TO: TARA SCHULTZ, CITY MANAGER
FROM: ADAM PIRRIE, FINANCE DIRECTOR
DATE: FEBRUARY 25, 2020
Reviewed by:
City Manager: TS
Finance Director: AP
SUBJECT:
Title
2020-21 BUDGET PROCESS PRESENTATION ON PRELIMINARY REVENUE PROJECTIONS
Body
SUMMARY
Staff is in the process of developing the City of Claremont’s 2020-21 budget. As part of an effort to increase community involvement in the budget process, the City has scheduled a series of presentations and community meetings on various aspects of the budget.
This report will provide an update on the development of revenue estimates for 2020-21 for the City, with emphasis on the City’s General Fund. The revenues budgeted for 2020-21 will be used to fund the operating and capital expenditures of the City of Claremont next fiscal year.
It is important to note that staff is still in the early stages of the budget development process, and that new information is likely to change the revenue projections as the budget process progresses. For example, some revenues are subject to cost of living adjustments that use the Consumer Price Index (CPI) to calculate increases, and actual CPI figures will not be known for several months. Further, many revenue estimates are based on current trends, and having the ability to collect more revenue data will allow staff to more accurately predict revenues for next fiscal year. Accordingly, the revenue estimates provided in this report should be considered preliminary assumptions.
RECOMMENDATION
Recommended Action
Staff recommends that the City Council receive and file the 2020-21 Preliminary Revenue Projections Report.
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ALTERNATIVE TO RECOMMENDATION
In addition to the staff recommendation, there is the following alternative:
• Request additional information.
FINANCIAL REVIEW
The staff cost to prepare this report and administer this project is estimated at $3,500 and is included in the operating budget of the Financial Services Department.
ANALYSIS
Background
To support the community’s desire for a more open and inclusive budget process, the City Council has requested that staff provide updates at regularly scheduled City Council meetings on the progress of the budget development process.
This report is the first update in the process and includes a discussion of preliminary revenue estimates for 2020-21. A further update on the City’s projected expenditures for the 2020-21 budget year will be presented to the City Council on March 24, 2020.
A community budget workshop is also scheduled for May 9, 2020, at which staff will present the proposed budget for 2020-21, including its recommendations for cost reductions to present a balanced budget to the City Council.
The proposed 2020-21 Operating and Capital Improvement Program Budget is scheduled to be presented for adoption by the City Council on June 9, 2020.
2020-21 Preliminary Revenue Estimates
Staff is in the process of developing the City of Claremont’s budget for 2020-21. They have prepared preliminary estimates of revenue for next fiscal year for City Council review.
The process of developing revenue estimates includes reviewing current revenue trends, including cost of living factors in future revenues, and evaluating commercial and residential development activities that may be taking place over the course of the next fiscal year. The process of gathering information to continue to refine revenue estimates for the next fiscal year will continue throughout the budget development process, and it is likely that the revenue estimates presented in this report will be refined as the adoption of the 2020-21 budget approaches.
The preliminary revenue estimates for 2020-21 by fund type are summarized in the table below:
Total projected City revenues for 2020-21 amount to $52,786,961. This is a decrease of $96,142 from the adopted budget for 2019-20 which included $52,883,103 in total revenues.
General Fund
General Fund revenues support many of the core services provided by the City of Claremont, including public safety, planning, community improvement, youth and senior program administration, street repair, building maintenance, and City administration.
Preliminary estimates of revenues for the City’s General Fund include total revenues of $27,648,333 for 2020-21. This reflects an increase of $485,427 over the adopted budget for General Fund revenues for 2019-20.
General Fund revenues are derived largely from taxes. The most significant sources of tax revenue include Property Tax, Sales Tax, Transient Occupancy Tax (TOT), Business License Tax, and Utility User Tax (UUT). Together these taxes account for approximately 79 percent of total General Fund Revenues.
Other sources of General Fund revenue include licenses and permits, fines and forfeitures, use of money and property, revenue from other agencies, charges for services, and miscellaneous revenues. Each of these revenue sources, as well as taxes are discussed in more detail below.
Property Tax
Property tax is assessed at a rate of one percent on real property within the City of Claremont. The Los Angeles County Assessor’s Office determines the value at which properties are assessed for the purpose of levying property tax. Property taxes collected by the County are distributed among several taxing entities, including the County, Claremont Unified School District (CUSD), the City of Claremont, and several small special districts. Claremont receives approximately 11.7 percent of this general sales tax levy.
