DEMONSTRATION AGREEMENT” with Microvi Biotech Inc. (“Microvi”) as a pilot project to see if their MICROVI MNE™ technology could safely remove nitrates from Well 6, and bring it back on-line; and
WHEREAS, the demonstration was a success and met he expectations of the City and Regional Water Quality Control Board, treating 45 gallons per minute removing all but a trace of nitrate from Well 6; and
WHEREAS, the City and Microvi have negotiated the attached Agreement for the use of the equipment, and continued treatment of the nitrates in Well 6; and WHEREAS, it will become effective once the Regional Water Quality Control Board approves the “Domestic Water Supply Permit Amendment” submitted in October 2022, to use the technology with Well 6 water and bring Well 6 back on-line; and WHEREAS, both the City and Microvi Biotech Inc. wish to execute the attached Agreement.
NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF SAN JUAN BAUTISTA NOW HEREBY FINDS:
1. That the recitals in this Resolution and accompanying staff report are true and correct and are hereby made a part of this Resolution.
2. It agrees that the technological services proposed by Microvi Biotech Inc., known as MICROVI MNE™, have proven to be beneficial to the City by removing nitrates in its well water, and will improve the quality and reliability of its current water system.
3. Authorizes the City Manager make minor changes that may be necessary to implement the intent of this Resolution and to execute the Agreement with Microvi Biotech Inc. for a term of one year, with extensions to that term as many 4 additional years.
PASSED AND ADOPTED by the City Council of the City of San Juan Bautista at a regular meeting held on the 24th day of January 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________
Leslie Q. Jordan, Mayor
ATTEST:
___________________________
Elizabeth Soto, Deputy City Clerk
Item #7E
City Council Meeting
January 24, 2023
1 CITY OF SAN JUAN BAUTISTA
CITY COUNCIL REPORT
AGENDA TITLE: FILL FOUR VACANCIES ON THE PLANNING
COMMISSION
MEETING DATE: Jnuary 24, 2023
SUBMITTED BY: Planning Commission Secretary Trish Paetz RECOMMENDED ACTION(S):
Receive the information provided by the Ad Hoc committee and decide which applicants will fill the four open seats on the Planning Commissioner.
BACKGROUND INFORMATION:
At the City Council meeting on December 20, 2022 Council was asked to appoint an Ad Hoc Committee to select a Planning Commissioner, in accordance with Municipal Code Section 2-3- 110. Whereupon, it was agreed that Mayor Jordan and Council Member Sabathia would serve on the Ad Hoc Committee. Staff advertised the vacancy by posting a notice with a new deadline of Friday, December 30. Since that meeting, two applications were received by City Hall staff. These applications were added to the applications received from Mishele NewKirk-Smith, Dan DeVries, and David Medeiros in September. All five applications were forwarded to the Ad Hoc Committee for their review and consideration.
Item #7F
City Council Meeting
January 24, 2023
Page | 1
City Council Board and Committee Membership Responsibilities Organization Primary Secondary Meeting Times Remuneration LAFCO Cesar Flores Scott Freels 2nd Wednesday 6:00
pm
None.
(GC56325(b)
AMBAG John Freeman Cesar Flores 2nd Wednesday 6:00
pm
$50
COG Mary Edge Scott Freels 3rd Thursday 4:00 pm
+ daytime special
mtgs
$100
Water Resources Assn
(w/SBC Water Dist.)
Leslie Jordan John
Freeman
Monthly
1st Thursday
None
West Nile Virus
(San Benito County)
Mary Edge As needed, 4th
Wednesday 3:15 pm
None
Integrated Waste
Mgmt.-Local Task
Force
John Freeman Meets annually. None
Monterey Bay Unified
Air Pollution Control
District Board
(alternates between
Hstr/SJB & S.Cruz
Co. cities)
Hollister
(Rotating
membership)
Santa Cruz
County/City
3rd Wednesday
1:30 pm
$100
CMAP Board Cesar Flores --- Monthly None
Intergovernmental
Committee
John Freeman Leslie Jordan Monthly, 1st
Thursday, 10:30 am
None
Ad Hoc Committee
for Pkg w/in the City
Mary Edge &
Leslie Jordan ---
As needed. None
Ad Hoc Committee
for Sphere of
Influence & Urban
Growth Boundary
Scott Freels &
Mary Edge ---
Currently meeting at
least monthly,
Monday at 5:30 pm
Item #7F
City Council Meeting
January 24, 2023
Page | 2
Ad Hoc Committee for
Sheriff Contract
Scott Freels &
Mary Edge ---
As needed. None
Ad Hoc Committee
for Cannabis
Scott Freels &
John Freeman
--- As needed. None
Investment Advisory
Committee
John
Freeman, CM,
Treas.,
Accountant
---
As needed. None
San Benito Homeless
Planning Group
(County)
Cesar Flores Mary Edge
Monthly, 2nd Monday
2:00 pm
None
Mont./SB County
Continuum of Care
Leadership Council
Cesar Flores Mary Edge
None
Monterey Bay Comm.
