Agenda, regular meeting — St. Helena City Council, May 23, 2023 (part 2 of 2)

Policy
Financial Policy
City of St. Helena
Administrative City Council Policy
Finance

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2. The City will conduct a mid-year financial status review to determine if projected revenues and expenditures meet target levels. If an operating deficit is projected at year-end, the City should evaluate the need for immediate corrective and/or mitigating actions, including operating or capital expenditure reductions and/or activate the use of established contingency balances. The deferral of essential and scheduled operational expenditures into the following fiscal year or the use of short-term loans and transfers to balance the budget should be avoided.

3. The City implements a formal purchasing system, principles, and guidelines to ensure that expenditure levels are monitored throughout the course of any fiscal year.

F. Cash Management

1. Annually the City’s Investment Policy P-FI-0002 is reviewed and presented to City Council for adoption.

2. Investments for the City are reported at fair value (generally based on quoted market prices). The State Treasurer’s Investment Pool and California Asset Management Program (CAMP) operate in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares.

G. Debt Management

1. The types of debt appropriate for the City include the following: general obligation bonds, bond or grant anticipation notes, lease revenue bonds, certificates of participation and lease-purchase transactions, other revenue bonds and certificates of participation, land-secured financings, such as special tax revenue bonds issued under the Mello-Roos Community Facilities Act of 1982, as amended, and limited obligation bonds issued under applicable assessment statutes, and tax increment financing to the extent permitted under state law. The City may from time to time find that other forms of debt would be beneficial to further its public purposes and may approve such debt without an amendment of this policy.

2. The City should plan the use of debt in a manner that sustains financial payments at manageable levels.

3. The City will strive to integrate its debt issuances with the goals of its capital improvement program by timing the issuance of debt to ensure that projects are available when needed in furtherance of public purposes. Normal wear and tear, upkeep and maintenance of its infrastructure and facilities should be paid from available operating revenues so as to avoid the use of debt to fund infrastructure and facilities improvements that are the result of normal wear and tear.

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4. The purposes for which long term debt may be appropriate include the following: (i) the project to be financed is necessary to provide basic services, (ii) the project to be financed will provide benefit to constituents over multiple years, (iii) total debt does not constitute an unreasonable burden to the City or its taxpayers and ratepayers, (iv) the debt is used to refinance outstanding debt in order to produce debt service savings or to realize the benefits of a debt restructuring. The City will not issue long-term debt to fund current operations and will seek to avoid the use of debt to fund infrastructure and facilities improvements in circumstances when the sole purpose of such debt financing is to reduce annual budgetary expenditures.

Debt financing should only be used for long-term capital improvement projects with a useful life exceeding the term of the financing and for which the project revenues or specific identified revenue sources are sufficient to service the long-term debt. Debt Financing can be used if the cost of financing is favorable as compared to the use of City investment holdings over the financing term.

5. It is a policy goal of the Issuer to protect taxpayers, ratepayers and constituents by utilizing conservative financing methods and techniques so as to obtain the highest practical credit ratings (if applicable) and the lowest practical borrowing costs. The City will seek to maintain a high credit rating through sound financial practices as a basis for minimizing borrowing costs.

6. Internal control procedures shall include monitoring all forms of debt annually in conjunction with the budget preparation process and report concerns and remedies, if necessary, to the City Council, to ensure that proceeds of debt will be directed to the intended use.

7. The City will diligently comply with and monitor compliance with all bond covenants.

8. The City will cause to be prepared and will timely post to the Electronic Municipal Market Access database (EMMA) all required annual continuing disclosures and, if needed, any material event notices.

9. The City will monitor all debt obligations for ongoing tax compliance and arbitrage reporting.

10. The City will not incur general obligation indebtedness for public improvements which exceed in aggregate 15% of the assessed value of all real and personal property of the City as specified in the California Government Code Section 43605.

11. The City will maintain a minimum net revenue coverage ratio for the Water and Wastewater funds (all annual revenues remaining after operating and maintenance expenses, net of pass-through grants, to annual debt service requirements net of excess appropriations required for variable rate debt) as required by each funding source.

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H. Fund Definitions

1. Governmental Fund Type Definitions
Governmental fund types include the General Fund, special revenue funds, capital projects funds, debt service funds, and permanent funds. The Governmental Accounting Standards Board (GASB) has clarified the definitions of these funds as follows:
a. General Fund – The General Fund should be used to account for and report all financial resources not accounted for and reported in another fund.
b. Special Revenue Funds – Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The restricted or committed proceeds of specific revenue sources should be expected to continue to comprise a substantial portion of the inflows reported in the fund. Other resources (investment earnings and transfers from other funds, for example) also may be reported in the fund if those resources are restricted, committed, or assigned to the specific purpose of the fund.

Governments should discontinue reporting a special revenue fund, and instead report the fund’s remaining resources in the general fund, if the government no longer expects that a substantial portion of the inflows will derive from restricted or committed revenue sources. c. Capital Projects Funds – Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Capital projects funds exclude those types of capital-related outflows financed by proprietary funds or for assets that will be held in trust for individuals, private organizations, or other governments. d. Debt Service Funds – Debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest, even if it is being accumulated for further years’ payments. Debt service funds should be used to report resources if legally mandated.
e. Permanent Funds – Permanent funds should be used to account for and report resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government’s programs. Permanent funds do not include private-purpose trust funds, which should be used to report situations in which the government is required to use the principal or earnings Agenda Item #9.10.

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for the benefit of individuals, private organizations, or other governments.

2. Proprietary Fund Type Definitions
Proprietary fund types include enterprise funds and internal service funds.

GASB has clarified the definitions of these funds as follows:
a. Enterprise Funds – GAAP provide that enterprise funds may be used to report any activity for which a fee is charged to external users for goods or services. Furthermore, a given activity must be accounted for in an enterprise fund if it meets any of the following criteria (in the context of its principal revenue sources):
a. There is outstanding debt that is backed solely by fees and charges;
b. Laws or regulations require that fees and charges be set to recover costs, including capital costs (depreciation or debt service); or
c. There is a pricing policy that fees and charges be set to recover costs, including capital costs (depreciation or debt service). b. Internal Service Funds – Internal service funds are used to report any activity that provides goods or services to other funds, departments, or agencies of the primary government and its component units, or to other governments, on a cost-reimbursement basis.

3. Fiduciary Fund Type Definitions
Generally Accepted Accounting Principles (GAAP) require fiduciary funds to report assets held in trustee or agency capacity for others cannot be used to support the government’s own programs. Fiduciary funds, as reported in GAAP financial statements, never should include resources that can be used to support the government’s own programs. Within the fiduciary funds category, funds that involve a trust agreement that affects the degree of management involvement and the length of time that the resources are held are distinguished from funds that involve only the receipt, temporary investment and remittance of fiduciary resources. Fiduciary fund types include pension, investment trust funds, private-purpose trust funds, and agency funds.
c. Pension Funds – Used to report resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, or other postemployment benefit plans, or other employee benefit plans.
d. Investment Trust Funds – Used to report the external portion of investment pools reported by the sponsoring government.

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e. Private-purpose Trust Funds – Used to report all other trust arrangements under which principal and income benefit individuals, private organizations, or other governments.
f. Agency Funds – Used to report resources held by the reporting government in a purely custodial capacity.

I. Fund Balance Classifications

1. Governmental Fund Balances
a. Fund balance is defined as the difference between assets and liabilities and in Governmental funds is reported as fund balance.

GASB No. 54 classified fund balances into the following categories:
i. Nonspendable: The nonspendable fund balance classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example, inventories and prepaid amounts. It also includes the long-term amount of loans and notes receivable, as well as property acquired for resale.
ii. Restricted: The restricted portion of fund balance is restricted to specific purposes. Examples are Gas Tax revenues and grant proceeds.
iii. Committed: The committed portion of fund balance is constrained by the limitations imposed through formal City Council action. Only formal City Council action can remove or modify a previously committed account.
iv. Assigned: The assigned portion of fund balance is established for intended use by either the City Council or its designee, such as the City Manager. No formal City Council action is needed to remove the intended use. GAAP required reserves, such as the Other Post-Employment Benefits (OPEB) reserve, belong to this category.
v. Unassigned: The unassigned portion of fund balance is that remaining after the non-spendable, the restricted, the
committed, and the assigned fund balances are identified and recorded.

The City of St. Helena will use GASB’s definitions of fund balance for the annual ACFR and for all other financial reporting. For all financial planning purposes, the term Net Position or Fund Balance will be used and will include any portion of the fund balance that is available for appropriation.

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Preferred order of use of governmental fund balances:

The City shall strive to use the most restricted fund balances prior to utilizing those that are less restricted. The following order of use reflects this guideline:
a. Non-spendable (if funds become spendable)
b. Restricted
c. Committed
d. Assigned
e. Unassigned

2. Proprietary and Fiduciary Fund Balances (Net Position) a. Fund balance is defined as the difference between assets and liabilities and in Proprietary and Fiduciary fund is reported as net position. GASB No. 63 classified reporting of net position into the following categories:
i. Net Investment in Capital Assets: The net investment in capital assets component of net position consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or
improvement of those assets.
ii. Restricted for Capital Projects: The restricted component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets.

Generally, a liability relates to restricted assets if the asset results from a resource flow that also results in the recognition of a liability or if the liability will be liquidated with restricted assets reported.
iii. Unrestricted: The unrestricted component of net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

J. Fund Balance Levels
The City of St. Helena has enacted the Fund Balance policies in an effort to ensure financial security through the maintenance of a healthy fund contingency balance that guides the creation, maintenance, and use of resources for financial stabilization purposes. The City’s primary objective is to maintain a prudent level of financial resources to protect against reducing service levels or raising taxes and fees due to Agenda Item #9.10.

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temporary revenue shortfalls or unpredicted one-time expenditures. The City also seeks to maintain the highest possible credit ratings which are dependent, in part, on the City’s maintenance of a healthy fund balance.

Balances for each of the areas below will be reported to City Council when a use of fund balance is being recommended, during mid-year and mid-cycle budget report, and on an annual basis in conjunction with the audited financials.

1. General Fund
The City’s fiscal goal is to maintain annual expenditure increases at a sustainable growth rate, and to limit expenditures to anticipated revenues in order to maintain a balanced budget. The Council’s directed target is to maintain an unassigned fund balance of thirty percent (30%) of annual operating expenditures for the fiscal year.
a. Computing General Fund Unassigned Fund Balance Percentage The City’s minimum funding target for General Fund Unassigned Fund Balance is set to 30% of the General Fund annual operating expenditure, less significant one-time revenues and expenditures. Examples include, but are not limited to: strike teams (revenues and expenditures), FEMA reimbursements, grant funding, and large capital purchases. The General Fund is described as Fund 101 only. One-time revenues and expenditures will be separately identified for tracking purposes.
b. Use of General Fund Unassigned Fund Balance
Use of General Fund Unassigned Fund Balance will only be used in extraordinary circumstances, upon the satisfaction of one of the following “economic triggers” and with the majority vote of the City Council (via resolution and through the adopted budget and/or fiscal update):
• State take-away of significant revenue
• Large drop in Property Taxes
• Major business closures (sales tax impact)
• Large, unexpected drop in Sales or Transient Occupancy taxes or other primary revenues due to severe recession
Use of General Fund Unassigned Fund Balance below the 30% reserve provides for a transition period, giving the City adequate time to realign its operating costs with available resources, while minimizing service impacts.

In the event unassigned fund balance is used, the staff will develop a one (1) to five (5) year reserve replenishment plan to meet the minimum 30% fund balance level.

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2. Buildings, Facilities, & Infrastructure Reserve
Building, facilities, and infrastructure replacement reserve should be established and maintained to provide for the timely replacement of City owned fixed assets. The balance is hereby defined as assigned by the City Council to allow the City to maintain an infrastructure reserve with a target balance equivalent to the projected annual cost of the first year Capital Improvement Plan fund expenditures.

3. Equipment, Technology, & Vehicle Replacement Reserve The balance is hereby defined as assigned by the City Council to allow the City to set aside an appropriate amount of money to property fund equipment, technology, and vehicle replacement. The City shall set aside funding annually in this reserve based on the vehicle, technology, and equipment replacement schedule.

4. Other Benefit Reserves
The City’s policy permits employees to accumulate earned but unused vacation and sick leave benefits which are eligible for payment upon separation from service. Retiring employees have the option of applying 100% of their unused sick leave accrued towards the payment of continuation insurance premiums, to the extent allowed by law. The City should set aside funding annually in this reserve to match the current liabilities.

5.2. Unassigned Operating Reserve
These balances are hereby defined as unassigned by the City Council to allow the City to weather unpredicted cyclical and rapid downturns in the economy.

These funds would be available for use in such conditions to mitigate negative economic fiscal impacts or State takeaways and can be activated within any one budget cycle through Council action. An economic downturn would entail a projected and/or sudden drop in core revenues (major tax and service revenue loss) of equal to or greater than 10% (including the impact of inflation) and/or a change in economic parameters (such as interest rates, debt service rates, pension and health rates) that cause a material change in expenditures of 10% or more, or the occurrence of a local natural disaster or unexpected financial claim requiring the immediate use of cash balances.

6. Use of Year-End Fund Balance in Excess of Targeted Reserves Fund balance is a measurement of available financial resources. The Council recognizes that the maintenance of a fund balance is essential to the preservation of the financial integrity of the City. The City goal is to use fund balance as a source to finance one-time investments, reserves, and/or commitments. As a one-time financing source, any unbudgeted year-end fund balance will be used for nonrecurring expenditures and only after the yearly audit and confirmation of the General Fund’s fund balance.

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At the end of each fiscal year, the Finance Division reports on the audited year-end financial results. Should actual General Fund revenues exceed expenditures and encumbrances, a year-end operating surplus shall be reported. Any year-end surplus that results in the General Fund fund balance exceeding the 30% fund balance target required by the policy shall be available for allocation. Division of the surplus balance shall be recommended to the City Council by the City Manager or designee based on the most critical needs at that time. Priority of allocation shall be the following, subject to Council approval:
• Imminent liability
• Offset projected future deficits
• Loan repayment acceleration
• Fund PERS unfunded liabilities
• One-time funding, non-recurring needs
• Capital assets and infrastructure

6.7. Water and Wastewater Operating Fund Balances
The City should maintain balances in the Water and Wastewater Funds at a level sufficient to accommodate operating and capital needs. City Council’s directed target for the Water Fund is 10-14 months (83%-106%) of annual operating expenditures in cash and the Wastewater Fund 6-8 months (50%- 67%) of annual operating expenditures in cash. These amounts include cash balances in the Water and Wastewater Capital Improvement Project Funds.

Multi-year fee studies for these funds should be updated periodically as a basis for defining the revenue sources necessary to maintain system infrastructure and required service levels. As a result of the periodic fee or master plan studies, adjustments to user charges may be necessary to maintain recommended fund balance levels.

K. Reserve Funds
Saving for future projects, acquisitions and other allowable purposes is an important planning consideration for local governments. Reserve funds provide a mechanism for legally saving money to finance all or part of future infrastructure, equipment, and other requirements. Reserve funds can also provide a degree of financial stability by reducing reliance on indebtedness to finance capital projects and acquisitions. In uncertain economic times, reserve funds can also provide officials with a welcomed budgetary option that can help mitigate the need to cut services or to raise taxes. In good times, money not needed for current purposes can often be set aside in reserves for future use. Expenditures from specific capital reserve funds can only be made upon authorization by the City Council.

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Reserve funds may generally be funded with:
c. Budgetary appropriations
d. Revenues not required by law to be paid into any other fund or account.

1. Capital Reserve Fund
Building, facilities, and infrastructure supported by the General Fund shall have a replacement reserve fund established and maintained to provide for the timely replacement of City owned fixed assets. The balance is hereby defined as assigned by the City Council to allow the City to maintain an infrastructure reserve with a target balance equivalent to the projected annual cost of the first year Capital Improvement Plan fund expenditures.

2. Equipment, Technology, & Vehicle Replacement Reserve Fund The balance is hereby defined as assigned by the City Council to allow the City to set aside an appropriate amount of money to property fund equipment, technology, and vehicle replacement. The City shall develop a vehicle, technology, and equipment replacement schedule and shall set aside funding annually in this reserve based on this schedule.

3. Employee Benefit Accrued Liability Reserve Fund
To be used to pay for any accrued “employee benefit” due an employee on termination of the employee’s service with the City. The City’s policy permits employees to accumulate earned but unused vacation and sick leave benefits which are eligible for payment upon separation from service. While the sick leave benefit is no longer available to the newly hired, legacy retiring employees have the option of applying 100% of their unused sick leave accrued towards the payment of continuation insurance premiums, to the extent allowed by law. The City should set aside funding annually in this reserve to match the current liabilities.

K.L. Interfund Loans
Interfund loans are the lending of cash from one City fund to another for a specific purpose and with a requirement of repayment. Interfund loans are typically shortterm in nature and constitute the allocation of cash between individual funds for working capital purposes.

Interfund loans are temporary borrowing of cash and may be made for the following reasons:
• To offset timing differences in cash flow.

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• To offset timing differences between expenditures and reimbursements, typically associated with grant funding.
• To provide funds for interim financing in conjunction with obtaining long-term financing.
• For short-term borrowing in place of external financing.

Interfund loans are not to be used to solve ongoing structural budget issues or hindering the accomplishment of any function or project for which the lending fund was established. Interfund loans are not to be used from fiscal year to fiscal year as a financing strategy. If a fund has a negative cash balance, a plan for reaching positive cash balance must be presented to City Council. A negative cash balance must be addressed in the fiscal year that the fund reaches negative cash.

Interfund loan monies may only be used for the purpose identified in the authorizing resolution. Appropriate accounting records will be maintained to reflect the balance of loans in every fund affected by such transactions. A summary of all outstanding interfund loans will be included in the Annual Comprehensive Financial Report (ACFR).

1. Interfund Loan Terms
a. Repayment of an interfund loan shall be within the same fiscal year, unless otherwise stated in the Council Resolution.
b. When required by the lending fund’s restrictions or regulations, interest will be paid by the borrowing fund to the lending fund, during the time the loan is outstanding.
c. The Council must approve interfund loans by resolution. Council approval and the resolution will include the following terms of the loan:
i. Purpose of Interfund Loan
ii. Identification of the source fund

1. Availability of unrestricted funds in the source fund

2. Review of multi-year plans for use of source fund cash

3. Analysis of legal or contractual restrictions
iii. Repayment of Interfund Loan

1. Repayment must have a payment source and funding
stream

2. Specific repayment schedule

3. Interest imposed at a rate equal to at lease investment earnings if loan did not occur (see Section III.K.2)
iv. Other Considerations

1. Feasibility of repayment
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2. Interfund Loan Interest
The following guidelines should be used in establishing the rate of interest:
a. Not lower than the “opportunity cost” if the funds were otherwise invested, such as the Local Agency Investment Fune (LAIF) or the California Asset Management Program (CAMP) pooled interest rate. b. Treasury yields or short-term bond yields for a similar term. c. Not higher than the external rate available to the City.

Interest is not required in the following circumstances:
a. The borrowing fund has no independent source of revenue other than the lending fund; or
b. The borrowing fund is normally funded by the lending fund; or c. The lending fund is the General Fund, which, being unrestricted, can loan interest-free, except to a proprietary fund (i.e., enterprise funds such as water and wastewater).

L.M. Financial Reporting
Budget decisions are of primary concern for the City Council, City Management, the public, and various stakeholders. When considering the budget, staff presents updated projections for revenues and expenditures/expenses and the reports indicate whether prior estimates are tracking with the approved budget.

Additionally, the external annual financial reporting for local governments involves producing the Annual Comprehensive Financial Report (ACFR) which is audited and produced by an independent, third party CPA/auditor. Throughout the year, the following reports are to be presented to City Council.

1. The City’s accounting and financial reports are to be maintained in conformance with GAAP.

2. Long Range Financial Forecast
a. A Long Range Financial Forecast (LRFF) for the City’s General Fund will be presented to City Council as part of the development of the annual budgetannually.
b. The LRFF provides a current and long-range financial assessment of revenues, expenditures, fund balance, and emergency reserves. The primary objective is to provide the City Council and the community with a financial forecast and identify any significant issues that may need to be addressed in the annual budget development process. c. The LRFF will consist of a baseline forecast, a recession forecast, and any other forecasts deemed necessary.
d. The LRFF is a ten-year forecast.
e. The LRFF will be updated as necessary throughout the fiscal year.