The projection for property tax revenue for 2020-21 is $10,693,100. This figure reflects an increase of approximately 4.5 percent over the prior year’s budget of $10,235,700. The projected increase in property tax revenue is the result of several factors. First, Proposition 13 provides for the annual increase in the assessed value of taxable property by the Consumer Price Index (CPI), capped at an increase of two percent.
Second, Proposition 13 permits the reassessment of property at market value when it is sold or transferred to a new owner. In developing projections for 2020-21, staff has assumed an increase in assessed value of two percent for properties reassessed at market value.
Finally, staff has assumed growth in assessed value of approximately 0.5 percent to account for new construction and the reassessment of properties that had their assessed values reduced in the past due to appeals, but are now subject to CPI increases in excess of two percent to recapture lost assessed value.
Sales Tax
Sales Tax is collected by retail establishments in Claremont at a rate of 9.5 percent and remitted to California Department of Tax and Fee Administration (CDTFA). CDTFA then distributes one percent of the sales tax to the City. The projection for sales tax revenue for 2020-21 is $4,836,000, a modest increase of $16,000 over the prior year.
Sales Tax revenues consist of two components - sales tax generated from taxable sales in Claremont, and Proposition 172 revenues, which are State sales tax collections distributed to cities and counties to fund public safety. Sales tax projections on the City’s 1 percent share of the 9.5 percent Claremont sales tax rate on taxable items is projected at $4,450,000, in line with the 2019-20 budget. Proposition 172 revenues are projected to increase by $16,000 to $386,000.
The closure of the Claremont Hyundai dealership will result in lower revenues than in the previous budget, however the loss of revenue associated with the auto dealership will be partially offset by increased revenues from online sales, prompted by changes in State law that require online retailers to collect and remit sales tax for purchases shipped to California. As staff receives more data about sales tax receipts in the wake of the auto dealership closure and the changes in State law regarding the collection of sales tax on online sales, the revenue budget for sales tax is likely to be amended to more effectively account for these factors.
Utility User Tax (UUT)
The Utility User Tax is collected at rate of 5.5 percent on fees for utility services such as electricity, water, gas, cable television and telephone. The projected UUT revenues for 2020-21 amount to $4,025,000, a decrease of $135,000 or 3.3 percent from 2019-20.
Accounting for most of the decrease in UUT revenues are those related to both the land-based and cellular telephone utilities. The UUT for telephone services has been steadily decreasing over the last few years. Residents’ reduced reliance on land-based telephone service and increasing competition for business in the cellular phone service industry are the likely causes of the projected decrease in UUT revenues of $100,000 or 16.0 percent over the 2019-20 budget.
UUT on the water utility has been projected 4.8 percent lower and the UUT on the electric utility has been projected 2.9 percent lower. The decrease in UUT revenues on both of these utilities is expected to be partially offset by higher UUT related to gas and cable television.
Given that there are still several months of UUT receipts to be received for the current year, it is likely that any emerging trends related to UUT for the current year may not be known until closer to budget adoption, therefore it is possible that projections for UUT revenues may change in the coming months.
Transient Occupancy Tax (TOT)
The City’s Transient Occupancy Tax is collected at a rate of ten percent on the room rate for hotel stays of thirty days or fewer.
The projection for TOT revenue in 2020-21 is $1,475,000, a modest increase of $25,000 over the prior year’s budget. Again, if receipts for the current year show that this projection can be updated as new information regarding TOT collections becomes available, then the revenue budget for Transient Occupancy Tax revenues may be adjusted as the budget process progresses.
Business License Tax
The Business License Tax is assessed on the gross receipts of businesses operating in the City of Claremont. Projected revenues for 2020-21 from this tax are estimated at $920,000, an increase of $25,000 or 2.8% over the budget for 2019-20.
The bulk of business license renewals for the approximately 3,000 businesses operating in Claremont take place in March and April of each year. Accordingly, additional information about trends related to Business License Tax revenue may result in adjustments to the projections for 2020-21 revenue.
Other Taxes
Other Taxes include franchise fees paid by utilities and property transfer taxes paid on the sale of real estate in Claremont.
The total projected revenues from other taxes is expected to be approximately $45,000 higher than the 2019-20 budget of $715,000, amounting to $760,000. This is the result of an additional $25,000 in expected franchise fee revenues related to the cable television utilities, and an additional $20,000 in property transfer taxes from the current number of property sales in Claremont.
The bulk of franchise fee revenues are received later in the year, and there are still many months of property transfer tax receipts yet to be received for the current year, therefore more available data later in the current fiscal year may result in adjustments to the projections for Other Tax revenues for 2020-21.
