HomeMy WebLinkAboutAgenda Packet - CC - 2017.03.15City Council
City of Burlingame
Meeting Agenda - Final
BURLINGAME CITY HALL
501 PRIMROSE ROAD
BURLINGAME, CA 94010
Council Chambers6:30 PMWednesday, March 15, 2017
2016-17 Mid-Year Budget Session
Note: Public comment is permitted on all action items as noted on the agenda below and in the
non-agenda public comment provided for in item 4.
Speakers are asked to fill out a "request to speak" card located on the table by the door and
hand it to staff, although the provision of a name, address or other identifying information is
optional. Speakers are limited to three minutes each; the Mayor may adjust the time limit in
light of the number of anticipated speakers.
All votes are unanimous unless separately noted for the record.
1. CALL TO ORDER - 6:30 p.m. - Council Chambers
2. PLEDGE OF ALLEGIANCE TO THE FLAG
3. ROLL CALL
4. PUBLIC COMMENTS, NON-AGENDA
Members of the public may speak about any item not on the agenda. Members of the public wishing to
suggest an item for a future Council agenda may do so during this public comment period. The Ralph M .
Brown Act (the State local agency open meeting law) prohibits the City Council from acting on any matter
that is not on the agenda.
5. STAFF REPORTS AND COMMUNICATIONS (Public Comment)
Adoption of a Resolution Amending the FY 2016-17 Operating and Capital Budgets to
Reflect the Recommended Mid-year Adjustments and Adoption of a Resolution Further
Funding the Renewal and Replacement Reserve in the City’s Capital Projects Fund
a.
Staff Report
Resolution - Budget Amendments
Resolution - Renewal & Replacement Reserve
Attachments:
Page 1 City of Burlingame Printed on 3/9/2017
March 15, 2017City Council Meeting Agenda - Final
Review of Draft FY2017-18 General Fund, Gas Tax, Measure A, Measure M and
Federally Funded Capital Improvement Program (CIP)
b.
Staff Report
FY2017-18 General Funds CIP Spreadsheet
Presentation
Attachments:
6. COUNCIL DIRECTION ON BUDGET POLICY ISSUES
7. ADJOURNMENT
Notice: Any attendees wishing accommodations for disabilities please contact the City Clerk at
(650)558-7203 at least 24 hours before the meeting. A copy of the Agenda Packet is available for
public review at the City Clerk's office, City Hall, 501 Primrose Road, from 8:00 a.m. to 5:00 p.m.
before the meeting and at the meeting. Visit the City's website at www.burlingame.org. Agendas and
minutes are available at this site.
NEXT CITY COUNCIL MEETING - Next regular City Council Meeting - Monday, March 20,
2017
VIEW REGULAR COUNCIL MEETING ONLINE AT WWW.BURLINGAME.ORG - GO TO
"CITY COUNCIL VIDEOS"
Any writings or documents provided to a majority of the City Council regarding any item on this
agenda will be made available for public inspection at the Water Office counter at City Hall at 501
Primrose Road during normal business hours.
Page 2 City of Burlingame Printed on 3/9/2017
1
STAFF REPORT
AGENDA NO:
MEETING DATE: March 15, 2017
To: Honorable Mayor and City Council
Date: March 15, 2017
From: Carol Augustine, Finance Director – (650) 558-7222
Subject: Adoption of a Resolution Amending the FY 2016-17 Operating and Capital
Budgets to Reflect the Recommended Mid-year Adjustments and Adoption
of a Resolution Further Funding the Renewal and Replacement Reserve in
the City’s Capital Projects Fund
RECOMMENDATION
Staff recommends that the City Council accept the FY 2016-17 Mid-year Financial Summary and
Five-Year Financial Forecast, and adopt the attached resolutions amending the FY 2016-17
Operating and Capital Budgets to reflect the recommended mid-year adjustments and further
fund the Renewal and Replacement Reserve in the City’s Capital Projects Fund.
BACKGROUND
This report summarizes the City’s mid-year fiscal status by providing an analysis of anticipated
revenues and expenditures in comparison to the current adjusted budget for the 201 6-17 fiscal
year. Revised forecasts incorporate final 2015-16 fiscal year results, year-to-date cash flow, and
other data points that were not available when the budget was originally developed.
To the extent possible, trends or emerging items that were not included in the City’s operating
budget have been identified, and the budgetary impacts of these items have been assessed. In
addition, this report notes changes in activities that have very little overall impact to the budget,
but allow for better alignment with Council goals and departmental directives. Although the focus
of the mid-year review is the City’s General Fund, this report also pr ovides an update for other
funds where fiscal changes are noted. The attached budget resolutions are recommended so
that the current budget will not only provide the proper funding needed to carry out the programs
and activities anticipated through June 30, 2017, but will also more accurately reflect the financial
condition of the City as it enters the FY 2017-18 budget process. Having the latest projections
reflected in the current budget enhances the forecasting process and allows decision makers to
have greater confidence in the information provided within the budget development framework.
In addition, during this time of moderate economic growth, the City may choose to set aside
further funding for an ever-growing list of unmet capital needs.
Considering current economic conditions and this most recent analysis of operations, staff has
updated the assumptions and projections incorporated in the City’s five-year financial forecast for
2016-17 Mid-Year Report March 15, 2017
2
the General Fund. This long-term forecast establishes an appraisal of fiscal sustainability beyond
the current budget cycle, providing important context to the annual budget process.
DISCUSSION
Economic Conditions
National Economy
At the time the City’s FY 2016-17 budget was being prepared, the national economy was in
“pause” mode after its fifth year of a gradual recovery from the worst recession since the Great
Depression. Most forecasts indicated that the economy would continue to grow at a moderate
pace (2½ - 3 percent), perhaps less sporadically than in recent years. U.S. real GDP had
increased 2.4 percent in 2015, the same rate as in 2014. The U.S. unemployment rate had
dropped to 4.9 percent (in January 2016) - its lowest level in eight years. Gasoline prices were
still falling, although consumer spending was only inching upward. Low mortgage rates remained
below 4 percent, and inflation was very tame. The Federal Reserve had raised the benchmark
interest rate (December 2015 - 25 basis points) for the first time in seven years. All the factors of
internal growth appeared to be positive. However, the possibility of a significant weakening of
some foreign economies had the potential to further restrain economic growth.
In the end, U.S. real GDP increased only 1.6 percent in 2016. However, the most acceleration
was seen in the third and fourth quarters. The deceleration in real GDP from the prior calendar
year reflects downturns in private inventory investment and in nonresidential fixed investment.
Although this measure of the nation’s economic growth would indicate a slower pace than
experienced in previous years, the numbers actually reflect relative strength in the midst of global
economic turmoil and low commodity prices. According to Beacon Economics, a leading
independent economic research and consulting firm, moderately low inflation and interest rates
continue to support spending. As the U.S. economy continues to chug along, real GDP growth is
projected to grow in the range of 2 percent in upcoming years.
2016-17 Mid-Year Report March 15, 2017
3
The U.S. unemployment rate was 4.8 percent in January 2017, which is largely accepted as full
employment, as a result of a tight labor market and more full-time hiring. Growth in payrolls is
projected to push the unemployment rate a bit lower. Lower unemployment is expected to push
wages higher, and inflation is expected to move higher. As a result, interest rates, both on the
short end of the yield curve and longer-term rates, are expected to increase. In addition, higher
wages should bolster consumer confidence, leading to potentially higher personal consumption
expenditures, which will also put upward pressure on inflation. Still, inflation is expected to stay
below the 2 percent Fed target rate for the near future.
Strong retail sales growth in January indicates that U.S. consumers are still bullish on the
economy. Although holiday sales were decent but unremarkable, January’s 0.7 percent monthly
jump in core retail sales (which exclude autos and gasoline, two notor iously volatile categories)
was positive.
The election of Donald Trump has caused economists to rethink their outlook on the U.S.
economy in 2017. While most agree that unified control under one party could remove the
political gridlock that has prevented major policy changes from occurring in the past, some are
not optimistic about the impact of such policies. Tax reform could create a modest positive
impact on short-run growth, but the implications for the Federal budget deficit and a widening of
the trade deficit are of concern. An increase in infrastructure spending would also be expected to
provide a positive impulse to economic growth, but this may also be short-lived. President Trump
campaigned aggressively on several policies that could, according to Beacon Economics’
Founding Partner Christopher Thornberg, “have seriously damaging effects on the functioning of
the economy” and “create enough of a shock to the economy to tip the nation into a recessionary
period”. In particular, Thornberg posits that the end of the U.S. commitment to free trade could
result in sharply falling imports and exports, significant disruptions of supply chains, a decline in
tourism, and a significant rise in consumer prices.
2016-17 Mid-Year Report March 15, 2017
4
So, although the economy headed into 2017 in a solid position, there is a lot of uncertainty about
future economic policies and how they will influence the national economy going forward,
especially into 2018.
State Economy
California turned in a solid performance in 2016, despite slower growth nationally. For four years
running, the state has added jobs at a faster pace than the nation as a whole. California’s
economy is also growing at a faster rate than that of the nation, and accounts for 13.6 percent of
the U.S. GDP.
The unemployment rate for California dipped to 5.1 percent on a seasonally adjusted basis in
January. Nearly every industry in the state continues to add jobs year-over-year, with the
categories of Healthcare and Social Assistance leading the way. It should be noted that the mild
growth in January was largely driven by Southern California; several cities in the San Francisco
Bay Area posted slight declines. In addition, manufacturing continued its slight decline in jobs in
2016.
2016-17 Mid-Year Report March 15, 2017
5
Along with employment growth, California’s residents have also experienced gains in personal
income. Total real personal income in the state increased by 3.1 percent in 2016 to almost $1.8
trillion due to higher levels of employment and rising wages. State wide, real per capita income
was $44,970 in 2016, up from $43,900 in 2015. Still, there are regions within the state where the
labor markets continue to struggle with high unemployment and low growth. As of December
2016, six of California’s 58 counties still had unemployment rates of more than ten percent, and
six more had rates higher than nine percent. The lowest unemployment rate was 2.7 percent in
San Mateo County, followed by Marin County at 2.9 percent and San Francisco at 3.0 percent.
Employment and wage growth continue to be strongest in Silicon Valley. Outside of the Bay area,
the majority of the job gains over the past few years have been in low-paying retail, hospitality
and social assistance.
Looking ahead, the rate of job creation in California is expected to slow to 1.7 percent annually in
2017 and 2018.
Economists also expect real personal income growth, estimated to be 3.1 percent in 2016, to
additionally increase in the range of 3.0 percent to 3.6 percent in each of the next two years, as a
tighter labor market results in higher wages for more workers. California’s minimum wage also
will increase in future years under state law.
2016-17 Mid-Year Report March 15, 2017
6
Housing affordability continues to be a major concern in California. Home prices and rents
remain very high in both the Bay Area and Los Angeles, as well as other parts of the state.
Median home prices in the San Jose ($944,000) and San Francisco-Oakland ($813,000) areas
ranked first and second highest among major urban areas in the country. While building permits
in these areas are higher than in the past ten years, building levels remain low relative to other
urban areas throughout the country. Over the long term, a constrained supply of new housing
may limit prospects for job and economic growth.
The Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey signals
that California commercial real estate continues its boom; but as U.S. economic growth slows,
there are signs of this boom topping out. Commercial real estate fundamentals improve with
increases in employment and income, and a slowing of the growth of these is potentially of
concern. The biannual survey projects a three-year outlook for California’s commercial real estate
industry and forecasts potential opportunities and challenges affecting office, multi-family, retail
and industrial sectors. The latest survey (July 2016) indicates a new topping out of the market for
office space in the near future. For each of the six markets surveyed (San Francisco, the East
Bay, Silicon Valley, Los Angeles, Orange County and San Diego), office developer sentiment has
declined. This downward trend occurs as developers become more pessimistic about the growth
of real rental rates and vacancy rates. To be clear, the survey does not indicate construction of
office space is imploding. Rather, it says that it is unlikely office space construction will be more
robust in 2019 than it is today.
In preparing the fiscal year 2017-18 budget, Governor Jerry Brown concluded that California’s
fiscal condition had worsened. Absent new budget solutions, the State’s Special Fund for
Economic Uncertainties would experience a deficit of $1.6 billion at the end of the 2017-18 fiscal
year. The deterioration in the State budget’s condition was largely the result of lower revenue
estimates relative to the assumptions in the June 2016 plan, and higher Medi-Cal costs than
previously estimated. However, the Legislative Analyst’s Office (LAO) assumptions of wages
2016-17 Mid-Year Report March 15, 2017
7
and salaries and capital gains continue to be higher than the administration’s assumptions, and
indicate healthy personal income tax revenue growth of nearly 7 percent in 2017-18, driving
positive revenue growth for the state. However, the LAO projects weakness in sales tax revenue,
largely due to the expiration of the temporary quarter-cent rate established by Proposition 30.
Finally, the corporation tax – the third of the state’s “Big Three” revenues – is expected to decline
by about 1 percent in the current fiscal year, followed by several years of growth that is roughly
on pace with the broader economy.
The Governor’s budget also notes a slowdown in the global economy as one of the main risks to
the state’s economy. Stock market volatility adds additional risk to the forecast. Although the
state is much better positioned for the next economic contraction, a recession would likely be
accompanied by a large fall in the stock market, strongly affecting revenues.
Local Economy
Just as the national recovery is bifurcated, with people possessing 20th-century skills still
struggling to find full employment, so, too in California there continues to be a marked difference
between the coastal counties and the inland counties in employment-loss recovered. With its
emphasis on the tech sector, the San Francisco Bay Area economy continued to outperform the
nation in 2016.