Power Authority
Policy Board
John Freeman Leslie Jordan
1st Wednesday,
8 meetings/year
10:30 a.m.
$100
Area Agency on
Aging
Mary Edge Cesar Flores None
EDCAC Leslie Jordan N-A Monthly, Thursday
6:00 p.m.
None
Public Safety
Committee
Scott Freels
Leslie Jordan
Rachel Ponce
(At Large)
PC Members
(2)
Quarterly, 4th
Monday
4:00 p.m.
None
UGB-SOI Scott Freels
Mary Edge
At Large –
PC Members
(2)
As needed None
1/17/2021 -tsp
Item #7G
City Council Meeting
January 24, 2023
1 CITY OF SAN JUAN BAUTISTA
CITY COUNCIL STAFF REPORT
TITLE: Resolution Affecting the Disposition of Parklets Pending Governors Action Lifting COVID State Of Emergency
MEETING DATE: January 24, 2023
SUBMITTED BY: Brian Foucht, Community Development Director RECOMMENDED ACTION(S):
Adopt a resolution ordering the removal of certain parklets, and directing the City Manager to make funds available to defray the cost of removal within 60 days of the date of lifting of the State of Emergency due to COVID-19 by the State of California.
BACKGROUND INFORMATION:
In April 2020 the City began meeting weekly with its downtown businesses to develop a plan in response to the ongoing Public Health Emergency. Thereafter, the City Council adopted Resolution 2020-24, enabling the establishment of outdoor shopping and dining via expansion of businesses into the right of way. Third Street was converted to a single, one-way lane to enable this expansion.
Resulting parklets were originally approved for a three-month period ending December 31, 2020.
On November 10, 2020, the City Council agreed to extend the parklets until March 30, 2021, and thereafter agreed to successive extensions to September 30, 2021 and March 30, 2022 pending adoption of an ongoing policy.
During the referenced hearings, the subject of “permanence” has involved issues of non-conformity, long term planning and design of the Third Street streetscape, public safety, infrastructure, relationship to buildings, structures and landscaping within the Third Street Historic District and cost of removal. It is established that to allow permanent “parklet” type outdoor commercial use would first require a thorough evaluation of the historic Third Street district streetscape.
City Council resolution 2022-21 directed the City Manager to cease issuing Encroachment Permits for parklet construction and requested input from the EDCAC regarding continuance of parklets.
The City Council thereafter adopted Resolution 2022-40 establishing a policy for ongoing disposition of parklets as follows:
• Parklets are generally perceived to be beneficial to the community and to the sponsoring business.
• There are noted adverse effects of parklets; however, the benefits outweigh the noted adverse effects.
• Parklets should not be prevalent on Third Street in the short term. As a means of limiting noted short term adverse effects, the present parklet experience should not be expanded.
Item #7G
City Council Meeting
January 24, 2023
2 • It is important to know and understand the attitudes and perspectives of the community, business owners and visitors.
• Parklets should remain until the Third Street Master Plan construction begins. Third Street Master Plan parklet/plaza concepts should be shaped by referenced surveys and testimonials. The parklet experience should be re-imagined for use in the context of the Third Street Master Plan.
The Governor’s office, on October 17, 2022 announced that the COVID 19 State of Emergency will end on February 28, 2023, and the State will rely on ongoing, enhanced public health initiatives to drive down rates and severity of infection. On December 20, 2022, the City Council directed the City Manager to return with a resolution that would institute a revised policy affecting parklets that would go into effect at such time that the COVID State Of Emergency is lifted, currently scheduled for February 28, 2023.