Licenses and Permits
Licenses and Permits revenue is collected on building, public works and grading permits issued by the City’s Community Development Department on commercial, residential and institutional development projects taking place in Claremont.
The projections for Licenses and Permits revenues included permit fees for specific projects expected to take place during 2020-21. Some of the larger projects included in staff’s projections are the Gable Crossing, Old School House Condo, Meadow Park residential projects, the Knights Inn and Dodge commercial developments, and the Pomona College Rains Center, Harvey Mudd Computer Sciences and Scripps College remodel institutional projects.
Projected Licenses and Permits revenues for 2020-21 amounts to $1,193,000, an increase of $297,100 or 33.2 percent over the budget for 2019-20. Community Development staff will continue to monitor the development progress on these and other projects, and should new development projects emerge or currently anticipated projects be delayed, it may be necessary for these revenue estimates for 2020-21 to be amended.
Fines and Forfeitures
Fines and Forfeitures are collected on parking, traffic, and code enforcement citations issued for violations of the Claremont Municipal Code and the California Vehicle Code.
The estimated revenues for Fines and Forfeitures for 2020-21 is $649,000. This represents an increase of $43,500 or 7.2 percent over the 2019-20 budget. Revenues from parking citations is expected to be $50,000 higher due to the increase in the parking citation amounts approved by the City Council in 2018. Base citation amounts were increased from $35 to $50 effective October 1, 2018. This $50,000 increase in parking citation revenue is expected to be offset by $6,500 in reduced revenues from code enforcement citations, false alarm penalties, and vacant property citations.
Use of Money and Property
Revenues from the Use of Money and Property include interest revenue earned on the investment of idle funds in interest bearing accounts, as well as the lease or rental of City facilities. Total revenues are expected to amount to $587,397 in 2020-21, an increase of $38,616 or 7.0 percent over the prior year.
Interest earnings of $90,000 are expected to remain flat when compared with revenues budgeted for 2019-20.
Facility rental revenue comes from the long-term lease of City facilities such as the Village Parking Structure commercial spaces, the Youth and Family Support Center, the Hughes Center preschool space, and the Larkin Park Building. The revenue associated with the rental of these types of facilities is expected to increase by $20,818, due to CPI increases permitted in the lease agreements with the tenants of the facilities.
The short-term rental of City facilities, including public buildings and parks is expected to result in $17,798 in additional revenues, primarily due to the increasing number of facility, sports field and park rentals, as well as the increased cost of providing City staff at events held at City facilities.
Revenue from Other Agencies
Revenue from Other Agencies includes State Motor Vehicle License Fees allocated to the City, and reimbursements from the Claremont Unified School District for half of the cost of providing a School Resource Officer (SRO) at Claremont High School. These revenues are expected to total $125,514 in 2020-21, and the increase of $3,274 is primarily due to the increased salary and benefit cost of the Police Officer assigned as the SRO.
Charges for Services
Charges for Services revenue are received for a variety of City-provided services, including development review and plan check services on development projects, recreation class, youth and senior program fees, and special event fees and sponsorships.
In total, Charges for Services revenue is expected to be approximately $1,473,972 in 2020-21, $95,664 lower compared with 2019-20, primarily because of lower anticipated levels of plan check and development review services related to projects that staff expects to take place in Claremont over the next couple of years
Again, if the level of development activity changes over the next few months, and new projects are identified that could generate revenue in the next fiscal year, the projections for revenue could be amended as the budget process progresses.
Similarly, if there are changes in the participation levels in City-sponsored recreation, youth and senior programs or special events, the Charges for Services revenue budget could also be amended prior to the City Councils’ review of the budget in June.
Miscellaneous Revenues
The Miscellaneous Revenues category accounts for revenues not included in any of the other categories already discussed above. The total projection for Miscellaneous Revenues of $1,035,864 includes receipts for the City’s agreement to lease water rights to the Golden State Water Company, the repayment of former City-Redevelopment Agency loans, and cost reimbursements for police, maintenance and other services, as well as miscellaneous sales revenue.
The projected figure for 2020-21 is lower than the prior year by approximately $231,525. This is because a transfer of funds in the amount of $249,487 into the General Fund from the State Gas Tax Fund was included in the budget for 2019-20. This was a short-term solution to balance the 2019-20 General Fund budget, and staff has elected not to include this transfer in the 2020-21 budget at this time.
Special Revenue Funds
Total revenues in the Special Revenues Funds are projected at $9,754,733, a decrease of $228,627 or 2.3 percent over the budget for 2019-20.
