AGENDA
Any records relating to an agenda item, received by a majority or more of the Council less than 24 hours before the meeting, shall be available for inspection online and in the City Hall lobby. Sign Language interpreters may be requested by calling (415) 485-3066 (voice), emailing [email protected] or using the California Telecommunications Relay Service by dialing “711”, at least 72 hours in advance of the meeting. Copies of documents are available in accessible formats upon request.
SAN RAFAEL CITY COUNCIL SPECIAL MEETING
MONDAY, SEPTEMBER 19, 2022 AT 6:00 P.M.
In-Person:
San Rafael City Council Chambers
1400 Fifth Avenue, San Rafael, CA 94901
Participate Virtually:
Watch on Zoom Webinar: https://tinyurl.com/CC-2022-09-19 Watch on YouTube: www.youtube.com/cityofsanrafael
Listen by phone: (669) 900-9128
ID: 899-2635-9885
One Tap Mobile: US: +16699009128,,89926359885#
OTHER AGENDA ITEMS:
1. Other Agenda Items:
a. Grand Jury Report - Affordable Housing: Time for Collaboration in Marin Resolution Approving and Authorizing the Mayor to Execute the Response to the Marin County Civil Grand Jury Report Entitled - Affordable Housing: Time for Collaboration In Marin (CD)
Recommended Action – Adopt Resolution
b. Fiscal Year 2021-22 City-Wide Budget Amendments and Fiscal Year 2022-23 Update Resolution Adopting Amendments to the City of San Rafael Budget for Fiscal Year 2021- 2022 for the Purpose of Confirming Authorized Appropriations and Transfers (Fin) Recommended Action – Adopt Resolution
ADJOURNMENT:
____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting:
Disposition:
`
Agenda Item No: 1.a
Meeting Date: September 19, 2022
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Community Development
Prepared by: Alicia Giudice
Community Development Director
Alexis Captanian, Housing Analyst
City Manager Approval: ______________
TOPIC: GRAND JURY REPORT – AFFORDABLE HOUSING: TIME FOR COLLABORATION IN MARIN
SUBJECT: RESOLUTION APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE RESPONSE TO THE MARIN COUNTY CIVIL GRAND JURY REPORT ENTITLED – AFFORDABLE HOUSING: TIME FOR COLLABORATION IN MARIN
EXECUTIVE SUMMARY:
The Marin County Civil Grand Jury has published a report entitled Affordable Housing: Time for Collaboration in Marin. The Grand Jury Report lists ten findings and one suggested recommendation to address the housing affordability challenge in Marin County. The Grand Jury has requested that the City of San Rafael review and respond to the findings and suggested recommendation, which focuses on a coordinated regional approach to affordable and workforce housing policy. A response to the findings and suggested recommendation has also been requested of the County of Marin, the other Marin cities and towns, and the Transportation Authority of Marin. The City’s written response must be submitted to the Grand Jury by September 22, 2022.
Staff has reviewed the Grand Jury Report, met with staff from the County and other cities and towns to discuss a coordinated response, and prepared a response to the findings and suggested recommendation that aligns substantially with other Marin jurisdictions. It is requested that the City Council authorize the Mayor to execute the City’s response to the Grand Jury Report.
RECOMMENDATION:
It is recommended that the City Council adopt the attached resolution (Attachment 1).
BACKGROUND:
On June 24, 2022, the 2021-2022 Marin County Civil Grand Jury released a report entitled Affordable Housing: Time for Collaboration in Marin (Grand Jury Report). This Grand Jury Report addresses the lack of affordable housing in Marin and offers a suggested solution to facilitate the development of more SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
affordable housing through regional coordination. This Grand Jury Report can be accessed at the following link:
https://www.marincounty.org/-/media/files/departments/gj/reports-responses/2021-22/affordablehousing--time-for-collaboration-in-marin.pdf?la=en The methodology used for preparing this report included:
• conducting interviews with elected officials and staff members from Marin County, local cities and towns, and neighboring counties;
• consulting experts on affordable housing issues, executives of both nonprofit and for-profit housing developers, and individuals from local housing advocacy groups; • reviewing past civil grand jury reports, past Marin County planning documents and proposals, academic studies, government reports and documents, and news articles on a broad range of affordable housing issues; and
• inspecting potential affordable housing building sites located in the county.
The “Discussion” section of the Grand Jury Report outlines the need for more affordable and workforce housing in Marin, Marin municipalities’ performance in meeting Regional Housing Needs Allocations (RHNA), and the implications of new statewide housing legislation SB35 for local control. The Grand Jury then presents the benefits of a countywide approach, including increased access to funding, and offers several approaches to countywide coordination, such as formation of a Joint Powers Authority (JPA) or a subregion for the Housing Element process. The Grand Jury suggests creating a regional authority or tasking an existing authority such as the Transportation Authority of Marin to facilitate affordable housing policy countywide, and references the City County Planning Committee (CCPC), previously proposed in 2006, as a potential model.
The Grand Jury Report presents the following findings:
F1. Marin County lacks sufficient affordable and workforce housing.
F2. Increasingly, individuals who work in Marin County cannot afford to live in the county, many of whom must commute from outside the county.
F3. Recent California laws provide new incentives for local governments to collaborate in developing affordable housing.
F4. The Regional Housing Needs Allocation allotments are widely viewed as unachievable for the county and many Marin municipalities.
F5. Failure to achieve Regional Housing Needs Allocation allotments will trigger loss of local control over housing development.
F6. There is new and increasing support and willingness to cooperate among elected officials for building affordable housing in Marin.
F7. A countywide approach to housing development would enhance Marin’s ability to meet affordable and workforce housing needs.
F8. Large affordable housing developments in Marin require subsidies to be financially feasible.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
F9. Organizations with expertise and access to subsidies and other funding sources are successfully building new affordable and workforce housing developments in Marin.
F10. A countywide approach to housing development would enhance Marin’s ability to secure funding for affordable and workforce housing.