While growth in FY 2016-17 is expected to slow to a more moderate rate than experienced in the
past two years, the Bay Area’s economy is still expected to grow faster than nearly all other large
metropolitan areas in the country. Job growth in San Francisco and the East Bay is slowing from
the heated pace of recent years due to the region’s high cost of living, according to Beacon
Economics. Beacon anticipates job growth in San Francisco to expand in the 1 percent to 1.3
percent range over the next year. The firm sees housing costs slowing the pace of people
moving into the region. Parts of the region are approaching full employment; San Francisco is
already there.
While the influx of highly educated professionals has been a primary driver of growth, the rising
cost of living in the area often offsets wage advantages, and net migration is expected to decline
over the next few years. Beacon said the San Francisco area rental market “appears to be
approaching the end of frenzied growth.” The firm expects multifamily permitting activity will fall by
18 to 24 percent in 2017, as compared to 2016, as “demand for apartments in the region’s pricier
submarkets continues to cool.” Beacon Economics does not expect housing costs to stop
growing in the near term as 30-year mortgage rates pick up. Rising mortgage rates will keep
median single-family home price appreciation to a more modest 3.0 percent to 4.5 percent over
the next year.
The Professional, Scientific, and Technology sector accounted for the largest number of job gains
in the San Francisco Metropolitan District this past year. This is corroborated by strong taxable
sales growth (+7.6 percent) in the Business and Industry spending category, which reflects
increasing capital expenditures by employers on equipment and supplies. Between October 2015
and October 2016, this sector added 10,800 jobs, representing 6.1 percent year-over-year
growth. While the Computer Systems Design and Related Services subsector has been a
primary driver of job creation within the larger industry, it has comprised a shrinking share of
2016-17 Mid-Year Report March 15, 2017
8
overall employment growth. This subsector accounted for one-third of all job creation in the
Professional, Scientific, and Technology sector this year, while between Oct ober 2014 and
October 2015, the subsector made up 52.2 percent of the sector’s overall job creation.
It is evident that California’s labor market has tightened considerably over the past year or so.
However, according to seasonally adjusted figures from the Employment Development
Department, the Bay Area overall broke a string of 66 consecutive months of job gains, losing
6,800 jobs in January. The San Francisco-San Mateo region suffered the largest losses (1,000
jobs) in technology, while hotels and restaurants lost an equal number. Gains in the area of
educational services and health care nearly offset these job losses. But the overall downshift is a
trend that was noted across the Bay Area and California as a whole.
Because the San Francisco Metropolitan area continues to be one of the United States’ top
tourist destinations, Burlingame continues to see strength in hotel tax revenues and consumer
spending. With an 84.9 percent occupancy rate in the first six months of this fiscal year, hotels in
the area are among the most occupied in the country. (The nationwide average for hotel
occupancy rates is 65.9 percent.) Revenues were up slightly over one percent from the same
period last year. As noted in the General Fund Revenue analysis (Attachment A), transient
occupancy (hotel) tax receipts in fiscal year 2015-16 were 10.1 percent (nearly $2.4 million)
higher than in the prior fiscal year. However, federally imposed travel restrictions could
negatively impact tourism and the area’s occupancy rates in the years to come.
As in other cities in the region, spending on autos, general consumer goods, and restaurants was
up through the first half of calendar year 2016. Burlingame sales tax receipts in the 3rd quarter of
2016 were 4.7 percent below the same quarter of the previous year, due largely to a onetime use
tax allocation that spiked last year’s returns. Adjusted for this anomaly, tax receipts increase 1.4
percent over the same prior year quarter. New auto returns were hampered by a dealership
closure, while lower fuel prices negatively impacted service stations. Nevertheless, healthy gains
were seen from restaurants, and the City’s share of the countywide use tax allocation pool also
increased when compared to a year ago.
2016-17 Mid-Year Report March 15, 2017
9
Again, although increasing incomes and wages among local residents have helped fuel taxable
sales, the high cost of housing in the region could impede growth in consumer spending in
coming years. As more and more residents spend a larger portion of their income on housing,
less money is left to purchase goods and services. In short, the state and local economic outlook
is expected to coincide with the national outlook of continued recovery. As the San Francisco
Bay Area was previously a “hot spot” for the growing economy, it is expected to experience a
stabilization effect sooner than other parts of the state.
Even with the positive economic trends of recent years, budgets have been developed with a
relatively conservative approach. The recession brought home the realization that some of the
City’s largest sources of revenue are highly volatile, inexorably linked to the health of the general
economy and events that cannot be anticipated in the short term. The recovery has been
tentative at times, and accompanied by increases in certain operating costs – particularly in the
area of personnel benefits – that need to be considered. The General Fund five-year financial
forecast is provided in the final section of this report. In conjunction with the General Fund
Reserve Policy, this long-term approach to the City’s budget helps ensure that future economic
downturns can be managed effectively.
Although renewed emphasis on budgeting for the longer-term will provide more certainty for
future budgets, the City cannot have a true budgetary “surplus” if unfunded needs continue to
grow. The establishment of the Other Post-Employment Benefits (OPEB) trust account was a
significant step in identifying unfunded liabilities and systematically providing for them within the
operating budget. Although pension reform has somewhat curbed the growth of these liabilities,
accrued obligations are being addressed by CalPERS by increased employer contributions.
Other liabilities await funding, however. The deferral of maintenance to infrastructure and
facilities has resulted in an increase of projects on the City’s list of “unfunded needs.” Staff will
strive to identify these deferrals and recommend their systematic funding within the operating
budget (of the appropriate fund) whenever possible.
General Fund
The City’s FY 2016-17 budget anticipated that the economy would continue to grow at a
moderate pace. Although not required to provide expenditure reductions for this mid-year
analysis, departments were asked to identify, to the extent possible, additional funding sources or
revenues that would be available to offset any additional budgetary needs.
Now, with more than half of the fiscal year of actual transactions under analysis, the City’s year -
end General Fund revenues are currently projected to be over $1.7 million higher than projected
in the FY 2016-17 adopted budget. Over 70 percent of the growth comes from increased tax
revenues, and the remainder reflects a one-time increase in charges for services. Details of the
City’s General Fund Revenue analysis at mid-year are provided in Attachment A of this report.
Expenditure budget revisions are discussed in more detail in Attachment B of this report. The
adjustments reflect an attempt to adjust certain departmental budgets to more accurately reflect
current needs, in response to unanticipated events, a change in programming direction, or access
to information that was not available at the time the FY 2016-17 budget was proposed. The
resulting budget should provide a clearer, more transparent picture of operating needs going
2016-17 Mid-Year Report March 15, 2017
10
forward. This is particularly important in establishing the framework for the FY 2017-18 budget,
where funds needed for continued service levels will be considered in the context of the City
Council’s established goals.
General Fund - Revenues
The following table shows the mid-year assessment of fiscal year 2016-17 General Fund
revenues. There are three columns for the 2016-17 fiscal year: The “FY16-17 Current Budget”
column shows the revenue budget adopted by the City Council last June; the “FY16-17 Midyear
Projection” column shows the most current projection for the fiscal year; and the final “FY16-17
Midyear Amendment” column reflects a summary of proposed revenue amendments to the FY
16-17 budget for the City Council’s approval with this Mid-year Report. For comparison
purposes, the table also includes the City’s actual General Fund revenues in fiscal year 2015-16,
as well as figures for the previous fiscal year. Year-to-date revenues are not included here as the
timing variability within each different category greatly complicates the analysis and would make
for a confusing presentation as a whole. However, year-to-date receipts may be discussed in the
various categories of revenue as they relate to a revised FY 2016-17 projection.
The key factors that pertain to staff’s recommended adjustments to each of the City’s General
Fund revenue categories are discussed in Attachment A of this report. The amended forecast
for the City’s largest revenue sources (Property Tax, Sales Tax and Transient Occupancy Tax) is
not only based on the previous year’s receipts, but also on the continued strength of the local
economy as reflected in cash receipts for the current fiscal year. In fact, revenue sources as a
whole are keeping pace with the FY 2015-16 actual amounts, with many comparing favorably to
the prior fiscal year. The recommended adjustments equate to a 2.4 percent increase in General
Fund revenues when compared to the FY 2016-17 adopted budget, and a 1.7 percent increase
over last year’s revenues for the fund. Note that FY 2014-15 actual amounts included $1 million
in one-time revenue from Millennium Partners, the original Burlingame Point developer, per the
CITY OF BURLINGAME, CA
SUMMARY OF GENERAL FUND REVENUES
FY14-15
Actuals
FY15-16
Actuals
FY16-17
Current
Budget
FY16-17
Midyear
Projection
FY16-17
Midyear
Amendment
Year-End
Up (Down) %
Property Tax 16,677,381$ 17,645,289$ 18,026,000$ 18,851,000$ 825,000$ 4.6%
Sales and Use Tax 11,100,900 12,827,673 11,969,000 12,150,000 181,000 1.5%
Transient Occupancy Tax 23,698,396 26,092,240 26,000,000 26,216,000 216,000 0.8%
Other Taxes
Franchise Tax 1,579,976 1,604,758 1,598,000 1,614,000 16,000 1.0%
Business Licenses 966,675 985,568 990,000 990,000 0 0.0%
State HOPTR 64,810 63,710 66,000 62,000 -4,000 -6.1%
Real Property Transfer Tax 436,853 499,514 477,000 292,000 -185,000 -38.8%
Licenses & Permits 83,840 86,154 88,000 88,000 0 0.0%
Fines, Forfeitures and Penalties 837,704 864,393 942,000 942,000 0 0.0%
Use of Money & Property 207,952 200,196 206,000 161,000 -45,000 -21.8%
Charges for Services 4,481,618 4,470,274 4,825,200 5,247,200 422,000 8.7%
Other Revenue 1,046,512 35,972 500 30,500 30,000 6000.0%
State Subventions 578,158 146,530 254,000 234,000 -20,000 -7.9%
Interest Income 260,740 757,153 389,000 630,000 241,000 62.0%
Total, General Fund Revenue 62,021,516 66,279,425 65,830,700 67,507,700 1,677,000 2.5%
2016-17 Mid-Year Report March 15, 2017
11
approved Development Agreement; this is shown as “other revenue”. There are no similar
projections in the adopted budget for future one-time revenues in FY 2016-17 or in the five-year
forecast. Such items can be added when the amount and timing of these unanticipated receipts
is certain.
General Fund - Expenditures
The f ollowing table shows the mid-year assessment of FY 2016-17 General Fund expenditures
by critical service area:
Again, there are three columns for fiscal year 2016-17. The “FY16-17 Adopted Budget” column
shows the budget adopted by the City Council in June 2016. Although the departmental budgets
were internally adjusted for encumbrances of the prior fiscal year, the encumbrances are
excluded for this mid-year analysis. The second FY 2016-17 column shows the new mid-year
projection for each department’s expenditures for FY 2016-17. The final FY 2016-17 column
shows the resulting amendments to the FY 2016-17 adjusted budget to reflect additional
resources required (or anticipated operational savings) by departments for the remaining fiscal
year. For comparison purposes, the table also includes the City’s General Fund actual
expenditure performance in fiscal year 2015-16, as well as figures for the previous fiscal year.
Budgetary savings (positive expenditure variances) within the General Fund in fiscal year 2015-
16 were experienced in all departments, resulting in expenditures of $2.8 million (roughly 5.6
percent) less than budgeted for the fiscal year. Since local government expenditure budgets
(appropriations) serve as the legal level of budgetary control, some level of savings will be
realized in any fiscal year. Although departmental budgets were analyzed for both underfunded
operating needs and anticipated budgetary savings, the focus was on ensuring budget adequacy
for General Fund operations for the remainder of the fiscal year.
There are fewer adjusting entries recommended for expenditure budgets in this analysis than
recommended for the City’s General Fund revenues. Most expenditure adjustments were fairly
minimal in amount, or offset by operational savings elsewhere in the department. Proposed
revisions to General Fund Expenditure Budgets are explained in detail in Attachment B.
Again, additional budgetary savings are a certainty, because the expenditure budgets reflect the
upper limit of spending levels for each department. Departments are only able to expend or
commit funds up to this legal level of budgetary control. Because these budgetary controls are
CITY OF BURLINGAME, CA
SUMMARY OF GENERAL FUND EXPENDITURES
By General Fund Program
FY2014-15
Actuals
FY2015-16
Actuals
FY16-17
Adopted
Budget
FY16-17
Midyear
Projection
FY16-17
Midyear
Amendment
Year-End
Up (Down) %
General government $ 4,121,895 $ 4,477,401 $ 5,182,271 $ 5,281,871 $99,600 1.9%
Public Safety 22,773,494 24,625,071 26,300,304 26,325,304 25,000 0.1%
Public Works 4,769,873 4,693,548 5,093,323 5,093,323 0 0.0%
Community Development 1,244,199 1,405,794 1,658,233 1,718,233 60,000 3.6%
Leisure & Cultural Services 11,495,604 12,257,646 13,897,197 13,897,397 200 0.0%
Total, Operating Expenditures $44,405,064 $47,459,460 $52,131,328 $52,316,128 $184,800 0.4%
2016-17 Mid-Year Report March 15, 2017
12
established within each category of departmental expenditures, budgetary savings tend to
average 2-4 percent of the annual expenditure budget. In recent years, the City experienced
higher-than-average expenditure variances due to savings in the category of personnel costs
from elevated levels of position vacancies. However, vacancy levels appear to have returned to a
normal rate. For this reason, it is anticipated that the City will experience a budgetary savings in
the range of $1 - $2 million in the current fiscal year.