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3. Internal Financial Reporting
a. Internal financial reports help City Council, the public, and management to monitor budgetary compliance on a timely basis. b. Internal financial reports often provide more detail on individual departments than does general purpose external financial reporting (Section 4 below) and does not require an independent auditor review and audit.
c. Internal financial reporting for all funds are to be issued on a periodic and timely basis – no less than quarterly semi-annually and no more than 30 45 days after the close of the period. The report will provide detailed information for the General, Water, and Wastewater Funds and summary information for all funds will be included as attachments to the report. The report will include a summary of all checks over $50,000 issued during that quarterinterval.
c.d. A mid-cycle report will be provided by June of each non-biennial budget cycle. This report will provide detailed information for the General, Water, and Wastewater Funds and summary information for all funds will be included as attachments to the report. Updates to revenues and expenses will be provided and recommended to City Council as necessary.
d.e. An end of the fiscal year unaudited report will be issued no more than 60 days after the close of Q4 with end of year estimates for revenues and expenditures/expenses for all funds.
e.f. Periodic reports will compare the adopted budget (Original Budget), adjusted budget (Final Budget), and the year to dateyear-to-date actuals (Actual Amounts).

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restrictions on their respective uses. The audit process ensures that the purposes of the various funds were carried out and the relative authorities to spend were honored.
d. The external auditor prepares financial reports for each fund based on the requirements of the funding source and once all funds are audited, they are accounted for in the financial statements, combining schedules, and notes to the financial statements.
e. Unless extraneous circumstances occur, the City will rotate audit service providers every five years. If an auditor is being retained for longer than five years, the reason must be included in a staff report to City Council at the time of the contract execution or renewal. f. The ACFR will be completed no later than December 31st following the close of the fiscal year.
g. The City is encouraged to submit the Annual ACFR to State and/or national government finance professional organizations
(Governmental Finance Officers’ Association’s Certification of Achievement for Excellence in Financial Reporting, California Society of Municipal Finance Officers ACFR Award) for independent review and evaluation.

M.N. Review and Update
This financial policy will be reviewed periodically and updated, if necessary, to reflect any changing requirements.

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Policy # P-FI-0016
Revision # Revision #4
Implementation Date 2018-11-28
Title:

Financial Policy
Last Update Date 2022-06-28
Approval by City Council May 23, 2023 Date Approved 2023-06-23 I. Purpose, Overview and Scope of this Policy
This document establishes policies of overall financial management, budget development, and fiscal administration for the City of St. Helena. Included herein are statements and principles designed to guide the City in maintaining its financial stability and delivering high-quality services to the public.

Formally adopted financial policies assist elected officials and City staff in the development of fiscal management practices, save time, and provide structure for financial decisions, promote public confidence, enhance transparency, and provide continuity over time. These policies will be updated periodically, but are designed with a long-term perspective and provide the basic framework and road map for addressing a wide variety of financial and economic conditions that the City will encounter. A fiscal policy supports long-term planning and enhances the City’s effectiveness in implementing long-term strategies to deliver efficient public services.

This document provides a structured, central repository for a variety of fiscal policies which are organized into the following categories:

A. General Financial Principles
B. Annual Operating Budget Policy
C. Capital Improvement Program
D. Revenues
E. Expenditures
F. Cash Management
G. Debt Management
H. Fund Definitions
I. Fund Balance Classifications
J. Fund Balance Levels
K. Reserve Funds
L. Interfund Loans
M. Financial Reporting
N. Review and Update
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II. Authority
Updates to this policy require City Council approval.

III. Policy
A. General Financial Principles
It is the overall policy of the City of St. Helena to build upon a sound conceptual framework to:

1. Manage its financial resources in a responsible and prudent manner.

2. Provide financial information in a relevant, thorough and timely manner, and in a format that effectively communicates financial status to the Council, citizens, and City employees.

3. Establish and maintain prudent fund balance levels.

4. Maintain financial reporting in compliance with current governmental accounting standards.

5. Promote and implement a relevant and strong system of internal financial controls to manage significant risks and monitor the reliability and integrity of financial and operating reporting.

6. Promote constructive and proactive financial decision making that includes, and is responsive to, citizens input and guidance.

7. Integrate long-term operating and capital resources planning into the annual budget process.

8. Allow for uncertainties and maintain a posture of financial flexibility.

9. Develop programs in a manner that support the City’s long-term ability to cover costs and provide the level and quality of service expected by its citizens.

10. Manage debt responsibly.

11. Establish and implement investment policies in accordance with City code and State law.

B. Annual Operating Budget Policy

1. Adoption of Operating Budget
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a. In accordance with the St. Helena Municipal Code the operating budget is prepared on a biennial budget cycle which passes a two-year spending plan but continues to appropriate funds on an annual basis (a “rolling” biennial budget). Within this budget, City Council approves funds for two years with staff providing City Council mid-year budget reports and a mid-cycle report to update revenues and expenses as necessary.
b. The biennial operating budget will be adopted by the City Council no later than June 30th of each budget year. The budget will include appropriations that provide expenditure authority to public officials responsible for operating their respective departments to fulfill obligations to provide public services as delegated by the City Council. c. Funds may not be expended for a new fiscal year until the budget for that fiscal year has been adopted by City Council or special provisions have been adopted by the City Council.
d. The budget presented must be balanced, which is when total projected expenditures do not exceed total estimated revenues. If projected expenditures exceed total estimated revenues, City Council may approve a planned use of accumulated fund balances in prior years for inclusion in the budget.
e. A 10-year Financial Forecast (Long Range Financial Forecast) shall be prepared annually projecting revenues and expenditures for the General Fund. This forecast shall be used as a planning tool in developing the operating budget. One-time revenue sources are not to be relied upon to fund on-going operations.

2. Controlling and Adjusting the Biennial Budget
a. The City structures and controls its budget by use of the following funds:
i. General Fund - is the primary operating fund of the City. It accounts for the receipt of property tax, general sales tax, transient occupancy tax, and other general revenues available to finance City operations. The General Fund accounts for all revenues and expenditures that do not fit the criteria to be accounted for in other funds with external restrictions imposed by their respective financing sources.
ii. Special Funds - account for resources externally restricted for use by their respective funding sources, such as grant programs financed by the State and Federal governments.

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iii. Enterprise Funds - account for water and wastewater systems, and may be used for fee-based programs if the intention is to recoup almost all City costs through fees or other charges. iv. Internal Service Funds - account for centralized service costs (such as vehicle services made available to all operating departments). Charges from the internal service funds appear as an expenditure in the user department, and as revenue in the central service department.
b. The City’s budget is controlled at the fund level by the City Council. i. The City Council, as representatives of the public, is the sole authority for creating or increasing expenditure appropriations within a fund. The City Council is also the exclusive authority for approving changes in revenue estimates with funds.
c. Department Directors will be held directly responsible and accountable for their budgets as originally adopted by the City Council or as thereafter revised in accordance with this policy. The level of expenditure control for departments is at the departmental level. d. Departments that operate programs among different funds are limited to the appropriation levels within any one fund. This policy also describes the level of authority needed to amend the adopted budget.

3. Transfers and revisions to the adopted budget:
a. The City Council approves:
i. All increases in appropriations within a fund.
ii. All transfers of appropriations between funds.
iii. All decreases in appropriations, with the exception that the City Manager may direct Department Directors to suspend
expenditures pending Council consideration of decreases in appropriations needed to respond to fiscal emergency.
b. The City Manager approves:
i. The City Manager may make budget transfers between
departments or programs as long as those changes do not increase overall appropriations within any one given fund.

Transfers between funds, overall increases in fund
appropriations, and overall increases in project budgets can only be made through City Council action.
c. Department Directors may authorize the transfer of appropriations within a department, except transfers: (1) that would purport an increase in the number of regular personnel, and (2) that would decrease appropriations for capital outlay.

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d. Finance Department:
i. The Finance Department is responsible for providing forms and instructions for requesting appropriation adjustments, and for analyzing and recommending adjustments to the City Manager.

The Finance Department will record approved budgets and adjustments into the City’s financial system.
ii. The Finance Department will ensure that the City’s Annual Comprehensive Financial Report (ACFR) includes a comparison of actual expenditures against the final budget, as amended and adjusted under the authorities of this policy.

4. Operating expenditure appropriations not spent during the fiscal year lapse at year-end, except for:
a. Encumbrances or commitments, as in the form of finalized purchase orders made during the fiscal year that have not been completed at year-end.
b. Appropriations for capital improvement projects and ongoing grants with a life-cycle beyond one year.

5. Governmental funds use the modified accrual basis of accounting while proprietary and fiduciary fund types are budgeted on a full accrual basis of accounting. The ACFR presents City’s finances on a Generally Accepted Accounting Principles (GAAP) basis and the City’s budget is prepared in conformance with these standards.

6. The City’s budget must comply with the annual determination of the City’s appropriations limit (GANN Limit) calculated in accordance with Article XIIB of the Constitution of the State of California and the City shall adopt an annual resolution to this effect.

C. Capital Improvement Program

1. The City will develop and maintain a comprehensive capital improvement project list. As part of the list, the City will develop and maintain a five-year Capital Improvement Program (CIP) to be updated annually for authorization to spend in the upcoming fiscal year. The CIP should reflect the current and changing needs of the community as well as enhance the community’s quality of life.
a. Note: The five-year CIP is not a budget commitment, and its acceptance by City Council does not provide officials the authority to spend. The plan is an expression of recognized needs, and a tool for use in budgeting.

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2. All projects within the CIP are to be tracked systematically and reports should clearly indicate funding provided, expenditures incurred, and required future funding by project. Each project on the 5-year CIP list should include the following:
a. Name of project
b. Brief description of project
c. Project Phases (e.g. design, construction, construction management, etc.)
d. CIP Category (Civic, Streets, Stormwater, Water, Wastewater) e. CIP Number
f. Annual cost estimates
g. Source of funds
h. Unfunded CIP needs

3. CIP cost and project estimates should be updated and presented to the City Council every six months. Estimated annual costs over the lifetime of each project on the list will be refreshed every six months with this data being used as part of the Long-Range Financial Forecast.

4. In addition to the 5-year CIP list, the City will maintain a 30-year project list to better plan for long-term capital needs. This list will be updated on a biennial basis during odd years (opposite of the biennial budget cycle). This update will account for change in priorities based upon regulatory compliance, infrastructure needs, funding availability, and cost estimates. Updated costs over the lifetime of each project will be used as part of the Long-Range Financial Forecast

5. Capital improvements that specifically benefit a select group of users and/or are fee-for-service based are to be financed/funded through user fees, service charges, special assessments and taxes, or development impact fees.

6. Funding and Financing
a. Funding refers to the stream of public agency revenue that pays for or offsets the cost of an asset or service or supports repayment of debt that finances the asset.
b. Financing refers to the method of paying for an asset or service, including debt financing.

7. A Capital improvement budget should systematically identify potential funding sources and financing options and match those resources to the Agenda Item #9.10.

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capital needs identified in the Capital Improvement Program. It should also identify which capital needs the agency will fund, when it will fund them, and from what resource.

8. Capital improvements that specifically benefit a fee-for-service enterprise operation (such as Water/Wastewater) are to be financed/funded through the service fees generated within that operation and fund, except in the event the voters of the City approve taxes or assessments for the purpose of financing and/or funding such capital improvements, in which case revenues from the voter approved taxes or assessments may also be used to finance and/or fund those capital improvements. Fees charged for enterprise operations should be supported by periodic updates to the rate study prepared for those fees in accordance the California Constitution and all applicable laws.
a. Notwithstanding the above paragraph, the city recognizes there may be emergency situations where enterprise operation capital improvements may need additional funding outside of the service fee structure, which may include direct borrowing and issuance of revenue bonds, and outside voter authorized initiatives. For the completion of critical enterprise capital projects, City Council may authorize use of General Fund unassigned fund balance in the following situations:
i. Life and safety emergencies
ii. Project completion is required (via mandate, cease and desist order, etc) and the current rate structure does not support the full cost to complete project.

9. The following shall be taken into consideration when using General Fund unassigned fund balance that specifically benefits a fee-for-service enterprise operation:
a. The City Council shall find that an emergency or extraordinary need exists to justify the use of these funds. Funds shall be appropriated only after the City Manager and Administrative Services Director have prepared and presented to the City Council an analysis of the emergency or extraordinary need that addressed the nature of the proposed expenditure(s) and any associated revenue requirements in subsequent years.
b. Use of fund balance does not cause the General Fund to fall below the reserve level identified in Section III.J.1.
i. If situation arises where reserve level may/will fall below the level identified in Section III.J.1., the City Manager and Administrative Services Director shall provide a funding plan to Agenda Item #9.10.

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the City Council, including proposed source(s) of funding and a timeline to bring the balance of the General Fund reserve to the level identified in Section III.J.1.
c. Although use of unassigned General Fund monies are considered unrestricted and may be used for any municipal purpose, the use of unassigned fund balance to an enterprise fund will normally be considered an interfund loan (see Section III.L) unless Council otherwise finds and documents an exigent need.

10. Transfers of resources to the CIP fund will be evaluated on an annual basis dependent upon the existence of available surplus dollars.

11. The City should strive to maximize the use of capital grants and State assistance in funding capital improvements before utilizing general revenue sources.

12. Funding Capital Improvements
The CIP uses a variety of funding sources to support projects. This section outlines some of the more common municipal funding sources used for funding capital improvements.
a. Pay-as-you Go (Cash or Pay-Go)
Debt financing is not always the most cost-effective way to purchase assets. Many times, the costs of interest and financing outweigh the costs of paying with cash, if that is an option. Pay-GO avoids these additional costs, but the agency must pay the full cost of the asset at the outset. Improvements typically made through the Pay-Go program tend to be smaller in scale and/or short-term improvements.

Additionally Pay-Go can be used to provide an additional funding source and offset long-term borrowing and used in conjunction with borrowing.
b. Long-Term Financing Methods
i. General Obligation Bonds (GO Bond)
• Permissible Projects – Acquisition and improvement
of public property and facilities.
• Approval Procedure – Issuer resolution and
ordinance; two-thirds voter approval.
• Source of Repayment – Ad Valorem property taxes
paid by owners of taxable property in the jurisdiction. ii. Special Assessment Bonds
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• Permissible Projects – Acquisition of property and
improvement of infrastructure and additional
facilities of benefit to the property that is charged.
• Approval Procedure – Engineers report, weighted
majority protect procedure.
• Source of Repayment – Assessments on the
property/fees limited special benefit to the property
that is being charged.
iii. Special Tax (e.g. Mello-Roos) Bonds
• Permissible Projects – Acquisition and improvement
of public property and facilities.
• Approval Procedure – Two-thirds voter approval or –
where there are fewer than 12 registered voters – by
landowners in the proportion to land owned within
the Community Facilities District.
• Source of Repayment – Special tax on property within
community facilities district.
iv. Certificates of Participation
• Permissible Projects – Unrestricted use.
• Approval Procedure – Resolution of governing board
approving lease or installment agreement.
• Source of Repayment – Lease or installment sale
agreement paid from General Fund (lease) or
special/enterprise (installment sale) revenues.
v. Revenue Bonds
• Permissible Projects – Acquisition and improvement
of revenue-producing public property and facilities.
• Approval Procedure – Issuer resolution and in some
instances public vote.
• Source of Repayment – Service charges and other
fees paid by users of project or services.
vi. Mark-Roos JPA Bonds
• Permissible Projects – Acquisition and improvement
of public property, facilities, and/or equipment.
• Approval Procedure – Resolution of governing boards
of JPA and participating entities.
• Source of Repayment – Taxes, user fees, lease or
installment payments, from local agencies to JPA.
c. Development Impact Fees
Development Impact Fees are collected to mitigate the impact of new development in the community. The amount of the impact fee Agenda Item #9.10.

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collected is based on a portion of the financing needed for identified public facilities. Property being developed is assessed the fee(s) at the time the building permit is issued.
d. Donations and Developer Funding
Projects may be funded by contributions and/or donations from private sources such as residents, developers, private organizations, and businesses. Contributions by developers and vendors may be reimbursed with City funds in future years through mechanisms such as a development agreement.
e. Enterprise Funds
Enterprise Funds account for specific services that are funded directly by fees and charges to users. These funds are intended to be fully self-supporting and are not typically subsidized by any general revenue or taxes. Within each Enterprise Fund, budgets are developed which are sufficient to fund current year operations and maintenance expense, as well as provide for current and future years’ upgrade, replacement, and expansion-related capital construction requirements.
f. Grants
Some projects are entirely or partially funded by grants and reimbursements from the State and federal government and other agencies. The receipts of certain grants and reimbursements typically follow the award of contracts.

D. Revenues

1. The City will strive to maintain a diversified and stable revenue base to minimize the impact of economic fluctuation.

2. The City will seek out, apply for, and effectively administer Federal, State, and other grants that address the City’s current operating and capital priorities in accordance with P-FI-0007 – Grant Application and Management Policy.

3. The City will pursue revenue collection and auditing to assure that funds due to the City are accurately received in a timely manner.

4. Use of one-time revenues for ongoing expenditures is discouraged.

Unpredictable revenues, such as excess ERAF, are budgeted conservatively and any amount collected in excess of the budget is generally carried forward in the fund balance.

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5. The City will seek reimbursement for State mandated costs whenever possible.

6. The City will adopt user fees with appropriate levels of cost recovery.

7. User fee studies should be performed and updated every five years to ensure the proper balance of costs and service charges. The City should strive to cover the full cost of providing non-tax and discretionary fee-based service operations except to the extent that City Council approves defined subsidy levels by program area.

8. Operating departments are to review public services to identify and determine those appropriate for fee collection. Recommendations for new fees are to be presented to the City Council for adoption to ensure fees reflect all direct and reasonable indirect costs of providing such services.

9. Enterprise operations, in general, are intended to be self-supporting.

E. Expenditures

1. Expenditures are to be budgeted and controlled so as to not exceed estimated revenues plus the approved and planned use of fund balances accumulated in prior years.

3. The City implements a formal purchasing system, principles, and guidelines to ensure that expenditure levels are monitored throughout the course of any fiscal year.

F. Cash Management

1. Annually the City’s Investment Policy P-FI-0002 is reviewed and presented to City Council for adoption.

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G. Debt Management

2. The City should plan the use of debt in a manner that sustains financial payments at manageable levels.

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Debt financing should only be used for long-term capital improvement projects with a useful life exceeding the term of the financing and for which the project revenues or specific identified revenue sources are sufficient to service the long-term debt. Debt Financing can be used if the cost of financing is favorable as compared to the use of City investment holdings over the financing term.

7. The City will diligently comply with and monitor compliance with all bond covenants.

9. The City will monitor all debt obligations for ongoing tax compliance and arbitrage reporting.

H. Fund Definitions

1. Governmental Fund Type Definitions
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Governmental fund types include the General Fund, special revenue funds, capital projects funds, debt service funds, and permanent funds. The Governmental Accounting Standards Board (GASB) has clarified the definitions of these funds as follows:
a. General Fund – The General Fund should be used to account for and report all financial resources not accounted for and reported in another fund.
b. Special Revenue Funds – Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The restricted or committed proceeds of specific revenue sources should be expected to continue to comprise a substantial portion of the inflows reported in the fund. Other resources (investment earnings and transfers from other funds, for example) also may be reported in the fund if those resources are restricted, committed, or assigned to the specific purpose of the fund.

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2. Proprietary Fund Type Definitions
Proprietary fund types include enterprise funds and internal service funds.

GASB has clarified the definitions of these funds as follows:
a. Enterprise Funds – GAAP provide that enterprise funds may be used to report any activity for which a fee is charged to external users for goods or services. Furthermore, a given activity must be accounted for in an enterprise fund if it meets any of the following criteria (in the context of its principal revenue sources):
i. There is outstanding debt that is backed solely by fees and charges;
ii. Laws or regulations require that fees and charges be set to recover costs, including capital costs (depreciation or debt service); or
iii. There is a pricing policy that fees and charges be set to recover costs, including capital costs (depreciation or debt service). b. Internal Service Funds – Internal service funds are used to report any activity that provides goods or services to other funds, departments, or agencies of the primary government and its component units, or to other governments, on a cost-reimbursement basis.

