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Home My WebLink About2006-11-08 e-packet AGENDA REDEVELOPMENT AGENCY CITY OF SOUTH SAN FRANCISCO REGULAR MEETING MUNICIP AL SERVICE BUILDING COMMUNITY ROOM WEDNESDA Y, NOVEMBER 8, 2006 7:00 P.M. PEOPLE OF SOUTH SAN FRANCISCO You are invited to offer your suggestions. In order that you may know our method of conducting Agency business, we proceed as follows: The regular meeting of the Redevelopment Agency is held on the second Wednesday of each month at 7:00 p.m. in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California. Public Comment: For those wishing to address the Board on any Agenda or non-Agendized item, please complete a Speaker Card located at the entrance to the Community Room and submit it to the Clerk. Please be sure to indicate the Agenda Item # you wish to address or the topic of your public comment. California law prevents Redevelopment Agency from taking action on any item not on the Agenda (except in emergency circumstances). Your question or problem may be referred to staff for investigation and/or action where appropriate or the matter may be placed on a future Agenda for more comprehensive action or a report. When your name is called, please come to the podium, state your name and address for the Minutes. COMMENTS ARE LIMITED TO THREE (3) MINUTES PER SPEAKER. Thank you for your cooperation. The Clerk will read successively the items of business appearing on the Agenda. As she completes reading an item, it will be ready for Board action. JOSEPH A. FERNEKES Chair RICHARD A. GARBARINO, SR. Vice Chair MARK N. ADDIEGO Boardmember PEDRO GONZALEZ Boardmember KARYL MATSUMOTO Boardmember RICHARD BATTAGLIA Investment Officer SYLVIA M. PAYNE Clerk BARRY M. NAGEL Executive Director STEVEN T. MATT AS Counsel PLEASE SILENCE CELL PHONES AND PAGERS HEARING ASSISTANCE EQUIPMENT IS AVAILABLE FOR USE BY THE HEARING-IMPAIRED AT REDEVELOPMENT AGENCY MEETINGS CALL TO ORDER ROLL CALL AGENDA REVIEW PUBLIC COMMENTS CONSENT CALENDAR 1. Motion to approve the minutes of October 11, 2006 2. Motion to confirm expense claims of November 8, 2006 CLOSED SESSION 3. Pursuant to G.c. section 54956.8 real property negotiations related to 323 Miller Avenue, 317-321 Commercial Avenue, 507-509 Grand Avenue, and SF Public Utilities Commission property located on Mission Road (APNs 093-312-050 and 060); Agency Negotiator: Assistant Director Marty Van Duyn ADJOURNMENT REGULAR REDEVELOPMENT AGENCY MEETING AGENDA NOVEMBER 8, 2006 PAGE 2 AGENDA CITY COUNCIL CITY OF SOUTH SAN FRANCISCO REGULAR MEETING MUNICIP AL SERVICE BUILDING COMMUNITY ROOM WEDNESDAY, NOVEMBER 8, 2006 7:30 P.M. PEOPLE OF SOUTH SAN FRANCISCO You are invited to offer your suggestions. In order that you may know our method of conducting Council business, we proceed as follows: The regular meetings of the City Council are held on the second and fourth Wednesday of each month at 7:30 p.m. in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California. Public Comment: For those wishing to address the City Council on any Agenda or non-Agendized item, please complete a Speaker Card located at the entrance to the Council Chamber's and submit it to the City Clerk. Please be sure to indicate the Agenda Item # you wish to address or the topic of your public comment. California law prevents the City Council from taking action on any item not on the Agenda (except in emergency circumstances). Your question or problem may be referred to staff for investigation and/or action where appropriate or the matter may be placed on a future Agenda for more comprehensive action or a report. When your name is called, please come to the podium, state your name and address (optional) for the Minutes. COMMENTS ARE LIMITED TO THREE (3) MINUTES PER SPEAKER. Thank you for your cooperation. The City Clerk will read successively the items of business appearing on the Agenda. As she completes reading an item, it will be ready for Council action. JOSEPH A. FERNEKES Mayor RICHARD A. GARBARINO, SR Vice Mayor MARK N. ADDIEGO Councilman PEDRO GONZALEZ Councilman KARYLMATSUMOTO Councilwoman RICHARD BATTAGLIA City Treasurer SYLVIA M. PAYNE City Clerk BARRY M. NAGEL City Manager STEVEN T. MATTAS City Attorney PLEASE SILENCE CELL PHONES AND PAGERS HEARING ASSISTANCE EQUIPMENT AVAILABLE FOR USE BY THE HEARING IMP AIRED AT CITY COUNCIL MEETINGS CALL TO ORDER ROLL CALL PLEDGE OF ALLEGIANCE INVOCATION PRESENTATIONS . Lung Cancer Awareness Month, November 2006 - Recipient: Ms. Jean Dubetz . Fire Prevention Poster Contest Winners - Paramedic/Firefighter Steve Mann AGENDA REVIEW PUBLIC COMMENTS ITEMS FROM COUNCIL . Announcements . Committee Reports . Appointment to RHNA Policy Advisory Committee CONSENT CALENDAR 1. Motion to approve the minutes of October 11 and 25,2006 2. Motion to confirm expense claims of November 8, 2006 3. Motion to cancel meeting of November 22,2006 and schedule special meeting of November 29,2006 4. Acknowledgement of proclamation issued: David Casagrande, retiree, 10/27/06 ADMINISTRATIVE BUSINESS 5. Resolution amending the 2006-07 budget for changes identified in the first quarter financial review COUNCIL COMMUNITY FORUM ADJOURNMENT REGULAR CITY COUNCIL MEETING AGENDA NOVEMBER 8, 2006 PAGE 2 AGENDA ITEM #3 ~~\l sM g :<. . :::'\1.