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Home My WebLink About2023.02.15@0930 SP Budget StandingWednesday, February 15, 2023 9:30 AM City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA City Hall - City Manager Conference Room: 400 Grand Avenue, South San Francisco, CA Budget Standing Committee of the City Council Special Meeting Agenda HYBRID IN-PERSON/VIRTUAL MEETING NOTICE 1 February 15, 2023Budget Standing Committee of the City Council Special Meeting Agenda HYBRID IN-PERSON/VIRTUAL MEETING NOTICE The purpose of conducting the meeting as described in this notice is to provide the safest environment for staff and the public while allowing for public participation. Mayor Nicolas, Councilmember Addiego, and essential City staff may participate via Teleconference. Pursuant to Ralph M. Brown Act, Government Code Section 54953, all votes shall be by roll call due to council members participating by teleconference. The Budget Standing Committee may meet by teleconference, consistent with the Brown Act as amended by AB 361 (2021). American Disability Act: The City Clerk will provide materials in appropriate alternative formats to comply with the Americans with Disabilities Act. Please send a written request to City Clerk Rosa Govea Acosta at 400 Grand Avenue, South San Francisco, CA 94080, or email at [email protected]. Include your name, address, phone number, a brief description of the requested materials, and preferred alternative format service at least 24-hours before the meeting. Accommodations: Individuals who require special assistance of a disability -related modification or accommodation to participate in the meeting, including Interpretation Services, should contact the Office of the City Clerk by email at [email protected], 24-hours before the meeting. Notification in advance of the meeting will enable the City of South San Francisco to make reasonable arrangements to ensure accessibility to the meeting. Page 2 City of South San Francisco Printed on 3/20/2023 2 February 15, 2023Budget Standing Committee of the City Council Special Meeting Agenda ZOOM LINK BELOW -NO REGISTRATION REQUIRED Join Zoom meeting: https://ssf-net.zoom.us/j/85292680192 (Enter your email and name) Webinar ID: 852 9268 0192 Join by Telephone: +1 669 900 6833 How to submit written Public Comment before the Meeting: Members of the public are encouraged to submit public comments in writing in advance of the meeting via the eComment tab by 7:30 a.m. on the meeting date. Use the eComment portal by clicking on the following link : https://ci-ssf-ca.granicusideas.com/meetings or by visiting the City Council meeting's agenda page. eComments are also directly sent to the iLegislate application used by City Council and staff. How to provide Public Comment during the Meeting: COMMENTS ARE LIMITED TO THREE (3) MINUTES PER SPEAKER 1. By Zoom: When the Clerk calls for the item on which you wish to speak, click on "raise hand." Speakers will be notified shortly before they are called to speak. 2. By Phone: Enter the conference ID fund on the agenda. When the Clerk calls for the item on which you wish to speak, Click *9 to raise a hand to speak. Click *6 to unmute when called. 3. In Person: Please be sure to sign up to speak with the Clerk and indicate the Agenda Item # you wish to address. When your name is called, please state your name and address (optional) for the Minutes. Page 3 City of South San Francisco Printed on 3/20/2023 3 February 15, 2023Budget Standing Committee of the City Council Special Meeting Agenda CALL TO ORDER ROLL CALL AGENDA REVIEW PUBLIC COMMENTS MATTERS FOR CONSIDERATION Motion to approve the Minutes for the meeting of May 23, 2022.1. Report presenting Fiscal Year (FY) 2022-23 Mid-Year Financial Report as of December 31, 2022, and proposed budget amendments for FY 2022-23 City Operating and Capital Improvement Program (CIP) Budgets (Karen Chang, Director of Finance) 2. ADJOURNMENT Page 4 City of South San Francisco Printed on 3/20/2023 4 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:23-120 Agenda Date:2/15/2023 Version:1 Item #:1. City of South San Francisco Printed on 2/10/2023Page 1 of 1 powered by Legistar™5 Call to Order. Time: 4:00 p.m. Roll Call. PRESENT: Vice Mayor Nicolas and Councilmember Addiego. AGENDA REVIEW City Manager Futrell suggested moving item 3 ahead of item 2. REMOTE PUBLIC COMMENTS None. MATTERS FOR CONSIDERATION 1. Motion to approve the Minutes for the meeting of April 26, 2022. Motion – Councilmember Addiego / Second –Vice Mayor Nicolas: to approve the minutes. The motion carried unanimously. 3. Report regarding the City of South San Francisco Operating Budget for Fiscal Year 2022-23. (Jason Wong, Acting Director of Finance) Acting Finance Director Wong presented the report regarding the city’s Operating Budget for Fiscal Year 2022-23. He requested feedback from the Budget Standing Committee members in preparation for the City Council study session on June 8, 2022. He advised that the city remained financially strong, with a AAA-rated credit rating. With most COVID-19 restrictions lifted and high vaccination rates in the County, staff expects revenues to rebound from their pandemic lows. He recommended unfreezing all frozen positions, adding new positions, using infrastructure reserves to fund critical infrastructure projects necessary throughout the city, and increasing spending to provide additional services to the community. MINUTES SPECIAL MEETING BUDGET STANDING COMMITTEE OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 MONDAY, MAY 23, 2022 4:00 p.m. Teleconference via Zoom Budget Standing Committee may meet by teleconference, consistent with the Brown Act as amended by AB 361 (2021. Under the amended rules, the City will not provide a physical location for members of the public to participate in the teleconference meeting. 