DISCUSSION:
The attached resolution will implement a revised policy contingent upon the Governor lifting the Covid – 19 State of Emergency as follows:
1. Continue the restriction against encroachment permits for new or replacement parklets;
2. Terminate the current encroachment permit authorization for parklets not associated with a restaurant or bar and require parklet removal within 15 days after the COVID State of Emergency is lifted.
3. Retain existing parklets established for eating establishments and bars and require the issuance of new Encroachment Permits subject to the following:
a) Required permit fees, costs for inspection, insurance and refundable security deposit of $1,000 to cover the cost of City removal, if needed.
b) A parking space rental fee, to be determined by the City Council, as a Business License Tax surcharge payable on a pro-rated basis for the months March - June 2023 and for the succeeding 12 months at the time of business license renewal. c) New issued encroachment permits to expire upon approval by the City Council of the Third Street Master Plan.
4. Compensate parklet owners required to remove parklets from the General Fund, in accordance with this resolution for the reasonable cost of removal, not to exceed $750.00 per parklet; Attached:
City Council Resolution
Page | 1
RESOLUTION 2023- XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN
BAUTISTA ESTABLISHING THE TERM OF PARKLETS ENCROACHMENT PERMIT
WHEREAS, in an effort to control the pandemic caused by the COVID-19 virus and in response to the Governor’s COVID - 19 Emergency Declaration, City Council declared a State of Emergency March 17, 2020; and
WHEREAS, the shelter in place health orders that followed the State Of Emergency closed all but essential businesses; and
WHEREAS, this closure of businesses was harmful to the City's economy and the City, among many other things, initiated the Transformation of Third Street by adopting Resolution 2020-24, on May 19, 2020; and
WHEREAS, to implement the Transformation of Third Street, business owners were offered the opportunity to expand their business onto the public right-of-way and build decks, also known as "parklets," where customers could sit safely and enjoy their services; and WHEREAS, in an effort to protect the historic nature of the downtown, parklets were required to be built in compliance with Guidelines adopted via City Council Resolution 2021- 61; and
WHEREAS, the parklet program was approved by the City Council for a period of six months ending December 31, 2020, and serially extended until March 30, 2021, February 16, 2021 September 30, 2021, March 30 2022, and May 31, 2022 via Resolution 2022-21; and WHEREAS, the City Council has approved and budgeted funds for the preparation of a Master Streetscape Plan (Third Street Master Plan) for the San Juan Bautista Downtown with a focus on Third Street Mixed Use area and desires to utilize the community’s experience with parklets to evaluate the character of public improvements within the Downtown area; and WHEREAS, the City Council has requested and received the evaluation and recommendation of the City of San Juan Bautista Economic Development Citizens Advisory Committee (EDCAC) established, in part, for this purpose; and WHEREAS, the City Council has considered the recommendations of the Economic Development Citizen Advisory Committee (EDCAC), the Historic Resources Board and the Planning Commission regarding the City policy regarding parklets and the term of parklets; and
WHEREAS, the City Council has considered the October 17, 2022 announcement by the Governor of the State of California, that the COVID 19 State of Emergency will end on February 28, 2023. Notwithstanding this announcement, the City Council is aware that COVID-19 variants represent a continuing and current threat to public health, safety and general welfare.
Page | 2
NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL hereby directs the City Manager to implement the following measures:
1. Continue the restriction against encroachment permits for new or replacement parklets;
2. Except as provided in section 3 below, terminate the current encroachment permit authorization for all parklets and require parklet removal within 15 days after the COVID State of Emergency is lifted.
3. Retain existing parklets established for eating establishments and bars and require the issuance of new Encroachment Permits subject to the following:
a) Required permit fees, costs for inspection, insurance and refundable security deposit of $1,000 to cover the cost of City removal, if needed.
b) A parking space rental fee, to be determined by the City Council, as a Business License Tax surcharge payable on a pro-rated basis for the months March - June 2023 and for the succeeding 12 months at the time of business license renewal.
c) New issued encroachment permits to expire upon approval by the City Council of the Third Street Master Plan.