The Grand Jury Report presents the following recommendation:
R1. No later than December 31, 2022, the Marin County Board of Supervisors and Marin’s city and town councils should jointly create a regional authority, or empower an existing authority such as the Transportation Authority of Marin, to coordinate affordable and workforce housing policy on a countywide basis.
The Grand Jury Report dated June 24, 2022 was distributed to the County of Marin and all cities and towns in Marin County. In addition, the report was distributed to the Transportation Authority of Marin.
The City of San Rafael has been requested to respond to the findings and recommendation R1.
The City is required to respond to the Grand Jury Report. Penal Code section 933(c) states in part:
“No later than 90 days after the Grand Jury submits a final report…the governing body of the public agency shall comment to the presiding Judge of the Superior Court on the findings and recommendations…[contained in the report].” To comply with this statute, the City’s response to the Grand Jury report must be approved by Resolution of the City Council and submitted to the Presiding Judge of the Marin County Superior Court and the Foreperson of the Grand Jury on or before September 22, 2022. A proposed Resolution is attached that would approve the City’s response.
ANALYSIS:
Overall, the Grand Jury Report does not present any previously unknown findings or information. The suggested solution to deepen collaboration countywide to achieve more affordable housing makes sense, and San Rafael currently engages with the County and other jurisdictions in several ways. While the report briefly acknowledges some of these efforts, Staff has taken the opportunity in its response to the Grand Jury Report to further describe current collaboration on housing with other jurisdictions, and to outline future possibilities and intentions.
Response to Report Findings
The Civil Grand Jury has requested that the City of San Rafael respond to the ten report findings listed above. Staff has reviewed these findings and agrees with the findings numbered F1, F2, F3, F4, F5, F6, F7, F9, and F10. Staff partially disagrees with the finding numbered F8. Staff has provided direct comments in response to F8 and four of the other findings:
F4. The Regional Housing Needs Allocation allotments are widely viewed as unachievable for the county and many Marin municipalities.
Response: Agree.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
The City supports using the Regional Housing Needs Allocation (RHNA) as a means of identifying sites for housing and is on track to meet its increased market-rate allocation for the 2023-2031 planning period.
In August 2021, the City Council adopted General Plan 2040. General Plan 2040 maintained almost all existing land use designations, which have existed since at least 2000. Most of these designations already allow residential development. The City is also actively seeking ways to support affordable and workforce/moderate housing projects. That said, whether the amount of housing allocated through RHNA can be built within the eight-year timeframe will depend on many factors that are outside the City’s control, such as owner interest, availability of land, financing, and other market forces.
F7. A countywide approach to housing development would enhance Marin’s ability to meet affordable and workforce housing needs.
Response: Agree.
San Rafael collaborates and coordinates housing programs with Marin County and other towns and cities in a number of areas, as discussed further in the response to Recommendation R1 below.
F8. Large affordable housing developments in Marin require subsidies to be financially feasible.
Response: Partially disagree.
Regardless of size, all affordable housing developments require subsidies. In fact, smaller developments are more expensive, more difficult to fund, and cost more per unit than larger developments.
F9. Organizations with expertise and access to subsidies and other funding sources are successfully building new affordable and workforce housing developments in Marin.
Response: Agree.
The Vivalon Healthy Aging Campus and Senior Housing currently under construction in San Rafael is an example of successful countywide partnership. Eden Housing and Vivalon are collaborating on a mixeduse project with studios and 1-bedroom apartments on the upper floors, which will be available to lowincome seniors. The City of San Rafael and County of Marin provided funding, and the Marin Housing Authority provided project-based vouchers.
F10. A countywide approach to housing development would enhance Marin’s ability to secure funding for affordable and workforce housing.
Response: Agree.
San Rafael collaborates and coordinates housing programs with Marin County and other towns and cities in a number of areas, as discussed further in the response to Recommendation R1 below.
Response to Report Recommendation
The Civil Grand Jury has requested that the City of San Rafael respond to report recommendation R1:
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5
R1. No later than December 31, 2022, the Marin County Board of Supervisors and Marin’s city and town councils should jointly create a regional authority, or empower an existing authority such as the Transportation Authority of Marin, to coordinate affordable and workforce housing policy on a countywide basis.
This recommendation will not be implemented because it is not warranted or reasonable.
The City agrees that more collaboration on housing policy and funding would be beneficial and will likely result in more affordable housing in our communities. In fact, much work has been done to date, as described below, and additional opportunities are being developed. The City remains open to additional collaboration and/or more formal arrangements in the future.
However, forming a Joint Powers Agreement (JPA) with 12 jurisdictions would take a significant investment of time, funding and energy that would likely impair current housing efforts, and of course requires willing partners. Doing so by December 31, 2022 is not a realistic timeline, particularly given that each Marin jurisdiction is currently striving to meet statutory deadlines to submit their housing element by January 31, 2023.
Below is a brief summary of existing and recommended new pursuits for strengthening interjurisdictional coordination and planning around affordable and workforce housing:
Existing collaboration
The City has long participated in housing collaboration with the County and other cities and towns, beginning in 2008 with the development of the countywide Housing Element Workbook, which provided a shared template, background information and model programs and policies for development of the 2009 Housing Element. This effort resulted in all Marin municipalities receiving certified housing elements, which in turn made more housing funds available.
In 2019, City staff joined a countywide working group of Planning Directors and planning staff to encourage interjurisdictional collaboration on housing issues and solutions, with a specific focus on responding to new state legislation to streamline housing developments. The working group established common goals and coordinated on housing legislation, planning, production, and preservation of existing affordability. The working group meets once monthly and has evolved from briefings and discussions regarding state housing legislation into collaboration on projects to facilitate the development of more housing in Marin County. The group received funds from ABAG to work collaboratively on shared Housing Element deliverables including translation dollars, Affirmatively Furthering Fair Housing products, visualizations, and a countywide website. In some instances where the City already had begun certain policies and projects ahead of other jurisdictions, the City shared its conclusions and remained open to alignment when in service to increasing housing supply.