6 SPECIAL BUDGET STANDING COMMITTEE MEETING MAY 23, 2022 MINUTES PAGE 2 Human Resources Direct Lockhart presented the proposed Human Resources Department expansion plans, which included replacing one full-time Human Resources Analyst II with one full-time Human Resources Analyst Senior position, adding a new full-time Human Resources Analyst Senior position, adding a new full-time Human Resources Technician position, and adding a new full-time Housing Resources Manager position. Vice Mayor Nicolas and Councilmember Addiego supported the proposed Human Resources Department expansion plans. City Manager Futrell stated the City Manager’s Office was proposing adding a Diversity Officer position and was in talks with San Mateo County about veterans housing. Councilmember Addiego was impressed with how the budget reports were written and how the staff wrote the reports easy to read and follow. 2. Report regarding proposed Capital Improvement Program for the fiscal year 2022-23. (Eunejune Kim, Director of Public Works/City Engineer, and Matthew Ruble, Principal Engineer) Principal Engineer Ruble presented a report regarding the proposed Capital Improvement Program for the fiscal year 2022-23. He stated that the Capital Improvement Program outlined large capital expenditures and infrastructure improvement projects throughout the city. City departments identified necessary improvements and prioritized project implementation when preparing the Capital Improvement Program. Staff would amend the fiscal year 2022-23 Capital Improvement Program based on direction from the Budget Standing Committee and present the revised report at the June 7, 2022, Special City Council study session. Vice Mayor Nicolas inquired whether the city could still qualify for a grant if a project was found later. Principal Engineer Ruble confirmed that the city would qualify if a known grant was pertinent to the budget. ADJOURNMENT Being no further business, Vice Mayor Nicolas adjourned the meeting at 4:44 p.m. Submitted by: Approved by: Gabriel Rodriguez Flor Nicolas Deputy City Clerk Vice Mayor Approved by the Budget Standing Committee: / / 7 City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA File #:23-119 Agenda Date:2/15/2023 Version:1 Item #:2. Report presenting Fiscal Year (FY)2022-23 Mid-Year Financial Report as of December 31,2022,and proposed budget amendments for FY 2022-23 City Operating and Capital Improvement Program (CIP)Budgets (Karen Chang, Director of Finance) RECOMMENDATION Staff requests that the Budget Standing Subcommittee of the City of South San Francisco (“City”)review the FY 2022-23 Mid-Year Financial Report and the proposed budget amendments for FY 2022-23;and refer the items to the February 22, 2023 City Council meeting for full Council acceptance. BACKGROUND/DISCUSSION Due to the formatting limitations of the City’s Agenda Management platform,the full staff report accompanying this agenda item is being attached as Attachment 1 of this report. Attachments: 1.Staff Report 2.GF Summary and Proposed Budget Adjustments 3.FY 22-23 Mid Year Department Requests Summary 4.Mid-year fund transfers 5.Presentation City of South San Francisco Printed on 2/10/2023Page 1 of 1 powered by Legistar™8 City of South San Francisco Page 1 of 12 File#: 23-119 Agenda Date: 02/15/2023 Version: 1 Item #: 2 Report presenting Fiscal Year (FY) 2022-23 Mid-Year Financial Report as of December 31, 2022, and proposed budget amendments for FY 2022-23 City Operating and Capital Improvement Program (CIP) Budgets (Karen Chang, Director of Finance) RECOMMENDATION Staff requests that the Budget Standing Subcommittee of the City of South San Francisco (“City”) review the FY 2022-23 Mid-Year Financial Report and the proposed budget amendments for FY 2022-23; and refer the items to the February 22, 2023 City Council meeting for full Council acceptance. BACKGROUND/DISCUSSION City Council approved the FY 2022-23 General, Enterprise and Internal Service Fund budgets on June 22, 2022. The approved budgets feature the annual expenditure and resource allocation plan that guide the implementation of City Council budget policies and priorities. The budget provides funding direction for the broad range of services that meet the needs of the community in accordance with City Council policy. This financial review provides the mid-year budget update to the City Council for the current fiscal year. Analysis of the revenues collected and all expenditures through December 31, 2022 measures operational adherence to the budgetary allocation plan. The adjusted budget incorporates current estimates for revenue and expenditure appropriations for all funds as of December 31, 2022. The Mid-Year Financial Report as of December 31, 2022 provides comparisons to the prior year and focuses on variances from the revenue and expenditure plans and allocations contemplated in the budget. I. Current Fiscal Year (FY 2022-23) Update A. General Fund Revenues – 2nd Quarter B. General Fund Expenditures – 2nd Quarter C. Additional General Fund