4. Compensate parklet owners required to remove parklets from the General Fund, in accordance with this resolution for the reasonable cost of removal, not to exceed $750.00 per parklet; PASSED AND ADOPTED by the City Council of the City of San Juan Bautista on the 24th day of January 2023 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________
Leslie Q. Jordan, Mayor
ATTEST:
______________________________
Elizabeth Soto, Deputy City Clerk
Item #7H
City Council Meeting
January 24, 2023
1 CITY OF SAN JUAN BAUTISTA
CITY COUNCIL STAFF REPORT
AGENDA TITLE: ACKNOWLEDGE RECEIPT OF A REPORT BY THE
HOLLISTER FIRE CHIEF REGARDING THE
INSPECTION OF CERTAIN OCUPANCIES IN THE CITY
MEETING DATE: January 24, 2023
SUBMITTED BY: Fire Marshal Charlie Bedolla
BRIEF DESCRIPTION: A Resolution of the City Council authorizing the acceptance and to acknowledge receipt of a report made by the Fire Chief of the Hollister Fire Department regarding the inspection of certain occupancies required annually pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code.
RECOMMENDATION: Staff recommends the City Council ADOPT a Resolution to authorize the acceptance of Senate Bill No. 1205, an act to add Section 13146.4 to the Health and Safety Code, relating to fire protection and to acknowledge receipt of a report made by the Fire Chief of the Hollister Fire Department regarding certain occupancies annual inspections.
DEPARTMENT SUMMARY
After the tragic 2016 “Ghost Ship Fire” in Oakland that killed 36 people, Senator Jerry Hill introduced Senate Bill 1205 The Fire Protection Services – Compliance Reporting. The bill was passed, and Section 13146.4 was added to the States Health and Safety Code last year.
California Health & Safety Code Section 13146.4 was added in 2018 and became effective on September 27, 2018. Said code requires all fire departments that provide fire protection services to perform annual inspections in every building used as a public or private school, hotel, motel, lodging house, apartment house, and certain residential care facilities to comply with building standards, as provided. California Health & Safety Code Section 13146.2 requires all fire departments that provide fire protection services to report annually to its administering authority on its compliance with Sections 13146.2 and 13146.3.
This Resolution will fulfill the requirements of the California Health & Safety Code regarding acknowledgement of the Hollister Fire Department’s compliance with California Health and Sections 13146.2 and 13146.3.
The City Council of the City of San Juan Bautista expressly acknowledges the measure of compliance of the Hollister Fire Department with California Health and Safety Code Sections 13146.2 and 13146.3 in the encompassed areas as follows:
Item #7H
City Council Meeting
January 24, 2023
2 A. EDUCATIONAL GROUP E OCCUPANCIES:
Educational Group E occupancies are generally those public and private schools, used by more than six persons at any one time for educational purposes through the 12th grade. Within the City of San Juan Bautista, there lie three Group E occupancies, buildings, structures and/or facilities.
During calendar year 2022, the Hollister Fire Department completed the annual inspection of three Group E occupancies, buildings, structures and/or facilities. This is a compliance rate of 100% for this reporting period.
B. RESIDENTIAL GROUP R OCCUPANCIES:
Residential Group R occupancies, for the purposes of this resolution, are generally those occupancies containing sleeping units, and include hotels, motels, apartments (two units or more), etc. as well as other residential occupancies (including a number of residential care facilities). These residential care facilities have a number of different sub-classifications, and they may contain residents or clients that have a range of needs, including those related to custodial care, mobility impairments, cognitive disabilities, etc. The residents may also be nonambulatory or bedridden.
Within the City of San Juan Bautista, there lie 21 Group R (and their associated sub-categories) occupancies of this nature.
During calendar year 2022, the Hollister Fire Department completed the annual inspection of 21 Group R occupancies, buildings, structures and/or facilities. This is a compliance rate of 100% for this reporting period.
C. INSTITUTIONAL GROUP I OCCUPANCIES:
Institutional Group I occupancy includes, among others, for the purposes of this resolution, the use of a building or structure, or a portion thereof, in which people are cared for or live in a supervised environment, having physical limitations because of health or age, are harbored for medical treatment or other care or treatment, or in which people are detained for penal or correctional purposes or in which the liberty of the occupants is restricted.