Future collaboration
The City intends to expand collaboration with the County and other cities and towns in the following ways:
1. Commit to collaboration: In the City’s draft 2023-2031 Housing Element, a proposed new program would “Collaborate with Marin County, cities and towns to address regional planning and housing issues”
▪ This would require the City, along with Marin County and other cities and towns, to commit resources to collaboration and hold a public hearing annually to report on progress to the respective decision-making body and report to the State through the Annual Progress Report (APR).
2. Implementation of Housing Element programs: During implementation of the 2023-2031 Housing Element, the City will collaborate with the County and other cities and towns on program SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6
implementation, especially those related to Affirmatively Furthering Fair Housing and tenant protections. This will include:
▪ Model ordinances: helping to inform model ordinances developed by the County, to be considered by the Board of Supervisors and City Councils. ▪ Outreach and community engagement: Conducting shared outreach and community engagement.
3. Housing Element Collaboration: Develop a deeper and more formalized collaboration on the Housing Element in the future. This could include:
▪ Shared Housing Element components and policy toolkit: Develop shared background and outreach sections, and a toolkit of programs and policies. This would provide consistency, save funds and improve accessibility for stakeholders and housing developers. ▪ Consider a Subregional approach: The County and cities and towns could consider developing a subregional approach to meeting the Regional Housing Need Allocation in the next housing element cycle.
▪ Shared consultants to conserve resources and develop more consistent policies and programs, the County, cities and towns will seek to hire the same consultants to prepare parts of the housing element, conduct regional outreach and conduct any needed environmental review.
4. Funding collaboration: explore ways to more effectively collaborate on shared funding for affordable housing. This could include:
▪ Inclusionary policies: Developing more consistent fees to encourage and facilitate more affordable housing as part of new market rate developments and increase funding for affordable housing.
▪ Regional housing trust fund: Consider the establishment of a regional housing trust fund which would make state applications more competitive and lower the administrative burden for cities and towns.
▪ Community Development Block Funds: Continue to collaborate as part of the Marin County entitlement community on using CDBG funds to fund affordable housing and leverage other State and Federal Sources.
▪ Permanent Local Housing Allocation (PLHA): Continue to collaborate as an entitlement community to use PLHA funds on housing-related projects and programs that assist in addressing the unmet housing needs of our local communities. ▪ The Bay Area Housing Finance Authority (BAHFA): Actively participate and support the efforts of BAHFA to raise funds to help address affordable housing and housing stability.
Conclusions
The Grand Jury Report focuses on enhanced regional collaboration to build more affordable housing while retaining local control, stating: “Regardless of the specific mechanism utilized, Marin must establish a strong culture of inter-jurisdictional collaboration to address housing needs beyond basic planning issues.” While the City will not implement the report’s recommendation for a regional authority, Staff agrees that a culture of inter-jurisdictional collaboration is critical, and will continue to build relationships, leverage existing collaborations, and pursue additional opportunities to coordinate approaches with other jurisdictions, when in alignment with San Rafael’s commitment to creating more affordable and workforce housing.
FISCAL IMPACT:
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 7
City review and comment on this Civil Grand Jury Report has no fiscal impact on the City of San Rafael.
OPTIONS:
The City is required to respond, however, the City Council has the following options to consider on this matter:
1. Adopt resolution as presented, approving the proposed response.
2. Adopt resolution with modifications to the proposed response.
3. Direct staff to return with more information.
RECOMMENDED ACTION:
Adopt resolution approving and authorizing the Mayor to execute the proposed response to the Marin County Civil Grand Jury Report.
ATTACHMENTS:
1. Resolution, with attached City response to Grand Jury report RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL
APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE THE
RESPONSE TO THE MARIN COUNTY CIVIL GRAND JURY REPORT ENTITLED - AFFORDABLE HOUSING: TIME FOR COLLABORATION IN MARIN
WHEREAS, pursuant to Penal Code section 933(c), a public agency which receives a Grand Jury Report with findings and recommendations pertaining to matters under the control of the public agency must, within ninety (90) days, provide a written response to the Presiding Judge of the Superior Court with a copy to the Foreperson of the Grand Jury, responding to the Report’s findings and recommendations; and
WHEREAS, Penal Code section 933(c) specifically requires that the “governing body” of the public agency provide said response and, in order to lawfully comply, the governing body must consider and adopt the response at a noticed public meeting pursuant to the Brown Act; and WHEREAS, the City Council of the City of San Rafael has received and reviewed the Marin County Grand Jury Report, dated June 24, 2022, entitled “Affordable Housing: Time for Collaboration in Marin;” and
WHEREAS, at a regular City Council meeting held on September 6, 2022, the Grand Jury Report was presented, public testimony was accepted, and the City Council discussed the report findings and recommendations.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San Rafael hereby:
1. Approves and authorizes the Mayor to execute the City’s response to the Marin County Grand Jury’s June 24, 2022 report, entitled “Affordable Housing: Time for Collaboration in Marin,” a copy of which response is attached hereto and incorporated herein by reference.
2. Directs the City Clerk to forward the City’s response forthwith to the Presiding Judge of the Marin County Superior Court and to the Foreperson of the Marin County Grand Jury.
I, Lindsay Lara, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a special meeting of the San Rafael City Council held on the 19th day of September 2022, by the following vote to wit:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
____________________________________
LINDSAY LARA, City Clerk
RESPONSE TO GRAND JURY REPORT FINDINGS AND
RECOMMENDATIONS
REPORT TITLE: “AFFORDABLE HOUSING: TIME FOR COLLABORATION IN MARIN” REPORT DATE: June 24, 2022
RESPONSE BY: San Rafael City Council
GRAND JURY FINDINGS
▪ We agree with the findings numbered: F1, F2, F3, F4, F5, F6, F7, F9, and F10 ▪ We disagree wholly or partially with the finding numbered: F8
GRAND JURY RECOMMENDATIONS
▪ Recommendation numbered R1 will not be implemented because it is not warranted or reasonable.