Each of the City’s Special Revenue Funds are discussed in more detail below.
Asset Forfeiture Fund
This Asset Forfeiture Fund is used to account for the revenues from the seizure of property related to drug crimes. Narcotics Asset Forfeiture revenues are used for the prevention of drug abuse and drug enforcement programs.
Revenues in 2020-21 consist of interest received on existing fund balance in the Asset Forfeiture Fund. The preliminary estimate for this revenue is based on recent interest earnings. Total revenues projected for the Asset Forfeiture Fund total $300 for 2020-21.
The table below shows a projected increase in Asset Forfeiture Fund revenue in 2020-21 of $100 or 50 percent over the prior year.
Supplemental Law Enforcement Services Fund (SLESF)
The SLES Fund is used to provide front-line police services and was the result of the Citizen’s Option for Public Safety (COPS) Program established by AB 3229. The City receives an annual allocation of funding from the State in the amount of $100,000. In the past, the City of Claremont has used SLESF funding to purchase equipment for the Police Department.
Preliminary estimates of revenue for the SLES Fund include the annual allocation of funding from the State in the amount of $100,000, as well as interest earnings on existing fund balance. Total revenues projected for the SLES Fund total $104,000 for 2020-21.
The table below shows a projected increase in Supplemental Law Enforcement Services Fund revenue in 2020-21 of $1,500 or 1.5 percent over the prior year, primarily due to higher expected interest earnings.
Traffic Offender Fund
The Traffic Offender Fund is used to account for revenues generated by the vehicle impound lot and expenditures relating to traffic safety and enforcement programs. Impound Lot revenues include towing, storage and release fees for impounded vehicles, as well as the proceeds from the sale of impounded vehicles.
Impound Lot revenues have been trending down over the last several years as changes in State law have made it easier for individuals who have had their vehicles impounded to reclaim them and avoid paying long-term storage fees. The City has used the Impound Lot revenues to fund the partial cost of traffic officers in the past, however diminishing revenues may make this difficult in the future.
Total revenues projected for the Traffic Offender Fund total $73,000 for 2020-21. Projected revenues for 2020-21 are in line with current actual receipts from the Impound Lot and reflect a decrease in total revenues of 63.9 percent over the budget for the prior year.
Wilderness Park Parking Lot Fund
The Wilderness Park Parking Lot Fund is used to account for the revenues generated from the Wilderness Park parking lot meters and annual permit sales, and expenditures related to the Claremont Hills Wilderness Park and associated parking lot operations.
Revenues in this fund also include parking citations and interest earnings. Total Wilderness Park Parking Lot revenues in 2020-21 are expected to be approximately $59,500 higher than the budget for the current year, primarily due to the increase in parking fees that was approved by the City Council in 2018.
Total revenues projected for the Wilderness Park Parking Lot Fund total $495,500 for 2020-21. The table below shows a total increase in projected revenues for 2020-21 of 13.7 percent.
State Gas Tax Fund
The State Gas Tax Fund is used to account for receipts and expenditures of monies apportioned to the City under Sections 2103, 2105, 2106, 2107, and 2107.5 of the California Streets and Highway Code, and under the Road Repair and Accountability Act of 2017. State Gas Tax revenues are used to fund street maintenance and repair projects.
Total revenues projected for the State Gas Tax Fund total $1,642,214 for 2020-21. Revenue estimates have been provided by the State Department of Finance and reflect an increase over the 2019-20 budget of $47,512 or 3.1 percent. Interest earning on balances in the State Gas Tax Fund are also expected to be $10,000 higher in 2020-21, resulting in a total increase in revenues of 3.6 percent.
Measure R Fund
The Measure R Fund is used to account for receipts and expenditures of monies apportioned to the City under Measure R, a voter approved retail transactions and use tax at the rate of one-half percent (0.5%). This money is restricted to expenditures that maintain and improve City streets and for transportation services.
Total revenues projected for the Measure R Fund total $498,802 for 2020-21. Revenue estimates for Measure R have been provided by Metro and are expected to increase by approximately $9,987 or 2.1 percent over the current year’s budget. Further, interest earnings on Measure R funds are expected to increase by $5,000, resulting in total revenues for 2020-21 that are 3.1 percent higher than in 2019-20.
Measure M Fund
The Measure M Fund is used to account for receipts and expenditures of monies apportioned to the City under Measure M, a voter approved transactions and use tax at a rate of one-half percent (0.5%). This funding is restricted in its use for the maintenance of streets and to provide and maintain transportation infrastructure.