3. Fiduciary Fund Type Definitions
Generally Accepted Accounting Principles (GAAP) require fiduciary funds to report assets held in trustee or agency capacity for others cannot be used to support the government’s own programs. Fiduciary funds, as reported in GAAP financial statements, never should include resources that can be used to support the government’s own programs. Within the fiduciary funds category, funds that involve a trust agreement that affects the degree of management involvement and the length of time that the resources are held are distinguished from funds that involve only the receipt, temporary investment and remittance of fiduciary resources. Fiduciary fund types include pension, investment trust funds, private-purpose trust funds, and agency funds.
a. Pension Funds – Used to report resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, or other postemployment benefit plans, or other employee benefit plans.
b. Investment Trust Funds – Used to report the external portion of investment pools reported by the sponsoring government. c. Private-purpose Trust Funds – Used to report all other trust arrangements under which principal and income benefit individuals, private organizations, or other governments.

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d. Agency Funds – Used to report resources held by the reporting government in a purely custodial capacity.

I. Fund Balance Classifications

1. Governmental Fund Balances
a. Fund balance is defined as the difference between assets and liabilities and in Governmental funds is reported as fund balance.

Preferred order of use of governmental fund balances:

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The City shall strive to use the most restricted fund balances prior to utilizing those that are less restricted. The following order of use reflects this guideline:
a. Non-spendable (if funds become spendable)
b. Restricted
c. Committed
d. Assigned
e. Unassigned

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seeks to maintain the highest possible credit ratings which are dependent, in part, on the City’s maintenance of a healthy fund balance.

In the event unassigned fund balance is used, the staff will develop a one (1) to five (5) year reserve replenishment plan to meet the minimum 30% fund balance level.

2. Unassigned Operating Reserve
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These balances are hereby defined as unassigned by the City Council to allow the City to weather unpredicted cyclical and rapid downturns in the economy.

3. Use of Year-End Fund Balance in Excess of Targeted Reserves Fund balance is a measurement of available financial resources. The Council recognizes that the maintenance of a fund balance is essential to the preservation of the financial integrity of the City. The City goal is to use fund balance as a source to finance one-time investments, reserves, and/or commitments. As a one-time financing source, any unbudgeted year-end fund balance will be used for nonrecurring expenditures and only after the yearly audit and confirmation of the General Fund’s fund balance. At the end of each fiscal year, the Finance Division reports on the audited year-end financial results. Should actual General Fund revenues exceed expenditures and encumbrances, a year-end operating surplus shall be reported. Any yearend surplus that results in the General Fund fund balance exceeding the 30% fund balance target required by the policy shall be available for allocation.

Division of the surplus balance shall be recommended to the City Council by the City Manager or designee based on the most critical needs at that time.

Priority of allocation shall be the following, subject to Council approval:
• Imminent liability
• Offset projected future deficits
• Loan repayment acceleration
• Fund PERS unfunded liabilities
• One-time funding, non-recurring needs
• Capital assets and infrastructure

4. Water and Wastewater Operating Fund Balances
The City should maintain balances in the Water and Wastewater Funds at a level sufficient to accommodate operating and capital needs. City Council’s directed target for the Water Fund is 10-14 months (83%-106%) of annual operating expenditures in cash and the Wastewater Fund 6-8 months (50%- 67%) of annual operating expenditures in cash. These amounts include cash Agenda Item #9.10.

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balances in the Water and Wastewater Capital Improvement Project Funds.

Reserve funds may generally be funded with:
c. Budgetary appropriations
d. Revenues not required by law to be paid into any other fund or account.

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employees to accumulate earned but unused vacation and sick leave benefits which are eligible for payment upon separation from service. While the sick leave benefit is no longer available to the newly hired, legacy retiring employees have the option of applying 100% of their unused sick leave accrued towards the payment of continuation insurance premiums, to the extent allowed by law. The City should set aside funding annually in this reserve to match the current liabilities.

L. Interfund Loans
Interfund loans are the lending of cash from one City fund to another for a specific purpose and with a requirement of repayment. Interfund loans are typically shortterm in nature and constitute the allocation of cash between individual funds for working capital purposes.

Interfund loans are temporary borrowing of cash and may be made for the following reasons:
• To offset timing differences in cash flow.
• To offset timing differences between expenditures and reimbursements, typically associated with grant funding.
• To provide funds for interim financing in conjunction with obtaining long-term financing.
• For short-term borrowing in place of external financing.

1. Interfund Loan Terms
a. Repayment of an interfund loan shall be within the same fiscal year, unless otherwise stated in the Council Resolution.

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b. When required by the lending fund’s restrictions or regulations, interest will be paid by the borrowing fund to the lending fund, during the time the loan is outstanding.
c. The Council must approve interfund loans by resolution. Council approval and the resolution will include the following terms of the loan:
i. Purpose of Interfund Loan
ii. Identification of the source fund

1. Availability of unrestricted funds in the source fund

2. Review of multi-year plans for use of source fund cash

3. Analysis of legal or contractual restrictions
iii. Repayment of Interfund Loan

1. Repayment must have a payment source and funding
stream

2. Specific repayment schedule

3. Interest imposed at a rate equal to at lease investment earnings if loan did not occur (see Section III.K.2)
iv. Other Considerations

1. Feasibility of repayment

M. Financial Reporting
Budget decisions are of primary concern for the City Council, City Management, the public, and various stakeholders. When considering the budget, staff presents updated projections for revenues and expenditures/expenses and the reports Agenda Item #9.10.

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indicate whether prior estimates are tracking with the approved budget.

1. The City’s accounting and financial reports are to be maintained in conformance with GAAP.

2. Long Range Financial Forecast
a. A Long Range Financial Forecast (LRFF) for the City’s General Fund will be presented to City Council annually.
b. The LRFF provides a current and long-range financial assessment of revenues, expenditures, fund balance, and emergency reserves. The primary objective is to provide the City Council and the community with a financial forecast and identify any significant issues that may need to be addressed in the annual budget development process. c. The LRFF will consist of a baseline forecast, a recession forecast, and any other forecasts deemed necessary.
d. The LRFF is a ten-year forecast.
e. The LRFF will be updated as necessary throughout the fiscal year.

3. Internal Financial Reporting
a. Internal financial reports help City Council, the public, and management to monitor budgetary compliance on a timely basis. b. Internal financial reports often provide more detail on individual departments than does general purpose external financial reporting (Section 4 below) and does not require an independent auditor review and audit.
c. Internal financial reporting for all funds are to be issued on a periodic and timely basis – no less than semi-annually and no more than 45 days after the close of the period. The report will provide detailed information for the General, Water, and Wastewater Funds and summary information for all funds will be included as attachments to the report. The report will include a summary of all checks over $50,000 issued during that interval.
d. A mid-cycle report will be provided by June of each non-biennial budget cycle. This report will provide detailed information for the General, Water, and Wastewater Funds and summary information for all funds will be included as attachments to the report. Updates to revenues and expenses will be provided and recommended to City Council as necessary.

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e. An end of the fiscal year unaudited report will be issued no more than 60 days after the close of Q4 with end of year estimates for revenues and expenditures/expenses for all funds.
f. Periodic reports will compare the adopted budget (Original Budget), adjusted budget (Final Budget), and the year-to-date actuals (Actual Amounts).

4. External Financial Reporting - Annual Comprehensive Financial Report (ACFR) a. An annual financial audit will be performed by an independent public accounting firm familiar with municipal government activities. The independent auditor will issue an audit opinion to be included in the City’s Annual Comprehensive Financial Report (ACFR). Additionally, the ACFR and Independent Auditor’s Report on Internal Control over Financial Reporting and Compliance will be presented to the City Council.
b. The ACFR is a set of financial statements for a state, municipality, or other governmental entity that comply with the accounting requirements established by the Governmental Accounting Standards Board (GASB).
c. In addition to the General, Water, and Wastewater Funds, the City also accounts for activities in approximately 70 special revenue funds that account for monies received from external parties with restrictions on their respective uses. The audit process ensures that the purposes of the various funds were carried out and the relative authorities to spend were honored.
d. The external auditor prepares financial reports for each fund based on the requirements of the funding source and once all funds are audited, they are accounted for in the financial statements, combining schedules, and notes to the financial statements.
e. Unless extraneous circumstances occur, the City will rotate audit service providers every five years. If an auditor is being retained for longer than five years, the reason must be included in a staff report to City Council at the time of the contract execution or renewal. f. The ACFR will be completed no later than December 31st following the close of the fiscal year.
g. The City is encouraged to submit the Annual ACFR to State and/or national government finance professional organizations
(Governmental Finance Officers’ Association’s Certification of Achievement for Excellence in Financial Reporting, California Society of Municipal Finance Officers ACFR Award) for independent review and evaluation.

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N. Review and Update
This financial policy will be reviewed periodically and updated, if necessary, to reflect any changing requirements.

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CITY OF ST. HELENA
RESOLUTION NO. 2023-__
Resolution approving Revision No. 4 to City of St. Helena City Council Policy P-FI-0016 Financial Policy and repealing and rescinding Resolution 2019-109 and any previous policies or administrative memoranda which are inconsistent with City Council Policy P-FI-0016, Revision No. 4.

RECITALS
A. The City recognizes that fiscal policies and procedures are necessary for efficient, effective, and proper accounting of City spending; and
B. On November 27, 2018, City Council adopted City Council Policy P-FI-0016 Financial Policy via Resolution 2018-161; and
C. On February 12, 2019, City Council adopted Policy P-FI-0016 Revision No. 1 Financial Policy via Resolution 2019-12 updating Section G. Debt Management to ensure compliance with SB 1029; and
D. On September 10, 2019, City Council adopted P-FI-0016 Revision No. 2 Financial Policy via Resolution 2019-109 updating Section B. Annual Operating Budget to add a clear definition of, “balanced budget” and Section K. Financial Reporting has been updated to include a requirement that all checks over $50,000 are report to City Council during the quarterly report; and
E. On October 19, 2021, the Governmental Accounting Standards Board (GASB) issued a pronouncement that changes the name of the most extensive report prepared following it standards to the Annual Comprehensive Financial Report, or ACFR; and
F. On June 22, 2022, City Council adopted P-FI-0016 Revision No. 3 Financial Policy via Resolution 2022-65; and
G. At this meeting, it was the consensus of Council and staff that additional language contained in the policy can be further refined; and
H. On May 23, 2023, City staff brought City Council Policy P-FI-0016 Financial Policy back to the City Council for consideration and adoption; and I. To avoid any inconsistencies with policy application, it is necessary to repeal and rescind any previous policies and procedures which conflict with City Council Policy P-FI-0016 Financial Policy, Revision No. 4.

Agenda Item #9.10.

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RESOLUTION
NOW, THEREFORE, the City Council of the City of St. Helena resolves as follows:

1. Approves Revision No. 4 to City of St. Helena City Council Policy P-FI-0016 Financial Policy; and

2. Repeals and rescinds any previous policies or administrative memoranda which are inconsistent with City Council Policy P-FI-0016 Financial Policy, Revision No. 4.

Approved at a Regular Meeting of the St. Helena City Council on May 23, 2023, by the following vote:

Mayor Paul Dohring: _____
Vice Mayor Eric Hall: _____
Council Member Anna Chouteau: _____
Council Member Lester Hardy: _____
Council Member Billy Summers: _____
APPROVED: ATTEST:
______________________ ________________________
Paul Jaminson Dohring, Mayor Cindy Tzafopoulos, City Clerk Agenda Item #9.10.

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Report to the City Council
Regular City Council - 23 May 2023
Agenda Section: NEW BUSINESS
Subject: Presentation of FY 2023-24 and FY 2024-25 Proposed Operating Budget.

CEQA
Determination:

Not a CEQA project
Prepared By: Mandy Kellogg, Administrative Services Director Reviewed By: April Mitts, Assistant City Manager
Approved By: Anil Comelo, City Manager

BACKGROUND
Preparation of the FY 2023-24 and FY 2024-25 Operating Budget began in January 2023 and is a culmination of input from the City Council, Executive Staff, and Department Staff.

In the upcoming budget cycle, the City has transitioned to a two-year budget cycle, also known as a biennial budget. The two-year budget cycle allows for longer-term planning and decision-making. The City can allocate resources and set goals for a two-year period, which provides more stability and enables better strategic planning by allowing a broader perspective on financial needs and priorities. In addition, there is less administrative burden associated with creating a biennial budget which will free up time and resources to allow the City to focus on progress towards City Council goals rather than continuously engaging in budget activities. Finally, a two-year budget cycle encourages a more strategic and long-term approach to budgeting by prompting the City to consider the broader implications and consequences of budgetary choices over a longer period of time. This can help with addressing complex and interconnected challenges, such as aging infrastructure, which requires sustained funding and planning. With the biennial budget, the City Council approves fund for two years with staff providing City Council midyear budget reports and a mid-cycle report to update revenues and expenses as necessary.

Agenda Item #12.1.

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The Proposed FY 2023-24 Operating Budget is being presented to City Council for review and recommendations. The FY 2024-25 proposed budget will be presented on June 13, 2023, which will take into account Council feedback from tonight's report and escalators will be added consistent with the Long Range Financial Forecast presented by Baker Tilly on February 28, 2023.

The City Council is required to adopt estimates of revenues and expenditures on a fiscal year basis and, per Municipal Code 2.12.060.B.9, the City Manager supervises the preparation of a detailed, proposed municipal budget submitted to the City Council with adoption no later than June 30th.

The following is a brief summary of the formation of the budget document.

FY 2023-24 and 2024-25 Budget Development
During budget development staff was guided by the following considerations:
• Alignment with City Council Goals:

1. Financial Sustainability

2. Infrastructure and Environmental Sustainability

3. Water Security

4. Community Information & Engagement

5. Quality of Life
• Alignment with City Council Workplan tied to Goals
• Conservative Revenue Assumptions
• Health Care Cost Increases
• Change to Labor Costs, Including Additional Positions • One-time vs. reoccurring costs
February 24, 2023 - On February 24th the Non-Profit Grant application period ended. City staff received 22 applications for a total of $239,317 in funding requests. Per the NonProfit Grant Policy, applications were reviewed for completeness and all applications were presented for funding recommendations. The Council working group met on March 24, 2023 to review the requests and made recommendations that align with the overall allocation of $120,000, to be presented to the City Council.

February 28, 2023 - On February 28th City Council received a the Long Range Financial Forecast (LRFF) presentation from Baker Tilly. Baker Tilly reviewed the City's LRFF presented on May 22, 2022 baseline model and collaborated with City staff to revise the assumptions on which the current model is based. They then provided a revised forecast based on the new assumptions. These assumptions are being utilized in building the FY 2023-24 and FY 2024-25 budgets.

April 25, 2023 - Staff presented the FY 2021-22 Audited Financials and the FY 2022-23 Mid-Year Budget Report. The presentation focused related to the audited financials showed a gain of $5.5 million to the General Fund balance as a result of revenues Agenda Item #12.1.

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received compared to actual expenditures. Based on the performance during FY 2021- 22 the General Fund Reserves grew to $15 million at June 30, 2022.

Staff then presented the FY 2022-23 Mid-Year Budget which showed a revenue increase of over $700,000 from the FY 2022-23 Adopted Budget. In addition, there were several unanticipated expenses and Council goal objectives that resulted in an additional expenditure request of $1.52 million, resulting in an overall use of General Fund Reserves in the amount of $2.9 million.

May 9, 2023 - The City Council received a report from each department head on general updates and their specific budget requests for the upcoming fiscal year. General updates included: recent noteworthy accomplishments and activities, current department priorities, department challenges and opportunities, funding requests, non-funded requests, and staffing needs to meet current demands as well as community and Council expectations. Table 1 provides a summary of the total staffing and non-staffing requests presented that evening.

Table 1 - May 9, 2023 Department Head Presentation - FY 2023-24 Budget Requests Item # of Positions Estimated FY 2023-24
Cost Increases
Positions 20 3,135,432
Bring Current Staff to
Market 2,521,167
TOTAL ADDITIONAL ANNUAL COSTS - Staffing 5,656,599
TOTAL ADDITIONAL BUDGET REQUESTS - Non-Staffing 3,948,330 TOTAL FY 2024 ADDITIONAL COSTS - IF 100%
FUNDED
9,604,929
It was noted during the presentation that all these requests would not be funded, and staff was still in the process of refining the budget document for presentation to City Council this evening.

DISCUSSION
The FY 2023-24 Proposed Budget takes into consideration the City Council goals, budget priorities, and strategies as listed in the Background section of this report. The budget document provides detailed projected revenues and provides detailed projected expenditures for each department and fund. After receiving feedback from the City Council on the FY 2023-24 budget, staff will prepare the final FY 2024-25 budget utilizing the escalators outlined in Table 2.

As noted in the background section, this is the first biennial budget being prepared and presented by staff to Council for consideration. In submitting budget requests, department heads have included most one-time costs in their FY 2023-24 requests and the FY 2024-25 requests were primarily based off of nominal escalators. Any additional one-time expenditure requests made by departments beyond what was requested in FY Agenda Item #12.1.

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2023-24 will be brought to City Council during either the mid-year or mid-cycle reports for consideration.

Table 2 - FY 2024-25 Escalators
Category Escalator

REVENUES
Property Tax 4.5%
Sales Tax 5%
Transient Occupancy Tax 5%
Other Revenues 4%

EXPENSES
Salaries & Benefits 5%
Health Insurance 5%
CalPERS Unfunded Liability 6.1%
Services and Supplies 4%
Maintenance 4%
Taxes, insurance, and other
contributions
7%
Capital Outlay 5%
The following chart shows the Fiscal Year 2023-24 Proposed Revenues and Expenses for General Fund, Water Operating Fund, and Wastewater Operating Fund:

Agenda Item #12.1.

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The overall FY24 Projected Revenues for the three major funds are $31.83 million and expenses are $32.86 million.

General Fund
Revenues
Proposed FY24 General Fund Revenues is estimated at $18.27 million and is broken down as follows:
• Property Tax (35%) $6,46 million
• Sales Tax (33%) $6.07 million
• Transient Occupancy Tax (21%) $3.83 million
• Other Revenue (11%) $1.93 million
City Council and staff recognize the maintenance of a fund balance is essential to the preservation of the financial integrity of the City - unanticipated needs, demands, and opportunities will surely arise over the next 12 months, and it is prudent to program sufficient financial reserves to be available to address them. The Council has designated a fund balance (reserve) policy of 30%; however, Council has expressed interest in Agenda Item #12.1.

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increasing the reserve levels. While increasing the fund balance is not being recommended at this time, staff did take this, as well as the inevitable recession, into consideration with our recommended use of a portion of the unrestricted fund balance (while still maintaining an unrestricted fund balance of 40%).

The recommendations below have taken into consideration the following:
• Council's interest in maintaining a fund balance greater than 30%; • Continue to maintain conservative revenue and expense projections; • Maintain sufficient cash balance for emergencies;
• Use of unrestricted fund balance generally for one-time costs and not ongoing costs; and
• Maintain sufficient cash balance for funding contingencies related to the Wastewater Treatment Plant project. Any funding for the completion of the plant would be through an interfund loan from the General Fund to the Wastewater Fund. While not known if these funds will be needed and, if so, how much will be needed for unexpected contingencies, staff has included a placeholder of $2,000,000 in the estimated net position table (Table 3 and Table 4) to not lose sight of potential, short-term, General Fund balance impacts.

FY24 Proposed Expenses included increases to the following:
• Salaries - Previously approved COLA in the amount of 4.2% and an additional 2% Equity adjustment for positions below the 95% of Market Median. • Benefits - 10% increase in healthcare premiums.
• Public Works Positions - Freezing 1 FTE as Senior Civil Engineer, funding 1 FTE as Engineering Technician, and funding 1 FTE as Maintenance Worker. • Contracts - Increased contract services to provide necessary engineering support for Capital Improvement projects.
• Maintenance - Increased maintenance costs related to supporting aging infrastructure.

In addition, the FY24 Proposed Budget includes the below one-time expenditures:

Table 3: FY 2023-24 One-time Staff Recommendations
Item 1x Costs Amount
Attorney Litigation Expense X 110,000
Planning Online Permitting Software Implementation X 165,000 Downtown Specific Plan & EIR X 500,000
Zoning Code Update X 45,000
Community Engagement Contract X 110,000
Website Hosting Transition X 20,000
Recreation Software Implementation X 16,000
Agenda Item #12.1.