Appropriations Request D. Additional Non-General Fund Appropriations Request E. Capital Improvement Plan (CIP) City of South San Francisco Legislation Text P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA Attachment 1 9 City of South San Francisco Page 2 of 12 F. American Rescue Plan Act (ARPA) Summary II.Reserves Overview & Considerations I. CURRENT FISCAL YEAR (FY2022-23) UPDATE The General Fund finances the operations of the City and pays for basic municipal services. The adjusted FY 2022-23 General Fund budget projects revenues totaling $126.2 million and expenditures totaling $137.0 million, including purchase order encumbrances from FY 2021-22, approved carryover amounts, and several City Council approved appropriation amendments prior to December 2022. The following sections show the revenue and expenditure results as of December 31, 2022. A. General Fund Revenues – 2nd Quarter The following table shows actual revenues as of December 31, 2022 with a comparative view of where the City’s revenues were at the same time last year (December 31, 2021): Table 1: FY 2021-22 vs. FY 2022-23 Revenues as of December 31 As shown in the above table, projected revenue for FY 2022-23 is $126.2 million – approximately $7.1 million more than the FY2021-22 budget. Actual revenue collections for the two quarters ended December 31, 2022 exceed prior year by $18.5 million and represent almost 54% of the projected revenue for the entire fiscal year. The following highlights the recommended adjustments to the FY2022-23 revenue budget. 1.Property Tax. The real estate market remains strong as homeowners continue to make 10 City of South San Francisco Page 3 of 12 improvements on their existing homes and new construction are added to the tax roll. Property tax comprises almost 40% of the General Fund’s total revenue. Property tax is allocated to the City in two large installments (December and April). Our records show property tax collections have reached 58.2% of our projection as of December 31, 2022. Based on the available information provided by the county, staff recommends a $2 million increase to the projections. 2. Sales Tax. There is about a two-month lag in the collection of sales tax receipts. Just like the 2nd quarter of FY 2021-22, the city has received approximately one-third of the projected sales tax revenue for the entire fiscal year. Our initial forecast on sales tax is well- aligned with the latest estimates provide by our sales tax consultant in January. Staff recommends a $1.4 million increase to our projections. 3. Transient Occupancy Tax (TOT). This revenue stream, most impacted by the pandemic- imposed travel restrictions, has demonstrated strong recovery to the pre-pandemic level. As of December 31, 2022, the city has recorded a TOT revenue collection of $7.4 million. This amount represents $2.9 million or 64% more than the FY 2021-22 2nd quarter year- to-date collection and has exceeded the same quarter collection for the two fiscal years prior to the pandemic [$6.2 million for FY 2017-18 and $6.8 million for FY 2018-19]. Staff remains optimistic about the continuous growth of this revenue stream when business travel begins to accelerate. As such staff recommends a $3 million increase in the projections. 4. Other Tax. Other tax includes real property transfer tax, business license and commercial parking tax. 2nd quarter year-to-date collection of commercial parking tax and business license tax exceeds prior year’s amount by $660k and $106k respectively. Revenue streams from new business startups and traffic to the City continues to strengthen since the decline in FY 2020-21. Staff recommends a $800k increase in our projections. 5. Licenses & Permits. Revenue from building and electric has demonstrated significant growth. Collection for the 2nd quarter year-to-date exceeds the prior year’s amount by $4.8 million, reaching $11.5 million (71% of budget). This has surpassed 2nd quarter year-to- date collection for the two fiscal years prior to the pandemic [$7 million for FY 2017-18 and $7.5 million for FY 2018-19]. Staff recommends a $3.9 million increase in our projections. 6. Service Charges. This revenue stream includes fees charges by various departments for services provided to the public and has been negatively affected by the pandemic. Total collection for 2nd quarter year-to-date exceeds prior year’s amount by $440k. This is primarily due to a significant increase in fees collected by the child care program. Overall, the actual revenue collection is within our expectations. However, staff recommends a 11 City of South San Francisco Page 4 of 12 $584k decrease in our projections as Planning Division receipts are below initial expectations. 7. Intergovernmental. Staff recommends a $800k decrease in our projections as the city has received less than expected grant and program reimbursement from other governmental entities. 