Total revenues projected for the Measure M Fund total $550,587 for 2020-21. Revenue estimates for Measure M have been provided by Metro and are expected to increase by approximately $11,264 or 2.1 percent over the current year’s budget. Further, interest earnings on Measure M funds are expected to increase by $500, resulting in total revenues for 2020-21 that are 2.2 percent higher than in 2019-20.
Proposition A Fund
The Proposition A Fund is used to account for the financial activity related to the City’s share of Proposition A monies. Proposition A increased sales tax in Los Angeles County by one-half percent (0.5%) and is used for transportation related purposes. The City of Claremont uses its Proposition A funding for its Get About and Dial-a-Ride transportation programs.
Revenue estimates for Proposition A for 2020-21 have been provided by Metro and are expected to increase by approximately $15,975 or 2.1 percent over the current year’s budget. Further, interest earnings on Proposition A funds are expected to increase by $5,000, resulting in total revenues for 2020-21 that are 2.7 percent higher than in 2019-20. Total revenues projected for the Proposition A Fund total $799,569 for 2020-21.
Proposition C Fund
The Proposition C Fund is used to account for the financial activity related to the City’s share of Proposition C monies. Proposition C increased sales tax in Los Angeles County by one-half percent (0.5%) and is used for transportation-related purposes.
Revenue estimates for Proposition C for 2020-21 have been provided by Metro and are expected to increase by approximately $13,251 or 2.1 percent over the current year’s budget. Further, interest earnings on Proposition C funds are expected to increase by $2,000, resulting in total revenues for 2020-21 that are 2.4 percent higher than in 2019-20. Total revenues projected for the Proposition C Fund total $663,337 for 2020-21.
Drainage Fund
The Drainage Fund is used to account for revenues received from developers to fund drainage projects. Funds are typically accumulated in this fund until enough monies are available to fund a large drainage project.
Revenue estimates for the Drainage Fund are based on development projects staff anticipates taking place next fiscal year. The projection for revenues in the Drainage Fund is approximately $85,000 or 63.0 percent lower than the budget for 2019-20. Total revenues projected for the Drainage Fund total $50,000 for 2020-21.
Landscape & Lighting District (LLD) Fund
The LLD Fund is used to support the activities of the Citywide Landscape and Light District, which is responsible for providing maintenance of right-of-way, parks, trees and street lights. The LLD is funded primarily through an annual assessment paid by property owners. The current amount of the annual assessment for a single-family residence is $180.17 and is collected on property owners’ annual property tax bills. Since the costs of services provided by the LLD are not fully covered by the amount of the assessment, a General Fund contribution of approximately $1 million per year is necessary to fully fund the LLD.
The projected revenues for the LLD for 2020-21 include an increase of 3.1 percent in the amount of the annual assessment, based on the most recent Consumer Price Index figure. The CPI increase in the LLD assessment is expected to generate approximately $83,866 in additional revenue in 2020-21.
Miscellaneous revenues for 2020-21 include the General Fund contribution of approximately $1 million, as well as some reimbursements for services provided by the LLD to outside entities. The 2019-20 revenues also included a one-time rebate in the amount $78,120 for the purchase of SCE-owned streetlights by the City, and their conversion to energy efficient fixtures. Miscellaneous revenues for 2020-21 are approximately $107,520 lower due to decreased projections for cost reimbursements, as well as the absence of the SCE rebate for the street light conversion project in 2020-21. Overall, projected LLD revenues for 2020-21 are expected to be $23,654 or 0.6 percent lower than the budget for 2019-20. Total revenues projected for the Landscape and Lighting District Fund total $3,837,190 for 2020-21.
Air Quality Management District (AQMD) Fund
The AQMD fund is used to account for clean air fees collected by the State and distributed by the Southern California Air Quality Management District (SCAQMD) for clean air projects. In the past, the City has used these funds for the installation of electric vehicle charging stations and the purchase of CNG vehicles.
Total revenues projected for the AQMD Fund total $49,500 for 2020-21. Revenue projections for 2020-21 are in line with current receipts and reflect an increase in total AQMD Fund revenues of approximately 2.1 percent over 2019-20.
Transportation Development Act (TDA) Article 3 Fund
This fund is used to account for bikeway grants revenues and expenditures. These grants are provided by the State to Metro for local and regional bikeways. These funds are typically accumulated until enough funding is available to complete a large project.
Revenue estimates for TDA Article 3 revenues have been provided by Metro and reflect an increase over the 2019-20 budget of $660 or 2.4 percent. Total revenues projected for the TDA Article 3 Fund total $27,703 for 2020-21.