\ (~ ~l v 0 C4.l1FO-p..~"'~ - CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 NOTICE OF CANCELLATION of Regular Meeting WEDNESDAY, NOVEMBER 22, 2006 7:30 P.M. AND NOTICE OF SPECIAL MEETING WEDNESDAY, NOVEMBER 29, 2006 7:30 P.M. NOTICE IS HEREBY GIVEN, that the regular meeting of the City Council of the City of South San Francisco scheduled for Wednesday, November 22,2006, at 7:30 p.m., in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California, has been cancelled. A special meeting ofthe City Council of the City of South San Francisco will be held on Wednesday, November 29, 2006, at 7:30 p.m., in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San Francisco, California. Isl Sylvia M. Payne City Clerk Posted: November 9, 2006 AGENDA ITEM #5 - ~'t\l S:1# ~ o 0 >< c;; ~ <') v 0 '<l!EQ!'~ Staff Report DA TE: November 8, 2006 TO: Honorable Mayor and City Council FROM: Jim Steele, Director of Finance SUBJECT: TRANS MITT AL OF FIRST QUARTER 2006-07 FINANCIAL REPORT AND RESOLUTION AMENDING THE 2006-07 BUDGET RECOMMENDATION: It is recommended that the City Council approve the attached resolution amending the 2006-07 budget for the changes discussed in the attachments to this Staff Report. BACKGROUNDIDISCUSSION: This Staff Report transmits the first quarter 2006-07 financial results, and recommends changes to certain revenues and expenditures in the 2006-07 budget. The changes are detailed in the attachments after the resolution. FISCAL IMPACT: Staff projects that the General Fund will end the fiscal year with a net operating budget surplus of $892,000, before expenditures for capital improvements and debt service. The General Fund Undesignated Reserve is projected to end the year at $7.1 million. Staff Report Subject: Transmittal of First Quarter 2006-07 Financial Report and Resolution Amending the 2006-07 Budget Date: November 8, 2006 Page: 2 of 2 Prepared by: APPfOvedE}.... s;. ry M. gel City Manager ---" ATTACHMENTS: Resolution Summary of all Budget Amendment Changes (Attachment A) First Quarter Report (Attachment B) First Quarter General Fund Operating Budget Details (Attachment C) First Quarter General Fund Reserves (Attachment C-1) JSIBN:ed RESOLUTION NO. CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION AMENDING THE 2006-07 BUDGET FOR CHANGES IDENTIFIED IN THE FIRST QUARTER FINANCIAL REVIEW WHEREAS, it is recommended that the City Council review the 2006-07 1 sl Quarter Financial Report and approve the 1 sl Quarter 2006-07 Budget Amendment Changes summarized as "Attachment A" hereto. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of South San Francisco that the City Council hereby amends the 2006-07 Budget for the six items shown in Attachment A, with revenues increasing by $3,682,720 and expenditures increasing by $1,639,702. * * * * * * I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at a meeting held on the _ day of , 2006 by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: City Clerk Attachment A, Budget Amendment Changes Revenues Expenses Increase in General Fund Property Taxes, from updated information 1 provided by County controller in October. $500,000 Increase in Redevelopment Property Tax Increment, net of County Admin 2 fees. Also reflects higher October allocation. $2,925,720 Increase in Redevelopment transfers to Low Moderate Income Housing Fund. As tax increment goes up, the required 20% payment to the Low 3 Moderate Income Housing Fund also goes up. $611,257 Increase in Redevelopment pass through payments to taxing entities. As tax increment increases, so do payments to the other taxing entities per 4 Redevelopment Law and contractual pass through obligations $771,445 Increase in Gas Tax dollars from the State. Reflects final State budget 5 release of prior year gas tax allocations. $257,000 Increase in Street Resurfacing Capital Improvement Budget (Project 0701). Staff recommends that the resurfacing project be increased with the 6 additional