8. Transfer In. Staff recommends a $694k increase in Transfers In, from the Infrastructure Reserve Fund ($294k), the Developer Deposit Fund ($308k) and the Public Safety Impact Fee Fund ($92k). If approved by Council, the above changes would result in increasing the overall revenue budget for FY 2022-23 by $10.4 million from $126.2 million to $136.6 million. B. General Fund Expenditures – 2nd Quarter The following table shows the actual expenditures by Department that have been recorded through December 31, 2022: Table 2: FY 2021-22 vs. FY 2022-23 Expenditures as of December 31 12 City of South San Francisco Page 5 of 12 * Non-General Fund; budgeted as internal service fund in Fund 785. The city is breaking even in terms of revenue and expenditures as of December 31, 2022, with expenditures exceeding revenues collected by $120k. 13 City of South San Francisco Page 6 of 12 C. ADDITIONAL GENERAL FUND APPROPRIATIONS REQUEST The following are additional General Fund expenditure appropriations requests totaling $2,956,000: 1. City Manager’s Office $45,000 • Survey for BNGC Property- $15,000 • Antoinette Lane Name Change- $30,000 2. Non-Expense Department $200,000 • Adjustment to the benefit fund 783 3. Police Department $0 • 1.0 FTE Police Officer. Additional headcount only. Two-year term assignment funded by the County with no fiscal impact in FY2022-23. 4. Public Works $1,039,000 Payroll (position requests): • 1.0 FTE Engineer- Senior (M340)- $53,000 • 1.0 FTE Management Analyst I (M570)- $36,000 Supplies and Services Request • Professional services increase cost of consultant fees- $950,000 5. Non-Departmental $608,000 • Additional Discretionary Payment (ADP) for CALPERS Unfunded Accrued Liability (UAL) 6. Library $12,000 The requested positions will likely be recruited mid-May to June. The position costs are calculated at 20 hours per week for 6 weeks. • 0.06 FTE Library Assistant II - Hourly (X225)- $5,000 • 0.06 FTE Library Clerk - Hourly (X235)- $3,000 • 0.06 FTE Office Specialist- Hourly (X235)- $4,000 7. Parks and Recreation Department (P&R) $932,000 Requests for additional $556,000 payroll cost and $377,000 in miscellaneous supplies and services. Breakdown as follows: Payroll (position requests): • 1.0 FTE Management Analyst II - $53,000 • 2.0 FTE Recreation Leader III- Hourly (X370)- $27,000 14 City of South San Francisco Page 7 of 12 • 3.0 FTE Recreation Instructor – Hourly (X350)- $51,000 • 0.5 FTE Recreation Leader III - Hourly (X370)- $7,000 • 1.0 FTE Park Maintenance Worker (A250)- $32,000 • 1.3 FTE Park Maintenance Worker - Hourly (X300)- $113,000 • 1.0 FTE Recreation & Community Services Program Coord (M530)- $70,000 • 0.18 FTE Recreation Leader III - Hourly (X370)- $10,000 • 0.41 FTE Recreation Leader III (A620)- $20,000 • 2.0 FTE Building Maintenance Custodian - Senior (A320)- $61,000 • 4.0 FTE Building Maintenance Custodian (A410)- $111,000 Supplies and Services Requests: • Corp Yard HVAC Unit- $25,000 • Upgrade MERV 13 HVAC, Miscellaneous City buildings-$80,000 • Police Station Bird Mitigation- $40,000 • Repair MSB Fire Sprinkler Deficiencies-$41,000 • New Pool pump- $11,000 • SF Opera Pop-up Series at OMP- $30,000 • Consulting Services for Measure DD Revamp- $150,000 8. Capital Improvement Fund (CIP) – see section E. $120,000 • Francisco Terrace Flood Wall project (sd2201) The ongoing impact of the mid-year requests beyond FY2022-23 have been estimated to be an additional $2.7 million in payroll and $1 million for supplies and services. D. ADDITIONAL NON-GENERAL FUND APPROPRIATIONS REQUEST The following are the additional non-General Fund expenditure appropriations requests totaling $2,011,000 from various sources. 1. Common Greens (Fund 231) $1,000 • P&R- Park Maintenance Worker- Hourly (budget adjust) 2. Oyster Point CFD Special Tax B (Fund 236) $71,000 • P&R- Oyster Point Maintenance Supplies- $20,000 • P&R- Oyster Point Water Cost Adjustment- $51,000 3. Developer Deposits (Fund 270) $308,000 • Fire- Rescue boat 15 City of South San Francisco Page 8 of 12 4. Public Safety Impact Fee (Fund 821) $92,000 • Fire – Rescue boat reserve 5. Infrastructure Reserves (Fund 513) $294,000 • P&R- OMP Ballfield restroom refurbishing. • P&R- OMP Tennis Court restroom refurbishing • P&R- OMP Basketball restroom refurbishing • P&R- Repaving tennis courts 6. Sewer Enterprise (Fund 710) $875,000 • WQCP- Chemicals increase cost- $275,000 • WQCP- SSF Scavenger SB1383 organics mandate- $600,000 7. Equipment Replacement (Fund 784) $370,000 • Public Works- add sales tax to vehicle purchase budget from FY22-2023 E. CAPITAL IMPROVEMENT PLAN (CIP) The following are the additional CIP project appropriation requests with their corresponding funding sources, amounting to $4,240,000: 1. Utah & Harbor Intersection Improvements (Existing project tr2101) $2,500,000 Funding Source: East of 101 Traffic Impact Fees Funding request is for the construction phase of this project to create traffic improvements on Harbor Way and Utah Ave. 2. Sea Level Rise Study and Planning at WQCP (Existing project ss1802) $1,360,000 Funding Source: Sewer Fund A cost sharing agreement with the United States Army Corps of engineers (USACE) is to be executed in summer 2023. These additional funds are required in readiness to move forward with USACE. 3. CDBG Curb Ramp Replacement (New project) $250,000 Funding Source: Infrastructure Reserves These funds are requested to complement existing CDBG funds earmarked for this project. The funds will pay for design, construction, construction management and inspection services. 4. Survey Monument (Existing project st2002) $125,000 Funding Source: Infrastructure Reserves Additional funds needed to complete the survey monument investigation, survey, calculations, staking and recording of replacement monuments that are missing or never 16 City of South San Francisco Page 9 of 12 installed. 