Nutrition Fund
This fund is used to account for financial activity related to the senior citizen nutrition program. Revenues include Federal grants, and donations from Nutrition Program participants.
Grant revenues for 2020-21 are expected to be approximately $8,323 lower than the budget for 2019-20. Los Angeles County, the pass-through agency for the Federal grants has indicated that grant funding levels may be reduced next year. Further, donations from program participant have also been trending down in recent years, and 2020-21 projected revenue reflect a $9,000 reduction in donation revenue. In total, Nutrition Fund revenues are expected to be approximately $17,323 or 9.0 percent lower in 2020-21 than the budget for 2019-20. Total revenues projected for the Nutrition Fund total $176,246 for 2020-21.
Community Development Block Grant (CDBG) Fund
The CDBG Fund is used to account for grant revenue received from the Department of Housing and Urban Development. The funds will be used for housing rehabilitation, senior case management and job creation programs, as well as capital projects when funding is available.
The revenue budget for the CDBG Fund of $167,685 has been carried over from 2019-20 to 2020-21. As the Los Angeles County Community Development Authority, the agency who oversees the administration of CDBG programs in LA County provides updated funding estimates, these revenue projections may change.
Park Dedication Fund
The Park Dedication Fund is used to account for revenues and expenditures relating to park improvements and construction. Revenues include park dedication fees resulting from new development. These funds finance the acquisition, construction and improvement of parks within the City.
The revenue projections associated with the Park Dedication Fund in 2020-21 include estimates for residential development projects that are anticipated to take place in the next fiscal year. Overall, Park Dedication Fund revenues for 2020-21 are expected to amount to $440,000 a decrease over the budget for the prior year of $180,200 or 29.1 percent.
Perpetual Care Fund
The Perpetual Care Fund establishes an endowment for future maintenance of the Oak Park Cemetery. Fee are collected from individuals who purchase space in the cemetery and deposited into the Perpetual Care Fund. This fund will be used to pay for the long-term maintenance of the cemetery when space is no longer available for sale and operating revenues are insufficient to cover the costs of maintaining the cemetery grounds.
Projected revenues for 2020-21 are in line with recent receipts for the fund and include an overall increase of $18,000 or 36.0 percent. Total revenues projected for the Perpetual Care Fund total $68,000 for 2020-21.
Successor Housing Fund
The Successor Housing Fund was established when the City of Claremont elected to assume the affordable housing responsibilities of the former Claremont Redevelopment Agency after the elimination of redevelopment agencies in California in 2013. This fund provides resources for the development of affordable housing programs in the City.
Projected revenues for 2020-21 include distributions from the Redevelopment Property Tax Trust Fund (RPTTF) to make repayments of former City-Redevelopment Agency loans. The RPTTF is funded by property taxes formerly received by redevelopment agencies. The redevelopment dissolution process provides for the funding of former Redevelopment Agency obligations through the RPTTF, including loan repayments. This process also requires that twenty percent of loan repayments be deposited in the Successor Housing Fund. The remaining eighty percent is deposited into the General Fund. Total revenues projected for the Successor Housing Fund total $76,100 for 2020-21.
Capital Projects Funds
Total revenues in the Capital Projects Funds are projected at $550,350, a decrease of $44,300 or 7.5 percent over the budget for 2019-20.
Each of the City’s Capital Projects Funds are discussed in more detail below.
General Capital Projects Fund
The General Capital Projects Fund is used to account for major capital improvement projects not financed by other special funds. Revenues in the General Capital Projects funding include development impact fees to complete transportation, utility undergrounding and fire facilities projects, as well as General Fund-funded projects.
Projected revenues for 2020-21 are based on development projects anticipated to take place in the next fiscal year that will require the payment of development fees. Fees collected in the General Capital Projects Fund are typically accumulated until there is enough funding to complete a large project. Total revenues projected for the General Capital Projects Fund total $40,000 for 2020-21.
Hillside Fund
This fund is used to account for revenues and expenditures associated with the acquisition and preservation of hillside open space.
In 2007 the City issued General Obligation Bonds to fund the acquisition of Johnson’s Pasture. The GO Bonds require the levy of an annual assessment on property owners in Claremont to collect enough revenues to make annual debt service payments on the bonds. These funds are deposited into the Hillside fund. Total revenues projected for the Hillside Fund total $510,350 for 2020-21 and represent an increase of 3.1 percent over 2019-20 budgeted revenues.