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Item 1x Costs Amount
Landscape Architect Consultants for Hardscape & Weed
Abatement X 100,000
Towable Trash Pump for Water and Storm Water X 40,000
Self-Propelled Electric Stump Grinder X 11,000
Crack Sealer for Street Repairs X 40,000
Light Tower for Night Work X 20,000
TOTAL 1,173,000
The addition of the items presented in Table 3 to the Draft FY 2023-24 budget, updates the estimated expenses to $19.68 million with use of fund balance of $1.74 million. Table 4 provides the updated estimated FY 2023-24 Net Position. Table 4 also includes a line item for the WWTP contingency, if needed.

Table 4: Updated General Fund Balance with Additional Staff Recommendations Estimated Ending Fund Balance
@ 6/30/2023 $12,141,950 Fund Balance %
Estimated Revenue @ 6/30/2024 $18,274,906
Estimated Expenses @ 6/30/2024 (19,678,627)
Use of Fund Balance ($1,403,721)
Estimated Fund Balance/Net
Position $10,737,869 *55%
WWTP Contingency - if needed
(Interfund Loan) ($2,000,000)
Estimated Fund Balance/Net
Position $8,737,869 *44%
*The Estimated Fund Balance percentage is based off of the Estimated Fund Balance divided by the total Expenses. The Proposed FY 2023-24 Budget includes approximately $1.2 million in one-time expenditures. For calculation purposes, if one-time expenditures are removed and the net position is calculated based off of ending fund balance divided by the non-occurring expenses, there is a shift in fund balance - this is noted in Table 4.

Table 5: Estimated General Fund Balance Removing 1x Expenditures from the Expense Line
Estimated Ending Fund Balance @
6/30/2023 $12,141,950
Fund Balance
%
Estimated Revenue @ 6/30/2024 $18,274,906
Estimated Expenses @ 6/30/2024 (reoccurring) ($18,505,627) Estimated 1x Expenses @ 6/30/24 ($1,173,000)
Use of Fund Balance ($1,403,721)
Estimated Fund Balance/Net Position $10,737,869 **64%
Agenda Item #12.1.

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WWTP Contingency - if needed
(Interfund Loan) ($2,000,000)
Estimated Fund Balance/Net Position $8,737,869 **54%
**The estimated fund balance percentage is based off of the estimated fund balance divided by the total re-occurring expenses.

As previously stated, City Council and staff recognize the maintenance of a fund balance is essential to the preservation of the financial integrity of the City. While the proposed budget maintains a fund balance level higher than the Council reserve policy of 30%, staff desires to stress and urge a continued fiscally conservative attitude in the face of a likely recession and remain prudent in use of fund balance for one-time, non-reoccurring expenses.

Water and Wastewater Funds
Water and Wastewater FY24 Proposed Revenues are projected at $8.81 million for water and $4.74 million for wastewater. This is an overall increase of $3.53 million from the current year. The projected increase is based on an updated Water and Wastewater Rate Study that was approved by City Council on May 9, 2023. The City initiated the Proposition 218 process and if the new rates are adopted by City Council they will go into effect on September 1, 2023.

FY24 Proposed Expenses included increases to the following:
• Salaries - Previously approved COLA in the amount of 4.2% and an additional 2% Equity adjustment for positions below the 95% of Market Median. • Benefits - 10% increase in healthcare premiums.
• Public Works Positions - Freezing 1 FTE as Senior Civil Engineer, funding 1 FTE as Engineering Technician, and funding 1 FTE as Maintenance Worker. • Contracts - Increased contract services to provide necessary engineering support for Capital Improvement projects and Temporary Operator support at the Treatment Plants.
• Maintenance - Increased maintenance costs related to supporting aging infrastructure.
• Utilities - Increased utility costs anticipated to support the operations of the new Wastewater Treatment Plant.

Table 6 provides a summary of the Estimated Fund Balance of the Water operations fund at June 30, 2024 and Table 7 provides a summary of the estimated fund balance of the Wastewater operations fund at June 30, 2024.

Table 6: Proposed Water Estimated Fund Balance
Estimated Ending Fund Balance @
6/30/2023 $3,453,679 Fund Balance %
Estimated Revenue @ 6/30/2024 $8,807,303
Estimated Expenses @ 6/30/2024 ($8,690,048)
Agenda Item #12.1.

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Excess for Capital Contribution ($117,255)
Estimated Net Position $3,453,679 39%
Table 7: Proposed Wastewater Estimated Fund Balance
Estimated Ending Fund Balance @
6/30/2023 $2,880,654
Fund Balance
%
Estimated Revenue @ 6/30/2024 $4,744,521
Estimated Expenses @ 6/30/2024 ($4,495,324)
Excess for Capital Contribution (249,197)
Estimated Fund Balance* $2,880,654 61%
* Balance includes approximately $2.70 million to be transferred to Wastewater CIP for the completion of CIP S-52 – Wastewater treatment plant upgrades.

Concluding Remarks
There are tremendous capital needs (Attachment 2 provides a summary of CIP needs updated in January 2023) and limited/insufficient funding and staffing available to immediately meet these needs. The City Council, staff, and the community are aware of the challenges ahead and recognize project management and delivery must be realistic, deliberate, and focused.

Based on direction received from City Council, staff will complete the FY 2023-24 and FY 2024-25 budget document to be presented at the June 13, 2023 City Council meeting.

Next Steps
• Provide direction to staff regarding the FY 2023-24 draft budget document • Based on Council direction, staff will refine the FY 2023-24 budget and add escalators to FY 2024-25 budget
• Five-Year CIP presented to Planning Commission for General Plan Conformance • June 13, 2023 - Final proposed budget and CIP presented to City Council for Consideration

FISCAL IMPACT
Fiscal impacts are described throughout the report and in Attachment 1.

RECOMMENDED ACTION
Review and provide staff with recommendations pertaining to the FY 2023-24 Proposed Operating Budget and methodology for preparing the FY 2024-25 Operating Budget.

ATTACHMENTS
Attachment 1 - FY 2023-24 and 2024-25 Preliminary Budget Forecast Presentation Attachment 2 - 20-Year comprehensive list - Updated January 2023 for Budget Agenda Item #12.1.

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FISCAL YEAR
2023-2024
AND 2024-2025

PRELIMINARY
BUDGET

FORECAST
BY:

ANIL COMELO, CITY MANAGER

APRIL MITTS, ASSISTANT CITY MANAGER

MANDY KELLOGG, ADMINISTRATIVE SERVICES DIRECTOR
MAY 23, 2023
Agenda Item #12.1.

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BUDGET OVERVIEW
 City is in good financial shape
 Healthy reserves & fiscal prudence needs to continue
 Revenues remain strong, expenditures increasing at a
faster pace than revenues
 City is not meeting resident expectations
 Investments needed: infrastructure, parks, City
facilities, roads, & amenities
 Need competent, stable staffing to achieve goals
and provide quality services
Agenda Item #12.1.

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CITY COUNCIL GOALS Goal 1 – Financial Sustainability
Goal 2 – Infrastructure and
Environmental Sustainability
Goal 3 – Water Security
Goal 4 – Community Information &
Engagement
Goal 5 – Quality of Life
Agenda Item #12.1.

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City Council Goals Total
Objectives
Objectives For
FY 2024
Goal 1 Financial Sustainability 9 4
Goal 2 Infrastructure and Environmental Sustainability 46 27 Goal 3 Water Security 11 6
Goal 4 Community Information & Engagement 20 14
Goal 5 Quality of Life 44 22
Other Goals
Goal 6 Employee Recruitment, Retention, & Morale 9 6
Goal 7 Organizational Effectiveness 19 13
Goal 8 CIP Projects 54 15
TOTALS 212 107

SUMMARY OF CURRENT GOALS
Agenda Item #12.1.

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ORGANIZATIONAL PRIORITIES AND

CHANGES
 Weed Abatement
 5-Year CIP Planning - $70 Million
 Community Information
 Art & Culture
 Economic Development
Agenda Item #12.1.

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DEPARTMENTAL REQUESTS
ITEM Est. Annual Cost
Positions (9+11) $3,135,432
Bring Current Staff to Market $2,521,167
Total Departmental Requests - Staffing $5,656,599
Total Departmental Requests - Non-Staffing $3,948,330
Total FY 2024 Additional Requests $9,604,929
Agenda Item #12.1.

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TOTAL DEPARTMENTAL REQUESTS- NON-STAFFING
ITEM Est. Annual Cost
On-Going Expenditures $2,253,330
One-Time Expenditures $1,695,000
Total Departmental Requests $3,948,330
Agenda Item #12.1.

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NON-PROFIT GRANT REQUESTS
COMMUNITY ENRICHMENT GRANTS: $20,000 CAP FOR EACH REQUEST AND TOTAL MAXIMUM ALLOCATION OF $120,000 Non-Profit Descriptions FY 23/24 Funding Requested
Cafeteria Kids Theater Summer Drama in St. Helena 1,000 Festival Napa Valley How I see Music Education Program 16,000 Friends of the Cameo Faces of St. Helena 8,500
Music in the Vineyards MITV Connects 3,030
Napa Valley College DAS Foundation Viva Mariachi! St. Helena 14,353 Napa Valley Museum Conservation & Exhibition of Sophie Alstrom Mitchell's Wildflower Watercolors 10,392
Our Town St. Helena Our Town St. Helena Strategic Plan 20,000 Rianda House Visit Me Today 15,000
St. Helena Cemetery Association St. Helena Cemetery Chinese Monument Project 12,963 St. Helena Community Band St. Helena Community Band Yearly Performances 10,000 St. Helena Community Garden St. Helena Community Garden Supplies 2,500 St. Helena Cooperative Nursery School St. Helena Cooperative Nursery School 12,000 St. Helena Farmers' Market Market Match Program 12,000
St. Helena Historical Society Educational Lecture Series and Cemetery Tour 16,479 St. Helena Housing Coalition, Inc. Secure Conditional Lease for Housing Civic/Cultural Center on City Property 20,000
St. Helena Little League SHLL Uniforms & Equipment 10,000 St. Helena Preschool For All St. Helena Preschool For All Scholarships 20,000 Sustainable St. Helena St. Helena Redwood Forest 5,000
The White Barn Napa Valley Puppet Festival 8,000
Upstage Napa Valley 3rd Annual Upstate NV Playwright Festival (Playfest 2023) 9,350
UpValley Family Centers of Napa County Ninos Activos / Active Kids | bilingual playgroups 7,500 Wine Country Animal Lovers Feline Spay and Neuter Programs 5,250 Totals 239,317
Agenda Item #12.1.

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NON-PROFIT GRANTS RECOMMENDED
Non-Profit Descriptions FY 23/24 Funding Requested
Cafeteria Kids Theater Summer Drama in St. Helena 1,000 Festival Napa Valley How I see Music Education Program 8,000 Friends of the Cameo Faces of St. Helena 8,500
Music in the Vineyards MITV Connects 3,000
Napa Valley College DAS Foundation Viva Mariachi! St. Helena 5,000 Napa Valley Museum Conservation & Exhibition of Sophie Alstrom Mitchell's Wildflower Watercolors - Our Town St. Helena Our Town St. Helena Strategic Plan - Rianda House Visit Me Today 7,500
St. Helena Cemetery Association St. Helena Cemetery Chinese Monument Project 10,000 St. Helena Community Band St. Helena Community Band Yearly Performances 10,000 St. Helena Community Garden St. Helena Community Garden Supplies 2,500 St. Helena Cooperative Nursery School St. Helena Cooperative Nursery School 7,000 St. Helena Farmers' Market Market Match Program 9,000
St. Helena Historical Society Educational Lecture Series and Cemetery Tour 10,000 St. Helena Housing Coalition, Inc. Secure Conditional Lease for Housing Civic/Cultural Center on City Property - St. Helena Little League SHLL Uniforms & Equipment 5,000 St. Helena Preschool For All St. Helena Preschool For All Scholarships 12,000 Sustainable St. Helena St. Helena Redwood Forest 5,000
The White Barn Napa Valley Puppet Festival 3,000
Upstage Napa Valley 3rd Annual Upstate NV Playwright Festival (Playfest 2023) 6,000 UpValley Family Centers of Napa County Ninos Activos / Active Kids | bilingual playgroups 7,500 Wine Country Animal Lovers Feline Spay and Neuter Programs - Totals 120,000
Agenda Item #12.1.

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EXISTING NON-PROFIT GRANT AGREEMENTS
Non-Profit FY 23/24 Funding
Boys & Girls Club 30,000
Rianda House 30,000
UpValley Family Centers 30,000
Totals 90,000
Agenda Item #12.1.

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CHAMBER OF COMMERCE GRANT AGREEMENT
Fiscal Year
Marketing
Agreement &
Special Events
Holidays Business Recovery Total Funding
FY 2022-2023 $250,000 $25,000 $50,000 $325,000
FY 2021-2022 $220,500 $25,000 $100,000 $345,500
FY 2020-2021 $185,000 $25,000 $25,000 $235,000
FY 2019-2020 $210,000 $25,000 $235,000
FY 2018-2019 $210,000 $210,000
Agenda Item #12.1.

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ST. HELENA CHAMBER OF COMMERCE - FY 2022-2023 BUDGET
Destination Marketing Expense Itemization City Contribution Chamber Budget Marketing & Promotional Agreement $160,000 $219,000
Welcome Center $60,000 $121,802
Subconsultant Contract (Shipyard Contract – Business Recovery) $50,000 $100,000 Destination Marketing Operating Expenses $57,854
Community Events :
-Holidays St. Helena (City Contract) $20,000 $20,000
-Holidays St. Helena (City- Additional Contribution) $25,000 $27,836 -Celebrate St. Helena $5,500 $11,938
-Summer Concert Series $3,500 $6,920
-Misc. Events (Earth Day, Sidewalk Sales, Mixers, etc.) $1,000 $262 FY 2023 Total Destination Marketing Budget $325,000 $565,612 Percentage of City Contribution vs. Chamber Actuals to-date: 57% Expenses itemized does not reflect total Chamber of Commerce budget and reflects Destination Marketing only.

Agenda Item #12.1.

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FY24 PROPOSED

OPERATING

FUND REVENUE

AND EXPENSES

31.83 32.86
-

5.00 10.00

15.00 20.00

25.00 30.00

35.00 Revenues Expenses
Millions
FY24 Proposed Revenues vs. Expenses
General Fund Water Fund Wastewater Fund
Agenda Item #12.1.

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FY 2023-24

GENERAL FUND

REVENUES
Total Revenues $18,274,906
Agenda Item #12.1.

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GENERAL
FUND

REVENUES
Agenda Item #12.1.

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GENERAL FUND EXPENSES BY DEPARTMENT
Department FY 23 Adjusted FY 24 Proposed % of Budget
Administration 1,040,738 1,111,319 5.6%
Administrative Services 1,242,911 1,048,611 5.3%
Attorney 386,000 496,000 2.5%
Planning/Building 1,285,201 2,031,193 10.3%
Library 954,708 998,629 5.1%
Parks & Recreation 881,774 1,109,257 5.6%
Fire 2,068,443 2,520,980 12.8%
Police 3,639,929 4,106,272 20.9%
Public Works 3,583,969 4,323,849 22.0%
Non-Department* 5,552,915 1,494,344 7.6%
Council 421,144 438,173 2.2%
TOTAL 21,057,732 19,678,627
Agenda Item #12.1.

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GENERAL FUND EXPENSES BY OBJECT CODE
Category FY 23 Adjusted FY 24 Proposed % of Budget
Salary and Benefits 10,591,346 11,339,229 57.6%
Services 6,371,607 5,053,866 25.7%
Supplies 801,628 622,331 3.2%
Maintenance 707,977 980,058 5.0%
Taxes, Ins., & Contrib. 1,312,272 860,216 4.4%
Capital 156,786 121,185 0.6%
Transfers 1,052,939 638,564 3.2%
Debt 63,177 63,178 0.3%
TOTAL 21,057,732 19,678,627
Agenda Item #12.1.

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GENERAL FUND EXPENDITURES VS. REVENUES
• Use of Reserves to Balance the Budget
FY24 General Fund Budget Amount
Proposed Revenues 18,274,906
Proposed Expenses 19,678,627
Difference* (1,403,721)
Agenda Item #12.1.

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GENERAL FUND REVENUES/EXPENSES
FY 19 Acutal FY 20 Actual FY 21 Actual FY 22 Actual FY23 Adjusted FY24 Proposed Revenues 16,032,990 14,270,828 16,579,357 20,561,585 18,168,514 18,274,906 Expenses 14,430,875 14,191,158 15,675,449 15,071,875 21,057,732 19,678,627 -

5.00 10.00

15.00 20.00

25.00 Millions
Agenda Item #12.1.

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FY24 UNFUNDED NEEDS
 Corp Yard Flood Hazard Mitigation
 New roadways and bridges
 Walking trails
 Trailer for Water Treatment Plant
 Competitive compensation
 Cost of permanent City Hall
Agenda Item #12.1.

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GENERAL FUND BUDGET REDUCTIONS
Description Budget Impact
Expense Reduction - 5% Vacancy Factor (480,000)
Expense Reduction - CalPERS Additional Discretionary Payment (154,253) Expense Reduction - Reduce Chamber Contribution (250,000) Revenue Reduction - FY24 Excess ERAF Reduction 200,000
Total Budget Reductions (684,253)
Agenda Item #12.1.

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GENERAL FUND ESTIMATED NET POSITION
Description FY24 Fund Balance Reserve
%
Estimated Unassigned Fund Balance @ 6/20/23 12,141,590
Estimated Revenues @ 6/30/24 18,274,906
Estimated Expenses @ 6/30/24 (19,678,627)
Use of Fund Balance (1,403,721)
Net Difference 0
Estimated Unassigned Fund Balance @ 6/30/24 10,737,869 55% WWTP Contingency If Needed (Interfund Loan) (2,000,000) Estimated Unassigned Fund Balance/Net Position 8,737,869 44% Agenda Item #12.1.

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WATER

OPERATING
FUND
Agenda Item #12.1.

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WATER FUND

REVENUES

6.65 5.72

6.63 8.81
-

1.00 2.00

3.00 4.00

5.00 6.00

7.00 8.00

9.00 10.00
FY 21 Actual FY 22 Actual FY 23 Adjusted FY 24 Proposed Millions
Revenue Comparison
Agenda Item #12.1.

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WATER OPERATING FUND EXPENSES BY DEPARTMENT
Department FY 23 Adjusted FY 24 Proposed % of Budget
Administration 305,242 341,258 3.9%
Administrative Services 723,326 605,055 7.0%
Attorney 159,500 159,500 1.8%
Public Works 5,569,632 6,474,425 74.5%
Non-Department* 1,253,312 1,084,234 12.5%
Council 21,927 25,576 0.3%
TOTAL 8,032,939 8,690,048
Agenda Item #12.1.

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WATER OPERATING FUND EXPENSES BY OBJECT CODE
Category FY 23 Adjusted FY 24 Proposed % of Budget
Salary and Benefits 2,139,507 2,302,521 25.7%
Services 2,310,671 2,691,284 31.0%
Supplies 1,944,989 2,002,970 23.0%
Maintenance 317,575 342,683 3.9%
Taxes, Ins., & Contrib. 239,877 239,877 2.8%
Capital 140,350 240,600 2.8%
Debt 939,970 940,439 10.8%
TOTAL 8,032,939 8,690,048
Agenda Item #12.1.

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WATER OPERATIONS FUND ESTIMATED NET POSITION
Description FY24 Fund Balance Net
Position
Estimated Unassigned Fund Balance @ 6/20/23 3,453,679
Estimated Revenues @ 6/30/24 8,807,303
Estimated Expenses @ 6/30/24 (8,690,048)
Excess for Capital Contribution (117,255)
Net Difference 0
Estimated Unassigned Fund Balance @ 6/30/24 3,453,679 39% Agenda Item #12.1.

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WASTEWATER OPERATING FUND
Agenda Item #12.1.

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WASTEWATER
FUND

REVENUES

3.45 3.36 3.39

4.74 -

0.50 1.00

1.50 2.00

2.50 3.00

3.50 4.00

4.50 5.00
FY 21 Actual FY 22 Actual FY 23 Adjusted FY 24 Proposed Millions
Revenue Comparison
Agenda Item #12.1.