Date: _____________________ Signed: __________________________ Mayor Kate Colin
City of San Rafael Response to Grand Jury Report Findings and Recommendations “Affordable Housing: Time for Collaboration in Marin”
(June 24, 2022)
City of San Rafael Response to Grand Jury Findings and Recommendations Page 2 of 5
RESPONSE TO GRAND JURY FINDINGS
F1. Marin County lacks sufficient affordable and workforce housing.
Response: Agree.
F2. Increasingly, individuals who work in Marin County cannot afford to live in the county, many of whom must commute from outside the county.
Response: Agree.
F3. Recent California laws provide new incentives for local governments to collaborate in developing affordable housing.
Response: Agree.
F4. The Regional Housing Needs Allocation allotments are widely viewed as unachievable for the county and many Marin municipalities.
Response: Agree.
The City supports using the Regional Housing Needs Allocation (RHNA) as a means of identifying sites for housing and is on track to meet its increased market-rate allocation for the 2023-2031 planning period. In August 2021, the City Council adopted General Plan2040.
General Plan2040 maintained almost all existing land use designations, which have existed since at least 2000. Most of these designations already allow residential development. The City is also actively seeking ways to support affordable and workforce/moderate housing projects. That said, whether the amount of housing allocated through RHNA can be built within the eight-year timeframe will depend on many factors that are outside the City’s control, such as owner interest, availability of land, financing, and other market forces.
F5. Failure to achieve Regional Housing Needs Allocation allotments will trigger loss of local control over housing development.
Response: Agree.
F6. There is new and increasing support and willingness to cooperate among elected officials for building affordable housing in Marin.
Response: Agree.
F7. A countywide approach to housing development would enhance Marin’s ability to meet affordable and workforce housing needs.
City of San Rafael Response to Grand Jury Report Findings and Recommendations “Affordable Housing: Time for Collaboration in Marin”
(June 24, 2022)
City of San Rafael Response to Grand Jury Findings and Recommendations Page 3 of 5 Response: Agree.
San Rafael collaborates and coordinates housing programs with Marin County and other towns and cities in a number of areas, as discussed further in the response to Recommendation R1 below.
F8. Large affordable housing developments in Marin require subsidies to be financially feasible.
Response: Partially disagree.
Regardless of size, all affordable housing developments require subsidies. In fact, smaller developments are more expensive, more difficult to fund, and cost more per unit than larger developments.
F9. Organizations with expertise and access to subsidies and other funding sources are successfully building new affordable and workforce housing developments in Marin.
Response: Agree.
The Vivalon Healthy Aging Campus and Senior Housing currently under construction in San Rafael is an example of successful countywide partnership. Eden Housing and Vivalon are collaborating on a mixed-use project with studios and 1-bedroom apartments on the upper floors, which will be available to low-income seniors. The City of San Rafael and County of Marin provided funding, and the Marin Housing Authority provided project-based vouchers.
F10. A countywide approach to housing development would enhance Marin’s ability to secure funding for affordable and workforce housing.
Response: Agree.
San Rafael collaborates and coordinates housing programs with Marin County and other towns and cities in a number of areas, as discussed further in the response to Recommendation R1 below.
RESPONSE TO GRAND JURY RECOMMENDATIONS
The Marin County Civil Grand Jury recommends the following:
R1. No later than December 31, 2022, the Marin County Board of Supervisors and Marin’s city and town councils should jointly create a regional authority, or empower an existing authority such as the Transportation Authority of Marin, to coordinate affordable and workforce housing policy on a countywide basis.
This recommendation will not be implemented because it is not warranted or reasonable.
The City agrees that more collaboration on housing policy and funding would be beneficial and will likely result in more affordable housing in our communities. In fact, much work has been City of San Rafael Response to Grand Jury Report Findings and Recommendations “Affordable Housing: Time for Collaboration in Marin”
(June 24, 2022)
City of San Rafael Response to Grand Jury Findings and Recommendations Page 4 of 5 done to date, as described below, and additional opportunities are being developed. The City remains open to additional collaboration and/or more formal arrangements in the future.
However, forming a Joint Powers Agreement (JPA) with 12 jurisdictions would take a significant investment of time, funding and energy that would likely impair current housing efforts, and of course requires willing partners. Doing so by December 31, 2022 is not a realistic timeline, particularly given that each Marin jurisdiction is currently striving to meet statutory deadlines to submit their housing element by January 31, 2023.
Below is a brief summary of existing and recommended new pursuits for strengthening interjurisdictional coordination and planning around affordable and workforce housing:
Existing collaboration
The City has long participated in housing collaboration with the County and other cities and towns, beginning in 2008 with the development of the countywide Housing Element Workbook, which provided a shared template, background information and model programs and policies for development of the 2009 Housing Element. This effort resulted in all Marin municipalities receiving certified housing elements, which in turn made more housing funds available.
In 2019, City staff joined a countywide working group of Planning Directors and planning staff to encourage interjurisdictional collaboration on housing issues and solutions, with a specific focus on responding to new state legislation to streamline housing developments. The working group established common goals and coordinated on housing legislation, planning, production, and preservation of existing affordability. The working group meets once monthly and has evolved from briefings and discussions regarding state housing legislation into collaboration on projects to facilitate the development of more housing in Marin County. The group received funds from ABAG to work collaboratively on shared Housing Element deliverables including translation dollars, Affirmatively Furthering Fair Housing products, visualizations, and a countywide website. In some instances where the City already had begun certain policies and projects ahead of other jurisdictions, the City shared its conclusions and remained open to alignment when in service to increasing housing supply.