5. Misc. Traffic Improvements FY2022-23 (Existing project tr2301) $100,000 Funding Source: Infrastructure Reserves Additional funding is required for studies, Traffic Advisory Committee (TAC) reviews and implementation costs to meet requests from City Council and the public. 6. Police Operations & 911 Dispatch Center (Existing project pf2208) $25,000 Funding Source: PEG Fund Additional funding is required to equip the Police Community room to host virtual meetings – mounted webcams, ceiling microphones, cabling and controller configuration. The following is a request for a funding source change: 7. Francisco Terrace Flood Wall (Existing project sd2201) ($120,000) Original Funding Source: American Rescue Plan Act (ARPA) funds New funding Source: General Fund This project will create flood protection improvements in the vicinity of Terrace Drive. The project was originally approved to be funded by ARPA funds as part of the FY2021- 22 Capital Improvement Plan. Since then, developments in the guidelines and recommendations on how best to efficiently utilize ARPA funds has led to a recommendation to fund this project from an alternative source (General Fund). F. AMERICAN RESCUE PLAN ACT (ARPA) In June 2022, the City received the second half tranche of its $12.3 million American Rescue Plan Act (ARPA) financial award. The first half was received in June 2021. Table 3 below shows the progress of allocation of these funds to various projects and purposes: Table 3: ARPA Funded Project Summary The table above shows that, to date, $8.16 million of ARPA funds has been appropriated. The cell highlighted in yellow is the request for the mid-year review – as explained in section E – CIP, this is a request to remove this project from direct ARPA funding and to replace it with a less restrictive funding source. Projects Total Appropriations to date Mid-Year Request Net Appropriations after Mid-Year Expenditures to date Unappropriated Funds General Government Services 4,530,000 4,530,000 2,560,000 Guaranteed Income Program 1,000,000 1,000,000 1,000,000 1,500,000 Broadband Expansion - Westborough Neighborhood (CIP)1,000,000 1,000,000 10,391 Public Wifi Expansion (CIP)150,400 150,400 - The Spit/Oyster Point Sea Level Rise Protection (CIP)1,000,000 1,000,000 111,238 Francisco Terrace Flood Protection (CIP)120,000 (120,000) - - SAMCEDA Restaurant Grants 260,000 260,000 260,000 Jobs for Youth Program (summer 2021)36,495 36,495 36,495 Shop Local Gift Cards 64,503 64,503 64,503 Other - 2,738,602 TOTAL 8,161,398 (120,000) 8,041,398 4,042,627 4,238,602 17 City of South San Francisco Page 10 of 12 II. RESERVES OVERVIEW & CONSIDERATIONS In FY 2021-22, General Fund revenues, excluding Measure W, were $125.5 million. In keeping with the City’s Reserve Policy of maintaining 20 percent of operating revenues which follows the Government Finance Officers Association’s (GFOA) best practice, the City’s General Fund reserves levels were increased by approximately $3.2 million, from $21.9 million to $25.1 million. This General Reserve amount does not change during the fiscal year. The Pension Stabilization Reserve was established by Council and does not change unless further action is taken. It remains invested and managed by the City’s third-party investment manager. After meeting the reserves requirement noted above, Table 4 below shows a summary of the City’s official reserves at June 30, 2022: Table 4: City Reserves Summary as of 6-30-2022 General Reserves $25,100,000 Pension Stabilization Reserves $5,545,000 Infrastructure Reserves $18,033,000 Total Reserve Levels $48,678,000 Available Unassigned GF Fund Balance 12,327,000 Reserves & Surplus Fund Balance $61,005,000 Table 5 below shows a breakdown of FY2022-23 Infrastructure Reserve appropriations to date as well as inflows of revenues. It also includes additional mid-year requests, detailed in previous sections of this report: Table 5: FY2022-23 Infrastructure Reserve Activities & Balance Item Amount FY2021-22 Balance $18,033,000 Add: Developer Contributions 434,000 $18,467,000 Less: YTD Appropriation Incentive Pay $1,142,400 Façade and Tenant Improvement Program $825,000 Transfer out to Stormwater CIP $1,550,000 FY2022-23 CIP project funding $6,490,000 Total appropriation $10,007,400 Mid-year Requests $769,000 Net IR activities after Mid-year $10,342,400 Available Reserve Balance after Mid-Year $7,690,826 The current City’s Financial Enterprise Resource Platform (ERP) system is approaching its end- of-life cycle in 2027. However, the City has yet to set aside money to replace the aging ERP 18 City of South San Francisco Page 11 of 12 system. Staff recommends the City set aside $6 million from its unassigned fund balance for the new ERP system and implementation. Staff strongly recommends that any appropriations from the unassigned fund balance be limited to one-time projects, versus funding ongoing needs such as increasing staff or continuing operating costs. Table 6 below shows the unassigned fund balance and the impact of the General Fund budget for FY2022-23, the effect of year-to-date budget amendments already approved by Council, the mid- year appropriations requests and revenue updates detailed in this report and the effect of setting aside an additional $6 million for the ERP replacement. The recommended revenue and expenditure budget updates are projected to result in a surplus of approximately $6 million so the allocation of this amount to the ERP project would leave the unassigned fund balance largely unchanged, as can be seen below. Table 6: General