Loading...
HomeMy WebLinkAboutReso - CC - 027-2010RESOLUTIONNO. 77-201n A RESOLUTION OF THE, CITY COUNCIL OF THE CITY OF BURLINGAME APPROVING THE STORM DRAINAGE FUND POLICIES WHEREAS, the City of Burlingame voters approved a Storm Drainage fee, which is assessed against all parcels within the city and collected annually; and WHEREAS, in order to ensure that the use of storm drainage fee revenue is used in accordance all applicable laws and with the pledges made to the voters; and WHEREAS, the City of Burlingame believes that it is prudent financial policy to have Council -approved, written policies governing the use of city funds; and WHEREAS, the City of Burlingame Financing Authority will be issuing approximately $33 million in storm drainage revenue bonds to fund the construction of improvements and wishes to secure the highest credit rating possible from the municipal bond rating agencies; and WHEREAS, the members of the Council appointed Citizens Oversight Committee have been briefed on the policies and are in agreement with the goals and benefits to be derived from the policies as written; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURLINGAME DOES HEREBY RESOLVE AND ORDER AS FOLLOWS: 1. The City Council approves the Storm Drainage Policies, attached and incorporated herein as Attachment "A" and makes them effective immediately. 011y:L h &=-:� Cathy Baylock, Mayor I, Mary Ellen Kearney, City Clerk of the City of Burlingame, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the Burlingame City Council held on the 19'h day of April, 2010, by the following vote to wit: AYES: Councilmembers BAYLOCK, BROWNRIGG, DEAL, KEIGHRAN, NAGEL NOES: Councilmembers: NONE ABSENT: Councilmembers: NONE Mary Ellin Kcarrky, City Cl(*k CITY OT BURLINGAME [yR ATE0 JUNE b, Citi of Burlingame, CA Storm Drainage Punt Policies Purpose of Policies Attacbment A. The purpose of these Council approved policies is to provide written guidelines and set restrictions for the Storm Drainage Fund. The voters of the City of Burlingame approved a storm drainage fee for the purpose of making improvements to the city's storm drainage system. The storm drainage fee is assessed to all parcels within the City of Burlingame. The storm drainage fee is collected by the County of San Mateo as part of the annual ad - valorem tax bill. The storm drainage fee is paid to the City of Burlingame by the County of San Mateo according to the Teeter Plan. Revenue Collections All storm drainage fee revenue collected by the city will be deposited into the Storm Drainage Fund. The fund will be a special revenue fund or and shall be accounted for separately from the General Fund. All storm drainage revenue collected by the city is available to fund improvements to the storm drainage system. Capital improvements can be funded on a cash basis or through the issuance of municipal debt. The Finance Director will determine whether capital improvements should be financed using cash or debt. In making his or her determination, the Finance Director will consider the costs of the projects; the life -cycle of the improvements to be made; the cost of using debt and the availability of unencumbered Storm Drainage fund reserves. Storm Drainage Revenue Debt The City of Burlingame, through the Burlingame Financing Authority, may issue storm drainage revenue bonds for the purpose of financing capital improvements to the storm drainage system. Any and all storm drainage fee revenue collected by the city is available to be pledged for the repayment of debt. The City of Burlingame's recognizes that the use of municipal debt represents a financial resource that can be prudently used to finance infrastructure improvements; equipment lease -purchases and to refinance long-term obligations to external parties where the interest costs associated with the repayment of those obligations are higher than the interest costs associated with the use of debt and the prepayment of those obligations. The use of debt will be managed judiciously in order to consistently maintain a sound fiscal position, minimize interest costs and protect the city's credit quality. The city will issue debt instruments, administers debt proceeds and makes debt service payments, acting with prudence, diligence and attention to prevailing economic conditions. Storm Drainage Fund Policies.doc Attachment A. It is the city's policy that debt must represent an equitable means of financing the construction and acquisition of storm drainage system assets. The city will use the following criteria to determine if debt will be used to finance the construction and acquisition of capital assets: • The use is debt is allowed under federal, state and local laws and regulations. • The need to construct or acquire capital assets has been well documented by the city as necessary and essential to the provision of city services. • The capital assets, once constructed or