Within the City of San Juan Bautista, there lie 0 Group I (and their associated sub-categories) occupancies of this nature.
During calendar year 2022, the Hollister Fire Department completed the annual inspection of Group I occupancies, buildings, structures and/or facilities. This is a compliance rate of 100% for this reporting period.
Additional items of note regarding this compliance rate can be found in the accompanying staff report for this resolution.
FINANCIAL IMPACT: N/A
CEQA: N/A
ATTACHMENTS:
2022 – City of San Juan Bautista Inspections
RESOLUTION 2023-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN BAUTISTA
ACKNOWLEDGING HFD TO PERFORM THE INSPECTION OF CERTAIN
OCCUPANCIES REQUIRED ANNUALLY PURSUANT TO SECTIONS 13146.2 AND 13146.3 OF THE CALIFORNIA HEALTH AND SAFETY CODE AND AUTHORIZE THE ACCEPTANCE OF SENATE BILL NO. 1205
WHEREAS, on September 27, 2018, the State of California passed Senate Bill 1205 (SB 1205) adding a new section to the California Health and Safety Code which affects every fire department or fire district in the State; and WHEREAS, the existing law, California Health & Safety Code Sections 13146.2 and 13146.3, requires every fire department or fire district to inspect every building used as a public or private school, hotels, motels, lodging houses, and apartment complexes annually; and
WHEREAS, this new bill requires every fire department or fire district to report annually to its administering authority their compliance with the annual inspection requirements of the California Health and Safety Code. The bill also requires the administering authority to formally acknowledge receipt of the compliance report in a resolution or a similar formal document; and
WHEREAS, the Hollister Fire Department has performed inspections for compliance with SB 1205; and
WHEREAS, the City Council of the City of San Juan Bautista has reviewed the report from the Fire Chief related to compliance with SB 1205.
NOW, THEREFORE, IT IS RESOLVED, that the City Council of the City of San Juan Bautista has received this report by the Hollister Fire Department for compliance reporting with Senate Bill 1205.
PASSED AND ADOPTED by the City Council of the City of San Juan Bautista at a Regular Meeting held this 24th day of January, 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
_______________________
Leslie Q. Jordan, Mayor
ATTEST:
_________________________
Elizabeth Soto, Deputy City Clerk
INSPECTIONS
COMPLETED COMPLIANCE
E (Schools) 3 OF 3 100%
TOTAL 3 OF 3 100%
R-1 (Hotel/Motels) 2 OF 2 100%
R-2 (Apartments) 19 OF 19 100%
TOTAL 21 OF 21 100%
I (Jails/Courthouse) 0 100%
TOTAL 0 100%
OVERALL INSPECTIONS 24 OF 24 100%
2022 CITY OF SAN JUAN BAUTISTA
STATE MANDATED INSPECTIONS
EDUCATIONAL GROUP E
RESIDENTIAL GROUP R
INSTITUTIONAL GROUP I
RESOLUTION NO. 2023- XX
A RESOLUTION OF THE CITY OF SAN JUAN BAUTISTA ADOPTING THE 2022 SAN BENITO COUNTY MULTI-JURISDICATIONAL HAZARD MITIGATION PLAN (“HMP”)
WHEREAS, Chapter 5-33 of the Municipal Code defines and describes the City’s “Emergency Organization and Functions;” and
WHEREAS, the purpose of Chapter 5-33, as described in the first section 5-33-010, are to provide for the preparation and carrying out of plans for the protection of persons and property within this City in the event of an emergency, the direction of the emergency organization, and the coordination of the emergency functions with all other public agencies, corporations, organizations, and affected private persons on the local, regional, Statewide, and national levels; and
WHEREAS, the role of the City Manager is to act as the Director of Emergency Services, and to that end, the City Manager is responsible for preparing for and responding to emergencies; and
WHEREAS; the City’s emergency preparation and responses are guided by the MultiJurisdictional Hazard Mitigation Plan, (“HMP”) and for the City, this is a regional Plan known as the San Benito County Multi-jurisdictional Hazard Mitigation Plan, last amended in 2016; and WHEREAS, since 2011, the County has maintained a HMP that meets the requirements of the Stafford Act and Title 44 Code of Federal Regulations (“CFR”) Section 201.6; and WHEREAS, using Federal Emergency Management Agency (FEMA) Hazard Mitigation Grant Program funds, since March 2020, the San Benito County of Office of Emergency Services (County OES) has completed an update of the MHP, a document of 1,000 pages