Future collaboration
The City intends to expand collaboration with the County and other cities and towns in the following ways:
1. Commit to collaboration: In the City’s draft 2023-2031 Housing Element, a proposed new program would “Collaborate with Marin County, cities and towns to address regional planning and housing issues”
▪ This would require the City, along with Marin County and other cities and towns, to commit resources to collaboration and hold a public hearing annually to report on progress to the respective decision-making body and report to the State through the Annual Progress Report (APR).
2. Implementation of Housing Element programs: During implementation of the 2023- 2031 Housing Element, the City will collaborate with the County and other cities and City of San Rafael Response to Grand Jury Report Findings and Recommendations “Affordable Housing: Time for Collaboration in Marin”
(June 24, 2022)
City of San Rafael Response to Grand Jury Findings and Recommendations Page 5 of 5 towns on program implementation, especially those related to Affirmatively Furthering Fair Housing and tenant protections. This will include:
▪ Model ordinances: helping to inform model ordinances developed by the County, to be considered by the Board of Supervisors and City Councils. ▪ Outreach and community engagement: Conducting shared outreach and community engagement.
3. Housing Element Collaboration: Develop a deeper and more formalized collaboration on the Housing Element in the future. This could include:
▪ Shared Housing Element components and policy toolkit: Develop shared background and outreach sections, and a toolkit of programs and policies. This would provide consistency, save funds and improve accessibility for stakeholders and housing developers.
▪ Consider a Subregional approach: The County and cities and towns could consider developing a subregional approach to meeting the Regional Housing Need Allocation in the next housing element cycle.
▪ Shared consultants to conserve resources and develop more consistent policies and programs, the County, cities and towns will seek to hire the same consultants to prepare parts of the housing element, conduct regional outreach and conduct any needed environmental review.
4. Funding collaboration: explore ways to more effectively collaborate on shared funding for affordable housing. This could include:
▪ Inclusionary policies: Developing more consistent fees to encourage and facilitate more affordable housing as part of new market rate developments and increase funding for affordable housing.
▪ Regional housing trust fund: Consider the establishment of a regional housing trust fund which would make state applications more competitive and lower the administrative burden for cities and towns.
▪ Community Development Block Funds: Continue to collaborate as part of the Marin County entitlement community on using CDBG funds to fund affordable housing and leverage other State and Federal Sources.
▪ Permanent Local Housing Allocation (PLHA): Continue to collaborate as an entitlement community to use PLHA funds on housing-related projects and programs that assist in addressing the unmet housing needs of our local communities.
▪ The Bay Area Housing Finance Authority (BAHFA): Actively participate and support the efforts of BAHFA to raise funds to help address affordable housing and housing stability.
____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting:
Disposition:
Agenda Item No: 1.b
Meeting Date: September 19, 2022
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Finance
Prepared by: Nadine Atieh Hade,
Administrative Services Director
City Manager Approval: ______________
TOPIC: FISCAL YEAR 2021-2022 CITY-WIDE BUDGET AMENDMENTS AND FISCAL YEAR 2022-2023 UPDATE
SUBJECT: RESOLUTION ADOPTING AMENDMENTS TO THE CITY OF SAN RAFAEL BUDGET FOR FISCAL YEAR 2021-2022 FOR THE PURPOSE OF CONFIRMING AUTHORIZED
APPROPRIATIONS AND TRANSFERS
RECOMMENDATION: Adopt resolution as presented.
BACKGROUND: During the process of developing and recommending the fiscal year 2021-22 budget, staff provided updates on the fiscal performance of the General Fund and projections through fiscal yearend.
The fiscal year 2021-22 City-wide budget was last presented to the City Council on June 21, 2022, during the budget approval process for the fiscal year 2022-23. At that point, staff shared updated projections and noted adjustments would be formally requested as part of the year-end update. Since the close of the fiscal year on June 30, 2022, staff has reviewed the revenues and expenditures in the General Fund, special revenue funds and other special purpose funds. This review has yielded adjustments that are specific to year-end and clean up in nature to special revenue funds and other special purpose funds.
Aside from the adjustments recommended during the June 21, 2022 meeting, staff is recommending year-end adjustments to align the budget with actuals. These budget adjustments are recommended by the City’s outside auditors as the approval by the City Council provides for complete budget accountability.
The purpose of these amendments is to formally authorize the expenditures and transfers required in certain funds to fulfill their respective purposes and functions through June 30, 2022.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
ANALYSIS:
General Fund
Revenues and Other Sources:
Revenues: The original FY 2021-22 budget, adopted on June 21, 2021, projected $87,861,080 in revenues. The City worked with two revenue consulting companies (HdL and Management Partners) and other local agencies to project revenues for FY 2021-22. As the recovery from the pandemic continued to outpace projections, the mid-year budget review (updated budget) presented on March 7, 2022, estimated an increase in revenues of $5,060,000 for a projected balance of $92,921,080 citing higher than anticipated sales and use tax receipts.
On June 21, 2022, revenues were projected to be $93,160,919, which was 0.3% above the updated budget, based on activity through April. At this time the projected increase did not include the impact of recognition of American Rescue Plan Act (ARPA) funds in the amount of $16,088,886, which was noted in the June staff report. With the addition of these revenues, staff now projects revenues to be $109,009,966 inclusive of ARPA revenue.
As the remainder of the year has come to a close, we’ve begun to see a macro-economic shift as the highs of the recent pandemic recovery have given way to recessionary fears. Sales and use taxes, which account for approximately 48% of the adjusted general fund budget, began to pull back a bit in the fourth quarter from the stellar returns of the second and third quarters to end the year roughly flat when compared to prior the prior year. This is owing to both the general economic slow-down to end the fiscal year as well as an approximately $600,000 adverse action by the California Department of Tax and Fee Administration regarding prior period misallocations of sales tax revenues to the City.
Property taxes, which account for about 30% of the general fund budget, have continued to achieve strong growth at 4.4% year-over-year and an average of 5% over the last three years. Growth can be expected to slow a bit in the coming year with the rise in interest rates cooling the frenzied housing market of late, however, it remains a strong and stable revenue stream for City.