Finally, certain adjustments are included in the mid-year budget resolution that increase the
Transfers Out of the General Fund in fiscal year 2016-17 as shown below:
The recommended adjustments are made necessary due to changes in other funds, described
later in this report.
General Fund Operating Summary
A summary of the impacts to the General Fund of the adjustments made as a result of this mid -
year analysis is shown in the schedule below:
Adjusted by the recommended amendments in this report, the General Fund shows a projected
surplus (positive net operating revenues) for fiscal year 2016-17 of approximately $4.1 million,
Amendments to General Fund Transfers In (Out)
Fiscal Year 2016-17
Description Amount $
CIP - Broadway Grade Separation ($500,000)
CIP - Paloma Park Playground (40,000)
Solid Waste Fund (28,600)
Equipment Service Fund 102,512
Net Change to Transfers In (Out)($466,088)
CITY OF BURLINGAME, CA
GENERAL FUND OPERATING SUMMARY
FY2015-16
Actual
FY16-17
Adopted
Budget
FY16-17
Midyear
Projection
FY2016-17
Midyear
Amendment
Total Revenue $66,279,425 65,830,700$ 67,507,700$ 1,677,000$
Expenditures
Departmental Expenditures (47,459,460)(52,131,328)(52,316,128)(184,800)
Transfers In (Out)(18,179,186)(10,574,927)(11,041,015)(466,088)
Total Expenditures (65,638,646)(62,706,255)(63,357,143)(650,888)
Net Operating Revenue 640,779 3,124,445 4,150,557 1,026,112
Add'l Transfer to CIP Renewal & Replacement Reserve 0 0 0 0
Change in General Fund Balance 640,779$ 3,124,445$ 4,150,557$ 1,026,112$
2016-17 Mid-Year Report March 15, 2017
13
which is $1 million higher than initially forecast, due largely to higher revenues than anticipated in
the fiscal year’s original budget, as summarized in this report.
In January 2015, the City Council approved a General Fund Reserve Policy that recognized the
need for adequate reserves to guard against future economic downturns, as well as to provide a
hedge for catastrophic events. In addition, in recognition of Burlingame’s significant unfunded
capital planning/facility needs and the continued impact of these needs on the City’s financial
flexibility, the Council also approved the establishment of a Renewal and Replacement Reserve
within the Capital Improvement Projects (CIP) Fund. The purpose of the Renewal and
Replacement Reserve was to prevent further accumulation of unfunded liabilities that aging
facilities represent. It was initially funded with a General Fund transfer of $3 million, a reflection
of the fund’s operating surplus in fiscal year 2013-14. In October 2015, the General Fund
Reserve Policy was revised based on a refined analysis of the optimal reserve level for
catastrophic events. The analysis supported a decrease in the Catastrophic Reserve to $2
million, citing more appropriate strategies to cover the potential of damages in excess of this new
reserve target. The $2.5 million reduction allowed an increase in the Renewal and Replacement
Reserve. Also in fiscal year 2015-16, an additional $5 million transfer from the General Fund to
the Renewal and Replacement Reserve was approved at mid-year. Note that, unlike other
amounts reflected in the fund balance of the Capital Projects Fund, Renewal and Replacement
Reserve funding will not be appropriated to a specific project. Rather, it will accumulate for
capital projects to be initiated when timing is optimal and sufficient other funding is identified.
General Fund Balance
Once all the mid-year adjustments are posted, the General Fund shows a projected total fund
balance of $33.8 million at the end of the 2016-17 fiscal year.
Although the mid-year budget projections for fiscal year 2015-16 reflected a reduction of fund
balance of nearly $3 million, a slight budgetary surplus in fiscal year 2015-16 resulted in a
beginning General Fund balance for FY 2016-17 that was more than $3.5 million higher than
CITY OF BURLINGAME, CA
CHANGES TO GENERAL FUND BALANCE
FY 2016-17
Midyear
Projection
FY 2015-16 Beginning Fund Balance 29,641,334$
Projected Revenues & Expenditures
Projected better than budgeted revenue performance 67,507,700
Projected departmental expenditures (52,316,128)
Subtotal, Revenues Net of Expenditures 15,191,572
General Fund Long-Term Debt (5,756,745)
Transfers In (Out) of General Fund (5,284,270)
Projected General Fund Balance, net of transfers 33,791,891$
2016-17 Mid-Year Report March 15, 2017
14
anticipated. This created a relatively large unassigned fund balance. In the current fiscal year,
the projected fund balance is also projected to grow. The $4.1 million anticipated increase in the
General Fund’s balance now projected for FY 2016-17 will essentially be reflected in a further
increase in the City’s unassigned fund balance.
Once funded as approved In the General Fund Reserve Policy, the City’s reserves ($18.7 million)
comprise the largest portion of the General Fund’s ending balance. Approximately $15.1 million
remain as “unassigned fund balance”, available for future appropriation. Similar to the use of
unassigned fund balances from the prior fiscal year and in recognition of the City’s large backlog
of facility needs, staff recommends that the Renewal and Replacement Reserve be funded by an
additional $4 million. The Renewal and Replacement Reserve was established with the intent of
providing funding for the replacement of City assets. Governmental funds (as opposed to
Enterprise Funds) do not incur annual charges for depreciation of assets; therefore, these costs
are recognized only when the asset needs to be replaced. The City’s list of capital/facilities
needs will continue to grow; the Renewal and Replacement Reserve is a mechanism to
accumulate funds to offset these needs. As such, the funds in this reserve are not appropriated
to a specific project, but would be available for capital projects to be initiated when timing is
optimal and sufficient other funding is identified. Staff is developing a framework for a reserve
policy specific to this Capital Project Fund reserve for City Council consideration and discussion;
this policy will be included in the 2017-18 fiscal year budget deliberations.
CITY OF BURLINGAME, CA
GENERAL FUND BALANCE ASSIGNMENTS
FY2015-16
Actual
FY2016-17
Midyear
Projection Up (Down) $Up (Down) %
Economic Stability Reserve 15,700,000$ 16,200,000$ 500,000 3.2%
Catastrophic Reserve 2,000,000 2,000,000 0 0.0%
General Plan Reserve 0 0 0 0.0%
Contingency Reserve 500,000 500,000 0 0.0%
Subtotal, Assigned Fund Balance 18,200,000 18,700,000 500,000 2.7%
Add: Unassigned Fund Balance 11,003,467 15,091,891 4,088,424 37.2%
Total, Ending Fund Balance 29,203,467$ 33,791,891$ 4,588,424$ 15.7%
CITY OF BURLINGAME, CA
CHANGES TO RENEWAL AND REPLACEMENT RESERVE
Beginning Balance 7/1/16 $13,500,000
Budgeted Transfer from General Fund in FY2016-17 3,000,000
Projected Ending Balance 6/30/17 $16,500,000
Recommended add'l transfer from General Fund 4,000,000
Recommended Ending Balance 6/30/17 $20,500,000
2016-17 Mid-Year Report March 15, 2017
15
General Fund Reserve Policy – As of June 30, 2017, the projected fund balance of $33.8 million
represents nearly 64.6 percent of General Fund operating expenditures of $52.3 million. The
City’s General Fund Reserve Policy and resulting reserve target was based on an assessment of
the City’s revenue volatility and infrastructure risks, as well as the possibility of extreme events, in
establishing a reserve target specifically for the City of Burlingame. As such, the Council’s
reserve management strategies reflect best practices in public finance. The $18.7 million in
reserves represents an amount equal to 27.7 percent of projected General Fund revenues
(excluding one-time revenues) for the year; the reserve policy calls for an Economic Stability
Reserve of 24 percent of budgeted revenues, a Catastrophic Reserve of $2 million, and a
$500,000 Contingency Reserve.
Other Funds
Other Funds – All City funds were reviewed for this mid-year analysis. The recommended
revenue adjustment for most funds is the result of anticipated earnings allocations from the City’s
investment portfolio, explained in the General Fund Revenues section of this report (Appendix A).
The recommended adjustments are shown below:
Peninsula Clean Energy Options – At the City Council’s goal-setting session in January, staff
was asked to determine the fiscal impact of enrolling the City’s municipal accounts in the
Peninsula Clean Energy (PCE) ECO100 program. PCE is San Mateo County’s official electricity
Interest Income Amendments
FY 2016-17
Fund
2015-16
Actual
Current
Budget
Midyear
Projection
Midyear
Amendment
General Fund 757,153$ 389,000$ 630,000$ 241,000$
Burlingame Avenue Assessment Dist.6,844 4,000 6,000 2,000
Gas Tax Fund 29,327 20,000 26,700 6,700
Measure A Fund 32,347 13,000 29,500 16,500
Water Fund 271,269 136,000 247,000 111,000
Sewer Fund 250,656 121,000 228,600 107,600
Solid Waste Fund 77,914 28,000 71,000 43,000
Parking Enterprise Fund 83,975 33,000 76,700 43,700
Building Enterprise Fund 78,525 38,000 71,600 33,600
Worker's Compensation Fund ISF 97,252 - 88,700 88,700
Facilities Services Fund ISF 5,867 4,000 5,000 1,000
Equipment Services Fund ISF 95,742 45,000 87,000 42,000
Information Services Fund ISF 11,234 6,000 10,000 4,000
OPEB Retiree Medical ISF 1,984 - 2,000 2,000
General Liability ISF 46,086 20,000 42,000 22,000
Other Local Grants/Donations - - 4,000 4,000
Public TV Access Fund 5,921 - 5,000 5,000
Development Fees 13,772 - 12,600 12,600
Storm Drainage Fund 172,361 79,000 157,000 78,000
Debt Service Fund 17,985 8,000 8,000 -
Total 2,056,217$ 944,000$ 1,808,400$ 864,400$
2016-17
2016-17 Mid-Year Report March 15, 2017
16
provider that provides electricity at competitive rates and with higher renewable energy content
than that provided by PG&E. Burlingame joined PCE in February 2016 along with San Mateo
County and all of its 20 cities; nine of these cities have “opted up” to PCE’s ECO100 program.
The City is currently enrolled in PCE’s ECOplus program – which provides power with 50 percent
renewable energy content. ECO100 is the opt-up option with 100 percent renewable energy
content. Both programs support clean, renewable energy and significantly reduce greenhouse
gas emissions and the City’s carbon footprint. ECOplus costs about 5 percent less than what
PG&E charges for electricity, while ECO100 costs about 5 percent more. Burlingame has over a
hundred electricity accounts consisting of buildings, parking lots, pumps, and traffic and street
lights. In calendar year 2015, Burlingame used 3,013,474 kwh of energy, at a cost of about
$625,138 under PG&E’s rates. Assuming the same level of electricity use, Burlingame will save
about $31,256 annually in electricity costs with ECOplus compared to PG&E. If the City were to
opt-up to ECO100™, it would cost approximately $31,256 per year above what the City would
pay with PG&E.
Staff estimates that if the City enrolled all of its accounts in ECO100, the City would reduce about
2,118 metric tons of carbon emissions, equivalent to removing 447 cars from the road
(https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator). The ECO100 program is
an especially attractive option for Burlingame as a way to purchase and use 100 percent
renewable energy without installing on-site solar energy systems. A 2015 energy audit found that
on-site solar would not be cost-effective for any City buildings.
Another option available to the City is to partially opt-up to ECO100 to lessen the costs. For
example, opting up to ECO100 for the City’s main building facilities, (City Hall, Rec Center, Corp
Yard, Police Station, Main Library, Easton Library, and Golf Center) will cost about $13,000 more
per year than PG&E’s rates.
Since the City is currently saving 5 percent on its electricity bills, opting up to ECO100 would cost
the City approximately $44,256 for the partial opt-up and $62,512 for the complete opt-up each
year, assuming electricity use and rates remain stable. The cost of the City’s electric power is
borne largely (75 percent) by the General Fund; approximately 23 percent is charged to the
Water and Sewer utilities, and the remaining 2 percent is paid by the Parking Enterprise Fund.
Staff intends to seek Council direction to start with ECO100 on July 1 as part of the fiscal year
2017-18 budget process.
Capital Projects Fund – Several adjustments were identified for the City’s Capital Projects Fund,
including additional appropriations for two new capital projects, and an increase in funding for a
third. Where appropriate, unused funds will be returned to the source fund. Within the Storm
Drain and Enterprise Funds, budgetary savings will be directed to similar projects, reducing the
need for new funding in the subsequent fiscal year.
The City’s Broadway Grade Separation Project will provide vital safety improvements by
separating the tracks at Broadway, thereby eliminating conflicts between trains and motor
vehicles, bicyclist and pedestrians; improve traffic circulation; and decrease emergency response
times. As such, the project ranks as the second top priority for grade separation projects in the
2016-17 Mid-Year Report March 15, 2017
17
entire state and first among Northern California grade separation projects on the California Public
Utilities Commission (CPUC) list. However, the $250+ million project cannot begin without the
appropriate studies and funding. A $500,000 appropriation for the Broadway Grade Separation
Project is needed so that the City can provide the local funding match required prior to initiating
the project’s Environmental Studies and Preliminary Engineering phases. The City has requested
$10.85 million in funding from the San Mateo County Transportation Authority (SMCTA ) to
undertake these studies, as well as the Final Engineering Design phase. (On March 2, the
SMCTA awarded the first $3.85 million for this project.) The City’s local match is estimated at
$1.2 million for the three phases of the project. The completion of these phases will allow the
project to begin the right-of-way acquisition and obtain appropriate agency approvals, thereby
rendering the project “shovel ready” to compete for regional, federal and state funding. The
remaining $700,000 local match will be requested through the annual CIP budgeting process in
the future.