that has been made available on the City’s web-site for residents to consider; and WHEREAS, the HMP serves as a strategy for the implementation and maintenance of the hazard mitigation programs of five jurisdictions including the City, the City of Hollister and the San Benito County Water District and Sunnyslope Water District; and WHEREAS, the update of the 2016 HMP incorporates direct participation and feedback from the San Juan Bautista City Manager and representatives from the four other jurisdictions, community outreach and feedback, as well as lessons learned from recent California wildfires threatening the County is 2018, drought seasons 2014-2017, intermittent flood events, and the coronavirus disease 2019 (COVID-19) pandemic; and
WHEREAS, to reduce the impacts of natural and man-made disaster, federal Disaster Mitigation Act of 2000 requires local governments to have an approved HMP as a condition of pre-and post-award-disaster assistance, and a requirement in order to apply for grants under the mitigation grants program; and
WHEREAS, the draft HMP was reviewed by California Office of Emergency Services and approved in August 2022, FEMA approved the HMP in October 2022, approved by the County Board of Supervisors Resolution 2022-139 November 8, 2022, and the HMP is now ready for approval by each of the four other local jurisdictions; and
NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF SAN JUAN BAUTISTA NOW HEREBY FINDS:
1. That the recitals in this Resolution and accompanying staff report are true and correct and are hereby made a part of this Resolution.
2. That it hereby adopts this Plan, as the official Hazard Mitigation Plan for the City of San Juan Bautista.
3. It authorizes the City Manager and/or delegate to participate in the drafting of future revisions as required by the Disaster Mitigation Act of 2000 and FEMA, and submit them to the City Council for approval for a period of five (5) years from the date of this Resolution.
4. That the City will comply with all applicable Federal Statutes and Regulations in effect with respect to the requirements of any federal grants programs awarded to the City in the next five years including 44 CFR 13.11 (C), and will amend the Plan as required by 44 CFR 13.11 (D).
BE IT FURTHER RESOLVED, that this Plan has been approved by San Benito County, Cal OES and FEMA, and a copy of this Resolution will be forwarded to each Agency.
PASSED AND ADOPTED by the City Council of the City of San Juan Bautista at a special meeting held on the 24th day of January 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________
Leslie Q. Jordan, Mayor
ATTEST:
___________________________
Elizabeth Soto, Deputy City Clerk
Item #7I
City Council Meeting
January 24, 2023
1 CITY OF SAN JUAN BAUTISTA
CITY COUNCIL REPORT
AGENDA TITLE: ADOPTION OF THE 2022 SAN BENITO COUNTY MULTIJURISDICTIONAL HAZARD MITIGATION PLAN (“HMP”)
MEETING DATE: January 24, 2023
DEPARTMENT HEAD: Don Reynolds, City Manager
RECOMMENDED ACTION(S):
It is recommended that the City Council adopt the attached Resolution and thereby adopt the 2022 San Benito County Multi-Jurisdictional Hazard Mitigation Plan (“HMP”) BACKGROUND INFORMATION:
To reduce the impacts of natural and manmade disasters, the federal Disaster Mitigation Act was adopted in 2000. It requires local governments to have an approved HMP as a condition or preand post-award-disaster assistance, and requirement to apply for mitigation grants. Since 2011, the County has maintained a HMP that meets the requirements of the Stafford Act and Title 44 Code of Federal Regulations (CFR) §201.6, with the previous plan update completed in 2016.
DISCUSSION:
The 2022 San Benito County Multi-jurisdictional HMP will serve as a strategy for implementation and maintenance of the hazard mitigation program in San Benito County. It incorporates lessons learned from recent California wildfires; specifically, fires threatening San Benito County in 2018, drought seasons of 2014-2017, intermittent flood events, and the coronavirus disease 2019 (COVID-19) pandemic. Attached with the Resolution are the first fifteen pages of the 1,001 page document. They include the Table of Contents and the purpose of the HMP, and the public process by which it was reviewed and updated. Funding for this planning process was obtained through the Federal Emergency Management Association (FEMA) Hazard Mitigation Grant Program.