In other revenue items, investment earnings took a sharp decline as high inflation and interest rate increases combined to take a heavy toll on the overall bond market. The City recorded a net investment loss of $2,062,074 as a result, however, these losses are unrealized and are caused by fair value measurement as of the report date (i.e., the City cannot currently sell its securities for a price commensurate with its amortized cost) as well as the erosion of prior year unrealized gains as a result of declining interest rates. As the City intends to hold the securities to maturity, these temporary losses will give way to offsetting gains in the future. Also notable is the recognition of ARPA funds in the amount of $16,088,886 during the year. These are Federal funds that have been earmarked for a variety of important projects throughout the City that will be discussed further in this report. Staff requests the budget be revised to reflect the recognition of these grant funds.
Revised revenues of $109,009,966 are 24% above the originally adopted budget for the reasons stated above.
Other sources: No adjustments are requested at this time pertaining to other sources of revenue in the general fund.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
Expenditures and Other Uses:
Expenditures: The original approved FY 2021-22 budget expenditures totaled $87,562,734 and were increased by $1,083,374 to $88,646,108 during the mid-year review process. As presented during the June 21, 2022, meeting an additional $2,700,000 in appropriations are requested to cover liabilities resulting from the City’s Workers' Compensation and Liability program actuarial studies performed during the year. Total expenditures are $91,346,108.
Other uses: An increase to transfers out in the amount of $9,000 is requested as a transfer to the Loch Lomond Marina assessment district to reimburse the fund for staff time charged by the City in the prior year for services that were ultimately not rendered.
Staff recommends the transfer from the general fund to the essential facilities fund in the amount of $714,885. When Measure E, the use tax of 0.75%, was voted into place in November 2013, it was approved by Council that 1/3 of the tax would be transferred to the essential facilities fund at year-end to assist in construction costs and debt servicing. This year, the amount was approximately $4.9 million but the general fund made principal and interest payments towards the debt on the facilities in the amount of $4.3 million. This leaves a balance of $714,885 to transfer to the essential facilities fund to support capital projects.
Proposed changes to the general fund revenues, expenditures and transfers are detailed in the table below.
The net impact of all proposed changes on the general fund is $12,665,001 of additional revenues and transfers.
Other Funds
Staff is requesting the approval of $3,765,205 in increased resources and $4,613,564 in increases of appropriations to other funds that are detailed in Attachment A.
General Fund
Adopted Budget
FY 2021-22
Approved
Changes Current Budget
Proposed
Changes Revised Budget
Revenues 87,861,080 5,060,000 92,921,080 16,088,886 109,009,966 Transfers in 1,755,022 1,755,022 - 1,755,022
Total Resources 89,616,102 5,060,000 94,676,102 16,088,886 110,764,988 Expenditures 87,562,734 1,083,374 88,646,108 2,700,000 91,346,108 Operating Transfer out 2,000,000 250,000 2,250,000 723,885 2,973,885 Total Appropriations 89,562,734 1,333,374 90,896,108 3,423,885 94,319,993 Net Result 53,368 3,726,626 3,779,994 12,665,001 16,444,995 Allocations
Use/(Source) of Emergency
Reserves (720,651) (47,960) (768,611) (324,548) (1,093,159) Use of Prior Period funds - 533,374 533,374 - 533,374
Available Funds (667,283) 4,212,040 3,544,757 12,340,453 15,885,210 SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
The net impact of all proposed changes on other funds of $848,360 in additional expenditures and transfers is summarized below:
Other year-end communications:
The City’s Pension liability has achieved significant progress that will be reflected on the city-wide statement of net position as of the fiscal year ending June 30, 2022. When the Marin County Employees’ Retirement Association (MCERA) Valuation from June 30, 2020, was updated to June 30, 2021, for financial reporting purposes in the actuary’s annual GASB 67/68 report, the result was full funding of the City’s pension liability. This was the result of extraordinary investment income during the year ended June 30, 2021, that is used as the measurement period for reporting June 30, 2022 and is the measure that is used for financial statement and related disclosure preparation. Therefore, our Annual Comprehensive Financial Report for fiscal 2022 will disclose a fully funded pension liability. However, when the new June 30, 2021, valuation was completed in February of 2022 the City’s funded ratio dropped to 95.8% and with the market declines experienced in fiscal 2022 it can be expected to be reduced further with the results being reported in the City’s June 30, 2023, annual report.
As staff completes its preparation of the government wide financial statements for the year-end audit, net results are estimated at $16-17 million, with the vast majority already allocated to planned expenses in the coming year(s). Staff will not have a finalized amount until the audit is completed as there could be other revenues pertaining to FY 2021-22 that trickle in through the end of September and the auditors could have proposed adjustments based on their review. Staff is recommending that the bulk of the net unassigned funds be assigned as following:
• $1,093,159 to the emergency and cash flow reserve to adhere to the City Council approved policy which requires minimum target reserve levels at 10% of general fund operating expenditures.
Staff has deferred its recommendation to increase the reserve level to 12% of general fund operating expenditures as there are currently projects on the horizon that are supported by grants and require a City match. Staff recommends keeping net available funds for purposes of matching the grants when the time comes.
• $14,971,510 earmarked for approved projects funded by ARPA proceeds supporting the City’s policy focus areas of economic recovery, housing & homelessness, racial equity, and sustainability, climate change & disasters.
• Any remaining fund balance following the above requested assignments earmarked for required grant matching for the Pickleweed Park Field Renovation project of which a total of $4.24 million is needed.