gas tax dollars. $257,000 Total $3,682,720 $1,639,702 City of South San Francisco Quarterly Financial Report 1st Quarter 2006-07 November 8, 2006 Attachment B OVERVIEW This is a first look at revenues and expenditures for the fiscal year 2006-07, based on the three months ending September 30, 2006. This early analysis is limited for the major revenues, as no significant Property Taxes are received until December, Sales Taxes received to date are mainly from a state-calculated advance, and only two months of Transient Occupancy Taxes (TOT) have been paid. Economy The nation's economy appears to be stalling after a year of slow improvement. The Conference Board reported that the index of leading economic indicators fell .2% in August, as in 5 of the last 8 months. Third quarter GDP growth fell to 1.6% from 2.6% in the second quarter. While there may be some concern over recession, lower fuel costs have offered some relief to consumers. The Federal Reserve has deferred further interest rate increases, which may help the real estate sector. The Wall Street Journal reported on November 2nd that "U.S. productivity growth ground to a halt during the third quarter, suggesting that a weakening economy is weighing on the ability of the U.S. to produce more goods and services without generating inflation. In annual terms, productivity climbed 1.3%, the slowest annual rate since the second quarter of 1997, when it was also 1.3%. ..The slowdown in productivity could add to fears that the slowing U.S. economy might not have as much of a damping effect on inflation as had been hoped, which would make it harder for the Federal Reserve to lower interest rates in response to any steep slowdown in the economy." The Bay Area economy is benefiting from growth in high technology industries, especially in biotech and internet applications. Demand remains high in the commercial real estate market. BT Commercial reports that office vacancy in South San Francisco was 8.7% in the third quarter of 2006 (calendar year), compared to 14.9% a year before. The reported vacancy rate for research and development space in South San Francisco was 6.5% for the quarter, near the already low 7.9% in the third quarter of 2005. The vacancy rate for local warehouse space fell to 5.0% in the third quarter of 2006 from 5.8% in the previous year. MBIA, the City's sales tax consultant, reported that sales tax growth slowed from the first quarter 2006 to the second quarter, statewide, and in Northern California. In South San Francisco, this trend was reversed, as sales taxes increased over the last two quarters. This growth is primarily attributed to large, out of state, cyclical capital equipment purchases by the biotech sector. Top Revenues Summary The following revenue sources total over half of General Fund revenues. % of Budget Project-ed Projected Selected General Received Year-end Variance to Fund Revenues Budget YTD YTD Budget (000 $'s) Sales Tax 12,839 978 7.6% 12,839 - P rope rty Taxes 12,183 57 0.5% 12,683 500 ERAF Refund 750 - 0.0% 750 Transient Occupancy Tax 5.650 937 16.6% 5,650 - Motor Vehicle In Lieu Fees 4.361 170 3.9% 4.361 Franchise Fees 2.950 309 10.5% 2,950 Building and Fire Permits 3.025 853 28.2% 3,025 Recreation Fees 2.501 346 13.8% 2,501 Business License Fees 1,785 344 19.3% 1,785 - Paramedic Fees 1,150 123 10.7% 1.150 - BLS Transport 425 112 26.4% 425 Interest Earnings 600 150 25.0% 600 - Total 48,219 4,379 9.1% 48,719 500 - 1 - Quarterly Financial Report In October each year, the County Controller provides estimates of property tax revenues for the city, redevelopment agency, and local districts. Over recent years, these estimates have been a reliable predictor of actual property tax revenues. For 2006-07, the October County numbers for secured property tax is substantially higher than the projections they provided for the adopted budget last spring. The higher estimate is over $500,000 higher than budgeted, and a budget amendment is proposed. At this early point of the fiscal year, there is not enough data to suggest any substantial variances in General Fund revenues from the adopted budget. However, there are some favorable indications in the City's sales tax receipts, motor vehicle fees, and franchise fees. 1. Sales and Use Taxes The State Board of Equalization (SBOE) made the usual allocation to the city for sales tax collections. This was mainly an advance, an estimate based on 30% of actual collections for the same quarter in the prior year. The mid-December payment will include the third quarter clean up, and provide the first real information on sales tax collections actually received in the 2006-07 fiscal year. The preliminary data for sales tax collections in the second quarter of 2006 (April through June) is the most recent data available, and the total is about $120,000 above the total for the second quarter of 2005, which indicates the growth trend of the first quarter continues. Most of the increase is in gains in retail and construction, and the transportation category shows higher receipts from service stations that reflect higher gasoline costs. Overall, the food service and "business- to-business" categories were stable. 