The City Manager was an active participant in the Plan update. The City’s relationship with its rural neighbors in the canyons, with ag producers, and with other regional government partners is critical to the effectiveness of this Plan as implemented. The concepts in the Plan were shared with the City Council last fall, and most recently with the Public Safety Committee. After approval Item #7I
City Council Meeting
January 24, 2023
2 from FEMA, City staff attended nine different trainings hosted by the County Office of Emergency Services.
FISCAL IMPACT:
There is no immediate fiscal impact. Having an approved HMP is required before the City can receive state and federal relief and grant funds.
ATTACHMENTS:
Proposed Resolution
HMP Pages 1- 15
Item #7J
City Council Meeting
January 24, 2022
CITY OF SAN JUAN BAUTISTA
CITY COUNCIL REPORT
AGENDA TITLE: INTRODUCE AN ORDINANCE AND READ BY TITLE
ONLY, WAIVING FURTHER READING, TO AMEND
SECTIONS 2-1-105 AND 2-2-115(B) OF THE SAN JUAN
BAUTISTA MUNICIPAL CODE TO VEST THE
AUTHORITY IN THE CITY MANAGER TO APPOINT
THE CITY CLERK.
MEETING DATE: JANUARY 24, 2023
DEPARTMENT HEADS: CITY MANAGER/CITY ATTORNEY
RECOMMENDED ACTION
Introduce and read by title only, waiving further reading, an Ordinance that if subsequently adopted would vest authority in the City Manager to appoint, supervise and exercise authority over the City Clerk.
BACKGROUND
At the City Council regular meeting on December 20, 2022, the Council directed that an ordinance be brought for consideration of introduction and adoption (at a second reading) which would delegate to and vest authority in the City Manager to appoint, supervise, and exercise authority over the City Clerk.
The City Clerk is established as one of the statutory officers specified by state law for general law cities such as San Juan Bautista, which has a Council-City Manager form of government (Government Code Section 34851). Since incorporation on May 4, 1896, the City Clerk position has been an elected position and in accordance with the Municipal Code the City Clerk is a department head. In order to hold the elective office of City Clerk the person elected had to be at least 18 years old, a resident and a voter in the City.
The duties, responsibilities and requirements of the city clerk position have changed and evolved significantly over the years and now regularly include duties under the Ralph M. Brown Act, the Public Records Act, the Political Reform Act and acting as the City’s Election Official to assure Item #7J
City Council Meeting
January 24, 2022
compliance with California election laws and regulations. As the duties and responsibilities of the city clerk position have increased, the professional expertise required to fulfill the position has also increased and most elected City Clerks in California have been replaced by an appointed City Clerk with appropriate training and experience who typically performs both City Clerk and other city staff duties. The last elected City Clerk, Ms. Shawna Freels, was elected at the November 3, 2020, general municipal election and Mr. Freels resigned from that position on January 23, 2022, and the position has remained vacant since that time.
DISCUSSION
Government Code Section 36509 provides authority to the City Council to place the question of whether the City Clerk should be an appointed position on the ballot. The Council did just that for the November 8, 2022 General Municipal Election and the City’s voters approved Measure W with 57.81% of the vote to make the office of City Clerk an appointive office by the City Council (455 votes in favor, 332 votes opposed). The elective office of City Clerk was also on the same ballot for the November 8, 2022 election as the measure asking whether the voters wished to make the office appointive, however, no person was elected to that office by that election and accordingly a vacancy continues to exist in the office of City Clerk. Therefore the power to appoint the City Clerk is now vested in the City Council. Appointed officers are not required to be either residents or electors of the City (Government Code Section 36510).
Government Code Section 34856 provides when the office of City Clerk is made appointive the City Council may by ordinance vest the authority to make that appointment in the City Manager.
The ordinance attached as Exhibit A makes the required changes to the Municipal Code to include appointing and exercising authority over the City Clerk a part of the City Manager’s duties as the Chief Executive Officer of a general law city with a Council-Manager form of governance.
A person appointed by the City Manager to serve as City Clerk would be required, under the City Manager’s supervision, to perform all the duties of the City Clerk set forth in Article 2 of Chapter 2-3 of the Municipal Code and the historic duties of a city clerk set forth in Government Code Sections 40801 through 40814.