Fund Unassigned Fund Balance Summary FY2021-22 Year-end GF Unassigned FB $12,327,000 Committed Reserve – POs & CIP $10,883,022 Subtotal $23,210,022 Adopted Budget Surplus $55,411 - FY2022-23 Net Budget Adjustments ($12,513,050) + Mid-Year Revenue Adjustments $10,435,400 - Mid-Year Appropriation Requests ($2,956,000) Total Adjustments ($4,978,238) FY2022-23 Projected GF Unassigned FB $18,231,784 ERP Replacement set-aside ($6,000,000) Net FY2022-23 Projected GF Unassigned FB $12,231,784 Conclusion The City of South San Francisco has proven its resilience during the COVID-19 pandemic and in its recovery from it. Revenue streams have rebounded strongly, particularly in the Transient Occupancy Tax (TOT) category, as was seen in the FY2021-22 year-end results. This has continued to date in FY 2022-23 in TOT revenue, property tax, sales tax and other categories, beyond initial adopted budget expectations, while some other categories are coming in slightly short of expectations. As a result, staff consider it necessary to make the adjustments detailed in this report. It is important to acknowledge, however, that the City does have a little way to go to return fully to pre-pandemic levels in some revenue categories. Furthermore, there is some risk of economic volatility in the near-term so staff remain cautiously optimistic and believe some revenue streams may level off somewhat from the current continued upward trajectory, particularly in TOT and sales tax, should economic headwinds occur. In addition, as revenues increase, there is often a 19 City of South San Francisco Page 12 of 12 commensurate increase in expenditures but it is important to ensure that these grow in a controlled and coordinated fashion. The City has strong financial reserves, as well as unassigned fund balance available in the General Fund which can be used for one-time projects, such as the recommended ERP replacement. It is a staff’s assessment that the City remains in a state of vigorous financial health. Staff recommends that the Budget Standing Committee accept the FY 22-23 Mid-year financial update and budget amendment requests, and refer this report to the February 22, 2023 Council meeting for full Council acceptance. 20 FY 2022-23 General Fund Proposed Budget Adjustments Actual Adopted Budget Approved Budget Adjustment Per Council Action Adjusted Budget Proposed Adjustment Proposed Amended Budget Taxes Property Tax 49,779,285 43,804,769 - 43,804,769 2,000,000 45,804,769 Sales Tax 22,361,011 20,991,018 - 20,991,018 1,400,000 22,391,018 Transient Occupancy Tax 12,135,639 11,160,752 - 11,160,752 3,000,000 14,160,752 Other Tax 6,537,422 4,893,252 - 4,893,252 800,000 5,693,252 Franchise Fees 4,863,076 4,600,000 - 4,600,000 - 4,600,000 License and Permits 14,062,472 15,500,000 - 15,500,000 3,925,400 19,425,400 Fines & Forfeitures 700,961 710,824 - 710,824 - 710,824 Intergovernmental 3,196,346 2,844,618 1,962,628 4,807,246 (800,000) 4,007,246 Charges for Services Planning 1,124,807 879,000 - 879,000 (584,000) 295,000 Fire 3,019,090 2,626,314 - 2,626,314 - 2,626,314 Parks & Recreation 2,917,505 2,796,248 50,000 2,846,248 - 2,846,248 Police 1,122,357 979,649 - 979,649 - 979,649 City Admin & Other 1,563,847 1,517,887 - 1,517,887 - 1,517,887 Use of Money & Property 3,060,851 5,453,469 - 5,453,469 - 5,453,469 Other Revenues 514,995 259,383 4,520 263,903 - 263,903 Transfers In 4,763,729 3,245,000 1,962,400 5,207,400 694,000 5,901,400 TOTAL REVENUES 131,723,392 122,262,182 3,979,548 126,241,730 10,435,400 136,677,130 EXPENDITURES City Council 252,677 258,749 1,900 260,649 - 260,649 City Clerk 887,680 1,143,342 11,107 1,154,449 - 1,154,449 City Treasurer 39,853 167,292 612 167,904 - 167,904 City Attorney 1,138,457 940,290 - 940,290 - 940,290 City Manager 3,911,696 4,527,997 751,599 5,279,597 45,000 5,324,597 Finance 3,148,918 3,892,875 512,210 4,405,085 - 4,405,085 Non expense/Dept 14,746,076 2,044,367 331 2,044,698 808,000 2,852,698 Human Resources 2,065,928 2,518,004 166,106 2,684,109 - 2,684,109 Economic & Comm Development 11,006,918 8,907,770 6,701,860 15,609,630 - 15,609,630 Fire 32,560,465 31,313,293 1,174,460 32,487,753 - 32,487,753 Police 33,281,487 32,957,662 1,492,361 34,450,023 - 34,450,023 Public Works 6,294,565 7,120,654 174,682 7,295,336 1,039,000 8,334,336 Library 6,495,266 6,706,110 450,843 7,156,953 12,000 7,168,953 Parks and Recreation 18,092,525 19,608,365 1,641,270 21,249,636 932,000 22,181,636 Transfers Out 831,343 100,000 3,413,258 3,513,258 120,000 3,633,258 TOTAL EXPENDITURES 134,753,855 122,206,770 16,492,598 138,699,368 2,956,000 141,655,368 Revenue in excess of Expenditures (3,030,463) 55,411 (12,513,050) (12,457,639) 7,479,400 (4,978,238) Information Technology*3,404,272 4,311,906 929,898 5,241,804 - 5,241,804 * Non-General Fund: budgeted as internal service fund in Fund 785 FY 2022-23 REVENUES FY 2021-22 Attachment 2 21 Fiscal Year 2022‐23 Mid Year Budget Requests‐ All Funds Dept.Funded By:Fund Name Description FTE One‐time/ Ongoing FY2022‐23 Request(s) FY 23‐24 (For reference only) CMO 100 General Fund Survey for BNGC Property ‐ 1x 15,000 ‐ CMO 100 General Fund Name change of Antoinette Lane ‐ 1x 30,000 ‐ PEG 786 PEG Fund Police Community Room ‐ 1X 25,000 ‐ PD 100 General Fund Police Officer 1.00 Ongoing 0 ‐ PW 100 General Fund Engineer‐ Senior 1.00 Ongoing 53,000 328,647 PW 100 General Fund Management Analyst I1.00 Ongoing 36,000 224,106 PW 710 Sewer Fund Operating supplies ‐ Ongoing 275,000 275,000 PW 710 Sewer Fund Special services ‐ SSF Scavenger Co., Inc.