2. Property Taxes As noted above, the recent estimates of secured property tax revenue from the County Controller's Office indicate that revenues will exceed the projections in the 2006-07 Adopted Budget. The county estimates for unsecured property taxes are in line with budgeted levels. While the real estate market has cooled in the Bay Area, the total of assessed valuations will continue to rise as new properties are added and existing properties are reassessed on sale. This growth in assessed valuations should support increases in property tax revenues. - 2- 1st Quarter 2006-07 3. Transient Occupancy Taxes (TOT) The hotels report TOT one month after collection, so only the first two months of actual receipts are available. Based on these actual receipts, which include late August returns not booked in fiscal September, the city has received $100,000 more TOT than the same time period a year ago, while about 3,500 fewer rooms were rented. This indicates the local hospitality market is stronger, and able to charge higher room rates. For non-residential hotels, average year to date occupancy and room rates citywide are at 80.4% and $90.77 compared to 81.6% and $80.73 for the same period a year ago. No increase to the projected TOT total for 2005-06 is proposed at this time. 4. Motor Vehicle in Lieu Fees (VLF) T~e state repaid the VLF loan (3 months of payments WIthheld two years ago) in July 2005, and there is no comparable payment for 2006-07. The tax has been reduced for vehicle owners, and the state backfills this tax reduction to the cities from property taxes. While two small payments related to surplus VLF in prior years were received in the first quarter, staff does not consider them significant enough to propose a revision to the projection for 2006-07. The backfill amount, projected at $4.0 million for 2006-07, should increase each year proportionately to the growth in property taxes. This growth was already factored into the 2006-07 budget. 5. Franchise Fees. Only 2 monthly payments from the South San Francisco Scavenger Company have been recorded to date. These reflect the higher garbage rates that became effective in July. However, the largest revenue source, the payment from PG&E, isn't received until April. 6. Building and Fire Fees. Year to date building permit receipts are $81,000 lower than last fiscal year to date. The results so far have reached 28% of the adopted budget. The budget for 2006-07 is lower than the actual revenues in 2005-06, which was a very strong year. Quarterly Financial Report 1st Quarter 2006-07 7. Recreation Fees Other Funds The largest revenues are paid in the Spring, and staff believes the current budget is still realistic for this fiscal year. 8. Business License Taxes This source of revenue is made up of business licenses and commercial parking taxes. Business I icense renewals aren't due until January 31 S\ and parking taxes are paid a quarter in arrears, so there is no significant data to review. Staff still believes the budget is realistic, but is concerned about potential competition from the parking garage at SFO recently opened to the public. 9. Paramedic Fees Payments for the regular Advanced Life Support (ALS) paramedic services are received both by the City's outside billing processor and in-house staff, and the current budget appears realistic at this point. The Basic Life Support (BLS) services added two years ago have failed to meet past revenue projections, but for the first quarter of 2006-07 collections are running slightly ahead of budget. 