An agreement was recently established between the City and the Peninsula Corridor Joint
Powers Board (JPB) to ensure cooperation between the JPB and the City in connection with the
design and construction of the Caltrain Electrification Project. The project consists of
converting Caltrain from diesel-hauled to electrical-powered trains for service between San
Francisco and San Jose. Although the JPB will be designing and constructing the project, an
initial deposit of $34,000 was established to reimburse the City for costs incurred by the City for
permit fees, design review, and inspection costs pertaining to construction within the jurisdiction.
The budget should be amended to provide for this revenue and the offsetting expenditures for the
project.
The Paloma Park play structure was recently ruined by a fire set by unknown persons. The fire
damage necessitated the removal of half of the play structure and caused damage to the
resistant surfacing. Since the playground is nearly 20 years old and was scheduled for
renovation in the next couple of years, the project should be moved up for completion as soon as
possible. Insurance will cover some of the cost to renovate the park. Additional work on the park
may be required in order to bring it up to current regulatory standards. As with all park
renovations, community input will be sought. An appropriation of $40,000 is recommended to
fund the design services needed to start the renovation process. Additional funds will be
requested as part of the Capital Improvement Plan for the 2017-18 fiscal year budget
development.
In November, the Council approved an additional appropriation of over $30,200 for the Village
Park Renovation project. Approved for the 2015-16 fiscal year, the project ran into delays as a
result of having to be re-bid, as well as construction costs estimates that exceeded the initial
$350,000 project budget. Unfortunately, heavy rains in the area began shortly after the project
broke ground. The project was flooded during several storms by the creek adjacent to the
playground, and several change orders were required. As with the additional funding request in
November, there are funds available in the Ray Park Playground project, since that project has
not yet started. Therefore, the proposed increase ($9,800) to the Village Park project can again
be offset with a decrease in the appropriation for the Ray Park Playground project.
2016-17 Mid-Year Report March 15, 2017
18
Measure A Fund – This fund accounts for the City’s share of the special half-cent sales tax to
fund transportation-related projects and programs. Based on improved sales tax revenues
county-wide, the FY 2015-16 budget was set at a fairly aggressive level of $800,000. However,
actual revenues for the year were well below target. Current year revenues are coming in only
slightly higher than last year, so the $824,000 budget may not be achieved. However, no budget
adjustment is recommended at this time. $1.1 million of Measure A Funds is appropriated for
transportation-related capital programs in the current fiscal year.
Gas Tax (HUTA) – This fund is used to account for the revenue received from the State of
California derived from gasoline taxes. These funds may only be used for street purposes as
specified in the State Streets and Highways Code. The projection of Highway Users Tax (HUTA)
revenues is extremely complex, with differing allocations derived from various sections of the
Code, and differences in the allocation of gasoline tax revenues from diesel and fuel use tax
revenues. Calculations are further complicated by the State’s gasoline sales tax/excise tax swap
introduced in 2010, and formulas to ensure that cities and counties are “made whole” from
impacts of the swap. However, the latest projections indicate that Burlingame will receive
approximately $592,000 in HUTA revenues in the current fiscal year, a $27,000 decrease from
the adopted budget.
Note that the fiscal year 2014-15 city and county HUTA allocations included a one-time HUTA
loan repayment in addition to the normal allocations. This repayment, falling gas prices and
consumption, and a “true up” of prior year over-allocations under the fuel tax swap system has
resulted in a significant decline in revenue from this tax source. A loss of transportation funding
will stress other governmental funding sources if Gas Tax revenues decline, including the use of
General Fund monies. Governor Brown called a special Legislative session in fall 2015 to deal
with critical transportation funding needs. Despite proposals from the Governor, legislative
leaders, and interest groups including the Fix-Our-Roads coalition (which includes the League of
California Cities and CSAC), no agreement has been reached. The Governor provided a revised
proposal in his January 2017 Budget proposal which would, when fully phased in, provide an
estimated $4.2 billion annual increase for state and local transportation programs plus one-time
loan repayments totaling $706 million.
Water & Sewer Funds
In recent years the Bay Area has been heavily impacted by a severe drought. Declining water
levels at the Hetch Hetchy Reservoir and a lack of rain and snowfall prompted aggressive
campaigns promoting water conservation at both the local and state levels. In January of 2014,
Governor Brown issued an Executive Order mandating water use restrictions, and by this time
last year, the City's residents and business owners had reduced consumption by 30 percent to
Description
2013-14
Actuals
2014-15
Actuals
2015-16
Actuals
Adopted
Budget
Midyear
Projection
Midyear
Amendment
Measure A 717,714$ 789,049$ 767,021$ 824,000$ 824,000$ -$
Gas Tax (HUTA)907,322 859,096 667,918 619,000 592,000 (27,000)
Total 1,625,036$ 1,648,145$ 1,434,940$ 1,443,000$ 1,416,000$ (27,000)$
FY2016-17
2016-17 Mid-Year Report March 15, 2017
19
date as compared to calendar year 2013 (surpassing the State's mandate for Burlingame of a 16
percent reduction in consumption.) Consumption patterns reached progressively lower levels in
the past two years due to the concerted and deliberate efforts to conserve water. (Note that the
City’s water billings are issued on a bi-monthly cycle, creating the up-and-down pattern from
month to month.)
As a result of reduced water consumption due to drought conditions, and the increased capital
and operating costs of the water system - including the cost of wholesale water purchased from
the San Francisco Public Utilities Commission (SFPUC) - the City found it necessary to raise
water rates to offset lost revenue. The proposed rate increases are equivalent to 9 percent in
2017, 7.5 percent in 2018, and 7.5 percent in 2019.
However, recent winter rains have brought an end to drought conditions in Northern California.
As indicated in the graph above, water consumption in the first four months of the fiscal year was
above prior year actual amounts, but dropped to new lows when the rains began. For the
remainder of the fiscal year, consumption is projected to match prior year experience. As such,
revenues of the fund are anticipated to be on target with the 2016-17 fiscal year budget, and no
adjustment to these revenues is anticipated at this time. The City will continue to closely monitor
consumption patterns in the coming months. Further information and updates will be provided to
the Council as the 2017-18 fiscal year budget for the Water Fund is developed.
Note that a direct reimbursement to the Water and Sewer Funds for utility services provided to
City facilities and parks based on consumption is assumed in the FY 2016-17 budget. These
costs are now reflected as departmental costs, rather than included in the various transfers
between funds.
6,000
9,000
12,000
15,000
18,000
July August September October November December January February March April May June100 gallonsHistorical Water Billings By Fiscal Year
Last Three Years
2014-15
Actual
2015-16
Actual
2016-17
Actual
2016-17
Projected
2016-17 Mid-Year Report March 15, 2017
20
Solid Waste and Landfill Funds – Although significant increases in Solid Waste rates were
necessary in 2011 and 2012 to pay off a deficit position from the 2001-2010 contract for solid
waste services, revenues in subsequent years have been adequate to generate surpluses within
the Solid Waste Fund account. The higher rates ended the need for General Fund transfers to
support activities of the Solid Waste Fund; revenues became sufficient to pay the costs of all solid
waste contracts and City-provided services, and they provided surplus funding of a Solid Waste
Rate Stabilization Reserve. Despite increasing costs over the years, rate increases have not
been required. For calendar year 2017, estimated revenues from collections for Burlingame
($10.6 million) are not quite adequate to cover the costs of the City’s collection contractor
(Recology) of $5.5 million; disposal & processing fees of $3.3 million; franchise fees of $720,000;
funding of the City’s landfill post-closure costs ($450,000); and $645,000 for costs borne by the
City, including street sweeping, and steam cleaning and maintenance of public receptacles. A
slight reduction in the utility’s rate stabilization reserve is anticipated. The recommended budget
adjustments reflect a $70,000 increase in the City’s costs borne directly by the fund, as well as a
$28,600 reduction in the transfer to the General Fund for the fund’s management. In addition, the
amount received from the State (and allocated to Rethink Waste member agencies) to offset the
cost of activities related to recycling containers is $31,200. This amount has been fairly
consistent and will be included in the Solid Waste Fund budget for the 2017-18 fiscal year.
Lastly, the amount collected for rate stabilization should be decreased ($61,000); the anticipated
operating deficit dictates that the amount included in the 2017 calendar year rates for this reserve
will be spent on services rather than put aside for future rate increases.
Current reserve levels (nearly $4.2 million at June 30, 2016) will allow the City to modulate future
rate increases, and insure that it is in good fiscal position when the current franchise agreement
with Recology terminates at the end of 2020. As noted, rates include a five percent surcharge for
landfill post-closure costs. The surcharge provides revenues to the Landfill fund to cover
maintenance and monitoring functions at the landfill site, and will serve to reduce the $2.2 million
fund deficit that results from the liability recorded for future post -closure costs. No budget
amendment is required for the Landfill fund for the current fiscal year, and very little change is
anticipated in the budget for these activities in fiscal year 2017-18.
Building Enterprise Fund – Revenues in the Building Enterprise Fund (largely construction
permits and building plan check fees) for the last fiscal year were significantly higher than in the
previous fiscal year, marking an increase in the volume and value of permits pulled, and providing
revenues slightly higher than projected in the 2015-16 fiscal year budget.
Because these revenues are difficult to project, and can swing significantly depending on the
timing of large development projects, no mid-year adjustments are typically recommended.
CITY OF BURLINGAME, CA
BUILDING FUND REVENUES
Description
FY2014-15
Actuals
FY2015-16
Actuals
FY16-17
Adopted
Budget
FY16-17
Midyear
Projection
FY16-17
Midyear
Amendment
Year-End
Up (Down) %
Construction Permit Fee $ 1,001,899 $ 1,291,505 $ 1,180,000 $ 1,180,000 $0 0.0%
Building Plan Check Fees 795,968 906,080 1,010,000 1,529,000 519,000 51.4%
Microfilm/Other Fees 37,698 58,240 40,000 40,000 0 0.0%
Total $1,835,565 $2,255,824 $2,230,000 $2,749,000 $519,000 23.3%
2016-17 Mid-Year Report March 15, 2017
21
However, in the current fiscal year the Building Division has received building permit applications
for both the Burlingame Point and Summerhill Development projects that will necessitate
engaging the services of the vendor Bureau Veritas to a greater degree than anticipated
($419,000) in the adopted budget. In addition, the volume of large projects, as well as in increase
in plan check activity, will result in a greater expenditure (an estimated $100,000) than was
anticipated in the City’s plan check services contract. These increased costs should be reflected
in the amended budget, as well as the offsetting revenues anticipated from these activities.
Parking Enterprise Fund – The Parking Enterprise Fund provides for the maintenance and
upkeep of the City’s parking lots and metering equipment, including maintenance and utility
service for the new electric vehicle charging stations in Parking Lot V. Excess revenues that
accumulate in the fund are intended to provide funding for future parking facilities and associated
revenue mechanisms.
A budget for the revenues that result from the electric vehicle charging stations was not included
in the adopted budget for the current fiscal year. Staff is recommending that these fee revenues
(approximately $12,000) be budgeted going forward, as the program will likely increase in size.
In addition, revenues from monthly parking permits exceeded budget last year due to an increase
in the streets included in the City’s residential street parking permit program. Receipts through
the first half of the year are keeping pace with fiscal year 2015-16 collections, so this budget can
be increased by $34,000. The fund’s expenditure budget appears to be adequate for the current
fiscal year.
Internal Service Funds – Internal service funds are used to account for internal costs that are
borne by all departments/programs of the City. Allocation of these centrally incurred costs is
performed based on estimated usage or other metrics. Changes to the budget of an intern al
service fund do not necessarily require an offsetting change in the fund’s revenues (charges to
the participating departments), as each fund has a separate fund balance that can vary due to
need. However, these funds are carefully monitored to ensure that departments are appropriately
and adequately charged.
Workers’ Compensation (WC) Fund – After incurring a significant drop in net position in the WC
Fund in fiscal year 2013-14, charges to the various departments (revenues to the fund) were
adjusted to more adequately provide for workers’ comp claims and activities. In addition, the City
transitioned to a new third party administrator effective January 1, 2015 in an effort to more
effectively settle claims, reduce litigation, and aggressively manage medical costs. These
changes greatly stabilized the fund’s fiscal position, with a reduction in liabilities of $557,000 (9.2
percent) in the past two fiscal years. Note that expenses to the fund, including a provision for
CITY OF BURLINGAME, CA
PARKING FUND REVENUES
Description
FY2014-15
Actual
FY2015-16
Actual
FY16-17
Adopted
Budget
FY16-17
Midyear
Projection
FY16-17
Midyear
Amendment
Year-End
Up (Down) %
Parking Fees $ 2,234,493 $ 2,281,495 $ 2,335,000 $ 2,335,000 $0 0.0%
Electric Vehicle Charging Station Fees 4,537 11,618 0 12,000 12,000 100.0%
Monthly Parking Permits 333,840 356,142 322,000 356,000 34,000 10.6%
Total $2,572,870 $2,649,255 $2,657,000 $2,703,000 $46,000 1.7%
2016-17 Mid-Year Report March 15, 2017
22
“incurred but not reported” claims, are based on an actuarial report of outstanding liabilities of the
program, and are subject to some uncertainty. The City’s reserves for the fund are currently
funded at the 70 percent confidence level.