‐ Ongoing 600,000 600,000 PW 100 General Fund Additional cost of professional services ‐ 1x 950,000 PW 784 Equipment Replacment Fund Vehicle Replacement added sales tax only ‐ 1x 370,000 Lib 100 General Fund Library Assistant II ‐ Hourly (X225) 0.06 Ongoing 5,000 84,307.00 Lib 100 General Fund Library Clerk ‐ Hourly (X235) 0.06 Ongoing 3,000 54,053.00 Lib 100 General Fund Office Specialist ‐ Hourly 0.06 Ongoing 4,000 80,214.00 P&R 100 General Fund Management Analyst II 1.00 Ongoing 53,000 220,252 P&R 100 General Fund Recreation Leader III ‐ Hourly (X370)2.00 Ongoing 27,000 112,475 P&R 100 General Fund Recreation Instructor ‐ Hourly (X350)3.00 Ongoing 51,000 213,678 P&R 100 General Fund Recreation Leader III ‐ Hourly (X370)0.50 Ongoing 7,000 28,118 P&R 100 General Fund Park Maintenance Worker (A250)1.00 Ongoing 32,000 133,357 P&R 231 Common Greens Park Maintenance Worker ‐ Hourly (X300)‐ Ongoing 1,000 554 P&R 100 General Fund Park Maintenance Worker ‐ Hourly (X300)1.34 Ongoing 113,000 106,723 P&R 100 General Fund Recreation & Community Services Program Coord 1.00 Ongoing 70,000 146,461 P&R 100 General Fund Recreation Leader III ‐ Hourly (X370)0.18 1x 10,000 ‐ P&R 100 General Fund Recreation Leader III (A620)0.41 1x 20,000 ‐ P&R 100 General Fund Building Maintenance Custodian ‐ Senior (A320) 2.00 Ongoing 61,000 510,236 P&R 100 General Fund Building Maintenance Custodian (A410)4.00 Ongoing 111,000 463,387 P&R 100 General Fund Corp Yard HVAC unit ‐ 1x 25,000 ‐ P&R 100 General Fund Upgraded MERV 13 HVAC, Misc. City Buildings ‐ Ongoing 80,000 80,000 P&R 100 General Fund Police Station Bird Mitigation ‐ 1x 40,000 ‐ P&R 100 General Fund MSB Fire Sprinkler Deficiencies ‐ 1x 41,000 ‐ P&R 100 General Fund New Pool Pump ‐ 1x 11,000 ‐ P&R 100 General Fund SF Opera Pop‐Up Series at Orange Memorial Park ‐ 1x 30,000 ‐ P&R 100 General Fund Consulting Services for Measure DD Revamp ‐ 1x 150,000 ‐ P&R 513 General Fund OMP Ballfield Restroom Refurbishing ‐ 1x 100,000 ‐ P&R 513 General Fund OMP Tennis Court Restroom Refurbishing ‐ 1x 50,000 ‐ P&R 513 General Fund OMP Basketball Court Restroom Refurbishing ‐ 1x 50,000 ‐ P&R 513 General Fund Repaving Tennis Courts ‐ 1x 94,000 ‐ P&R 236 Oyster Point Special Tax B Oyster Point Maintenance Materials Costs ‐ Ongoing 20,000 20,000 P&R 236 Oyster Point Special Tax B Adjustment for Oyster Point Water Costs ‐ Ongoing 51,000 51,000 Non‐Exp 270 Developer Deposits Rescue Boat and reserve (270‐27478)‐ 1x 308,000 ‐ Non‐Exp 821 Public Safety IF Fund Rescue Boat and reserve (821‐27326)‐ 1x 92,000 ‐ Non‐Dept 100 General Fund Additional CALPERS UAL payment ‐ 1x 608,000 Non‐Exp 100 Benefit Fund Adjustment to make the benefit fund whole ‐ 1x 200,000 CIP 710 Sewer Fund Sea Level Rise Study ‐ 1x 1,360,000 CIP 513 Infrastructure Reserve Survey Monument ‐ 1x 125,000 CIP 820 E101 Traffic IF Fund Utah & Harbor Intersection ‐ 1x 2,500,000 CIP 513 Infrastructure Reserve Misc Traffic Improvements ‐ 1x 100,000 CIP 513 Infrastructure Reserve CDBG Curb Ramp Replacement ‐ 1x 250,000 CIP 201 ARPA Fund Francisco Terrace Flood Wall ‐ 1x (120,000) CIP 100 General Fund Francisco Terrace Flood Wall ‐ 1x 120,000 ‐ Total Mid‐year requests 9,207,000 3,732,568 Funding Source Name Fund Amount General Fund 100 2,956,000 ARPA Fund 201 (120,000) Common Greens Fund 231 1,000 Oysterpoint Tax B Fund 236 71,000 Developers Deposit Fund 270 308,000 Infrastructure Reserves Fund 513 769,000 Sewer Fund 710 2,235,000 Equipt & Replacement Fund 784 370,000 PEG Fund 786 25,000 E101 Traffic IF Fund 820 2,500,000 Public Safety IF Fund 821 92,000 Total Mid‐Year Request 9,207,000 Attachment 3 22 Fiscal Year 2022-23 Mid Year Budget Request (Fund Transfers) Dept.Funded By:Fund Name Description One-time/ Ongoing FY2022-23 Request(s) PEG 786 PEG Fund Police Community Room 1X 25,000 Non-Exp 513 Infrastructure Reserve Transfer Out total for multiple requests 1x 294,000 Non-Exp 270 Developer Deposits Rescue Boat and reserve (270- 27478)1x 308,000 Non-Exp 821 Public Safety IF Fund 27326)1x 92,000 Non-Exp 100 General Fund fund whole 1x 200,000 CIP 513 Infrastructure Reserve Survey Monument 1x 125,000 CIP 820 E101 Traffic IF Fund Utah & Harbor Intersection 1x 2,500,000 CIP 513 Infrastructure Reserve Misc Traffic Improvements 1x 100,000 CIP 513 Infrastructure Reserve CDBG Curb Ramp Replacement 1x 250,000 CIP 201 ARPA Fund Francisco Terrace Flood Wall 1x (120,000) CIP 100 General Fund Francisco Terrace Flood Wall 1x 120,000 Total Mid-year transfers 3,894,000 Fund Fund Name Transfer In Transfer Out Total 100 General Fund (694,000.00) 320,000.00 (374,000.00) 201 ARPA Fund (120,000.00)(120,000.00) 270 Developer Deposit Fund 308,000.00 308,000.00 510 Capital Improvement Fund (3,000,000.00) (3,000,000.00) 513 Infrastructure Reserve Fund 769,000.00 769,000.00 783 Benefit Fund (200,000.00) (200,000.00) 786 PEG Fund 25,000.00 25,000.00 820 East of 101 Traffic IF Fund 2,500,000.00 2,500,000.00 821 Public Safety Impact Fee Fund 92,000.00 92,000.00 Total (3,894,000.00) 3,894,000.00 - Attachment 4 23 FY 2022-23Mid-Year Budget Review Presentation to Budget Subcommittee Karen Chang, Director of Finance FEBRUARY 15, 2023 24 FY 2022-23 Revenues •FY 2022-23 Budgeted Revenues = $126.2 million •Total Receipts through December 31 = $67.6 million (53.6%) REVENUES FY 2021-22 FY2022-23 (in millions)Adjusted Budget Actuals as of 12/31 %age of Budget Adjusted