acquired, will provide long-term service capacity for both current and future residents. • The capital assets have a life span equal or greater to the term of the debt used to finance the construction or acquisition of the assets. • Available cash is insufficient in the near- and long-term to construct or acquire capital assets on a pay-as-you-go basis. • The use of debt is cost-effective and prudent given prevailing interest rates, current economic conditions and the future financial outlook. The city will not use debt for the following: • Current and future annual operating expenses. • Maintenance expenses that do not add to the service capacity of a capital asset. • Equipment with a short-term use that is not capitalized. • Any uses prohibited by federal, state or local laws and regulations. It should be noted that it is the city' preference is to avoid interest expenses resulting from the use of debt by using cash when available to pay for the construction and acquisition of capital assets. Therefore the city will endeavor to set aside funds and establish reserves whenever possible to finance planned capital improvements and equipment purchases. When cash set -asides or reserves still prove insufficient to finance the construction or acquisition of capital assets, then the city will use a combination of cash and debt to finance the improvements and equipment. Administration Expenses The annual costs of administering the storm drainage fee and any associated debt are also allowable expenses. Such costs may include: future engineering studies or analyses required to maintain and periodically validate the fee; costs associated with the assessment and collection of the fee by either the County of San Mateo or the City of Burlingame; banking fees; the cost of required audits and reports; any and all other costs associated with the annual administration of the storm drainage fee. Storm Drainage Fund Pclicies.doc Attachment A. Priority of Payments Upon the issuance of debt to fund capital improvements to the storm drainage system, the annual debt service payments shall receive fust order of priority when appropriating funds. This will serve to secure payment to all bond holders prior to making additional appropriations for other expenses. Administration expenses shall be second in priority for payment from annual revenues followed by the accumulation of funds in Council designated reserves. Any and all funds remaining after this assignment of funds shall be considered fund balance. Operations and maintenance of the storm drainage system are costs that are currently paid for by other city funds. It is the City Council's policy to continue funding operations and maintenance of the storm drainage system from other funds. Fund Balance Once all payments are made annually, any surplus funds will constitute the fund balance of the storm drainage fund. The City Council can and may designate portions of fund balance for specific purposes. The Council designates three reserves within the storm drainage fund: An annual operating reserve; a storm drainage fee stabilization reserve and a capital improvements reserve. The reserves will serve the following purposes: Annual OperatinI4 Reserve: The Storm Drainage Fund shall maintain an annual operating reserve equal to twenty-five (25%) of annual revenue collections. The purpose of the reserve is to safeguard against any unforeseen contingencies or emergencies that may affect the use, efficiency and security of the storm drainage system. Examples of expenses that can be funded by the annual operating reserve include repairs to damage caused by natural or man-made disasters; unforeseen legal mandates or judgments against the city pertaining to storm drainage activities or storm water management practices; and unexpected modifications to the storm drainage system caused by future land uses or development and/or other capital improvements funded by the city. Storm Drainage Revenue Stabilization Reserve: The Storm Drainage Fund shall maintain a rate stabilization reserve equal to 10% of annual revenue collections. The purpose of the reserve is to safeguard against any potential disruptions in the collection of the annual storm drainage fee caused by economic downturns; delinquencies in payment of the fee; and/or any unforeseen legal or legislative changes that affect the city's ability to assess and collect the fee as envisioned. Capital Improvements Reserve: The Storm Drainage Fund shall accumulate funds in a capital improvements reserve to finance improvements to the storm drainage system on a cash basis. The capital improvements reserve will help the city avoid interest costs associated with the issuance of additional debt. The capital improvements reserve will be funded after the reserve thresholds have been met in the annual operating reserve and the storm drainage revenue stabilization reserve. Storm Drainage Fund Policies.doc