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WASTEWATER OPERATING FUND EXPENSES BY DEPARTMENT
Department FY 23 Adjusted FY 24 Proposed % of Budget
Administration 206,029 229,866 5.1%
Administrative Services 584,438 470,143 10.5%
Attorney 26,500 126,500 2.8%
Public Works 2,898,526 3,236,953 72.0%
Non-Department* 538,689 458,717 9.0%
Council 21,927 25,576 0.6%
TOTAL 4,276,109 4,495,324
Agenda Item #12.1.

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WASTEWATER OPERATING FUND EXPENSES BY OBJECT CODE
Category FY 23 Adjusted FY 24 Proposed % of Budget
Salary and Benefits 1,587,777 1,664,201 37.0%
Services 1,581,933 1,576,998 35.1%
Supplies 264,912 334,802 7.4%
Maintenance 278,262 316,336 7.0%
Taxes, Ins., & Contrib. 205,877 205,877 4.6%
Capital 105,300 144,300 3.2%
Debt 252,047 252,810 5.6%
TOTAL 4,276,108 4,495,324
Agenda Item #12.1.

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WASTEWATER OPERATIONS FUND ESTIMATED NET POSITION
Description FY24 Fund Balance Net
Position
Estimated Unassigned Fund Balance @ 6/20/23 2,880,654
Estimated Revenues @ 6/30/24 4,744,521
Estimated Expenses @ 6/30/24 (4,495,324)
Excess for Capital Contribution (249,197)
Net Difference 0
Estimated Unassigned Fund Balance @ 6/30/24 2,880,654 61% Agenda Item #12.1.

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CAPITAL

IMPROVEMENT

PROGRAMS
Agenda Item #12.1.

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CIP SUMMARY CHART (20 YEARS)
CIP
Total Estimated CIP
Years 1-5
Total Estimated CIP
20-year
Estimated Shortfall
20-year
Streets 7,228,420 62,840,013 (28,335,847)
Stormwater 1,465,584 17,318,584 (6,477,001)
Civic 4,765,183 11,154,793 (8,245,280)
Water 32,480,867 57,819,117 (500,000)
Wastewater 23,004,000 28,663,900 (222,000)
TOTAL 68,944,054 177,796,407 (43,780,128)
Agenda Item #12.1.

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Town Yountville 73 76
70 66
59 63
60 56
49 50
44 +3
-4
-3
+0
-7
-6
Local
Streets
and Road
Fund
SB 1 Local
Streets and
Roads
General
Fund Measure T
Local
Developers
Fees
City of Napa
City of American
Canyon
City of Calistoga
City of St. Helena
County of Napa
59 +0
II. Defining the NeedPCI from 2018 to 2020
Agenda Item #12.1.

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36 II. Defining the NeedCost Escalation

0.2% 0.2% 0.2%

3.9%

2.7%

10.0%
0%
2%
4%
6%
8%
10%
12%
18/19 19/20 20/21
Actual Measure T Interest Generation vs.

Construction Cost Escalation
Interest Cost Escalation = Negative Return on Investment Agenda Item #12.1.

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Streets – Annual Funding Level
Budget needs
Avg $2.2M
Annual
Budget $800K
5 Pt Increase
in PCI ($775K)
Maintain PCI 50
($550K)
No Funds ($0)
Agenda Item #12.1.

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BUDGET SHORTFALL MITIGATION STRATEGIES
 Cost containment
- keep employee compensation below market
- avoid investing in equipment, technology, & maintenance of assets  Grants
 Shared Services
 Technology and Process Improvement
 Expectations adjustment?
 Reserves?
 New revenues?
Agenda Item #12.1.

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GRANT AWARDS IN THE LAST 3 YEARS - $5,713,330
Fiscal Year Grants Received
2020-21 $1,588,844
2021-22 $962,435
2022-23 $3,162,051
Agenda Item #12.1.

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SHARED SERVICES
Service American
Canyon
City of
Napa
County of
Napa Yountville St. Helena Calistoga
Police
Dispatch
Fire Protection
Fire (Planned)
Admin/IT
Library
Water
Sewer
Stormwater
Animal Control
Animal Shelter
Housing
Agenda Item #12.1.

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BUDGET SHORTFALL MITIGATION STRATEGIES
 Expectations adjustment?
 Reserves?
 New revenues?
- Expansion of existing hotels
- Building of new hotels
- Taxes
Agenda Item #12.1.

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Compensation Market Analysis
% +/- % +/-
Median 75th %tile
SHEA -12.2% -19.2%
POA -21.0% -30.1%
Mid-Managers/Exec. -12.4% -19.4%
Agenda Item #12.1.

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Workforce Challenges
• Compensation below market
• Under-staffed
• Not enough positions to accommodate workload
• Positions not being able to be filled
• Turnover and workload
• Example:

Agenda Item #12.1.

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GENERAL FUND EXPENDITURES VS. REVENUES
* Use of Reserves to Balance the Budget
FY24 General Fund Budget Amount
Proposed Revenues 18,274,906
Proposed Expenses 19,678,627
Difference* (1,403,721)
Agenda Item #12.1.

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SUMMARY
 Strong reserves and stable revenues
 Zoning Update in final stages
 Wastewater treatment plant almost built
 Completion of Water/Wastewater Rate Study
 Significant investment in road pavement
 Important choices need to be made as a community
Agenda Item #12.1.

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QUESTIONS?
Agenda Item #12.1.

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20-Year CIP Project Summary - January 2023

STORMDRAIN
0-5 Year 0-20 Year
Total Est. Costs Total Est. Costs
1 R20-01 Mitchell Drive to Sulphur Creek Storm Drain 190,200 190,200 2 R20-02 Mills Lane Strom Drain Project - costs are for design only 121,384 121,384 3 Stormwater Systems Improvements 9,580,000 1,154,000
4 Stormwater Systems Rehabilitation and Replacement 950,000 5 SDRR-1 Storm Drain Rehabilitation and Replacement* 6,477,000 TOTALS 17,318,58 1,465,584 4
* Unfunded
CIVIC*
0-5 Year 0-20 Year
Total Est. Costs Total Est. Costs
1 C19-03 Crane Park Lighting Improvements 354,509 354,509 2 C20-02 Repaint Fire Station #1 100,000 100,000
3 C20-04 Baldwin Park Fence and Pathway Repair 81,350 81,350 4 C21-01 LSWTP and Mobile Generator 350,000 350,000
5 C22-01 Napa Valley College Move 1,648,156 1,648,156
6 C22-02 Replace Playground Equipment and Fence at Crane Park 250,000 250,000 7 C22-03 Jacob Meily Park Drainage Site Survey and Installation of new Turf and Upgrade Irrigation 125,500 125,500 8 Carnegie Building - 20 year costs * 891,144 124,189
9 Fire Station - 20 year costs * 3,073,678 507,162
10 Head Start Building - 20 year costs * 593,726 243,914 11 Lyman Park - 20 year costs * 385,945 118,568
12 Public Works Corporation Yard - 20 year costs * 892,995 284,109 13 Signorelli Barn - 20 year costs * 142,823 96,020
14 Library - 20 year costs * 1,798,793 399,152
15 Teen Center - 20 year costs * 466,174 82,554
TOTALS 11,154,79 4,765,183 3
* Unfunded
** Exlcuded: Demo 1480 Main Street, Permanent City Hall

STREETS
0-5 Year 0-20 Year
Total Est. Costs Total Est. Costs
1 R18-81 Downtown Sidewalk Improvements - Phase I 2,003,314 2,003,314 2 R19-03 Sulphur Creek Erosion Repair 70,555 70,555
3 R19-05 Grayson and South Crane Rehab 75,000 75,000
4 R19-07 Silverado Trail Guardrail Replacement 524,860 524,860 5 R21-02 Pratt & Elmhurst Crosswalk Improvements on Main Street/Hwy 29 259,286 259,286 6 R21-04 Pope Street Crosswalk Improvements at College 244,405 244,405 7 R22-01 Spring Street Bike Lane Striping 31,000 31,000 8 R22-79 Pavement Restoration FY 22 Design/FY 23 Constructioon 1,120,000 1,120,000 9 R23-01 Signalization Dowdell Lane and Hwy 29 200,000 200,000 10 R23-02 "HAWK" Pedestrian Hybrid Flashing Beacon for Hwy 29 @ Charter Oak 200,000 200,000 11 Pavement Restoration to a PCI of 80 (currently at 50) - years 1-5 12, 200,000 156,389 12 Pavement Restoration to a PCI of 80 (currently at 50) - years 6-20 *** 34,455,205 2,300,000 13 Downtown Sidewalk Improvements - Phase II, Phase III * 11, - 500,000 TOTALS 62,840,01 7,228,420 3
* Unfunded
*** Partially Unfunded
20-Year Project Summary
20-Year Project Summary
20-Year Project Summary
Agenda Item #12.1.

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20-Year CIP Project Summary - January 2023
WATER ****
0-5 Year 0-20 Year
Total Est. Costs Total Est. Costs
1 W-109 Bell Canyon Intake Tower Replacement 3,293,227 3,293,227 2 W-80 Dwyer Road Booster Pump Station 900,000 900,000
3 W18-113 SCADA Improvements - Offsite Communications 800,000 800,000 4 W-86 Spring Mountain Pressure Zone Improvements (Holmes Tank Upgrade) 3,044,935 3,044,935 5 PWTM-1 Napa Intertie Pipeline Replacement 5,715,000 5,715,000 6 Smart Water Meters 1,970,000 1,970,000
7 W21-01 Kearney & Andrea Water Main Replacement 875,705 875,705 8 W-101 Rehabilitate Tank 2 at Lower Reservoir 940,000 940,000 9 W18-111 WTP Condition Assessment 200,000 200,000
10 Napa Intertie Pump Station Replacement (Construction) 10, 800,000 800,000 11 Napa Intertie Pump Station Replacement (DESIGN) 2,300,000 2,300,000 12 Water Treatment Plant (Water Treatment Plant Rehabilitation) 8, - 400,000 13 PWTM-2 Water Treatment Plant Transmission Main Replacement 7,9 7,954,000 54,000 14 W18-118 Water Main Annual Replacement Program Allowance 1,440,000 1,440,000 15 PWRR-1 Yr 6-10 - Water Main Annual Replacement Program allowance - 986,750 16 PWRR-1 Future Allowance for Pipeline R/R (Years11-15) 4, - 243,500 17 PFAS Sampling Project 25,000 25,000
18 Disinfection By Products Project 696,000 696,000
19 Risk and Resilience Assessment Report dated January 2022 - Add'tl recommended items 150,000 150,000 20 Cyber-Security Implementation 50,000 50,000
21 Asset Management Program Development 50,000 50,000
22 Asset Management Software Assessment & Optimization planning 15,000 15,000 23 CMMS Purchase & Setup 50,000 50,000
24 ArCommercialIS Purchase & Setup 50,000 50,000
25 Allocated RW CIP 250,000 250,000
26 W-85 Bell House Valve Replacement 520,000 -
27 W18-120 Bell Canyon Phreatic Surface Monitoring 100,000 100,000 28 Water Distribution Fire Flow Improvements 1,500,000 312,000 29 Replace WTP Residence 500,000 500,000
TOTALS 32,480,867 57,819,117
WASTEWATER ****
0-5 Year 0-20 Year
Total Est. Costs Total Est. Costs
1 S-52 WWTP Phase I Upgrades 13,402,000 13,402,000
2 S23-01 Recycled Water - Deliver Recycled Water to Crane Park's Irrigation (Design) 50,000 50,000 3 WWTP Pond Cleaning, Decommissioning, and Repurpose 1,000,000 1,000,000 4 S18-70 Sewer Replacement Program 1,240,000 1,240,000
5 S18-71 Crinella Lift Station Improvements 1,140,000 1,140,000 6 WWGM-6 Del Campo Curt 608,000 608,000
7 WWRR-1CCTV Inspection Program, Phase 1 222,000 222,000 8 WWRR-2 Flow Monitoring Program 60,000 60,000
9 WWRR-3 High Priority Pipeline Replacement 3,348,000 3,348,000 10 WWRR-4 Model Update and System Analysis 50,000 50,000 11 WWRR-5 CCTV Inspection Phase 2 657,000 -
12 WWRR-6 Address R/R needs from Phase 1 CCTV Program Years 6-10 & 11-20 - 5, 002,900 13 Asset Management Program Development 50,000 50,000
14 Asset Management Software Assessment & Optimization planning 15,000 15,000 15 CMMS Purchase & Setup 50,000 50,000
16 ArcGIS Purchase & Setup 50,000 50,000
17 S21-01 WWTP Recycled Pipeline and Pump Station (design only) 250,000 250,000 18 S21-01 WWTP Recycled Pipeline and Pump Station (Construction) 1,469,000 1,469,000 -
TOTALS 23,004,000 28,663,900
20-Year Project Summary
20-Year Project Summary
Agenda Item #12.1.

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1 Cindy Tzafopoulos
From: Annette Shafer <[email protected]> Sent: Monday, May 22, 2023 4:23 PM
To: Public Comment
Cc: Amy Carabba-Salazar; Stephanie Iacobacci
Subject: [External] Item 12.1
Dear Council Members,
It is vital that the city continue to support the Chamber's efforts to attract visitors to our vibrant town at the current level. The businesses have seen the benefits from their increased efforts and we strongly urge you to continue your support so that they can build on the fantastic momentum that they've created. The visitors create much needed revenue for the city in TOT and we want our local businesses to thrive. We, as local businesses, are grateful for any and all support we can get! It all works together to reinforce a healthy, dynamic community. steph
Seeking your support,
Annette
Annette Shafer
Crisp Kitchen & Juice
p:707-738-6500 | e:[email protected] |
w:www.crispkitchenandjuice.com | a:PO Box 1224, St. Helena, CA 94574
Create your own email signature
Agenda Item #12.1.

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1 Cindy Tzafopoulos
From: Pam Starr <[email protected]>
Sent: Monday, May 22, 2023 3:38 PM
To: Public Comment; Contact City Council; Anil Comelo; April Mitts; Paul Dohring; Anna Chouteau; Billy Summers; Eric Hall; Lester Hardy
Subject: [External] budget funding St Helena Chamber
Importance: High
Please confirm that the following will be read at tomorrow council meeting To City Council and Members of our Community,
The St Helena Chamber partnership with the City of St Helena is an important collaboration for the health and growth of this town. I was surprised to hear the City manager would make a recommendation to not partner with the Chamber. When I joined the Chamber Board in 2019, there was very little community support for community located at the entrance to our town. Today, the awareness of business activity to the south and north of old town Main Street has grown to both visitors and locals. The business area on the southern entrance to St Helena is growing in large part because of the promotion provided by the St Helena Chamber. We all wine with the increasing tax revenue generated. The Welcome Center has become key to the promotion and success of many of our businesses throughout the entire town. I’m certain that all of you have seen the successful impact numbers provided by our Chamber President. Or better yet, look at the City TOT/Occupancy numbers for reference. If the Chamber loses funding from the City then the Welcome Center would most-likely shut down, critical communications to our community will cease and we will take a huge step backwards as a community. And as a side note, Chambers of Commerce very rarely run welcome centers so thank you to our Chamber President for understanding its value.

The City Manager just hired two assistants which were unnecessary to our previous city managers. With this extra help to the city manager I am certain they can collaborate on where else to cut funds. While I am sympathetic to the City Manager’s budget challenges, it’s shortsighted to eliminate any of the funding to the Chamber as the Chamber has been the glue through fires, covid, water shortages and the recovery of our town businesses. I urge all of the City Council members to reject the City Managers proposal of cutting any funds to the Chamber. The City and the Chamber need to continue working together in unity, because that is what makes a community stronger. The Chamber spends a lot of its own money to help fund and enhance the destination marketing contract the City provides to make our dollars go farther. The Chamber should be looked at as a partner, who is equally invested in the destination marketing efforts that help support businesses and tourism. Please work with the Chamber CEO to have a meeting of the minds and collaborate the continuation of the contract.

Respectfully,
Pam Starr
Pam Starr
Owner/Founding Winemaker
700 Dowdell Lane Saint Helena CA 94574
707-333-9111 cell
Springtime is Here!
2022 Estate Sauvignon Blanc & 2020 Malbec are now available, through our membership.

JOIN THE CASALI MEMBERSHIP TODAY
Agenda Item #12.1.

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From: Kristine Waldenburg
To: Public Comment
Subject: [External] Item 12.1
Date: Tuesday, May 23, 2023 10:08:53 AM
Hello!
As a 26 year business owner in St. Helena (and a former Chamber Board member), I feel qualified to speak on the proposal to pull the contract with the City of St. Helena.

Please, what a mistake this would be!
I know that visitors to St. Helena can be a sore subject! However, the outreach and destination marketing that this current Chamber leadership and staff have implemented has been invaluable over the years. Amy and company have been great and I, for one , have benefitted from their insights and instincts.

Keeping in mind that the merchants in town have gone through A LOT over the last few years, the Chamber has been laser focused on keeping St. Helena a destination which keeps people coming, which keeps people spending, which translates to tax money for St. Helena. To short circuit this seems very short sighted.

Please keep this relationship with the business community funded! Thank you,
Kristine Waldenburg
Lolo’s
1120 Main Street
Agenda Item #12.1.

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From: Laura Rombauer
To: Public Comment
Subject: [External] Tuesday May 23rd Item 12.1
Date: Tuesday, May 23, 2023 10:16:21 AM
Importance: High
To all those in position of governance for the City of St. Helena, As a long-time resident of the Napa Valley and a small business owner on Main Street for over 20 years, I find it profoundly disappointing and quite frankly shocking that the City of St. Helena is considering defunding or at least reducing the funding directed to our town’s Chamber of Commerce. Given the size of our town, I am impressed with what our Chamber has been able to do in an effort steer visitor traffic to St. Helena. Our town’s holiday decorations (including the now ICONIC BARREL TREE), social media outreach and data analytics have proven to support local businesses such as mine.

Unfortunately, the governance of our town has a long history and reputation of anti-business, antidevelopment and NIMBY attitudes that have put St. Helena in a tight spot regarding revenue streams that compare to our close neighbors in Calistoga and Yountville. The multitude of long-term vacant spaces on Main Street is a clear result of these attitudes. Those of us working (and providing good and steady jobs to locals) need all the help we can get to get the word out that St. Helena is worth stopping by for a visit.

I strongly recommend that the Chamber continue to be fully funded as it moves forward to put St.

Helena back on the map of our Napa Valley visitor’s itineraries.

Best regards,
Laura Rombauer, Proprietor
Napa Valley Vintage Home
1201 Main Street
St. Helena, CA 94574
(707) 963-7423
Agenda Item #12.1.

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May 23, 2023
Mayor Paul Dohring
St. Helena City Council
Submitted Electronically
Re: St. Helena Chamber of Commerce FY24 Marketing Budget Dear Mayor Dohring and St. Helena City Council,
On behalf of Napa Valley’s tourism and hospitality industry, I am writing in support of the St.

Helena Chamber of Commerce’s request to maintain their FY23 marketing budget for upcoming FY24. In addition to Visit Napa Valley’s county-wide destination marketing efforts, the budget invested in FY23 for localized St. Helena programming proved invaluable to your Chamber’s strategic destination marketing plan, allowing the team to gain significant momentum in another challenging year for our hospitality industry and our Napa Valley cities’ general plan funding. Many destinations were not as fortunate in their recovery trajectory.

Napa Valley and our towns won back more than our fair share of visitors in 2021 and 2022, but now is not the time to become complacent. Competition for visitor eyes and dollars is fierce.

Other California destination are now recovering and have the resources to compete. Your investment in destination marketing is an investment in your St. Helena businesses and local economy.

At Visit Napa Valley, we appreciate the positive working relationship we have with the St.

Helena Chamber of Commerce and applaud their creative and collaborative approach to promoting and supporting your St. Helena businesses. By maintainingthe FY23 budget for the upcoming fiscal year, your Chamber will continue the hard work to bring both the local and visitor dollars to Main Street, St. Helena.

Regards,
Linsey Gallagher
President & CEO
Agenda Item #12.1.

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From: Mark Hoffmeister
To: Public Comment
Subject: [External] Chamber of Commerce and City of St. Helena Partnership Date: Tuesday, May 23, 2023 10:30:04 AM
All:

My name is Mark Hoffmeister and I am the owner of Wydown Hotel and building located at 1422-1428 Main Street. I am also a board member for the St. Helena Chamber of Commerce, Chair of the St. Helena Tourism Improvement District board and resident of St. Helena. I am writing to express my support for the continued financial partnership between the St. Helena Chamber of Commerce and the City of St. Helena . As a business owner and operator, as well and Main Street retail landlord, I feel the elimination or reduction of City support would be detrimental to the businesses and residents of our town. The Chamber plays a vital role in marketing our businesses, hosting local events and keeping the town informed. I ask that you please continue to support the Chamber, our business owners and local citizens.