Budget Actuals as of 12/31 %age of Budget Property Tax $41.1 $19.0 46.2%$43.8 $25.5 58.2% Sales Tax 20.3 6.8 33.3%21.0 7.9 37.7% TOT 8.6 4.5 52.2%11.2 7.4 65.9% Licenses & Permits 16.5 6.7 40.7%15.5 11.5 74.0% Intergovernmental 5.8 1.6 27.2%4.8 0.9 18.5% Service Charges 7.8 3.9 53.0%8.7 4.3 51.1% All Other Revenues 13.5 5.2 38.5%16.0 7.6 47.5% Transfers In 5.5 1.5 27.4%5.2 2.5 47.5% TOTAL $119.1 $49.2 41.3%$126.2 $67.6 53.6% 2 25 General Fund - Highlights Revenues •Property Taxes, Sales Taxes, TOT and Permits are trending higher than anticipated •Intergovernmental funds are less than projected Expenditures •Most expenditures are trending as budgeted •Major Budget adjustments include PO and CIP rollovers, Salary & benefits adjustments 3 26 Other Funds- Highlights Revenues •Contribution to Benefits Fund Expenditures •Budget adjustments to various funds to reflect projected increase in program costs & capital needs 4 27 General Fund – Proposed FY 2022-23 Adjustments Summary •$10.4 million increase in Revenue •$3.0 million increase in Expenditures General Fund Summary FY 22-23 Adopted Budget Approved Budget Adjustment FY 22-23 Adjusted Budget Proposed Adjustments FY 22-23 Proposed Amended Budget Revenue 122.3 4.0 126.2 10.4 136.7 Reserves-POs & CIP 10.9 10.9 10.9 Available Resources 14.9 137.1 147.6 Expenditure (122.2)(16.5)(138.7)(3.0)(141.7) Est. Net Revenue (Expenditure)0.1 (1.6)(1.6)7.4 5.9 5 28 FY 2022-23 General Fund Proposed Revenue Adjustment Revenue Category FY 2022-23 Adjusted Budget Proposed Adjustment FY 2022-23 Proposed Amended Budget Property Taxes 43,804,769$ 2,000,000$ 45,804,769$ Sales Taxes 20,991,018 1,400,000 22,391,018 TOT 11,160,752 3,000,000 14,160,752 Other Taxes 4,893,252 800,000 5,693,252 Franchise Fees 4,600,000 - 4,600,000 License & Permits 15,500,000 3,925,400 19,425,400 Intergovernmental (Grants)4,807,246 (800,000) 4,007,246 Charges for Services 8,799,097 (584,000) 8,215,097 Use of Money & Property 5,453,469 - 5,453,469 Other Revenues 974,727 - 974,727 Transfers In 5,207,400 694,000 5,901,400 Total 126,191,730$ 10,435,400$ 136,627,130$ 6 29 FY 2022-23 Proposed General Fund Supplies & Services Appropriation Requests Estimate ongoing cost for FY 23-24 $1 million Dept Description Requested Amount CMO Survey for BNGC Property 15,000$ CMO Antoinette Lane Name Change 30,000 Non-Expenses Dept Contribution to Benefits Fund 200,000 PW Consultants Cost Increase (offset by Permit Fee Rev)950,000 Non-Dept ADP to CalPERS to paydown unfunded liability 608,000 P&R Corp Yard HVAC Unit 25,000 P&R Upgrade MERV 13 HVAC, various City bldg 80,000 P&R Police Station Bird Mitigation 40,000 P&R Repair MSB Fire Sprinkler Deficiencies 41,000 P&R New Pool Pump 11,000 P&R SF Opera Pop-Up Series at OMP 30,000 P&R Consulting Services for Measure DD Revamp 150,000 CIP Francisco Terrace Flood Wall project 120,000 Total 2,300,000$ 7 30 FY 2022-23 Proposed General Fund Personnel Appropriation Requests Estimated payroll costs for FY 23-24 $2.7M Dept Position FTE Requested Amount PD Police Officer (backfill lieutenant 2-Year assignment)1.00 -$ PW Engineer - Senior 1.00 53,000 PW Management Analyst I 1.00 36,000 Library Library Assistant II (Hourly)0.06 5,000 Library Library Clerk (Hourly) 0.06 3,000 Library Office Specialist (Hourly)0.06 4,000 P&R Management Analyst II 1.00 53,000 P&R Recreation Leader III (Hourly)3.09 64,000 P&R Recreation Instructor (Hourly)3.00 51,000 P&R Recreation & Community Services Program Coord 1.00 70,000 P&R Park Maintenance Worker 1.00 32,000 P&R Park Maintenance Worker (hourly)1.30 113,000 P&R Building Maintenance Custodian - Senior 2.00 61,000 P&R Building Maintenance Custodian 4.00 111,000 Total 19.57 656,000$ 8 31 FY2022-23 Non-General Fund Appropriation Requests 9 Description Amount Funding Source P&R - Park Maintenance Worker-Hourly 1,000$ Common Greens P&R - Oyster Point Maintenance Supplies 20,000 Oyster Point CFD Special Tax P&R - Oyster Point Water Cost Adjustments 51,000 Oyster Point CFD Special Tax P&R - OMP Ballfield restroom refurbishing 100,000 Infrastructure Reserve P&R - OMP Tennis Court restroom refurbishing 50,000 Infrastructure Reserve P&R - OMP Basketball Court Restroom refurbishing 50,000 Infrastructure Reserve P&R - Repaving Tennis court 94,000 Infrastructure Reserve Fire - Rescue Boat 308,000 Developer Deposit Fire - Rescue Boat reserve 92,000 Public Safety Impact Fee WQCP - Chemical cost increase 275,000 Sewer Fund WQCP - SSF Scavenger SB1383 organics mandate 600,000 Sewer Fund PW - Add sales taxes to vehicle purchase budget 370,000 Equipment Repl Fund Total 2,011,000$ 32 FY2022-23 Capital Projects Funding Requests 10 Project Amount Funding Source Utah & Harbor Intersection Improvement 2,500,000$ E 101 Traffic Impact Fee Sea Level Rise Study & Planning at WQCP 1,360,000 Sewer Fund CDBG Curb Ramp Replacement 250,000 Infrastructure Reserve Survey Monument 125,000 Infrastructure Reserve Misc Traffic Improvements 100,000 Infrastructure Reserve Police Operations & 911 Dispatch Center 25,000 PEG Fund Francisco Terrace Flood Wall (120,000) ARPA - Funding source swap Francisco Terrace Flood Wall 120,000 General Fund Total 4,360,000$ 33 FY2022-23 GF Reserves & Unassigned Fund Balance City Reserves General Reserves $ 25,100,000 Pension Reserves 5,545,000 Infrastructure Reserves 7,690,800 TOTAL Reserve Levels $ 38,335,000 FY22-23 General Fund Unassigned FB Combined: $50,567,584 1134 Next Steps Council Meeting at 2/22 35 Thank you! 1336