General Liability Fund – Similar to the Workers’ Compensation Fund, the charges to the various
departments that fund this risk management internal service fund have been adjusted in recent
years to more adequately reflect claims and activities in the area of general liability. T he fund is
administered by the City Attorney’s Office, which recently reported a higher level of activity in the
number of claims being litigated. The budget for the fund (both revenue and expenditures) was
increased (approximately 4.5 percent) based on prior year results, but staff will not know the fiscal
implications of current activities until after the fiscal year’s actuarial studies are complete. While
no changes are recommended at this time, staff will monitor the fund carefully and increase
charges to departments if indicated in the development of the 2017-18 fiscal year budget.
Administration/Information Services Internal Service Fund – The budget for this fund
includes not only information services, but also the costs of maintenance for centralized printing
and mailing equipment. Several small budget enhancements are requested for the current fiscal
year to provide funding for contractual services that were either unanticipated ($15,000 for Wi-Fi
services survey, hardware, installation and licensing) or under budgeted ($15,000 for extension of
ShoreTel and financial system licensing.) In addition, responses to a Request for Proposals
(RFP) for consultant services in the procurement of a records management system had not yet
been analyzed when the fiscal year budget was adopted, and the contract will require $5,000
more than the $30,000 initially estimated.
Not unlike other cities and governmental agencies, Burlingame utilizes tools such as mobile
devices and remote access to improve its organizational efficiency and the cost effectiveness of
the services it delivers. However, this also increases its security risks, and the City cannot afford
to ignore that additional efforts are needed to protect its information from cyberattacks. IT staff
are currently reviewing the results of a recent audit of internal system controls performed by the
City’s external auditors, and will be developing a strategy to prevent data breaches, detect when
a data breach occurs, and determine the extent of such breaches. An incident response plan will
then be put in place that identifies the actions the City will take in the event of a breach. Such a
strategy involves leveraging cost-effective tools and technology, educating the staff on how to
behave in a prudent manner regarding information security, and conducting regular reviews and
security audits by an independent party to assess the effectiveness of the measures being taken.
These activities will better position the City to recognize cyber-attacks/attempts and allow for
better protection of the City’s data as these types of attacks become more frequent and
sophisticated. An increased appropriation for the Administration/Information Services Internal
Service Fund is anticipated for the additional cost of cyber-security technology in the upcoming
2017-18 fiscal year budget process.
Equipment Services Fund – This fund is used to account for the costs of operation,
maintenance, and replacement of automotive equipment used by the various departments. The
fund has been credited in the current fiscal year with revenues for the auction and sale of old
vehicles in the amount of $6,000.
2016-17 Mid-Year Report March 15, 2017
23
In addition, the mid-year budget resolution calls for the elimination of a $102,512 transfer from the
General Fund. The last payment of an interfund loan (for implementation of a computer aided
dispatch records management system for Police dispatch in 2012) did not require a budget
appropriation, so this budget adjustment corrects the error.
Unfunded Needs
In November 2013, staff presented the City Council with a list of unfunded needs as well as broad
cost estimates for the various projects. After extensive public outreach, staff asked the City
Council to prioritize the projects so that funding plans could be developed. The City Council
ranked a new downtown parking garage as the highest priority, followed by the Community
Center, and City Hall.
Since that time, City staff has explored various options/partnerships with private developers to
build one or more parking garages at little or no cost to the City. Options to partner with
developers on construction of a new City Hall were also considered. Separately, the City has
worked with its financial consultant to help determine how to fund the projects (such as the
Community Center) that may require some type of voter approval of a funding mechanism. At
this time, no decisions have been made about any of the potential public-private partnerships or
tax mechanisms.
As funding options are explored, other capital needs have been identified that will compete for
General Fund resources and challenge the organization’s capacity to successfully undertake
future projects. For example, the Broadway grade separation project was discussed in the capital
project section earlier in this report. The preliminary project cost is estimated to exceed $250
million. In the coming years, staff will explore opportunities to obtain external funding to advance
the project beyond the design and environmental phases. As the project moves towards the
construction phase, the City will be required to provide a local match, estimated to be in the range
of $15–$20 million, towards the construction costs.
Also, a large number of City buildings, in addition to the facilities previously identified, have
served their original intended design life and are in need of major improvements. Though the City
regularly invests in building maintenance, major building components are overdue for
replacement. To the extent possible, necessary improvements are included in the five-year CIP
program, but this approach has not proved to be sufficient in averting further unfunded needs. In
early December, staff presented a Building Facilities Condition Assessment Study and Capital
Improvement Master Plan which identify maintenance needs and capital improvements
necessary to extend the lifespan of the City’s existing facilities. The study concluded that the City
should consider replacing older buildings before maintenance costs increase significantly. It also
concluded that, while staff is able to manage its current work load, additional resources are
needed to properly maintain the buildings and manage new capital projects.
Although funds are being set aside in the City’s Renewal and Replacement Reserve, the amount
of funding seems to diminish when compared with the growing set of unfunded needs. In
addition, the reserve is being funded by annual surpluses and one-time revenues, and as such
will be the first General Fund resources that will be reduced or eliminated when the economy
2016-17 Mid-Year Report March 15, 2017
24
inevitably retracts. Staff is drafting a Renewal and Replacement Reserve Policy for City Council
discussion and direction during the fiscal year 2017-18 Budget process. However, these
unfunded needs should be kept in mind when reviewing the current General Fund Five-Year
Forecast.
General Fund Five-Year Financial Forecast
The five-year forecast attached to this report as Attachment C was developed using the FY
2016-17 budget, adjusted for the recommended adjustments in this report, as a starting point for
estimating revenues and expenses of future operating budgets.
To evaluate the ongoing impact of each of the updated General Fund projections described in the
City’s five-year forecast, it is important to consider which adjustments reflect one-time events, and
which represent a fundamental change in the City’s revenue or expenditure structure. One-time
revenues cannot be relied upon to augment ongoing services, just as non-reoccurring costs will
not drain the General Fund on a continuing basis. Therefore, no sale of property or other General
Fund assets are assumed in the five-year forecast.
The five-year forecast was prepared with careful consideration to each revenue and expenditure
category. These analyses roll up to the summary forecast shown in Attachment C. General
Fund revenues are monitored closely, and projections are based upon a rolling forecast model
that combines actual results with smoothed, multi-year historical data. When appropriate,
compound annual growth rates (CAGR) are utilized to smooth cumulative year-over-year growth,
as though growth has occurred steadily over the specified period of time. Adjustments are also
made for known and/or assumed financial factors such as economic and legislative changes at
the national, state, and local level. Forecast assumptions may also utilize information from third
party experts, published industry indices, and/or data collected from City departments. This
procedure for analysis allows a different CAGR or growth assumption to be applied for every
account within a revenue or expenditure category. For example, if solid waste franchise fees are
anticipated to grow faster than electric franchise fees, these different growth rates can be part of
the assumptions. However, the casual reader will not be able to determine these forecast
assumptions by simply calculating a growth ratio.
The rest of this report attempts to articulate major deviations from a flat growth assumption within
any category; the assumptions are summarized in the tables below:
Forecasted Revenue Assumptions
Revenue Description Growth Factor Explanatory Comments
Property Tax
6% - 7.5%
The actual assessment roll growth, per the
County Assessor, is based on the January 1
lien date and continuing trend of low
property turnover. The housing market may
cool in the next few years due to rising
interest rates, but some Bay Area insulation is
expected due to high demand. In FY 2019-20,
the Burlingame Point properties project will
2016-17 Mid-Year Report March 15, 2017
25
Revenue Description Growth Factor Explanatory Comments
ERAF Rebate
be included in the City’s assessed valuation
data.
Varies –
expected to decline
Adjustments made for Educational Revenue
Augmentation Fund (ERAF) rebate,
decreasing over the next five years due to
growing demands on ERAF funds. The City will
continue to treat largely as one-time revenue.
Sales Tax 2.2% - 2.7%
Based upon recent Q3 2016 sales tax data
and the HdL Companies long-term forecast.
Indications of a shift of consumer spending on
services (rather than taxable goods) and
statewide concerns regarding diminishing
sales tax base could limit growth.
Transient Occupancy Tax -2.6% - 2.5%
Based upon assumption that average daily
room rates will be constrained by price
elasticity. Includes an assumption for some
diversion of revenue as a result of new SFO
hotel in fiscal year 2019-20.
Other Taxes - Franchise Tax 1.0% - 3.0% Based upon expected gross revenue changes
for PG&E, garbage, and cable TV.
Other Taxes - Business Licenses 1.0% - 3%
Based upon expected growth in long-term
parking as a result of record highs in
passenger traffic at SFO. Minimal growth is
expected in general business license revenue
because it is based upon volume of
businesses rather than gross receipts.
Other Taxes - State HOPTR Flat Limited to growth in the number of
homeowner occupied parcels.
Other Taxes - Transfer Tax 2.5%
Based upon historical patterns and
consistently low inventories of properties for
sale.
Licenses & Permits
Fines, Forfeitures & Penalties
Less than 1%
Based primarily on no/slight annual
adjustments to fees, and a very small increase
in volume.
Not included here is an assumption for added
parking lots or garages over the next five
years due to unknown implementation date.
Charges for Services 2% - 2.5%
Growth based primarily on consumer price
index adjustments to fees. Not included here
is an assumption for increased programming
at new Community Center due to unknown
implementation date.
Use of Money & Property 2.5%
The assumption is based upon current long-
term lease information, which permits
adjustments based upon consumer price
indices, as well as a scheduled increase to the
monthly rent for various leases. No
2016-17 Mid-Year Report March 15, 2017
26
Revenue Description Growth Factor Explanatory Comments
assumptions have been made for the Golf
Center lease.
Other Revenue No growth No growth projected due to one-time
revenue.
State Subventions Flat
The forecast assumes that mandated cost
recoveries from past years will continue to
decrease as the State makes progress in
paying these liabilities.
Interest Income 50% - 2017-18
10% thereafter
Based upon expected cash balances and
increases in Federal Funds rate per Federal
Reserve policy analysis (December 2015).
Forecasted Expenditure Assumptions
Expenditure Description Explanatory Comments
Salaries & Wages
Includes effect of current collective bargaining
agreements, including recently approved
agreements with labor groups and increased
wages for part-time employees effective January
1. Assumes an annual growth in salaries of 2-3%
for out years, as well as normal merit step
increases.
Benefits
Includes an annual growth rate of 5% - 6.5% for
January 1 changes in health care rates, per the
most recent OPEB study. Also includes expected
PERS contribution rate increases (14.4% average
annually for Safety and 11.4% for Misc.
employees) coupled with forecast increases in
salaries & wages.
Also included are employee contributions to
health care and PERS in accordance with current
MOUs.
Operating Costs
Based upon cost of living adjustments for most
non-personnel costs and expected changes in
utility rates. A 3% compounded annual growth
rate is assumed for most operating costs. A 6%
escalation factor for service from Central County
Fire is also assumed.
Operating Costs (cont.)
Operating costs include a payroll surcharge
assessed on full-time employees to fund
previously incurred costs associated with retiree
medical benefits for former employees
(implemented in fiscal year 2014-15).
Internal Services Based upon a 3% blended escalation factor.
2016-17 Mid-Year Report March 15, 2017
27
Expenditure Description Explanatory Comments
Capital Outlay Includes a base of $230K based upon historical
use and 3% growth rate.
Transfers In (Out)
Assumes reimbursements for debt service,
increasing General Fund investments in Capital
Projects (with a floor of 2 of the 12% TOT tax
revenue), and support of City shuttle programs.
Debt Service
Actual debt service for all current outstanding
bond issues. Assumes no refinancing of current
debt and no new general obligation debt
issuances.
In the five-year forecast, property tax revenues are assumed to grow at a rate higher than
inflation, but not as quickly as in recent years. Although growth in Burlingame’s assessed value
in fiscal year 2015-16 was 6.8 percent, and current year property tax revenue was based on a roll
7.85 percent higher, growth in the roll so far for fiscal year 2017-18 indicates that an increase of
approximately 5 percent in property taxes can be anticipated. This rate includes an inflationary
factor of slightly over 1 percent as reported by the State Board of Equalization for December
2016. The inflationary factor is capped at 2 percent annual growth. The rest of the growth is from
re-assessments, usually the result of properties changing ownership. If the economy continues to
strengthen, assessed values should also increase steadily, and the inflationary factor will most
likely be back to 2 percent in future years. As a result, the assumed growth factor is 6.0 percent
for secured property taxes in most fiscal years 2018-19 through 2021-22. Although a bump-up
(to 7.5 percent) of these projected revenues is allowed in 2019-20 for the anticipated completion
of the Burlingame Point development, the potential revenue impact of other future (specific)
development, is NOT included in the long-term forecast.
Property tax revenues as a whole exhibit a much slower rate of growth than secured property
taxes in the five-year forecast due to the possible diminishment of excess ERAF refunds. Long a
part of the City’s property tax revenue stream, the refunding of amounts remaining in the County’s
Educational Revenue Augmentation Fund (ERAF) to the subsidizing local governments is
projected to diminish considerably, perhaps even coming to an end if the State’s uses of ERAF
are intensified.