Other Funds
Adopted Budget
FY 2021-22
Approved
Changes Current Budget
Proposed
Changes Revised Budget
Revenues 50,163,304 50,000 50,213,304 2,725,463 52,938,767 Transfers in 2,085,000 1,562,000 3,647,000 1,039,742 4,686,742 Total Resources 52,248,304 1,612,000 53,860,304 3,765,204 57,625,508 Expenditures 54,400,936 37,017,905 91,418,841 4,297,707 95,716,548 Transfers out 1,840,022 1,312,000 3,152,022 315,857 3,467,879 Total Appropriations 56,240,958 38,329,905 94,570,863 4,613,564 99,184,427 Net Results (3,992,654) (36,717,905) (40,710,559) (848,360) (41,558,919) SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5
The Parking Services Fund continues to reel from the adverse effects of the pandemic. Although ending the year with a positive change in net position of $1,128,068, the Fund benefitted from large favorable adjustments for Pension and OPEB expense related to investment gains of the prior fiscal year. The Parking Fund is an Enterprise Fund and, therefore, follows the accrual basis of accounting and economic resources measurement focus as opposed to governmental funds, which use a modified accrual basis and current financial resources measurement focus. Pension and OPEB balances are adjusted a year in arrears as they require actuarial analyses of final balances that is not completed prior to issuance of the annual report. For the fiscal year ended June 30, 2022, the Parking fund recorded favorable adjustments to expense line items in the amounts of $1,319,144 and $306,839 for Pension and OPEB, respectively. So, on an operational basis, the fund experienced a loss of approximately $500,000 during the fiscal year and staff has been analyzing the fund to provide recommendations of actions needed in order to be profitable again.
FISCAL YEAR 2022-2023 UPDATE
General Fund
It is too early in the year to predict the status of revenues and expenses. The City is focused on achieving its Goals and Objectives established for the fiscal year, implementing an updated master fee schedule, analyzing funds that continue to be adversely affected by COVID-19, such as Parking and Childcare to modify operations to be self-sustaining, and following the market closely so we can start preparing for recessionary times if needed.
The use of ARPA funds continues to be focused towards the City’s policy focus areas of economic recovery, housing & homelessness, racial equity, and sustainability, climate change & disasters.
Expenditures are separately tracked and accounted for to ensure detailed accounting and transparency of eligible uses. Staff continues to submit compliance reports to the Federal government as scheduled.
FISCAL IMPACT: This action authorizes the formal appropriation of resources in the 2021-22 fiscal year to support the actual expenditure and transfer activity through June 30, 2022, as described in this report.
No spending authority beyond what was spent or committed as of June 30, 2022, is created through this action.
RECOMMENDATION: Staff recommends that the City Council adopt the Resolution as presented.
ATTACHMENT:
1. Attachment A
2. Resolution approving fiscal year 2021-22 amendments with Exhibit I Attachment A
Resources
Proposed revenue changes
Increased funding for Workers’ Compensation Program following actuarial analysis (606)
$2,100,000
Increased funding for Liability Program following actuarial analysis (605)
600,000
999 3rd Street loan legal expense reimbursements (243) 24,563 Library grant from Sothern California Library Cooperative (215) 900 Proposed transfers in changes
Loch Lomond Marina Community Facilities District transfer to correct prior year charges (237)
$17,544
Paramedic tax capital transfer to the Essential Facilities Fund (420)
307,313
Measure E use tax transfer to the Essential Facilities Fund (420) 714,885 Total proposed changes to resources $3,765,205
Uses
Proposed expenditure changes
Increased appropriations to the Abandoned Vehicle Abatement Fund for additional personnel costs in connection with the repayment of furloughs (200)
$6,020
Increased appropriations to Library Special Assessment Fund for additional grant received during the year (215)
900
Increased appropriations for legal costs associated with 999 3rd Street loan completed earlier in the year (243)
40,574
Increased appropriations for the Measure C Wildfire Prevention Fund to match additional funding provided for Core programs during the year (242)
552,400
Increased appropriations to the East San Rafael Traffic Mitigation Fund for project support (246)
427,000
Attachment A
Increased appropriations for the Grants Fund for expenditures related to an additional sustainability grant received during the year (283)
96,150
Increased appropriations to the Capital Improvement Fund for project support (401)
197,675
Increased appropriations to the Parks Capital Improvements Fund for rekeying tennis court locks (407)
279
Increased appropriations to the Low and Moderate Income Housing Fund for legal costs associated with the Centertown project (495)
46,040
Energy efficient lighting improvements to both the Albert J. Boro Community Center and Department of Public Works building (603) 74,300
Increased appropriations to the Employee Benefits Fund for additional payments of accrued vacation and sick leave to employees upon termination in excess of budget (604)
119,420
Increased appropriations for the Liability Program to support increased claims during the year (605)
248,000
Increased appropriations for the Workers Compensation Program to fund additional claims (606)
2,325,200
Increased appropriations for the Communication Replacement Fund for increased telecommunications charges (609)
163,750
Proposed transfers out changes
Transfer from the Paramedic Tax Fund to the Essential Facilities Fund (210)
307,313
transfers out from the Loch Lomond CFD #10 to reimburse for the prior year’s expenditure charged to Loch Lomond CFD #2 (236) 8,544
Total proposed changes to uses $4,613,564
Net proposed changes to Other Funds (Resources less Uses) $(848,360) Expenditures and Transfers out as adopted fiscal year 2021-2022 $56,240,958 Expenditures and Transfers out as approved through June 30, 2022 $94,570,863 Expenditures and Transfers out with proposed changes $99,184,427 RESOLUTION NO.