Enterprise Funds
Total revenues in the Enterprise Funds are projected at $9,478,744, an increase of $473,003 or 5.3 percent over the budget for 2019-20.
Each of the City’s Enterprise Funds are discussed in more detail below.
Transportation Fund
The Transportation Fund is used to account for revenues and expenditures related to the operation of the City’s Dial-a-Ride service. The fund receives revenues from the Los Angeles County Metropolitan Transportation Authority based on ridership and cost data for the Dial-a-Ride program. These revenues are expected to amount to $296,000 in 2020-21.
Miscellaneous revenues in the Transportation Fund include passenger fares and transfers in from the Proposition A Fund to fully fund Dial-a-Ride services. Ridership has been trending down in recent years, and the decrease in projected miscellaneous revenues reflects a reduction in expected passenger fares of $20,000. Total revenues projected for the Transportation Fund total $763,291 for 2020-21, a decrease of $22,000 or 2.8 percent compared with the revenue budget for 2019-20.
Sewer Fund
The Sewer Fund is used to account for financial activity related to replacement, upgrade, maintenance and repair of the sanitary sewer system. Revenues for the fund consist of sewer connection fees from new development and sewer service fees on existing development.
Projected Sewer Fund revenues include an increase in interest revenue of $5,000 or 9.1 percent over 2019-20. The City is in the process of completing a sewer study, and initial indication suggest that an increase in sewer service fees may not be necessary in 2020-21, therefore revenue from these fees has been projected without an increase. Sewer connection fees for development projects expected to take place next fiscal year are anticipated to generate additional revenue of $103,000 compared with the 2019-20 budget. Total revenues projected for the Sewer Fund total $1,040,00 for 2020-21. This represents an increase of $108,000 or 11.6 percent over the prior year.
Sanitation Fund
The Sanitation Fund is used to account for activities related to commercial and residential refuse collection, street sweeping, recycling, and bin rentals. Fees for sanitation service are collect quarterly for residential accounts and monthly for commercial accounts and deposited into the Sanitation Fund.
Total Sanitation Fund revenues are expected to increase by 3.8 percent in 2020-21. Total revenues projected for the Sanitation Fund total $7,039,322. These projected revenues include an increase in sanitation fees by the Consumer Price Index of 3.1 percent. In addition, revenues from bin rentals are expected to be $40,000 higher based on recent rental activity. Overall, Charges for Services are expected to increase by approximately $248,826 or 3.7% over the budget for 2019-20.
Increases in interest revenue of $2,000 and late fee revenue of $5,000 have also been included in preliminary estimates for the Sanitation Fund for 2020-21.
It is important to note that increases to Sanitation fees based on cost of living must use the March CPI figure. Since this figure will not be available until mid-April, it is possible that the projected increases in sanitation fees may change as the budget development process progresses.
Cemetery Fund
The Cemetery Fund is used to account for sales, marketing, maintenance and interment operations of the Oak Park Cemetery. The City took over the privately-run cemetery in March 1978. Revenues are derived from the sale of space and burial services in the cemetery.
Total Cemetery Fund revenues are expected to increase by 26.0 percent in 2020-21 to a total of $636,131. This is primarily due to a growing demand for space and burial services in the Oak Park Cemetery, coupled with an anticipated increase in cemetery fees by a 3.1 percent CPI factor.
It is important to note that increases to cemetery fees based on cost of living must use the April CPI figure. Since this figure will not be available until mid-May, it is possible that the projected increases in cemetery fees may change as the budget development process progresses.
Internal Service Funds
Total revenues in the Internal Service Funds are projected at $2,107,507, an increase of $20,121 or 1.0 percent over the budget for 2019-20.
Each of the City’s Internal Service Funds are discussed in more detail below.
Motor Fleet Fund
The Motor Fleet Fund is used to account for activities involved in rendering motor fleet services to departments within the City, in addition to several outside agencies. Costs of materials used, and services rendered are accumulated in this fund and charged to the user as such goods are delivered or services rendered.
In developing preliminary revenue estimates for 2020-21, internal service charges to the City’s operating departments have been carried over from the prior year in the current projections. This is because the amounts of the internal service charges are dependent on the projected expenditures of the Motor Fleet Fund, which are still being developed.
Projected revenue from charges to outside agencies, including the Claremont Unified School District, the Inland Valley Humane Society and the City of Montclair has been increased based on recent service history, and is partially offset by a projected decrease in interest revenue for 2020-21.
Total Motor Fleet Fund revenues are expected to increase by 1.5 percent in 2020-21 to a total of $1,375,739.