The City’s Transient Occupancy Tax (TOT) revenue has grown in recent years to be the City’s
largest General Fund revenue source. A surge in both occupancy and hotel room rates has
resulted in a 22.7 percent increase in the City’s TOT revenues in the past three years. The rate
was last increased six years ago from 10 to 12 percent (effective January 1, 2010), and that rate
is assumed to remain unchanged in future years.
Yet the revenues generated from TOT are very volatile. As noted in the risk-based analysis of
the City’s General Fund reserve needs, receipts are directly tied to changes in average daily
room rates (ADR) of the City’s 3,742 hotel rooms. As occupancy rates are already very high, and
room rates show some signs of leveling off, it is unreasonable to assume these revenues will
continue to grow as they have in the past few years. A growth rate of 2.5 percent is applied to the
City’s base TOT revenue for most years of the forecast. A downward adjustment is included in
2016-17 Mid-Year Report March 15, 2017
28
fiscal year 2019-20 to reflect the completion of a 400-room hotel at SFO. Although the timing and
impact of the new hotel on area ADRs and occupancy rates is far from certain, staff has prudently
calculated that there will be a negative impact on TOT revenues.
The City’s sales tax base has continued to grow with the economic recovery of past years, and
the forecast for the upcoming fiscal year and the four years beyond calls for a growth rate of
approximately 2.5 percent. Due to consumer trends that indicate a decrease in the purchase of
goods and materials in favor of non-taxable transactions (i.e., services), this more conservative
growth rate is appropriate.
Income from the City’s investments has increased very modestly with the growing economy.
Though yields on the short-term, risk averse investments (typical for inclusion in municipal
portfolios) have languished with historically low rates for so many years, increases in interest
rates are anticipated in the next couple of years. Any increase to the very low yield rates will
result in significant growth factors. For example, if a 1 percent investment yield grows moderately
to 1.5 percent in the fifth year of the forecast, this represents a 50 percent growth over the period.
Note that this revenue source has been greatly diminished in recent years and is no longer a
significant contribution to General Fund revenues. However, as interest rates rise, staff will
continue to optimize the portfolio’s performance.
The limited revenues received in the categories of Licenses and Fines are assumed to grow only
modestly for purposes of the five-year forecast. Charges for Services are forecast to grow at a
rate of 2.5 percent annually. Although Increases in fees were anticipated due to the completion
of the City’s Cost Allocation and User Fee studies in fiscal year 2015-16, the study did not result
in measurable additional revenue. For the most popular services, the City either found their fees
to be adequate to cover costs, or determined that the general public benefitted from the provision
of these services. It is appropriate that fees for services that provide a public benefit are
subsidized by general revenues (i.e., taxes). Fees will be additionally discussed in detail with the
presentation of the Master Fee Schedule in April.
With revenues forecasted to grow an average of 4.7 percent in the next five years, the
examination of General Fund expenditures becomes critical in the evaluation of the City’s long -
term fiscal health. In particular, assumptions regarding future personnel costs (which constitute
over half of the General Fund budget) must be carefully considered. Whereas City revenues can
vary widely with the economy, decisions made about employee costs have less of an immediate
impact on operating budgets, but carry long-term implications that could stifle the ability to provide
an appropriate level of services in the future. The trend of most concern in governmental
expenditures has been anticipated for many years, and is reflected in large unfunded pension
obligations.
Last month, the California Public Employees' Retirement System (CalPERS) voted to reduce its
investment return assumption to 7 percent from 7.5 percent over the course of three years. The
action replaces a previous plan that would have triggered incremental declines in the return
assumption in boom years when actual performance exceeded expectations. Many state
retirement systems have made plans to gradually drop their long -held discount rates in response
to lower-than-projected yields on their investments since the recession. Fitch called the new
2016-17 Mid-Year Report March 15, 2017
29
trend “an exceptionally slow recognition by pension decision-makers that high targeted returns
are unlikely to materialize in the current investment environment.” The rating company also
predicted that many other systems are likely to "follow suit as pension managers confront
persistent challenges to achieving investment targets."
These decisions are coming after pension plans have missed their return assumptions by wide
margins for two years straight. The shortfalls largely wiped out the funding progress pensions
made in 2013 and 2014. A higher expected rate of return increases the likelihood that assets set
aside to fund retirement obligations will be insufficient to meet the demand of retiring workers. But
pension plans have previously resisted large shifts downward in investment assumptions
because it means higher payments from contributing governments to make up the difference. For
example, California’s contribution to CalPERS in fiscal 2018 will increase by $172 million -- $105
million of which is from the general fund as a result of the lower assumed rate.
The City has always reflected a conservative CalPERS rate in its five-year forecast. However the
impact of the discount rate change is severe. The rates shown below reflect rates provided by
CalPERS (through FY 2017-18); subsequent year rates are based on an actuarial study recently
completed by Bartel Associates (the City’s external actuary), commissioned specifically to
determine the impact of the change in CalPERS’ discount rate. Note that the most immediate
impact of the discount rate assumed by CalPERS can be seen in the large increase in the UAL
(unfunded accrued liability) of prior years.
Since personnel costs are such a large portion of the General Fund budget, changes in employer
contribution rates will have a significant impact on the fund’s five-year projection.
Salaries and wages have been broadly projected at levels that assume all existing labor
agreements are adhered to until expiration. The City’s most recent labor contracts, while
reflecting concern over increasing employee benefit costs, also acknowledge the improved
economy and the higher cost of living in the Bay Area. The contracts provide a balance in the
four major cost areas of employee compensation: salary, health premium contributions, pension
obligations, and retiree medical, though the cost to the City continues to grow in all these areas.
The long-term forecast reflects growth in salaries and wages at a level of 3 percent once these
contracts expire.
Another part of the personnel cost budgets is the pre-funding of retiree medical benefits (OPEB).
Funded on a pay-as-you-go basis until the 2014-15 fiscal year, the cost of these benefits, largely
Fiscal
Year
Normal
Cost
UAL
Payment Total %
Normal
Cost UAL Payment Total %
2016-17 10.60%+1,714,000 22.90%19.70%+958,000 40.60%
2017-18 10.70%+2,004,000 24.60%20.90%+1,179,000 45.20%
2018-19 11.10%+2,444,000 27.60%21.80%+1,496,000 51.80%
2019-20 11.50%+2,960,000 30.90%22.40%+1,866,000 58.70%
2020-21 12.40%+3,328,000 33.60%23.80%+2,148,000 64.40%
2021-22 12.20%+3,860,000 36.00%23.40%+2,529,000 69.80%
Estimated CalPERS Rate
Misc. Rate Safety Rate
2016-17 Mid-Year Report March 15, 2017
30
incurred in prior years, is now being pre-funded through an (external) irrevocable trust. These
costs represent a surcharge of approximately 30 percent on regular salaries and benefits. The
normal cost (cost of the benefit earned by active employees for the current fiscal year) is included
in all personnel cost projections, and should decrease over time because retiree medical benefits
offered to new employees (since 2012) are greatly reduced in this area. An actuarial valuation as
of June 30, 2015 confirms the amount of the surcharge needed to continue funding these benefits
for the next two fiscal years.
With respect to non-personnel expenditures, it should be noted that the General Fund transfer out
(expenditure) for the CIP has in past years been based on a set portion of the TOT revenues (2 of
the 12 percentage point TOT rate) – over $4.3 million for 2016-17. As such, capital spending has
been able to proceed at a rate higher than other General Fund expenditures. In the five-year
forecast, the same rate of growth in this transfer is assumed as the growth rate in the City’s TOT
revenues. The regular transfer amount was intended to reflect the annual cost of maintaining the
City’s current infrastructure in its current condition, and has been considered an essential part of
a sustainable budget. However, due to the identification of the City’s many unmet capital project
needs, particularly in regards to City facilities, staff has recommended that the transfer amount
based on TOT revenue be considered a minimum annual transfer amount. As in the 2016-17
fiscal year budget, staff will recommend the transfer for the upcoming fiscal year General Fund
budget be increased based on the City’s capital needs for the upcoming fiscal year, to the extent
there is staff capacity in the organization to accomplish the identified projects. While annual
funding of $3 million for the Renewal and Replacement Reserve in the Capital Projects Fund is
also assumed in the five-year forecast, no assumptions have been made regarding the use of the
Renewal and Replacement Reserve for capital spending, as these will be subject to the City
Council’s priorities.
Although the broad assumptions that underlie the five-year forecast are considered to be
conservatively realistic, any number of risk factors could result in a less positive forecast,
including ineffective monetary policy by the Federal government, a major retrenchment of
consumer spending, increased unemployment, escalating inflation, or an emergency event.
Conversely, improved revenues from the implementation of business development strategies in
progress may provide the headwind - in the form of higher revenues - needed for smoother
budgetary times in the near future. No single strategy is assumed to succeed (and included in
the five-year forecast) until the result is imminent. For example, the forecast includes a slightly
higher-than-normal increase in property tax in the 2019-20 fiscal year in acknowledgement of the
Burlingame Point development, but no other assumptions (in revenues or expenditures) were
modified for the project. Staff has endeavored to provide the most realistic budgetary projections
possible using the most recent data available. Analysis of the General Fund and the City as a
whole will continue through the development of the fiscal year 2017-18 budget, and will include
revisions to this five-year forecast.
Longer term financial planning is not limited to the General Fund. The City’s other operating funds
are also examined for unfunded liabilities and future vulnerabilities, and adjustments are made as
needed. To the extent these funds are not self -sustaining, they can indicate a drag on the City’s
General Fund operations. To avoid such a condition, long-term plans are updated frequently, and
any changes in the outlook of these funds are brought to Council’s attention through the budget,
mid-year analysis, and other financial reporting processes currently in place.
2016-17 Mid-Year Report March 15, 2017
31
FISCAL IMPACT
Authorization of the attached budget amendment updates the previous allocation of City
resources for the 2016-17 fiscal year, reflecting changes in economic conditions and the City’s
current fiscal year-to-date performance. Also attached is a resolution approving the transfer of $4
million from the General Fund to the Capital Project Fund’s Renewal and Replacement Reserve.
The City Council may consider revisions to the mid-year adjustment in the attached resolution,
and/or additional amendments to the FY 2016-17 budget. The goal is to provide the most
accurate picture of the 2016-17 fiscal year’s standings in preparation for the FY 2017-18 budget
and to assist decision makers in planning for the City’s needs in the long-term.
Exhibits:
Mid-year Budget Amendments Resolution
Funding of the Renewal and Replacement Reserve Resolution
2016-17 Mid-Year Report March 15, 2017
32
City of Burlingame
FY 2016-17 Mid-year Report
Attachment A – General Fund Revenues
Property Taxes – The San Francisco Bay Area housing sector was a sustaining factor in the
local economy through the diff icult period following the “dot com” bust, and fared relatively well
through the declines in home prices f rom 2008 through 2010. In the past five years the market
has improved and stabilized. Assessed property values continue to rise, increasing 7.85 percent
in the past year, after rising 6.8 percent in each of the previous two years. The local housing
market is very strong, despite a persistent lack of inventory. And though credit conditions remain
relatively tight, recent years have seen a renewed interest in commercial real estate
development.
Property tax rolls are established prior to the beginning of the fiscal year. In FY 2016-17,
Burlingame’s roll value (land and improvements) has increased 4.80 percent, including an
inf lationary factor of 1.02 percent applied to all California property assessments. As shown in
the chart below, the preponderance of the City’s property tax revenues (over 70 percent)
comes from secured property taxes, which are established by the tax rolls and diminished only
through refunds on successful appeals to the County Assessor’s Office.
In FY 2015-16, actual property tax revenue receipts were within ½ percent of the budget (as
adjusted at mid-year), representing a 5.8 percent increase in property taxes over the prior year.
Revenues from secured property taxes were expected to rise approximately 6.6 percent in FY
2016-17, but since the final assessed roll for Burlingame reflects a 7.85 percent rise over the prior
year, an upward adjustment of $126,000 in the Secured Property Taxes budget is indicated.
Other components of property tax revenues were conservatively budgeted. For example,
Property Tax in Lieu of VLF is also allocated based on growth in the County’s secured property
tax roll, and is projected to come in $44,000 higher than initially budgeted for 2016-17.
In addition, the City continues to expect adjustments in the County’s ERAF (Educational Revenue
Augmentation Fund) distributions, as these may negatively impact the City’s excess ERAF
reimbursement in comparison to prior years. Excess ERAF reserves are held by the County and
distributed when all other obligations of the funds have been met. The ERAF reimbursement
received early in January consisted of 45 percent of the excess ERAF amount for each of the
current and prior fiscal years, plus the remaining ERAF reserve balances for fiscal year 2014.
Due to growing demands on the ERAF funds, these reimbursements have leveled off and are
expected to decline. The County continues to warn that, as funding for education grows and
other State commitments are satisfied through the ERAF funds, excess ERAF distributions could
decline significantly, and even be eliminated. For fiscal year 2016-17, the City’s excess ERAF
distribution was slightly ($30,000) higher than in the prior year. But these funds were very
Description
2014-15
Actuals
2015-16
Actuals
Adopted
Budget
Midyear
Projection
Midyear
Amendment
Current Secured Property Tax 11,214,778$ 11,946,937$ 12,717,000$ 12,843,000$ 126,000$
Secured Supplemental Property Taxes 346,666 455,228 500,000 500,000 -
Unsecured Property Tax 618,498 649,049 689,000 664,000 (25,000)
Property Tax in Lieu of VLF 2,668,277 2,849,279 3,019,000 3,063,000 44,000
ERAF Refund 1,564,072 1,461,327 800,000 1,490,000 690,000
Unitary Tax 265,091 283,469 301,000 291,000 (10,000)
Total 16,677,381$ 17,645,289$ 18,026,000$ 18,851,000$ 825,000$
2016-17
2016-17 Mid-Year Report March 15, 2017
33
conservatively budgeted, and a $690,000 mid-year increase is proposed to bring this line item up
to the actual amount received in 2016-17. The uncertain future of ERAF refunds makes this a
highly unreliable revenue source, a factor that has been taken into consideration in the City’s
long-term projections. Even though excess ERAF distributions have contributed significantly to
General Fund revenues for quite some time, these refunds should be considered as “one-time”
revenues, used to fund reserves or applied to one-time expenses.