Thanks,
-Mark
Agenda Item #12.1.

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From: Michelle Dondero
To: Public Comment; Contact City Council
Subject: [External] The Impact of Chamber Efforts on Brasswood and the Importance of Tourism Marketing Date: Tuesday, May 23, 2023 11:49:27 AM
Hello,
I hope this email finds you well. As the Director of Marketing at Brasswood Winery Estate, I am reaching out to provide important insights into the positive impact of the Chamber's efforts on our business and to emphasize the crucial role of tourism marketing in driving St. Helena's business commerce.

Firstly, I would like to express our appreciation for the Chamber's ongoing support in promoting local businesses like Brasswood. From working directly with Amy and her team over the past few years, we have witnessed the significant benefits of their initiatives. Some of these include:

Invaluable opportunities for collaboration and networking among our local businesses. Through events, workshops, and mixers, we have established meaningful connections with fellow business owners.

Promotional initiatives have played a pivotal role in raising awareness for the Brasswood brand. The Chamber has featured us in blog posts, brochures, and social media, increasing our visibility and opportunity for customer acquisition.

Consistent marketing tourism efforts have attracted visitors and fueled the growth of our business. These efforts have proven to strengthen St. Helena's brand and reputation as a desirable destination for travelers.

I believe it is important that we continue our strong partnership with the City and Chamber to sustain the growth and prosperity of our local businesses. By working together, we can ensure that St. Helena remains an attractive destination for tourists, which in turn supports our economy and benefits the entire community.

Thank you for your attention to this matter.

Regards,
Michelle Dondero
Agenda Item #12.1.

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--
Michelle Dondero
Marketing Director
707-968-5434 x 312
3111 St. Helena Hwy, N., St. Helena, CA 94574
brasswood.com | @brasswoodnapavalley
Agenda Item #12.1.

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From: Mike Larson
To: Public Comment
Subject: [External] Distinguished Council Members
Date: Monday, May 22, 2023 6:43:16 PM
Attachments: image002.png
Dear Council members,
Hello and good day!
Our world is run by storytelling, culture is defined by It’s stories as well as explored by those who are captivated by those stories. Show me the best stories and I will show you the world and all it has to offer. The Chamber plays an integral role in helping curate, organize, broadcast and track the stories and how well they are, fine tuning them to continually be exactly what will bring those captivated minds and souls to the upper Napa Valley.

It’s disheartening to hear St. Helena’s City Manager would like to eliminate a partnership with the St. Helena Chamber of Commerce and does not see value in destination marketing efforts. As a local photographer I can assure you marketing efforts with a well-established brand the Chamber has built for the City is vital to get tourists to visit the area and spend money. The Chamber has done an incredible job working to promote St. Helena and put it at the forefront on all areas of destination marketing efforts.

How can a City not want to partner with a local Chamber? That seems like it’s sending the wrong message. Local businesses have seen the benefits from their increased efforts and we strongly urge you to continue your support so that they can build on the fantastic momentum that they've created. Destination marketing is vital for a city and most towns work closely with their Chambers to strategically promote its assets. The Chamber has done this well in the last 5 years. Many business have seen tremendous growth and it seems disconnected to even make such a recommendation.

Recessions bring about a natural experiment to pull back on spending. Some can be good and others can be detrimental. Pulling back the storytelling and buzz about what we have here naturally would reduce the exposure our community has to the traveling world. Out of all experiments to reduce budgetary needs this seems the least efficient.

I highly urge you to learn what the Chamber does. Ask questions and understand how DM marketing works. There are more traveling in than those who own second homes by a large factor. Let’s help continue telling the story and support local businesses by supporting the Chamber!
- Mike Larson
St. Helena Business & Resident

MIKE LARSON
mikelarson.com
Agenda Item #12.1.

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M 805-549-0199
O 707-690-1611
mikelarson
Agenda Item #12.1.

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From: Nicole Dale
To: Public Comment
Subject: [External] Public Comment Item 12.1 – Chamber Partnership Date: Tuesday, May 23, 2023 1:03:13 PM
Dear City Council and City Manager,
As a Chamber member, business owner, and resident of St. Helena I am writing to express my concern over the City Manager's recommendation to end the City's partnership and funding with the Chamber of Commerce.

If anything, there needs to be MORE funding allocated to the Chamber for their efforts in marketing and promoting St. Helena to visitors. They are doing an amazing job and are seasoned professionals. They know our city and its people very well and are champions of us.

It is extremely obvious when you visit the other towns nearby- namely Napa and Yountvillethat St. Helena is lagging behind. The City should be focusing on the infrastructure of welcoming visitors to town- more parking, better aesthetics, art, maintaining spaces, signage, etc. Walking up Main Street most late afternoons I notice few visitors, but tons of weeds along our extremely uneven and unsafe sidewalks. There are many areas of improvement the City should be focusing on to better St. Helena for both residents and tourists alike. The suggestion of cutting funding in any area of tourism is the exact opposite of what we need.

I urge you to respectfully oppose the City Manager’s recommendation and keep the existing partnership with the St. Helena Chamber of Commerce.

Regards,
Nicole Dale
Wild Vine Tours
707-287-5417
[email protected]
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From: Scott Mangelson
To: Public Comment
Cc: Contact City Council
Subject: [External] City Funding for Tourism and Event Marketing with Chamber of Commerce Date: Tuesday, May 23, 2023 11:46:15 AM
Dear City Manager and City Council,
I am writing to you as a concerned citizen and a small business owner in Saint Helena. I recently became aware of a proposal to terminate the contract with the Chamber, which plays a crucial role in promoting Saint Helena as a destination and organizing community events, among other important activities. As I see it, our city is in dire straits. Businesses are closing down, there is a significant number of vacant properties downtown, our neighborhoods are becoming vacation homes for the wealthy, and local businesses are struggling to find employees willing to commute to Saint Helena for work.

The primary reason behind this issue is that other cities offer more favorable business conditions.

When hiring employees, they would rather stay in Napa or commute to the nearby Yountville, while those living in Santa Rosa or Lake County consider Calistoga a superior option with its downtown parking and shopping options and several world-class hotels. Saint Helena is unable to attract Uber/Lyft drivers beyond Yountville after 8:00 pm due to insufficient demand. When I relocated here 25 years ago, Saint Helena was a charming gem in the Napa Valley, boasting the finest restaurants, an exceptional shopping district, thriving wine tourism, and highly desirable housing. However, if you ask any local Napa Valley resident, the common water cooler conversation is “what has happened to Saint Helena.”
While we collaborate on finding solutions to our infrastructure, affordable housing challenges, downtown vacancies, and economic revitalization, severing ties with the very engine that drives this revitalization is undoubtedly the wrong approach. Any business owner or household budget manager understands the importance of managing finances, but quitting a job, firing sales and marketing personnel, or neglecting to promote a store amounts to a death sentence.

The Chamber's efforts are yielding results, with tourism on the rise and our holiday celebrations and lighting surpassing previous years. Therefore, let us continue investing in Saint Helena and provide our Chamber of Commerce with the necessary marketing and event support to sustain their commendable work.

Regards,
Scott Mangleson
NIGHT Wines
Vintner/Winemaker
M 707.337.304
Agenda Item #12.1.

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May 22, 2023
For the attention of:

Mayor Paul Dohring
Vice Mayor Eric Hall
Council Member Anna Chouteau
Council Member Lester Hardy
Council Member Billy Summers
City Manager Anil Comelo
Letter in support of the Chamber of Commerce receiving Destination Marketing Funding Dear Members of the St. Helena City Council and City Manager:

Since its inception, the St. Helena Tourism Improvement District (SHTID) has proudly partnered with the Chamber of Commerce in supporting St. Helena to become a desirable city to eat, play, stay and shop.

Each year we have awarded the Chamber with a grant to do Destination Management on behalf of the SHTID. Not only does this grant help to drive visitors to our city who stay with our local lodging partners, but these visitors also frequent wineries, restaurants, specialty stores and local and state parks.

Visitors and their revenue spend, support the town of St Helena, a feat which cannot be accomplished by residents alone.

Imagine this scenario.

If you create the most beautiful city, in a sought-after destination, offering: delectable restaurants, wineries, hotels for every occasion, retail experiences and unrelenting scenery …. But, you don’t tell anyone about it, NO ONE WILL VISIT. Not for the day, not for overnight stays or multi-day excursions.

No money will be spent to support local and family-owned ventures, more stores will close creating additional empty storefronts, employment opportunities will greatly decrease and ultimately our working residents and available workforce will be forced to find an income elsewhere.

This is the point of Destination Marketing. The City of St Helena HAS to invest in capturing our fair market share of visitors who would like to explore a charming Napa Valley City. Visitors have options.

Those who are looking for their “bucket list” vacation or a place to celebrate their milestone occasion, could easily choose other neighboring Napa Valley towns. Do we really want to be a “drive through” city?
Destination Marketing is the tool which helps convince potential visitors to choose us, to choose St.

Helena.

Chamber Membership does not capture enough revenue to support funding for Destination Marketing in addition to the other projects and roles that the Chamber currently fulfills. The City is estimated to receive roughly 21% of its revenue from Transient Occupancy Tax (TOT) from the next fiscal year. This revenue is captured solely from hotel occupancy, from guests who chose us, through Destination Marketing. It is Agenda Item #12.1.

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only reasonable to ask that the City maintains its support of the Chamber and Destination Marketing efforts. The SHTID has already confirmed its support of the Chamber for the next fiscal year.

There is a direct correlation between the value of Destination Marketing and the amount of revenue that visitors bring to this community. This is reflected in $3.8M TOT estimated revenue contribution to the City’s General Fund. Should the Chamber not receive any funds for Destination Marketing in the next Fiscal year, then the TOT revenue contribution to the City will be directly impacted.

The St. Helena TID Board of Directors urge you to consider continuing your support of the Chamber and contributing to the funding for the Chamber’s Destination Marketing for the next fiscal year.

Sincerely,
2023/2024 St. Helena TID Board of Directors
Mark Hoffmeister, Wydown Hotel, Chair Lodging Representative Vern Lakusta, Harvest Inn, Vice Chair Lodging Representative Marcelle Adderley, Southbridge Napa Valley, Secretary/Treasurer Lodging Representative Mitchell Warren, El Bonita Motel Lodging Representative Cynthia Cohen, Meadowood Chamber Representative
Agenda Item #12.1.

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From: Carole Castell
To: Public Comment
Subject: [External] Chamber of Commerce Funding
Date: Tuesday, May 23, 2023 9:27:56 AM
Hi there,
A continued partnership with The Chamber of Commerce is absolutely essential in keeping our community growing and thriving. Their staff has done such a wonderful job encouraging visitation and making this town a place that people want to stay in and not just drive through to get to Calistoga or Yountville. I live and work here and over the past several years have seen a dramatic improvement through the Chamber’s efforts and know it would a great loss if they were unable to continue without City funding.

Thank you,
Carole Castell
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From: Casey Miller
To: Public Comment
Subject: [External] Item 12.1
Date: Tuesday, May 23, 2023 10:08:28 AM
Dear City Council,
I encourage you to carefully consider the recommendation that the city manager is making in regards to the partnership with the St. Helena Chamber of Commerce. As a small business owner in Saint Helena, I believe the decision to lose the partnership and cut funding would greatly impact my business and other businesses around me in a negative way. St Helena needs to continue to push its marketing for all businesses and The Chamber is the best and most established way to do so. Please do not accept this recommendation. Thank you! Casey Miller
Owner/Founder of FitNV
Personal Trainer
Cell: (707) 331-0209
Instagram: getfitwcasey and fitnvonmain
Website: www.getfitwcasey.com
Agenda Item #12.1.

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From: Wilkins, Claire
To: Public Comment; Contact City Council; Anil Comelo; April Mitts; Paul Dohring; Anna Chouteau; Billy Summers; Eric Hall; Lester Hardy
Subject: [External] IMPORTANT: Item 12.1 : Letter to be read at City Council Meeting 5.23.2023 for public comment Date: Tuesday, May 23, 2023 10:40:40 AM
Attachments: image001.png
Letter to City Council 23 May 2023, Item 12.1.pdf
Please see the below letter to be read for public comment at the City Council Meeting May 23 2023 in regards to Item 12.1
Dear City Council and Members of our Community
I am writing as a Member of the Board of Directors of the St. Helena Chamber of Commerce, as the Director of Hospitality at Beringer Vineyards and as a resident of St. Helena for the past 10 years.

I am extremely concerned to hear that the City Manager is recommending to the City Council that they cut the contract with the St. Helena Chamber of Commerce and cancel funding. In a small community likes ours, it is imperative to our success that there is a collaborative partnership between the City and the Chamber – the success of our businesses in this tourist destination, is also a success for our City - and we must not forget this.

Collaborative efforts to fund and support the promotion of Saint Helena is key, especially at a time where we face increased local competition from Calistoga and downtown Napa, and further afield from Paso Robles and Santa Barbara, not to mention risk from an economic downturn during the next six months. More than ever, we need to continue to focus on two key factors to attract the tourist to our City to spend tax dollars – through a strong destination marketing campaign, and by offering the Welcome Center on Main Street. To date, the Chamber of Commerce has delivered on these two factors to great success and delivered impressive results, and this is not the time to stop these two key initiatives. We need to stay relevant, seen and competitive to ensure we are continuing to support our business community as best as we can – cutting funding and going significantly backwards is not an option for our business community and our City. Stopping our destination marketing campaign is not an option. Closing the Welcome Center is not an option.

As I have previously communicated back in June 2022, as a local business, we have been positively impacted by the improved marketing campaign delivered by the Chamber and spend of marketing dollars as a result of the City’s funding – our traffic increased YOY, +21.4%, and our sales have increased by +47% YOY. We want this growth to continue. With more tasting rooms opening in Napa, as a local business, we need more support now to market the benefits of travelling up valley and visiting St. Helena.

The Chamber plays a vital role in the business community and is continuing to grow the programming it offers with this key funding, providing a strong return on this key investment from the City,
• Operating a Visitor Center/staffing/public restrooms 7 days a week 9-5pm, with nearly 20K visitors annually
• Community events: Summer Concerts for the city, Celebrate Community Awards, + Holiday’s in St.

Agenda Item #12.1.

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Helena featuring the Barrel Tree, which Beringer Vineyards is a key Sponsor and supporter. • Providing scholarships to St. Helena’s students
• All the destination marketing efforts, this includes, managing all social channels, sthelena.com, influencer visits, press visits, paid strategic media, ads, branding exposure, photography, video content, marketing assets, & more. We had 34 Media placements this year, including TV live shots and over 27 influencer visits.
• Providing business resources to all Chamber partners, newsletters, informational communication efforts, business response recovery resource center, member minute, & more, and was a key driver in supporting the business community through the hard impacts from the fires, and from COVID. The Chamber was the “glue” in our community.
• Providing free business workshops/ job fairs/ educational seminars and mixers • Aid in disseminating CITY communications such as: Napa Valley Vine Trail, non-profit grant applications, reminders about building codes, construction projects such as PGE gas line repair, city surveys, etc
It is vital now that the Chamber’s funding and partnership with the City remains “as is” to continue the tremendous momentum the Chamber has built for destination marketing for St. Helena, and this important investment of support for the business community continues.

I appeal to you, our members of the City Council, to reject the City Manager’s proposal and continue to support and fund the key efforts of the Chamber in driving business to our City and supporting our business community. I have full confidence in the dedicated efforts and work of our Chamber President & CEO, Amy Carabba, and I hope the City Manager will once again resume a collaborative working partnership with Amy and the Chamber, as has been previously enjoyed.

Thank you for your kind attention.

Yours sincerely
Claire Wilkins

CLAIRE WILKINS
Director of Hospitality
Beringer Vineyards | Beaulieu Vineyard | Etude Wines
T (707) 302 7566
M (707) 363 8087
E [email protected]
www.tweglobal.com
Agenda Item #12.1.

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**************************************************************************** ****************************
This email and any attachments may be confidential, protected by copyright and may be subject to legal privilege. If you are not the intended recipient of this email, please notify the sender immediately, delete it from your system and do not use, copy or disclose any of the information in the email for any purpose. Treasury Wine Estates and its related entities do not guarantee that this email or any attachments are virus free. Please do not alter or delete this notice.
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Agenda Item #12.1.

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From: Felicia Chan
To: Public Comment
Subject: [External] Item 12.1
Date: Tuesday, May 23, 2023 10:46:17 AM
To the City of St. Helena,
I am writing to respectfully protest the cutting of funds (Item 12.1) to the St. Helena Chamber of Commerce. This organization is a key marketing partner of Gott’s Roadside, and this reduction of funds would negatively impact our local store marketing and regional brand-building efforts. They are both an effective and forward-thinking organization. In fact, the funding should be moving in the opposite direction toward more support versus less.

Kind regards,
Felicia

FELICIA CHAN
Director of Marketing & Communications
GOTT’S ROADSIDE
P.O. Box 1226 | St. Helena, California 94574
M – 415.314.4929
http://www.gotts.com
Agenda Item #12.1.

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From: Heidi Bamburg
To: Contact City Council
Cc: Amy Carabba
Subject: [External] Please Maintain Funding for Chamber of Commerce Date: Tuesday, May 23, 2023 10:05:23 AM
Attachments: image001.png
image002.png
To the St. Helena City Council:

I’m writing to express my strong encouragement for the City to maintain financial support for the St.

Helena Chamber of Commerce. As a Main Street business, we depend heavily on the marketing efforts of the Chamber of Commerce to make St. Helena businesses attractive for locals and tourists. More than 95% of our revenue comes from tourism, and the Chamber provides greatly needed promotion and events to encourage tourists to make their way up valley and spend money.

Without that support, we would have closed our doors years ago, like so many other restaurants in St. Helena.

While we depend upon tourism to survive, since we opened in 2017, we have also tried to create a space that caters specifically to St. Helena residents with many events and offerings:

The Saint Social Club (locals monthly event club)
Women & Wine Wednesdays
Live music from St. Helena musicians
Partnership with Market to expand St. Helena fine-dining options Co-sponsorship of The Cameo
Complementary tasting space for small SH vintners
Use of local catering from Oak Avenue, Sunshine, and Model Bakery Discounts for local guests
SH Merchant Happy Hour
Tuesday Bunko Night
Yet despite all these efforts, still 95% of our business comes from tourists. It’s very hard to run a business in St. Helena with minimal support from the people who live here. Why do have so many empty storefronts? Why have we lost so many restaurants in the last 5 years? We’ve seen Napa, Yountville, and Calistoga support hotel developments, parks, tasting rooms, events, festivals, and social media to create a vibrant business climate and greatly increased street traffic.

We NEED to support the Chamber more, not less!
The St. Helena Chamber is the only effective force driving business growth in St. Helena. Their marketing and social media generate significant awareness to get visitors to venture up valley.

They understand the needs of the business community in St. Helena and create a centralized voice for business interests.

Amy and her team have done an incredible job. We are grateful to have them and their tenure in St.

Helena. I urge you to continue funding for the Chamber of Commerce and to find more ways to support the local business that are still open in our town.

Cheers,
Agenda Item #12.1.

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Agenda Item #12.1.

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From: John Skupny
To: Public Comment
Subject: [External] "Item 12.1"
Date: Tuesday, May 23, 2023 11:24:02 AM
Attachments: image001.png
Regarding Item 12.1 on 5/23/23 City Council meeting.

After having to endure the past three years of a pandemic, rising rents and a slow recovery of visitors to St. Helena it would seem counter productive to end the funding that
helps to promote visitors to St. Helena. Seems like backing off on the gas that generates such a major portion of our City’s revenue through taxes and the ALMIGHTY TOT!
I think the possible defunding for Destination Marketing, community events including the holiday décor that specifically promotes commerce for businesses, as well as help fund a portion of the Welcome Center that provides public restrooms on Main Street is a mistake.

Thank you,
Agenda Item #12.1.

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From: Kate Hamlin
To: Public Comment; Contact City Council; Anil Comelo; April Mitts; Paul Dohring; Anna Chouteau; Billy Summers; Eric Hall; Lester Hardy
Subject: [External] St Helena Chamber support
Date: Tuesday, May 23, 2023 10:44:42 AM
I am writing in support of our hard working Chamber. It would be a very very poor decision to cut funding to them.