RESOLUTION OF THE SAN RAFAEL CITY COUNCIL ADOPTING AMENDMENTS TO THE CITY OF SAN RAFAEL BUDGET FOR FISCAL YEAR 2021-2022 FOR THE
PURPOSE OF CONFIRMING AUTHORIZED APPROPRIATIONS AND TRANSFERS WHEREAS, the City Council approved Resolution No. 14938 adopting the fiscal year 2021-2022 budget; and
WHEREAS, the City Council approved Resolution No. 15043 amending the fiscal year 2021-2022 budget, and took other actions during the year to authorize spending; and
WHEREAS, as part of the fiscal year-end closing process, staff has reviewed and analyzed actual revenues, expenditures and transfers through June 30, 2022, has identified a need for additional budget adjustments, and has submitted its analysis and recommendations in a report to the City Council; and
WHEREAS, after examination, deliberation and due consideration, the City Council has approved the same report and recommendations; NOW, THEREFORE, BE IT RESOLVED, by the San Rafael City Council that Resolution No. 14938 for fiscal year 2021-2022 is further amended to authorize the following adjustments to resources and appropriations, which are reflected in the Consolidated Funds Schedule (Exhibit I attached hereto and incorporated herein by reference):
Revenues: Revenues: Revenues: Revenues: Revenues:
Fund Current Budget Resources Transfers in Revised Budget 001 - General Fund 94,676,102.00 16,088,886.00 110,764,988.00 215 - Library Special Assessment Fund 1,101,827.68 900.00 1,102,727.68 237 - Loch Lomond-Marina CFD #2 80,851.00 17,544.00 98,395.00 243 - Affordable Housing In-Lieu-SR 869,880.74 24,562.50 894,443.24 420 - Measure E-Public Safety Facility 17,695.22 1,022,197.61 1,039,892.83 605 - Liability Insurance Fund 1,775,494.02 600,000.00 2,375,494.02 606 - Workers Compensation Fund 2,402,621.36 2,100,000.00 4,502,621.36 Total Revenue Adjustments 100,924,472.02 18,814,348.50 1,039,741.61 120,778,562.13 Expenditures Expenditures Expenditures Expenditures Expenditures Fund Current Budget Appropriations Transfers out Revised Budget 001 - General Fund 90,896,108.00 2,700,000.00 723,884.69 94,319,992.69 200 - Abandoned Vehicle Abatement 171,464.23 6,020.00 177,484.23 210 - Emergency Medical Services 8,561,587.30 307,312.92 8,868,900.22 215 - Library Special Assessment Fund 1,230,295.98 900.00 1,231,195.98 236 - Loch Lomond CFD #10 19,148.00 8,544.00 27,692.00
237 - Loch Lomond-Marina CFD #2 350,000.00 40,573.50 390,573.50 242 - Measure C Wildfire Prevention Parcel Tax 1,817,116.32 552,400.00 2,369,516.32 246 - East SR Traffic Mitigation 1,498,837.04 427,000.00 1,925,837.04 283 - Grants Fund - Other 120,005.77 96,150.00 216,155.77 401 - Capital Improvement Fund-City 1,570,559.46 197,675.00 1,768,234.46 407 - Parks Capital Improvements Fund - 278.81 278.81
495 - Successor RDA-L & M Housing-City 95,000.00 46,040.00 141,040.00 603 - Building Maintenance Fund 745,098.15 74,300.00 819,398.15 604 - Employee Benefits Fund 1,041,759.71 119,420.00 1,161,179.71 605 - Liability Insurance Fund 2,528,985.93 248,000.00 2,776,985.93 606 - Workers Compensation Fund 2,017,859.25 2,325,200.00 4,343,059.25 609 - Communication Replacement Fund 487,735.00 163,750.00 651,485.00 Total Expenditure Adjustments 113,151,560.14 6,997,707.31 1,039,741.61 121,189,009.06 I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a special meeting of the Council of said City on Monday, the 19th day of September 2022 by the following vote, to wit:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
LINDSAY LARA, City Clerk
EXHIBIT I
TABLE I
CHANGES TO GENERAL FUND REVENUES AND OTHER SOURCES
General Fund
Adopted Budget
FY 2021-22
Approved
Changes Current Budget Proposed Changes Revised Budget
Revenues 5,060,000 87,861,080 92,921,080 16,088,886 109,009,966 Transfers in 1,755,022 1,755,022 - 1,755,022
FY 21-22 Resources 89,616,102 5,060,000 94,676,102 16,088,886 110,764,988 FY 20-21 Rollover - - - - -
Total Resources 89,616,102 5,060,000 94,676,102 16,088,886 110,764,988
TABLE II
CHANGES TO GENERAL FUND EXPENDITURES AND OTHER USES
General Fund
Adopted Budget
FY 2021-22
Approved
Changes Current Budget Proposed Changes Revised Budget
Expenditures 87,562,734 1,083,374 88,646,108 2,700,000 91,346,108 Transfer out 2,000,000 250,000 2,250,000 9,000 2,259,000 Transfer out‐CIP - - - 714,885 714,885
Total Appropriations 89,562,734 1,333,374 90,896,108 3,423,885 94,319,993
TABLE III
CHANGES TO OTHER FUND EXPENDITURES AND OTHER USES
Other Funds
Adopted Budget
FY 2021-22
Approved
Changes Current Budget Proposed Changes Revised Budget
Revenues 50,000 50,163,304 50,213,304 2,725,463 52,938,767 Transfers in 2,085,000 1,562,000 3,647,000 1,039,742 4,686,742 FY 21-22 Resources 52,248,304 1,612,000 53,860,304 3,765,204 57,625,508 FY 20-21 Rollover - - - - -
Total Resources 52,248,304 1,612,000 53,860,304 3,765,204 57,625,508 Expenditures 54,400,936 37,017,905 91,418,841 4,297,707 95,716,548 Transfer out 1,840,022 1,312,000 3,152,022 315,857 3,467,879 Total Appropriations 56,240,958 38,329,905 94,570,863 4,613,564 99,184,427 Net Results (36,717,905) (3,992,654) (40,710,559) (848,360) (41,558,919)
TABLE IV
CITY‐WIDE APPROPRIATION SUMMARY
All Funds
Adopted Budget
FY 2021-22
Approved
Changes Current Budget Proposed Changes Revised Budget
General Fund 1,333,374 89,562,734 90,896,108 3,423,885 94,319,993 Other Funds 38,329,905 56,240,958 94,570,863 4,613,564 99,184,427 Total Expenditures 38,351,279 145,803,692 184,154,971 8,037,449 192,192,420