Supplemental property taxes, collected for the balance of the current tax year on increased
assessed valuation when property changes ownership, is coming in only slightly ahead of
amounts for the same period last year. Although it appears that these revenues will come in
slightly short of budget, no adjustment is proposed for this line item revenue.
Unsecured property taxes (assessed on business fixtures, business personal property, boats,
aircraft, etc.) are only slightly higher than in the prior fiscal year. Because this line item revenue
fell short of budget in FY 2015-16, a $25,000 decrease in this budget is recommended. In
addition, Unitary Tax revenue was also a bit short of budget in the prior fiscal year. Although a
higher assessment of utility-owned properties is reflected in the County Assessor’s role, a slight
downward adjustment in the FY 2016-17 budget ($10,000) is proposed for this line item.
Sales and Use Taxes – The table below shows the City’s sales tax revenues over the past eight
years, as well as a projection for the current fiscal year. The recession was obviously marked by
a severe decline in consumer spending and associated taxable transactions. Burlingame
experienced a flattening of sales tax revenues in the last quarter of fiscal year 2007 -08, as both
consumers and businesses retrenched in response to the economy. As can be seen in the chart
below, sales tax revenues for the City declined 12.7 percent in FY 2008-09, with a further 23.68
percent decrease in FY 2009-10. With the economy recovering, sales tax revenues surged
upward in FY 2010-11, and continued to grow at an impressive pace. In fact, these revenues
surpassed pre-recessionary levels in FY 2013-14, with nearly $10.2 million in receipts.
Sales and use tax revenues for the City’s fiscal year ended June 30, 2016 reflected an over 15.5
percent increase from the prior year, but about half this increase was due to a one-time
adjustment by the State. December 31, 2015 marked the end of a series of revenue swapping
procedures by the State (referred to as the “triple flip”) which began in 2004 to secure debt
service payments for the State’s Economic Recovery Bonds. The triple flip unwind process was
wrapped up in May 2016, with receipt of “payback” amounts held by the state from previous
quarters. This supplied a one-time bump in sales tax revenues of nearly $1 million for last fiscal
year. The chart on the next page shows total sales tax receipts from the Bradley Burns (local 1
%) allocations from the State Board of Equalization (SBOE), the amounts received from the
State’s Sales and Use Tax Compensation (SUTC) Fund, and the additional Public Safety Sales
Tax. In future years, the local sales tax allocations will be received in whole, and the State’s
SUTC Fund will be retired.
Description FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
FY2017
(Est.)
Sales & Use Tax 5.86$ 5.00$ 6.15$ 6.33$ 6.90$ 7.48$ 8.36$ 10.20$ 12.00$
Sales Tax Compensation Fund 2.39$ 1.27$ 1.89$ 2.16$ 2.17$ 2.57$ 2.59$ 2.48$ -$
Public Safety Fund-Sales Tax 0.11$ 0.11$ 0.11$ 0.12$ 0.13$ 0.14$ 0.15$ 0.15$ 0.15$
Grand Total 8.36$ 6.38$ 8.15$ 8.62$ 9.20$ 10.20$ 11.10$ 12.83$ 12.15$
Year-over-year change -12.70%-23.68%27.74%5.71%6.73%10.84%8.87%15.56%-5.28%
Fiscal Year 2009-17 Sales & Use Tax Revenue
(in millions)
2016-17 Mid-Year Report March 15, 2017
34
Because of the time lag in the reporting and submission of sales taxes to the BOE, only one
quarter’s data is available from which to project the City’s FY 201 6-17 revenues from this source.
Although a review of Burlingame’s 3rd quarter data for 2016 (remitted to the SBOE in October –
December 2016), indicates a decline in taxable transactions of approximately 4.7 percent, the
prior year quarter included a significant transaction in the area of energy/utilities (Business and
Industry group). Without that one-time aberration, sales and use tax receipts grew 1.4 percent
when compared with the same quarter last year. The chart below shows that sales tax revenues
continue to increase moderately, with many major industry groups reporting a positive change
compared to the same quarter of 2015.
Revenues from transactions in the City’s largest sector – Autos and Transportation – decreased
slightly in the comparable quarter. However, relatively low interest rates, more fuel-efficient drive
trains, and declining fuel prices continue to push the auto industry forward. Although the demand
5.86
5.00
6.15 6.33
6.90
7.48
8.36
10.20
12.00
2.39
1.27
1.89 2.16 2.17
2.57 2.59 2.48
0.000.11 0.11 0.11 0.12 0.13 0.14 0.15 0.15 0.15$0
$2
$4
$6
$8
$10
$12
$14
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 ProjectionMillionsHistorical Sales & Use Tax Revenue
Sales & Use Tax
Sales Tax
Compensation Fund
Public Safety Fund-
Sales Tax
2016-17 Mid-Year Report March 15, 2017
35
for automobiles is anticipated to level off somewhat in FY 2016-17, the sector as a whole should
remain fairly strong for the remainder of this fiscal year.
It is interesting to note that the City’s share of the countywide use tax pool jumped 9.5 percent
compared to same quarter in 2015, after having risen 12 percent in the previous year. Use tax is
the responsibility of the buyer rather than the seller and does not involve a California “point of
sale”. Therefore, the tax is coded to the county of use and then distributed to each jurisdiction in
the county on a pro rata share of taxable sales. While these receipts represent only 10-12
percent of the total sales tax revenues (and are categorized by major industry group along with
point-of-sale receipts), the increase reflects a continued acceleration of online shopping for
merchandise shipped from out of state. This trend, along with a shift in consumer spending
habits to non-taxable goods and services, puts pressure on brick-and-mortar retailers and the
underlying sales tax base for local governments.
The City’s FY 2016-17 adopted budget assumed little growth in sales tax revenues due to the
prior year adjustments and one-time transactions. However, due to continued strength in the
economy, an upward adjustment of $181,000 (an additional 1.5 percent) is proposed for the
current fiscal year, for a total projection of $12.1 million in sales tax revenue. This estimate is
consistent with the projections supplied by HdL, the City’s sales tax consultant. HdL was also
consulted in the preparation of the five year forecast for sales and use tax revenues.
Transient Occupancy Taxes (TOT) – TOT revenues constitute Burlingame’s largest General
Fund revenue source, and are usually a good indicator of current economic activity. TOT
revenues are reported and paid to the City each month (for the prior month), so results as of
January 31, 2016 reflect the first six months of the fiscal year. The budget for FY 2016-17 was
2016-17 Mid-Year Report March 15, 2017
36
established based on TOT collections through March 2016, when 2015-16 fiscal year-end results
were projected to be approximately $25.2 million, an increase of 9.1 percent from the prior fiscal
year. Noting that the new fiscal year would not include a regional event as large as Super Bowl
L, continued low vacancy rates and a steady rise in average daily room rates (ADR) supported
the original fiscal year 2016-17 budget projection of $26.0 million – a projected growth of 3
percent in TOT revenue.
In fact, the City ended the 2015-16 fiscal year with nearly 26.1 million in TOT revenues (see
graph above, where Q1 shows results for July through September of each fiscal year). And
occupancy rates as reported by the City’s hotels remained fairly robust in the first half of the
current fiscal year. Burlingame hotels reported an average occupancy rate of 84.9 percent
between July and December 2016 and an ADR of approximately $192. Certain large remodeling
projects were started and completed during the 2015-16 fiscal year, and staff believes that
modest growth will be felt in the remainder of the current fiscal year. A new projection of $26.2
million is proposed at mid-year for TOT revenues, representing a 0.5 percent growth rate in the
2016-17 fiscal year.
However, TOT revenues continue to be highly vulnerable to the cyclical nature of tourism and
changes in the economy. The City continues to project TOT revenues conservatively, as hotel
room pricing has far outpaced local pricing indices as well as inflation; as such, it is expected that
in the near term, price elasticity will constrain growth.
Other Taxes – A number of other sources provide tax revenues to the City’s General Fund.
Although they are consolidated for reporting purposes, prior year actual amounts and the
current year activity for each source ha ve been reviewed for the most accurate projection of
2016-17 year-end results.
Real Property Transfer Tax revenues are showing a marked decrease, and that is largely due to
the number of large property sales in the prior two fiscal years. A significant decrease in the
volume and value of real estate sales during the recession is reflected in the City’s Property
Transfer Tax revenue, as shown in the chart below. The City receives this revenue the month
following a real property transaction, splitting the 0.11 percent tax evenly with the County.
3.0
2.6 2.6
3.0
4.2
3.9 3.8
4.3
4.9
4.5
4.0
4.8
5.8
5.1 4.8
5.6
6.3
5.6 5.4
6.4
7.4
6.0 6.0
6.7
-
1
2
3
4
5
6
7
8
Q1 Q2 Q3 Q4$ Millions2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
Historical Transient Occupancy Tax Revenue by Quarter
2016-17 Mid-Year Report March 15, 2017
37
Although improved home values have pushed these receipts higher with the recovering
economy, property turnover in the area continues to be relatively low.
The FY 2015-16 amount received for property transfer taxes was an unprecedented $499,514.
Current year (July 2016 through January 2017) tax receipts are coming in about 41 percent lower
than last year’s receipts during the same time period, due to the lack of sale of any large
commercial properties in recent months. So, depending on real estate sales in the remainder of
this fiscal year, this revenue is expected to come in much lower than the $477,000 budget.
Month to month variation in real estate sales (reflected in the chart below) makes this revenue
difficult to project. However, staff conservatively proposes a $185,000 decrease in the FY 2016-
17 budget for the City’s property transfer tax revenues.
Year-to-date Business License Tax revenues are coming in at a rate 1.0 percent higher than
last year. This includes the special business license tax (5 percent of revenues) assessed on
airport parking enterprises, which comprises approximately 40 percent of this revenue line item.
To reach the budget of $990,000 for the current fiscal year would represent less than a ½ percent
$231,612
$280,069
$379,266
$379,542
$347,855
$436,853
$499,514
$292,000
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
(Projected)
Fiscal Year 2009-17 Real Property Transfer Tax Revenue
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Jul-07Jul-08Jul-09Jul-10Jul-11Jul-12Jul-13Jul-14Jul-15Jul-16City of Burlingame
Fiscal Year 2007-16 Real Property Transfer Tax Revenue
2016-17 Mid-Year Report March 15, 2017
38
increase over the 2015-16 fiscal year results for business license revenues. While a higher
volume of licenses might be expected in an improving economy, the cost of an annual business
license in Burlingame is small ($100 for most businesses). Unless airport parking enterprises
experience a significant change in operations, this remains a relatively small and somewhat fixed
revenue source. Staff believes that the budgeted amount is on target for this fiscal year.
The largest category of Burlingame’s Franchise Fees is derived from the regional garbage
hauler (8 percent of revenues), and is collected and remitted monthly. Because there have
been no changes in solid waste rates since January 1, 2012, there should be little change in the
franchise fees derived from th is activity, and no mid-year adjustment is proposed for fiscal year
2016-17. Franchise fees for the provision of gas and electric utilities were slightly under-
estimated in the prior fiscal year. Although these revenues are not received until April, ther e is
no indication that the current year’s revenues will deviate significantly , and the current year
adopted budgets for these fees also appear to be on target. However, a $16,000 upward
adjustment is proposed for cable franchise fee revenues , as these came in ahead of budget last
year, and current fiscal year receipts remain strong .
Licenses and Permits – General Fund revenues in this category, consists largely of alarm and
overnight parking permit fees, along with taxicab licenses. Last year, this revenue source,
increased only mildly compared to the previous year . With a budget of $88,000, these receipts
account for a very small part of total General Fund revenues.
Fines, Forfeitures and Penalties – This category consists largely of revenue from parking
citations and vehicle code violation fines. Parking citation revenue in FY 2015-16 declined from
the prior fiscal year amount s due to a turnover in staffing. However, as the staffing challenges
have been largely resolved, current receipts are on track with the adopted budget projections .
No adjustment is recommended for these revenues.
Use of Money and Property – This revenue category includes lease payments received on
various City properties. Budgeted revenue for the current fiscal year is proposed to be decreased
by $45,000 to reflect current year receipts and collectability, including a reduction in the VB Golf
Lease agreement effective January 1, 2017.
Investment Income – Yields on municipal portfolios dropped steadily following the 2008
market downturn. Over recent years, the Federal Reserve has implemented monetary policies
to keep credit affordable and inflation in check to help the economy recover from the recent
recession. Similar to other cities, Burlingame invests in only the safest of securities (the
highest priority of the City’s investment policy is preservation of capital), and yields have
continued to hover at historic lows for such investments .