As a small business in town we rely on the tireless efforts the Chamber provides for us. Please reconsider this ridiculous idea.

Thank you for giving this your upmost attention and support the Chamber of Commerce and Visitors Center.

Kate Hamlin
[email protected]
Agenda Item #12.1.

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From: Katherine Bull
To: Public Comment; Contact City Council
Subject: [External] URGENT- Continued partnership with the Chamber of Commerce Date: Tuesday, May 23, 2023 9:33:56 AM
Attachments: image001.png
Dear Saint Helena City Council MembersAs both a resident of Saint Helena and a business owner within our city, I am writing to express the importance of our continued partnership with the Chamber of Commerce - item 12.1.

The Chamber of Commerce has consistently demonstrated its commitment to fostering a thriving business community. Their tireless efforts in promoting economic development and advocating for the needs of local businesses have been instrumental in driving our city's prosperity, especially in a post Covid-19 world. Many businesses on Main St. would not have been able to reopen as soon as they did after the first phase of “shut-downs’ without the assistance of the Chamber, which could have had catastrophic affects on countless business in this town.

By continuing our partnership with the Chamber of Commerce, we can ensure the continuation of essential programs and initiatives that directly benefit us as business owners. The chamber's networking opportunities, educational resources, and business support services have played a significant role in our growth and sustainability.

Additionally, the Chamber of Commerce serves as a powerful advocate for our collective interests. Their representation at various levels of government helps shape policies that are favorable to local businesses and enables us to navigate regulatory challenges more effectively. The chamber's voice is instrumental in ensuring that our concerns are heard and addressed by decision-makers.

I urge you to consider the immense value that the Chamber of Commerce brings to our local economy and the livelihoods of countless business owners. By continuing your partnership, you will demonstrate your commitment to supporting small businesses, fostering economic growth, and creating an environment where entrepreneurship can flourish.

Thank you for your attention to this matter. I kindly request that you prioritize the renewal of the contract with the Chamber of Commerce. Your support will have a lasting positive impact on our business community and our city as a whole.

Sincerely,
Katherine Salinas
CEO
Meuse Gallery
1331 Main Street,
St. Helena, CA 94574
d-707-968-5942
c-831-224-3717
[email protected]
www.meusegallery.com
Agenda Item #12.1.

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Agenda Item #12.1.

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From: Meagan Rounds
To: Public Comment; Contact City Council; Anil Comelo; April Mitts; Paul Dohring; Anna Chouteau; Billy Summers; Eric Hall; Lester Hardy
Subject: [External] Item 12.1
Date: Tuesday, May 23, 2023 2:20:44 PM
Dear Councilmembers,
RE: Item 12.1
While we understand the need to reduce costs to reallocate funds for much-needed projects, cutting the Chamber of Commerce's destination marketing efforts would significantly impact area businesses and slow tourism efforts at a time when St. Helena is already at a disadvantage compared to Napa, Yountville, and Calistoga.

Only after the addition of much-needed lodging in the City of St. Helena will the current businesses have any hope of survival without the Chamber's efforts. Continuing to add new retail and dining as currently approved without the Chamber's efforts to increase foot traffic, you risk crippling existing businesses even further.

We have benefitted greatly from the Chamber's support and economic recovery post-pandemic. We must keep momentum with destination marketing, putting St. Helena at the forefront of visitors' minds.

Sincerely,
Jude Wilmoth & Meagan Rounds
Cook St. Helena
Agenda Item #12.1.

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May 23, 2023
To The City Council of St. Helena,
I am writing in today to express my concern to remove the Destination Marketing contract that you have with the St. Helena Chamber of Commerce. As a Chamber President/CEO in American Canyon I understand the value of the work that is being done through the marketing efforts at the St. Helena Chamber of Commerce. We in American Canyon have a very small marketing budget and because of that we struggle to increase tourism into American Canyon. I always reference the ability that the upper valley chambers have to draw in tourism and to do promotions for their towns.

This is a huge reason why there is such a draw to your region. This is only possible with the funding they receive from their towns.

Amy Carabba-Salazar, is extremely skilled in DM work and she brings so much value to your community with her and the teams marketing efforts. I truly believe that St.

Helena’s economy would drastically take a hit if her efforts were discontinued. With already declining tourism numbers in our region, this is truly a decision that needs to be thought out carefully and not made on a whim. I hope to see the council take the right action on this agenda item tonight by continuing to support the St. Helena’s Chamber of Commerce Destination Marketing Contract.

Thank you for your consideration.

Sincerely,
Valerie Zizak-Morais
President/CEO
American Canyon Chamber of Commerce
Agenda Item #12.1.

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1 Cindy Tzafopoulos
From: Linzi Gay <[email protected]>
Sent: Tuesday, May 23, 2023 4:43 PM
To: Public Comment
Subject: RE: [External] The Vital Role of the St. Helena Chamber of Commerce in Supporting Local Businesses through Destination Marketing
Hello,
I sent this yesterday to be included in the public comments for the City Council meeƟng today. I do not see it listed and just wanted to confirm it was received.

This is in response to Item 12.1 under New Business.

Thank you,
Linzi Gay
President
Clif Family Winery & Farm
Office: 1334 Vidovich Lane, St. Helena, CA 94574
Tasting Room: 709 Main Street, St. Helena, CA 94574
p 707.968.0625 | m 707.486.7072
www.cliffamily.com
A Certified B Corp Company
From: Linzi Gay
Sent: Monday, May 22, 2023 2:29 PM
To: [email protected]
Subject: The Vital Role of the St. Helena Chamber of Commerce in Supporting Local Businesses through Destination Marketing
Dear Members of the St. Helena City Council,
I am wriƟng to express support for the St. Helena Chamber of Commerce and its significant contribuƟon to the vitality of local businesses in our community through their desƟnaƟon markeƟng efforts.

As the President of Clif Family Winery & Farm in St. Helena, I have personally witnessed the posiƟve impact of the Chamber's iniƟaƟves on our business and on the local economy. The Chamber of Commerce serves as a catalyst for growth, collaboraƟon, and innovaƟon, creaƟng a thriving business environment that benefits not only the businesses themselves but also the enƟre community.

One of the key reasons why the St. Helena Chamber of Commerce is vital to the success of our local businesses is its excepƟonal desƟnaƟon markeƟng iniƟaƟves. The Chamber has consistently demonstrated its commitment to promoƟng St. Helena as a desirable tourist desƟnaƟon, aƩracƟng visitors from far and wide. By effecƟvely showcasing the unique qualiƟes, rich heritage, and diverse offerings of our city, the Chamber's markeƟng campaigns have played a pivotal role in driving foot traffic, enhancing customer engagement, and increasing sales for local businesses. This increased visibility Agenda Item #12.1.

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2 not only helps to drive tourist visits but also encourages locals and neighboring communiƟes to explore and support St.

Helena businesses.

Furthermore, the Chamber of Commerce fosters collaboraƟon among our local businesses and community members through community events, holiday decoraƟons, and a beauƟfully designed Main Street Welcome Center, which also offers convenient public restrooms.

I urge the City Council to recognize the invaluable contribuƟon of the St. Helena Chamber of Commerce and conƟnue to support their efforts. By invesƟng in the Chamber's desƟnaƟon markeƟng iniƟaƟves, community events and the Welcome Center, we can create an even more prosperous future for our community, where our businesses and community thrive and St. Helena remains a sought‐aŌer desƟnaƟon for visitors from near and far.

Thank you for your Ɵme, aƩenƟon, and ongoing commitment to the health and vitality of local St. Helena businesses.

Best,
Linzi Gay
President
Clif Family Winery & Farm
Office: 1334 Vidovich Lane, St. Helena, CA 94574
Tasting Room: 709 Main Street, St. Helena, CA 94574
p 707.968.0625 | m 707.486.7072
www.cliffamily.com
A Certified B Corp Company
Agenda Item #12.1.

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Report to the City Council
Regular City Council - 23 May 2023
Agenda Section: NEW BUSINESS
Subject: Receive information about potential revenue options and provide direction to staff.

CEQA
Determination:

Not a CEQA project
Prepared By: Anil Comelo, City Manager
Reviewed By: April Mitts, Assistant City Manager
Approved By: April Mitts, Assistant City Manager

BACKGROUND
On February 28, 2023, the City Council received a presentation from BakerTilly which provided financial projections and warned about the need to increase revenues and/or further adjust service levels. The presentation (click here for link) provided several ways of dealing with the financial situation including reducing expenditures, engaging more aggressively in shared services, and increasing various types of fees and taxes. The key conclusion was that if community expectations are to be met, simply addressing the fiscal gap by only reducing expenditures will not work in the long run and new revenue stream(s) would need to be considered.

The financial outlook shows short-term stability; however, there are significant long-term challenges to address including unfunded needs consistent with Council Goals and community expectations that include repair of major streets and sidewalk improvements, infrastructure and environmental sustainability, quality of life, and overall staffing.

As noted in the Baker Tilly report, the updated Long Range Financial Forecast (LRFF), which includes revised forecast assumptions, shows a General Fund annual deficit starting in FY 2023 and continuing through FY 2028 (Figure 1 and Figure 2).

Agenda Item #12.2.

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Figure 1 - Updated Baseline Forecast Surplus (Deficit)
Figure 2 - Updated General Fund Reserves
As seen in Figures 1 and 2 the City is anticipated to have positive cash flow by FY 2029 which relies on the opening of the Farmstead hotel and the associated revenues.

With the baseline forecast updated, Baker Tilly reviewed the City’s identified unfunded or underfunded needs and capacity to meet the service delivery expectations of the community. These needs are identified as: compensation adjustments to bring current staff to 75% of market, having optimal staffing levels, and funding critical capital projects.

Together, these needs equate to an additional $6.5 million annually. If these needs were addressed in FY 2024, the impact to the General Fund is profound, increasing the City’s Agenda Item #12.2.

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annual deficit to $5.8 million in FY 24 with the annual deficit reducing to $4.4 million per year by FY 2032 as noted in Figures 3 and 4.

Figure 3 - General Fund Annual Surplus (Deficit)
Figure 4 - Updated General Fund Reserves

DISCUSSION
As mentioned above there are many unfunded needs facing the City and, as seen in Figures 1-4, the current revenues do not sustain the needs. Over the years, the City has adjusted its expenditures in a number of ways to maintain its reserve level and stay within the revenues generated; however, this is not enough for many reasons, two of which are noted below:

Agenda Item #12.2.

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• Increased costs of goods, services, and utilities. While the City can reduce expenditures, if the costs of goods and services continue to increase the result is paying more and getting less, which ultimately leads to diminished services to the community both from the service and capital improvement standpoint. • Increased Fire Department salary and benefits costs over the last nine years primarily due to transition from a part-time staffing model to a full-time staffing model. For example: FY 2015 salary and benefit costs were $379,743 compared to estimated FY 2023 costs of $1,705,804 is a 349% increase over 9 years. The increase in staffing costs exclude costs associated with strike teams.

Recognizing the imbalance of revenues vs. expenses and as a starting point to offset increasing costs, the City has, more recently, taken the following steps:
• Embarked on efficiency initiatives including implementation of technology and process improvement efforts
• Partnered more frequently for regional grants
• Increased grant applications
• Explored Shared Services
• Sought funding through state and federal representatives • Taken an overt pro-economic development stance
In addition, staff will bring to City Council a proposal to incentivize the expansion of existing hotels which will generate additional revenue. Additionally, later this year staff will be bringing to City Council revisions the City’s User Fee and Impact Fee Schedules which will seek to recover a portion of the cost-of-service delivery. Items covered in the fee schedules include fees related to recreation activities, development activity, and various types of permits. We hope that all these efforts will bear fruit; however, they do not change the fundamental fiscal situation.

The cost of addressing unfunded needs and the cost of regular ongoing services is considerable and growing - they will therefore need to come from new revenue streams.

The most stable and on-going new revenue sources as suggested in the BakerTilly report are:
• Hotels
• Taxes
The City is in an enviable position of being a desired vacation destination. It is for this reason there is a pent-up demand for hotel development – enough to make other communities around the state envious. Historically, the concern to increase hotel development has been the potential of eroding the small town feel and the loss of localserving businesses. Sadly, local-serving businesses are being eliminated around the world for a variety of reasons that have nothing to do with tourism and more to do with the growth of e-commerce and big-box stores, which are fueled by our collective desire Agenda Item #12.2.

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to enjoy lower prices. The fear of being over-run by tourists is understandable but should be evaluated on a case-by-case basis by carefully considering the impact of each potential development. Thirty-five years ago, there was a concerted effort to stop the Wine Train from operating in St. Helena because of fears of the arrival of thousands of tourists. Those fears have not materialized, and today, local businesses and residents look fondly at the train and even wish it would disembark tourists downtown to generate economic activity.

Hotels take many years to be built and are notoriously complex developments. However, once built, they generate three types of General Fund revenue: Sales taxes, property taxes, and Transient Occupancy Taxes (TOT). Compared to our neighbors, the City of St. Helena has not taken full advantage of the tourist-oriented revenue generating potential. For example, the City of Calistoga and the Town of Yountville generate approximately 60% and 55% of their budget respectively from TOT compared to only 30% for the City of St. Helena. Because of the lengthy process for hotel developments, the fact is that any new hotel development will not generate tax revenue until at least Fiscal Year 2028. This means that the City will need to explore the possibility of implementing one or more taxes to generate sufficient revenues to fund City services.

The Community Survey conducted in December 2022 and shared with the City Council on February 14, 2023, indicated understanding about the need for additional revenues and the potential sources of those new funds. Since that survey was not specifically designed to determine support for a ballot measure, a different poll would need to be conducted to make this determination.

All taxes imposed by local governments are classified as either general or special taxes.

General Tax - is any tax levied to fund general government purposes and which goes into the local government entity's general fund. General taxes imposed by local governments must be approved by voters and, moreover, they must be put before voters during regularly scheduled general elections. General taxes require approval from a simple majority of voters—50 percent + one vote.

Special Tax - is any tax levied for a specific purpose. If revenue from a tax is earmarked in a legally binding way for a service such as infrastructure, transportation, fire or police safety, or parks and recreational facilities, it is a special tax. Special taxes imposed by local governments require a two thirds (66.67 percent) supermajority vote at the ballot box for approval. Special taxes passed via voter initiatives require a 50 percent + one vote at the ballot box for approval.

The following is a summary of the various types of taxes that can be implemented.

Sales Tax:

The City can increase the sales tax collected for purchases within their jurisdiction.

California’s sales tax rate varies across cities and counties, with the average rate of 8.5%.

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Table 1 provides a summary of the 2023 Sales and Use Tax Rate distribution for St.

Helena and Table 2 provides a comparison of local sales tax rates for Napa County.

Table 1 - 2023 Sales and Use Tax Rates
Table 2 - Comparison of Local Sales Tax Rates
Jurisdiction Total Current Sales Tax Rate
City of American Canyon 7.75%
City of Napa 7.75%
Town of Yountville 7.75%
City of St. Helena 8.25%
City of Calistoga 7.75%
Local governments (cities and counties) are permitted to levy additional sales and use taxes with the combined rate not exceeding 2%. As noted in Table 1, 1% (of the maximum 2%) is currently being assessed for Measure D (St. Helena’s ½ cent sales tax approved by voters in 2016) and Measure T (Countywide ½ cent sales tax approved by voters in 2012). This allows for up to another 1% sales tax that can be assessed, or approximately $4.6 million annually, if approved by the voters. As you may recall, the June 2022 Countywide election included Measure L which, if passed, would have imposed a 0.25% sales tax for Fire Protection. Ultimately this ballot measure failed; however, if it, or another Countywide sales tax, were to be passed, it would decrease the total percentage available to St. Helena if a sales tax increase is desired by the community.

Business License Tax:

Business license taxes are imposed on all businesses that operate within the City limits, including home‐based businesses. While most business license taxes are imposed at a flat rate, others may be based on gross receipts and may also be differentiated by business type. Unlike sales taxes, which are automatically collected at the point of sale and distributed back to the City by the State, business license taxes would likely require Agenda Item #12.2.

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potentially significant additional staff time and resources to track and enforce. Therefore, the revenue generated by the tax would be offset by the cost to administer the program.

The amount of revenue that could be generated by a business license tax would depend on the amount of the tax and the number of businesses, which is not known with certainty at this time. For example, the City currently imposes a flat rate based on the type of business and number of employees. It is anticipated that in FY 2023 the City will collect $180,000 in business license taxes. If the City were to implement a gross receipts-based business license tax at 0.8%, it is estimated an additional $2.5 million annually would be generated.

Real Property Transfer Tax/Documentary Transfer Tax
Currently, there is a property tax transfer rate of $1.10 per $1,000 of property value levied when properties are sold. These taxes are either paid by the buyer, the seller or both and the revenue is split by the City and the County. Only charter cities can increase this rate via a ballot measure. Since St. Helena is currently a general law city, increasing the property tax transfer rate would require the City to become a charter city, which is also something that would need to be approved by the voters. At the current rate St. Helena receives ($0.55/$1000), the City collects between $100,000-$200,000 annually in property transfer taxes.

Utility Users Tax
The utility users’ tax (UUT), first imposed in California in 1967, can be imposed on utility services including electricity, gas, water, sewer, telephone (including cell phones and long-distance calling), sanitation, and cable television. Recently, local governments have expanded their UUTs to tax internet, streaming, and video-conferencing services. The amount of revenue that could be raised from a UUT would depend on the utilities being taxed and the rate. Table 3 provides examples of annual UUT raised for cities with populations between 5,000-10,000. The taxes are collected by the utilities and paid directly to cities. St. Helena does not currently impose any UUT.

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Table 3 - Examples of Annual UUT for Comparable Cities
Assessment Districts
Assessment Districts are a "property tax" mechanism used by local governmental agencies in California to fund public improvements and services. Assessment Districts are established for a specific geographical area that receives a special benefit from specific public improvements and services. In other words, the charge only applies to properties receiving a benefit instead of being applied against all properties within a governmental jurisdiction, as is the case with regular property taxes. Special benefits are defined as "a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large.” General enhancement of property value does not constitute a special benefit. For example, street lighting is an improvement, not a special benefit. However, street lighting confers a "safety" benefit to properties nearby and to non‐residents driving through. In this case, the safety benefit conferred to properties nearby is a special benefit, but the safety conferred on pass‐ through drivers is a general benefit. The local agency is required to separate and quantify special and general benefits so that properties nearby the street lighting (in this example) are charged for just the special benefit portion. The general benefit portion must be paid from other sources and cannot be charged against the properties within the Assessment District. Revenues collected through an Assessment District are strictly limited for the improvements and services for which the Assessment District was formed. Furthermore, a district cannot be formed without the participation of the property owners through a ballot procedure. Only those property owners that receive the special benefit are allowed Agenda Item #12.2.

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to vote and votes may be weighted, with property owners receiving more of the special benefits getting more weight, and those with less special benefits getting less weight.

Assessment district taxes can be passed based on a majority vote of the affected property owners. Assessment is charged via property tax bills. Some assessments have a term and others can go on in perpetuity and most assessments provide for an inflation factor.

Property Taxes
Property tax is imposed on real property (land and permanently attached improvements) and tangible personal property (moveable property) located within the state. The California property tax is ad valorem meaning it is based on the value of property rather than on a fixed amount or benefit to the property or persons.

Proposition 13 limits the real property tax rate to 1% of a property’s assessed value, plus rates previously imposed to fund indebtedness approved by the voters. Local governments have the ability to issue general obligation bonded debt backed by an increase in the ad valorem property tax rate (as discussed further in this report).

Parcel Tax
A Parcel tax requires two-thirds voter approval and is not an ad valorem property tax. A parcel tax is a particular type of excise that is based on either a flat per-parcel rate or a rate that varies depending on use, size, and/or number of units on each parcel. A parcel tax measure is generally put before the voters to support various city services and may be levied for general purposes or restricted to a particular purpose. For instance, a flat parcel tax of $50 per parcel per year would increase revenues by approximately $123,550 annually (based on 2,471 parcels).

Unlike ad valorem property taxes specifically passed by the voters to support the issuance of general obligation bonds, a public agency cannot issue bonds directly backed by the parcel tax. If the intention is to utilize a parcel tax for debt repayment, the City would need to issue lease revenue bonds requiring the City to lease an essential City asset and lease it back. The internal source of repayment for the lease revenue bonds can be the parcel tax but it cannot be specifically pledged to the repayment.