RECOMMENDATION:
At this time it is recommended that the City Council (1) Discuss, consider public comment and consider a motion introducing the Ordinance attached as Exhibit A.
Exhibit A – Ordinance 2023-xx
Item #7J
City Council Meeting
January 24, 2022
ORDINANCE NO. 2023 -__
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF SAN JUAN BAUTISTA
AMENDING SECTIONS 2-2-105 AND 2-2-115(B)
OF THE SAN JUAN BAUTISTA MUNICIPAL CODE
TO VEST AUTHORITY IN THE CITY MANAGER
TO APPOINT THE CITY CLERK
-o0o-
THE CITY COUNCIL OF THE CITY OF SAN JUAN BAUTISTA HEREBY ORDAINS AS FOLLOWS:
SECTION 1. Section 2-2-105 of the San Juan Bautista Municipal Code hereby is amended to read as follows:
2-2-105 Chief Executive.
The City Manager shall be the chief executive of the City government under the direction and control of the Council except as otherwise provided in this ordinance. He/She shall have authority over all other officers and employees including the City Clerk, except he/she shall have no authority over the City Treasurer or City Attorney.
SECTION 2. Section 2-2-115(B) of the San Juan Bautista Municipal Code hereby is amended to read as follows:
2-2-115(B) Chief Manager Duties.
Appoint, Dismiss, Etc. Appoint and promote, discipline, suspend or dismiss, all officers and employees of the City including the City Clerk, except he/she shall have no authority over the City Attorney or City Treasurer. No department head shall be appointed or removed until the City Manager shall have first reviewed such appointment or removal with the City Council in executive session.
The City Manager shall provide a single merit principle personnel system for all officers and employees of the City except the City Attorney, City Treasurer, Chief of Police, and the Director of Public Works, and
EXHIBIT A
Item #7J
City Council Meeting
January 24, 2022
may designate an officer responsible to him/her to administer said personnel system.
SECTION 3. This ordinance and the various parts thereof are hereby declared to be severable. Should any part of this ordinance be declared by a court to be unconstitutional or invalid, such decision shall not affect the validity of the ordinance as a whole, or any other part that the part so declared.
SECTION 4. This ordinance shall go into effect thirty (30) days after the date of its adoption.
THE FOREGOING ORDINANCE was first read at a special meeting of the San Juan Bautista City Council on the 24th day of January, 2023, and was adopted at a regular meeting of the San Juan Bautista City Council on the 21st day of February, 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
_______________________________
Leslie Q. Jordan, Mayor
ATTEST:
______________________________
Elizabeth Soto, Deputy City Clerk
APPROVED AS TO FORM:
______________________________
City Attorney
PUBLIC NOTICE
NOTICE OF VACANCY
CITY TREASURER
A vacancy has occurred in the City Treasurer’s Office.
Candidates are sought for the position of City Treasurer for the City of San Juan Bautista. To qualify, a candidate must be an elector and resident of the City of San Juan Bautista.
The City Treasurer is the keeper of all money coming into their hands as treasurer. They comply with all laws governing the deposit and securing of public funds and the handling of trust funds in their possession. They pay out money only on warrants signed by legally designated persons. Monthly, the City Treasurer submits to the City Clerk a written report and accounting of all receipts, disbursements and fund balances, and files a copy with the City Council. The City Treasurer performs such duties relative to the collection of city taxes and license fees as prescribed by ordinance. The City Treasurer may appoint deputies for those acts for which they are responsible.
City Council has set a $100 monthly stipend for this position.
Interested applicants shall submit a resume, or biography, and statement of interest to City Hall at 311 Second Street, P.O. Box 1420, San Juan Bautista, CA 95045, or e-mail to [email protected] for receipt not later than 4:00 p.m. on Tuesday, January 31, 2023. Appointment to fill the vacancy will be addressed at the February 21, 2023 Regular Meeting of the City Council, at 6:00 p.m. Applicants should plan to attend.
City of San Juan Bautista
311 Second Street
P.O. Box 1420
San Juan Bautista, CA 95045
(831) 623-4661
www.san-juan-bautista.ca.us
Posted 1/6/2023
Item# 8A
City Council Meeting
January 24, 2023