10. Interest Earning Interest earnings are on track to meet budget at this point ofthe year. Expenditures Salaries and benefits make up about four-fifths of General Fund budgeted expenditures. The actual salaries and benefit expenditures are running at 25% of the adopted annual budget through September. Expenditures (000 % of Budget $'s) Budget YTO Actual Expended Salaries and Benefits 45,634 1 0,505 23.0% Non-Salaries 12,504 4.050 32.4% Total General Fund Operating Budget 58,138 14,555 25.0% 1. Redevelopment Funds The County reported higher Redevelopment property tax increment revenues in October, similar to the higher numbers the General Fund received. Based on the County's revised numbers, property tax increment will increase by a net of $2.9 million, with about half of that ($1.5 million) in the Downtown project area. That will require $.6 million more in transfers to the Low Moderate Income Housing Fund, as well approximately $.8 million in higher pass through payments to the School District, the County, and other taxing entities. All of these increases are included in the attached budget amendment resolution. Staff is projecting that if the Agency spends all of its committed housing project budgeted funds, it will end the year with $5.5 million in reserves for future housing projects. 2. Sewer Fund The Sewer Fund continues to stretch its resources to fund the remaining Wet Weather projects within the authorized 9% rate increases. The City Council has approved an advance from the Redevelopment Agency to pay for Developer Fee funded pump station four improvements. Staff will continue to monitor the capital improvement program to ensure that the highest priority capital projects are completed within the 9% rate lllcrease program. 3. Storm water Fund Staff identified the ongoing financial health of this fund as an issue in the 2006-07-budget process. The Redevelopment Agency is funding $8.5 million in Lindenville improvements, and future capital improvements will require additional resources. 4. Parking Fund The Parking Fund is projected to end the year with $800,000 in fund balance to be used for future parking capital projects. 5. Other The State budget, passed after the City's budget was adopted, freed up additional gas tax payments to cities representing a portion of funds the State withheld in prior years. The City's share is an additional $257,000 in gas taxes this fiscal year, and staff is recommending those dollars be used to increase the street resurfacing capital improvement project budget. That increase is factored into the attached budget amendment resolution. - 3 - CITY OF SOUTH SAN FRANCISCO OPERATING BUDGET, 2006-07 Attachment C GENERAL FUND SUMMARY, 2006-0715t QUARTER REVIEW Projected Unaudited Adopted Amended Year to Date Projected Variance Actual Budget Budget 9/30/2006 Year End Favorabie % 2005-06 2006-07 2006-07 2006-07 2006-07 (Unfavorable) Change Revenues and Other Financing Sources Property Taxes 11,776,863 12,183,306 12,183,306 57,300 12,683,306 500,000 4.1% ERAF One Time Refund from County 1,871,955 750,000 750,000 0 750,000 Sales Tax 12,251 ,284 12,839,494 12,839,494 977,549 12,839,494 Transient Occupancy Tax 5,469,708 5,650,000 5,650,000 937,066 5,650,000 Motor Vehicle In Lieu Fees 4,460,748 4,361,219 4,361,219 170,246 4,361,219 Revenue from Other Agencies 1 ,522,527 866,500 1,047,077 453,173 1,047,077 Franchise Fees 2,858,554 2,950,000 2,950,000 308,766 2,950,000 Business License 1,787,569 1,785,000 1,785,000 343,841 1,785,000 Building and Fire Permits 3,554,441 3,025,000 3,025,000 853,075 3,025,000 Charges for Services 5,736,520 5,116,400 5,116,400 1,028,183 5,116,400 Fines 889,085 1,090,000 1,090,000 210,443 1,090,000 Interest 767,495 600,000 600,000 150,000 600,000 Net Change Investment Value -54,909 Rent 2,526,995 2,532,000 2,532,000 495,674 2,532,000 Administrative Charges 1,986.774 2,018,500 2,018,500 504,625 2,018,500 Other 639,783 540,000 570,000 140,480 570,000 Transfers In 2.293,579 1,623,500 1,625,390 351,250 1,625,390 Total Revenues: 60,338,973 57,930,919 58,143,386 6,981,672 58,643,386 500,000 0.9% Plus Prior Year Carryovers 386,684 386,684 Total Revenues and Other Financing Sources $ 60,338,973 57,930,919 58,530,070 6,981,672 59,030,070 500,000 Expenditures Administration 4,987,088 5,162,414 5,273,205 1,134,281 5,273,205 Economic & Comm. Dev. 3,600,855 3,375,585 3,550,000 1,198,260 3,550,000 Fire 14,902,099 14,875,060 14,875,060 3,583,979 14,875,060 Library 4,067,035 4,202,541 4,313,860 1 ,050,855 4,313,860 Police 16,294,619 17,541,466 17,597,068 4,346,216 17,597,068 Public Works (formerly Maintenance Services) 7,154,504 7,702,307 7,731,408 1,895,929 7,731,408 Recreation and Community Services 4,633,023 4,739,617 4,796,914 1,345,817 4,796,914 Subtotal, Operating Budget Expenditures 55,639,224 57,598,990 58,137,516 14,555,335 58,137,516 Net Operating Budget Impact $ 4,699,749 $ 331,929 $ 392,554 $ (7,573,663) $ 892,554 CITY OF SOUTH SAN FRANCISCO OPERATING BUDGET, 2006-07 Attachment C-1 Total General Fund Operating and Capital Budget, & Projected Changes to General Fund Reserves 1 st Quarter Review