Municipal Bonds
Municipal bonds are sold by local and state governments to help fund public projects. In this way, the City is able to initiate projects immediately without having to “save up” for years to accumulate enough money. Bonds are very similar to a mortgage in that the City receives funds in a lump sum to build a project and then pays it back to bondholders over a period of time – usually 30 years – with interest. There are various types of bonds that can be sold by the City without voter approval. These include lease revenue bonds, water revenue bonds and sewer revenue bonds as restricted by the “Debt Limit”. The cost of the bonds will depend on the market interest rates in place at the time the bonds are sold as well as the overall creditworthiness of the City (general fund lease revenue) or the available revenue stream (water / sewer enterprise fund revenues).

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General Obligation Bonds
General Obligation Bonds generally have the lowest cost of borrowing since they are not an obligation of the City but rather are repaid solely by the ad valorem tax on real property.

The credit is based upon the quality and diversity of the local property tax base. Given that St. Helena recently received an AA+ S&P rating for the 2022 General Obligation Bonds, exploring another general obligation bond measure might be a cost‐effective and efficient way for the City to leverage this lower borrowing cost to initiate large infrastructure projects sooner.

As an example: A $10M bond over 30 years at a 4% interest rate will have annual debt service payment of $579,000. To fund this amount, St. Helena property owners would pay approximately $13.71 per $100,000 in assessed value. As assessed values increase each year, the tax levy decreases.

Lease Revenue Bonds
If the City does not wish to pursue another general obligation bond measure, the City can still issue bonds to initiate large infrastructure projects sooner but would need to lease essential City assets. The internal source of repayment can be a sales tax or parcel tax but would require a lease revenue bond structure. The limitations here are the quality, availability and dollar value of essential City assets. Essential City assets include such things as city hall, fire stations, police stations and a corporation yard. Less essential assets would include community/senior centers, a library, or other City buildings of an older nature. The insured value of the leased assets must be at least equal to or exceed the amount of bonds being sold. For example, a $10 million bond would require $10 million of leased assets. Unlike general obligation bonds, the lease payments are paid by the general fund and the credit worthiness of the City is directly linked to the repayment. A general fund rating is generally a notch or two lower than the rating on a general obligation bond. The lower the rating, the higher the interest rate on the bonds.

Voter‐Initiated Taxes
While the California Constitution prohibits local governments from imposing a special tax without two‐thirds voter approval, the approval threshold for special taxes proposed by a citizen initiative is a simple majority, according to a recent California appellate court decision. In order for the measure to qualify for the ballot:
• Tax ordinance/measure written by residents/initiative proponents proposing special tax to fund specific purposes.
• City Staff does not write the tax ordinance/measure and the Council does not propose it to the voters.
• Proponents circulate measures and petition to voters for signatures; proponents have 180 days from document filing to gather signatures. • If the petition has enough signatures, the measure qualifies (goes on ballot).

There are two options for election dates:

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• On the date of the next regular Council election that is not less than 88 days after the Council meeting at which the petition is certified, or • On a special election date that is between 88 and 103 days after the Council meeting at which the petition is certified.

Transient Occupancy & Cannabis Taxes
There are two other common types of taxes that can be proposed by municipalities to fund services:
• Transient Occupancy Tax, also known as the TOT or hotel tax, is imposed on occupants of rooms or living spaces at hotels, inns, motels, etc. Cities may impose hotel taxes for stays lasting 30 days or less, with taxes based on the cost of the room. In St. Helena, the total hotel tax is 15% and is summarized in Table 4.

Table 4 - Summary of St. Helena Hotel Taxes
Approximately 90% of all TOT is collected through the City’s six hotels. Given the limited number of hotels subject to TOT, and because the TOT has already suffered immensely due to the pandemic, raising this tax is not recommended at this time. • Cannabis taxes can be based on a multitude of factors. Generally, the tax may be based on the gross receipts of a cannabis business, and the tax rate may differ depending on the stage of production (growing, cultivation, manufacturing, delivery, etc.), or sale to consumers. Alternatively, several tax measures proposed to tax cannabis businesses based on the square footage of a property, with different rates for cultivators, nurseries, “canopy space,” manufacturers, or retailers. Given that the City does not currently allow cannabis dispensaries or production facilities, this type of tax is not relevant to the current discussion but could be imposed in the future should the City Council allow Cannabis businesses.

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Development Impact Fees
A development impact fee is charged by a local governmental agency to an applicant in connection with approval of a development project for the purpose of defraying all or a portion of the cost of public facilities related to the development project. A development impact fee is not a tax or special assessment. By its definition, a fee is voluntary and must be reasonably related to the cost of the service provided by the local agency. If a development impact fee does not relate to the impact created by development or exceeds the reasonable cost of providing the public service, then the fee may be declared a special tax and must then be subject to a two‐thirds voter approval. While this may be an option the City can consider, levying these type of fees must be approached carefully and with a great deal of analysis and study. Both the political and legal implications of having a development impact fee declared to be a special tax can be exceedingly grim. The best defense against such an outcome is careful construction of the development impact fee program and scrupulous attention to substantive and procedural requirements of the Mitigation Fee Act. The City Attorney must play an active role in this process.

Furthermore, since development impact fees need to be tied to specific capital improvements that are necessary due to increased development, use of funds generated by these fees is not as flexible as proceeds from the various taxes discussed above.

Long Range Financial Plan - Baker Tilly Report
As mentioned at the beginning of this report, on February 28, 2023, Baker Tilly presented many viable options to the City Council for revenue enhancement strategies which have been discussed above and as noted in Attachment 1.

SUMMARY
There are several choices facing the City Council ranging from adjusting expectations and service levels, engage in shared service model(s) to reduce costs, implement efficiency initiatives (technology & process improvements), increase revenues via new hotel development (5-10 years for revenue generation), or increase revenues via taxes.

As noted in the discussion section, there are several ways that the City can raise additional, steady streams of revenue to accomplish the Council’s stated goals. Almost all of them require voter approval. There are also myriad options as to how these various taxes could be structured depending on how much annual revenue the Council would like to generate. One example of a way to reach a revenue goal of $6 million annually would be to implement the following tax options:
• Property Transfer Tax of 1.5% = $2.2 million
• Gross Receipts Tax of 1% = $3.2 million
• Parcel Tax of $1,000 = $3.8 million
It is important to note that the above is only an example and would require voter approval on three separate tax measures.

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This was intended to be a general presentation and deeper dive of revenue options available to the City. Depending upon the City Council’s preference, staff can take a range of further actions including returning it at a future date with a more specific recommendation for a tax measure.

Please note that if the Council wishes to place a measure on the November 2024 ballot, a ballot resolution needs to be filed with the election’s office no later than August 11, 2024. Voter initiated taxes have a different set of deadlines given that signatures must be collected and verified.

FISCAL IMPACT
Dependent on City Council direction.

RECOMMENDED ACTION
Discuss and direct staff.

ATTACHMENTS
Attachment 1 - Revenue Enhancements Strategies
Attachment 2 - Revenue Enhancement Options Presentation Agenda Item #12.2.

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Attachment 2 - Long Range Financial Plan - Baker Tilly Report Revenue Enhancement Strategies from Baker Tilly Report
Budget Strategy
Estimated
Fiscal
Impact
Implementation Considerations
Allow development of new
hotels to increase transient
occupancy tax (TOT) revenue
$1,300,000
annually
• Developers may seek tax incentives for building a
new hotel
• Would also increase sales and property taxes
Increase TOT rate by 1% $450,000
annually
• A general purpose TOT increase requires majority
voter approval at an election where Council seats
are on the ballot unless a fiscal emergency is
declared whereby the measure can proceed
during a non-election season
• Pushback from local hotels
• TOT rate increases are generally supported by
voters
Establish a Parks
Maintenance District
$300,000 -
$500,000
annually
• Requires approval of property owners to be
assessed.
• May take a year or more to implement.
• City would still be required to provide “general
benefit” financial contributions
Increase local transactions
and use (sales) tax by 0.5%
$2,300,000
annually
• A general purpose sales tax increase requires
majority voter approval at an election where
Council seats are on the ballot unless a fiscal
emergency is declared whereby the measure can
proceed during a non-election season. A specific
purpose sales tax increase requires two-thirds
voter approval and may be taken to voters at any
time.
• City leadership will need to act before other
overlapping jurisdictions add additional local sales
taxes that would reach the cap of 2% of local sales
taxes in any one jurisdiction. Otherwise, the City
might be required to seek legislative relief to be
allowed to exceed the cap.

Implement a Utility User Tax Varies as
noted in
Table 3
• A general purpose UUT requires majority voter
approval at an election where Council seats are on
the ballot unless a fiscal emergency is declared
whereby the measure can proceed during a nonelection season.

Implement a Library Parcel
Tax
$1,200,000
annually
• A parcel tax would need to be approved by twothirds of voters and may be taken to voters at any time.
• To generate $1.2 million would require a $313
parcel tax assessed annually
Agenda Item #12.2.

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Budget Strategy
Estimated
Fiscal
Impact
Implementation Considerations
Review and Update Business
License Tax
$3,200,000
annually
• Based on 1% tax rate (net of annual enforcement
costs)
• Modeling the tax to generate the appropriate
revenues and to address equity and fairness
across business sizes and sectors will be
important.
• Changes in the BLT model require a majority vote
where Council seats are on the ballot unless a
fiscal emergency is declared whereby the measure
can proceed during a non-election season.
• City would need to consider administrative
support to assist with public information and
education during the transition, and enforcement,
the latter of which can be outsourced through a
tax consulting firm that might cost $50,000 per
year for enforcement costs.

Implement Real Property
Transfer Tax
$2,250,000
annually
• Annual estimate is based on a 1.5% tax rate
• Requires an election and majority vote to change
from a general law city to a Charter city. This
would be taken to voters during a general election
where Council seats are also up for election.
• Charter measure would be accompanied by a real
property transfer tax measure, that is a general
law tax subject to majority voter approval.
• May incur one-time costs approaching $500,000
to draft a Charter and accompanying ballot
measures for voter consideration.

Sell Surplus Property Dependent
on property
One time
revenue
source
• Sale of surplus property must fulfill the provisions
required under the Surplus Land Act.
• This is a one-time revenue source that should only
be used to restore General Fund reserves until
which time ongoing revenues sources are found to
address the gap.
• Future decisions could be made to use the funds
for one-time needs.

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REVENUE

ENHANCEMENT

OPTIONS
May 23, 2023, City Council Meeting
Anil Comelo, City Manager
April Mitts, Assistant City Manager
Agenda Item #12.2.

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AGENDA
• Review of Long-Range Financial Forecast
• City’s Fiscal Needs
• Revenue Options
• Questions for Council
• Discussion and Direction
Agenda Item #12.2.

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LONG RANGE FINANCIAL FORECAST – BAKER TILLY
UPDATED BASELINE FORECAST, FEBRUARY 24, 2023
Agenda Item #12.2.

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CITY NEEDS
Category Estimated Annual Shortfall
CIP – Streets $1,786,338
CIP – Stormwater $ 323,850
CIP – Civic* $ 412,264
CIP – Water $ 25,000
CIP – Wastewater $ 11,100
Staffing** $3,929,199

TOTAL ESTIMATED ANNUAL
SHORTFALL $6,487,751
* Facilities only; excludes Parks and purchase/building of new City Hall ** Optimal staffing at market, estimated annual shortfall Year 1 – General Fund Only Agenda Item #12.2.

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LONG RANGE FINANCIAL FORECAST – BAKER TILLY

UPDATED BASELINE FORECAST, ADDRESSING CITY NEEDS
Agenda Item #12.2.

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GENERAL
FUND

REVENUES
Agenda Item #12.2.

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REVENUE OPTIONS - SUMMARY
Revenue Strategy Authority
Estimated
Annual
Impact

1. Allow development of new hotels (estimated annual TOT) City Council $1,300,000

2. Increase TOT rate by 1% Voter Approval $450,000

3. Increase local transactions and use (sales) tax by 0.5% Voter Approval $2,300,000

4. Implement a utility user tax Voter Approval $200k-$600k

5. Implement a $313 Library parcel tax Voter Approval $1,200,000

6. Establish a Parks Maintenance District Voter Approval $400,000

7. Review and update business license tax (BLT) to 1% of gross receipts Voter Approval $3,200,000

8. Implement a 1.5% real property transfer tax Voter Approval $2,250,000

9. Sell surplus property (one-time funds) City Council Dependent

10. General Obligation Bonds to Fund Infrastructure Voter Approval Dependent Agenda Item #12.2.

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CHOICES AND OPTIONS
• Adjust expectations and service levels
• Engage in Shared Service model(s) to reduce costs
• Seek grants
• Implement Efficiency Initiatives
• Technology & Process improvements
• Increase revenues
• Incentivize expansion of current hotels
• New Hotels
• Implement a new tax
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COST OF STAFFING – BY CLASSIFICATION
Position Cost* Impact
Maintenance Worker 68,479 Maintainance of streets, parks, etc.

Police Officer 112,346 Investigations and traffic
Project Manager 129,950 CIP management
Assistant To CM 134,687 Key initiatives, CIP, & Econ. Dev.

Accounting Tech 72,970 Handle support functions
Assistant Planner 96,507 Support Planning/Econ Dev.
*Annual Salary Only Not Including Benefits
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EXTRA $200,000
• Hire of 2 Public Workers Maintenance Workers
• Give all classifications a 2% salary increase
• Pay down liability – CalPERS
• Purchase Bucket Truck
• Replace 2 very old (1990s) Public Works trucks
• Hire Police Officer and an Accounting Assistant
• Purchase a Permit Application software
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FUNDING IMPACTS
• Faster responses to citizen requests
• Community wide public safety enhancements
• Increased maintenance of parks and other public spaces • Investments into infrastructure: parks, sidewalks, & streets. • Increased programming for Recreation, Library
• Forward Progress toward sustainable initiatives
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QUESTIONS FOR COUNCIL AND DISCUSSION POINTS
• Does the Council want to change community expectations? • Does Council see a need for an increase in revenues?
• If yes, what is the desired target?
• What measure(s) does the Council want to explore?
• What are the directed next steps?
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EXAMPLE OF TAX OPTIONS TO MEET GOAL
• Goal $6M
• Property transfer tax (1.5%) $2.2M
• Gross receipts tax (1%) $3.2M
• Parcel tax ($1,000) $3.8M
Agenda Item #12.2.

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Questions?
Agenda Item #12.2.

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1 Cindy Tzafopoulos
From: TOM BELT <[email protected]>
Sent: Monday, May 22, 2023 5:02 PM
To: Public Comment
Subject: [External] Please Include the Following Public Comment to City Council Agenda Item 12.2 Good evening Mayor Dohring and City Council Members Hall, Hardy, Chouteau, and Summers,

City staff claims our city employees are under compensated and understaffed. To this end, I believe more specific information is needed for our community to better understand city staffs' report for Agenda Item 12.2 that reads: "With the baseline forecast updated, Baker Tilly reviewed the City’s identified unfunded or underfunded needs and capacity to meet the service delivery expectations of the community. These needs are identified as: compensation adjustments to bring current staff to 75% of market, having optimal staffing levels, and funding critical capital projects. Together, these needs equate to an additional $6.5 million annually".

First, In light of this agenda item, it would be beneficial for our community to have a list of the St.

Helena City Employees' salaries that need compensation adjustments to bring those salaries within 75% of the Market?

Secondly, what cities and populations did Baker Tilly use to define "market"?

Third, the City's staff report refers to St. Helena having less than optimal staffing levels and salaries.

In the Utility Uses Tax section of the staff report there is a table, (Table 3), that lists 15 California cities with comparable population sizes to St. Helena. Can we use that same list of 15 cities to compare the number of city employees in each department and those employee salaries to what St.

Helena offers?

Thank you for addressing these questions.

Tom Belt

Agenda Item #12.2.

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1 Cindy Tzafopoulos
From: Alan Galbraith <[email protected]>
Sent: Saturday, May 20, 2023 9:43 AM
To: Cindy Tzafopoulos
Subject: [External] Public Comment, Agenda 12.2, Regular City Council Meeting, May 23, 2023 City staff in its report (agenda item 12.2, May 23 Council Meeting) presents a list of revenue options not dissimilar to the list presented by staff to the Council in 2015. The leading candidates back then were a local sales tax increase and a real property transfer tax. At that time the Council realistically recognized that it could ask voters to approve only one of the several presented options. It chose to pursue a local sales tax increase. The Council led a significant campaign resulting in its adoption by St. Helena voters. (Voters had rejected a similar proposal in 2010.).

I think it remains true that the Council must settle on one — and only one — revenue proposal for voter adoption. More than one risks ballot rejection of all. With the local sales tax now in place, the logical next step is a real property transfer tax. This can be no surprise to St. Helena voters. Both the mayor and the vice‐mayor in their campaign platforms strongly supported enactment of a real property transfer tax in the last election.

Enactment of such a tax requires that St. Helena become a charter city. I would urge following the Emeryville model. The charter should do no more than adopt the relevant general laws of California. This continues current governance structure. It obviates distracting debate over charter particulars.

As for the real property transfer tax itself, I strongly urge adoption of a graduated tax. The key word is “graduated.” (I believe the City of Los Angeles has done so; it is colloquially known as “the mansion tax.”). There are two policy reasons for doing so: first, it would be a progressive tax, which is plainly in the public interest; second, it would mitigate to some extent the pernicious impact of Proposition 13, whereby homeowners who have held their homes for a longtime, with large increases in property value, have not been paying for the timely rehabilitation of public infrastructure.

My purpose here is to promote a “graduated” property tax transfer. The progressive transfer rates should be designed to assist the City in addressing its well‐documented infrastructure needs.

Respectfully submitted,
Alan Galbraith
St. Helena Mayor, 2014‐18

Sent from my iPad
Agenda Item #12.2.

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Report to the City Council
Regular City Council - 23 May 2023
Agenda Section: NEW BUSINESS
Subject: Designating one (1) Councilmember as Liaison to the Groundwater Sustainability Agency and Associated
Technical Advisory Group.

CEQA
Determination:

Not a CEQA project
Prepared By: Anil Comelo, City Manager
Reviewed By: April Mitts, Assistant City Manager
Approved By: Anil Comelo, City Manager

BACKGROUND
In 2014, the State of California passed the Sustainable Groundwater Management Act (SGMA), which required the County of Napa to form a Groundwater Sustainability Plan and a Groundwater Sustainable Agency (GSA) to manage and protect groundwater for future generations. In late December 2019, the Napa County Board of Supervisors named themselves to constitute the newly formed Groundwater Sustainability Agency for Napa County. A key element of the preparation of a sustainability plan is to ensure that all relevant stakeholders have input to the plan. Meetings typically occur in conjunction with the Napa County Board of Supervisors meetings held at 1195 Third St., Suite 305, Napa, CA 94559.

A Technical Advisory Group (TAG) was formed as a group of independent experts to make technical recommendations on the various projects and workplans to help implement the Groundwater Sustainability Plan. TAG meetings typically occur the second Thursday of each month at 1:30 p.m. at 1195 Third St., Suite 305, Napa, CA 94559 with the first meeting held on May 11, 2023.

DISCUSSION
A legislative intent of SGMA is to recognize and preserve the authority of cities and counties to manage groundwater according to their existing powers. As a result, local Agenda Item #12.3.

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governments play an important land-use and water-management role in California. To ensure the City has representation in Napa County at both the GSA and TAG meetings, staff recommends City Council designate one (1) Councilmember as liaison.

The City liaison will provide input to the GSA and TAG as an official representative of the City of St. Helena and will report to City Council any topics of interest.

The 2022 St. Helena Intergovernmental City Council Assignments names Mayor Dohring and Councilmember Hardy as assigned to the Napa County Groundwater Sustainability Plan Advisory Committee. To maintain consistency, staff recommends City Council designate Councilmember Hardy as the liaison to the Groundwater Sustainability Agency and associated Technical Advisory Group.

FISCAL IMPACT
None

RECOMMENDED ACTION
Designate one (1) Councilmember as Liaison to the Groundwater Sustainability Agency and associated Technical Advisory Group.

Agenda Item #12.3.

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St. Helena City CouncilMay 23, 2023

St. Helena City Council
May 23, 2023