Technology Fund
The Technology Fund is used to account for activities involved in providing technology and network services to departments within the City. Costs of equipment and services used are accumulated in this fund and are charged to the user departments.
In developing preliminary revenue estimates for 2020-21, internal service charges to the City’s operating departments have been carried over from the prior year in the current projections. This is because the amounts of the internal service charges are dependent on the projected expenditures of the Technology Fund, which are still being developed. Accordingly, the preliminary revenue budget for the Technology Fund for 2020-21 is the same as the adopted budget for 2019-20.
Other Funds
Total revenues in the Other Funds are projected at $3,247,294, a decrease of $801,766 or 19.8 percent over the budget for 2019-20.
Each of the City’s Other Funds are discussed in more detail below.
Debt Service Fund
The City’s Debt Service Fund is used to account for the City’s debt service payments on outstanding debt. Current debt of the City of Claremont includes Pension Obligation Bonds (POBs) issued in 2006 to pay off the City’s CalPERS Safety Plan’s Side Fund, General Obligation (GO) Bonds issued in 2007 for the acquisition of Johnson’s Pasture, Certificates of Participation (COPs) issued in 2018 to fund the renovation of Foothill Boulevard, and a loan obtained in 2019 to fund the acquisition of streetlights from Southern California Edison.
Revenues in the Debt Service Fund consist of transfers in from other funds in sufficient amounts for the City to make regularly scheduled payments on outstanding debt. In 2020-21 these transfers in are expected to amount to $1,495,442, a decrease of $850,988 or 36.3 percent over the prior year. The reason for this large decrease is the final payment of the loan on the City Yard facility that was made in January 2020.
Successor Agency Fund
The Successor Agency Fund is used to account for the repayment of obligations of the former Claremont Redevelopment Agency, as well as the administrative costs of winding down the affairs of the former Agency.
Projected revenues for 2020-21 include distributions from the Redevelopment Property Tax Trust Fund (RPTTF) to make payments on former Claremont Redevelopment Agency obligations, including outstanding redevelopment bonds and City-Agency loans, as well as a contract for senior rental subsidies. The RPTTF is funded by property taxes formerly received by redevelopment agencies. The redevelopment dissolution process provides for the funding of former Redevelopment Agency obligations through the RPTTF. The amounts of the payments to be made on former Redevelopment Agency obligations is approved annually by the State Department of Finance. In 2020-21 revenues from the RPTTF are expected to total $1,751,852, an increase of 2.9 percent over the budget for 2019-20.
Conclusion
The development of the 2020-21 operating and capital improvement budget for the City is ongoing. The projected revenues included in this report are preliminary. As more information becomes available relative to cost of living factors, current revenue trends and development activity in the City, revenue estimates will be updated for the presentation of the budget to the City Council and community later in the year.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds the following:
Council Priorities - This item applies to the City Council Priority Goal entitled “Maintain Financial Stability”.
Sustainability Plan - This item does not apply to the goals of the Sustainability Plan.
Economic Sustainability Plan - This item does not apply to the recommendations outlined in the Economic Sustainability Plan.
General Plan - This item relates to the General Plan Implementation Measure I-18: Continue to maintain accurate records of City revenues, investments, fund balances, expenditures, employee related costs, and other financial matters. Provide periodic updates to City Manager and City Council on the City’s financial condition.
2019-20 Budget - This item meets the Financial Services Department Work Plan Goal FS-1: Provide administrative support to the City Council, City Manager, and all operating departments on a daily and long-range planning basis.
Youth and Family Master Plan - This item does not apply to the goals and objectives in the Youth and Family Master Plan.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA). Under CEQA Guidelines Section 15378(b)(5), continued administrative activities and organization activities that will not result in a direct or indirect physical change in the environment are not CEQA projects. Moreover, under CEQA Guidelines Section 15378(b)(4), government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment are not CEQA projects.
The acceptance of 2020-21 revenue projections is an organizational activity of the government which involves the fiscal activities but does not commit to any specific project, as such, this item is not a CEQA project. Even if it was determined to be a CEQA project, pursuant to CEQA Guidelines Section 15061(b)(3), CEQA does not apply to this item because there is no potential for causing a significant effect on the environment. The acceptance of 2020-21 revenue projections will not have a significant effect on the environment because the action will not result in or lead to a physical change in Claremont. Therefore, no additional environmental review is needed at this time.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process. Copies are available at the City Hall public counter, the Youth Activity Center, the Alexander Hughes Community Center, and the City website.
Submitted by:
Adam Pirrie
Finance Director