Description
2014-15
Actuals
2015-16
Actuals
2016-17
Adopted Budget
Midyear
Projection
Midyear
Amendment
Gas 105,382$ 109,866$ 110,000$ 110,000$ -$
Electric 213,447 228,920 222,000 222,000 -
Garbage 711,918 699,539 717,000 717,000 -
Cable TV & Wave Astound 444,600 462,098 448,000 464,000 16,000
AT&T Video Service 104,630 104,336 101,000 101,000 -
Total 1,579,976$ 1,604,758$ 1,598,000$ 1,614,000$ 16,000$
FY2016-17
2016-17 Mid-Year Report March 15, 2017
39
The City has contracts with PFM Asset Management, LLC. for outside investment advisory
services. PFM assists in the annual review of the City’s ongoing cash flows and investment
goals, and recommends any appropriate revisions in the investment policy. The managed
portfolio’s benchmark is the Bank of America Merrill Lynch 1-5 Year U.S. Treasury Index, with a
duration of 2.65 years. The market value of the portfolio as of December 31, 2016 was $140.5
million, consisting of an $81.5 million managed pool of top-rated securities, $58.3 million in the
State Local Agency Investment Fund (LAIF), and $0.3 million in the County pool. The City’s
aggregate investments (including the very liquid State and County investment pools) averaged
a yield to maturity of 1.11 percent.
Interest earnings for all of the City’s funds in FY 2015-16 were over $2 million, above the
$922,000 combined budgets for the year. These results include the impact of the year-end
“mark-to-market” adjustment (an increase of $254,000), which was unknown at the time of the
projections, and generally not included in the development of the interest earnings budget .
Given the Federal Reserve’s intention of tightening its monetary policy more gradually than
anticipated in the prior year, there was reason to expect short-term investment rates to rise only
modestly in FY 2016-17. The combined effect of an under-estimated budget in the prior year,
and the anticipation of more frequent rate increases from the Federal Reserve , is current year
interest revenue projections that are much higher than reflected in the 2016 -17 fiscal year
budget.
The aggregate yield to maturity on the City’s investments of 1.11 percent compares favorably
with the 0.92 percent reported in last year’s mid -year analysis. The Local Agency Investment
Fund (LAIF), which holds the majority of the City’s idle cash, is yielding 0.68 percent, up from
0.37 percent one year ago. Revenues from the City’s investments are therefore anticipated to
be higher than in the prior fiscal year in total. However, it would not be prudent to include an
assumption about the year -end “mark-to-market” adjustment in forecasting this revenue. Actual
income earnings are allocated out to other City funds based on average cash balance throughout
the fiscal year. As cash balances vary from year to year within the different funds, interest
earnings by fund are difficult to project. Of the t otal interest earnings now projected for the 2016-
17 fiscal year, $630,000 is projected to be General Fund interest revenue. Staff has proposed
adjustments to the interest revenue budgets in all funds (page 14 of this staff report) that will be
credited with any material interest earnings in FY 2016-17. These mid-year adjustments will
provide a more accurate projection of interest earnings to the various funds for future budgets.
State Subventions (Intergovernmental revenues) – Through various pieces of legislation and
propositions, the State of California has placed a requirement to reimburse local agencies for
costs born when the State mandates a new program or higher level of service to be provided by
those local agencies. This reimbursement process is known as mandated cost claiming. Over
the years, many of these state mandates have been suspended to save the state money, and
receipts for prior claims were so erratic that they were no longer included in the City’s budget.
Yet, based on the continued health of the State’s economy, staff conservatively estimated
$10,000 of state reimbursements of prior year mandates in the FY 2016-17 Budget.
Revenues were healthy enough in the 2015-16 State budget to pull the pre-2004 mandate
repayment “trigger mechanism”, bringing additional funds ($765 million in total) to counties, cit ies
and special districts, and fulfilling the state’s obligation for pre-2004 mandates in their entirety.
Payments for both the City’s mandated cost claims and interest were accrued to the 2014-15
fiscal year. The total of this state revenue was over $313,000 for fiscal year 2014-15. Because
these revenues were inconsequential in FY 2015-16, an elimination of the $10,000 budget in the
current fiscal year is recommended.
2016-17 Mid-Year Report March 15, 2017
40
It is unknown whether the Governor’s Budget for FY 2017-18 will include additional funding for
mandatory cost claims. At any rate, the timing and allocation of these funds to the state-wide
agencies for various mandates and accrued claims will not be determinable in advance.
Receipts of State Motor Vehicle License Fees (VLF) totaled $12,000 in 2015-16. Following the
2011 State Budget Act, which stripped most remaining VLF allocations from cities, revenues from
this source are not significant and always uncertain. Thus, the City is no longer budgeting this
revenue. Also in this same category of revenues, the POST (Peace Officer Standards and
Training) reimbursement budget should be decreased $10,000, to reflect a reduced participation
of the City’s police officers in POST programs than originally anticipated.
Charges for Services – General Fund revenues in this category were down (approximately a
quarter percent overall) in FY 2015-16 compared to the previous year due largely to a slight
decline in the City’s development applications. As seen in the chart below, most departments
generate some amount of receipts in this revenue category. With a budget of over $4.8 million,
these receipts account for approximately 7.3 percent of Burlingame’s total General Fund
revenues.
Receipts from recreational services were 4.6 percent above the adopted budget in fiscal year
2015-16, but slightly below (1.9 percent) the mid-year projection. Additional growth was
anticipated in the current year budget, and 2016-17 fiscal year-to-date receipts indicate a
continued demand for recreational offerings. Park fees were also projected to be slightly higher
and are targeted to come in on budget. The volume of development remains fairly high,
approximating prior-year levels. Given that fiscal year 2015-16 fell slightly short of budget, the
slim growth factor anticipated in the current year budget for Planning services revenue may not
be totally achieved.
However, Public Works fees for services have experienced a significant revenue increase in the
current fiscal year due to the progression of several larger projects of higher structural complexity
than experienced in the previous fiscal year. In fact, one of the projects called for special
encroachment permits for subsurface shoring systems, a permit for which a fee was first
established in the FY 2016-17 Master Fee Schedule. As a result, these fees are projected to be
$432,000 higher than the proposed budget for the current fiscal year.
CITY OF BURLINGAME, CA
CHARGES FOR SERVICES BY DEPARTMENT
Department
FY14-15
Actual
FY15-16
Actual
FY16-17
Current
Budget
FY16-17
Midyear
Projection
FY16-17
Midyear
Amendment
Year-End Up
(Down) %
Police 62,280 59,456 92,700 62,700 (30,000) -32.4%
Parks 158,475 148,572 172,500 172,500 - 0.0%
Recreation 2,599,854 2,637,496 2,602,000 2,602,000 - 0.0%
Aquatics - - 176,000 176,000 - 0.0%
Planning 617,287 577,413 626,500 626,500 - 0.0%
Public Works 425,538 421,996 463,000 895,000 432,000 93.3%
Library 613,879 619,508 688,000 708,000 20,000 2.9%
Other 4,306 5,834 4,500 4,500 - 0.0%
Total, Departmental Fees 4,481,618$ 4,470,274$ 4,825,200$ 5,247,200$ 422,000$ 8.7%
2016-17 Mid-Year Report March 15, 2017
41
The revenue projection for Police Services should be adjusted downward due to the elimination
of the Abandoned Vehicle Abatement program. This State program was administered by
C/CAG (City/County Association of Governments) of San Mateo County and expired in May
2013. The program was closed in June 2016 after a final distribution of the residual fund
balance was made. The Abandoned Vehicle Abatement program should be removed as a
revenue source. The amount budgeted for the 20 16-17 fiscal year was $30,000.
The FY 2016-17 Burlingame Library budget was increased slightly with the proposed opening of
a Passport Intake Office. In an effort to offset a decrease in service fee revenues an d in
recognition of a growing community need, the Library desired to provide this new service in
partnership with the US State Department beginning in July 2016. Though staff turnover earlier
in this fiscal year caused a significant delay, training of the appropriate staff has been
completed, and the new program is expected to be operational within the month. The $60,000
revenue projection for the current year needs to be adjusted downward to $15,000.
In addition, remuneration for the provision of library services to the Town of Hillsborough is
calculated after each year-end and based on average per-capita costs (within Peninsula Library
System budgets) applied to two-thirds of the population of Hillsborough. The new projection is
more than originally estimated by $65,000. This upward adjustment is also reflected in the
attached FY 2016-17 mid-year budget amendment.
Other Revenues – The City receives other miscellaneous revenues from time to time. The
budget for these miscellaneous revenues (unclaimed property from the State, rebates,
miscellaneous refunds of prior -year expenses, etc.) was therefore set at a de minimis $500.
However, the County recently reimbursed the City for the costs of a police investigation and
expert witness services i n a civil law enforcement action. The reimbursements amounted to
nearly $30,000, which is reflected in an increase in the proposed budget for this revenue
category.
2016-17 Mid-Year Report March 15, 2017
42
City of Burlingame
FY 2016-17 Mid-year Report
Attachment B – General Fund Expenditures
The following table shows the FY 2016-17 mid-year assessment of departmental (operating)
General Fund expenditures:
Although many of the proposed mid-year budget amendments are off-set within each department
or division, they are described in detail below to illustrate changes in operations that were not
anticipated at the time the FY 2016-17 budget was adopted.
General Fund Personnel Costs
The challenge of any public sector agency is to provide competitive salary and benefit packages
in order to recruit and retain quality talent, while keeping the cost of providing these packages at
a reasonable and sustainable level. Negotiated or imposed contracts in years since the
recession have resulted in signif icant savings and have assisted in achieving structural benefit
CITY OF BURLINGAME, CA
SUMMARY OF GENERAL FUND EXPENDITURES
Description
FY2014-15
Actual
FY2015-16
Actual
FY16-17
Adopted
Budget
FY16-17
Midyear
Projection
FY16-17
Midyear
Amendment
Year-End
Up (Down) %
General Gov't (Admin Svcs)4,121,895$ 4,477,401$ 5,182,271$ $5,281,871 99,600$ 1.9%
Public Safety
Central County Fire (Burlingame)10,470,376 10,966,697 10,896,255 10,896,255 0 0.0%
Police & Dispatch 12,303,118 13,658,374 15,404,049 15,429,049 25,000 0.2%
Public Works 4,769,873 4,693,548 5,093,323 5,093,323 0 0.0%
Community Development - Planning 1,244,199 1,405,794 1,658,233 1,718,233 60,000 3.6%
Leisure & Cultural Services
Aquatic Center 400,831 336,689 476,000 476,000 0 0.0%
Library 4,392,440 4,385,376 5,016,939 5,004,939 -12,000 -0.2%
Parks & Recreation 6,702,334 7,535,581 8,404,258 8,416,458 12,200 0.1%
Total Expenditures 44,405,064$ 47,459,460$ 52,131,328$ 52,316,128$ 184,800$ 0.4%
CITY OF BURLINGAME, CA
SUMMARY OF GENERAL FUND EXPENDITURES
By General Fund Categories
FY2014-15
Actuals
FY2015-16
Actuals
FY16-17
Adopted
Budget
FY16-17
Midyear
Projection
FY16-17
Midyear
Amendment
Year-End
Up (Down) %
Salaries & Wages $ 13,960,108 $ 15,469,014 $ 17,378,905 $ 17,335,453 ($43,452)-0.3%
Benefits 8,313,332 8,767,936 9,868,148 9,905,600 37,452 0.4%
Operating Costs 18,176,224 19,920,557 21,068,541 21,259,341 190,800 0.9%
Internal Services 3,861,235 3,247,960 3,586,234 3,586,234 0 0.0%
Capital Outlay 94,165 53,993 229,500 229,500 0 0.0%
Total Expenditures $44,405,064 $47,459,460 $52,131,328 $52,316,128 $184,800 0.4%
2016-17 Mid-Year Report March 15, 2017
43
changes that will help control f uture employee benefit costs. For example, Burlingame
employees are now paying a portion of the employer’s retirement rate in addition to the
employees’ rate, as well as a larger portion of their health care premiums. Retiree medical
benefits have been significantly reduced for new hires, and provisions for the payout of sick leave
hours have been curtailed. Although many of these savings are evident in recent-year budgets,
the savings from some of these actions will not be realized in full for many years. In the current
more favorable economic environment, compensation increases are anticipated to keep up with
cost of living indexes. But the costs of prior-year pension obligations are anticipated to grow
significantly in the next five years, and these changes will put added pressure on personnel costs
beginning with the upcoming FY 2017-18 budget.
Because personnel budgets are based on full occupancy (no vacancies) of permanent positions,
budgetary savings will occur in most every department. However, personnel cost savings due to
vacancies are difficult to estimate and vary by departments and programs, so no budget
adjustments have been made on a City-wide basis.
It should also be noted that most health plan rates were increased effective January 1, 2017; the
increases ranged from -1.8 to +13.6 percent, depending on the plan, with an average of 4.0
percent across all plans. However, because the (weighted) average increase in the plans used
most by the City’s current employees was only 0.8 percent, no adjustment is being made to the
departmental budgets to cover the impact of these increases for the last half of the current fiscal
year.
Note that personnel costs (and total operating expenditures) for the General Fu nd have
(since FY 2014-15) included contributions to the irrevocable trust fund established in
October 2013 for the purpose of funding the City’s retiree medical benefit obligations
(OPEB). The full costs of these past and current obligations are now reflected in the
departmental budgets. As best practices would dictate, the City is committed to contributing
the annual required contribution to the trust fund in both good and bad financial times, using
conservative, realistic assumptions that are adjusted based on bi -annual actuarial report s
specific to the City’s program and its participants . Unlike pension liabilities, the City’s OPEB
is a closed program and less susceptible to volatile swings in annual contributions.
General Fund Appropriation Adjustments
Total General Fund expenditures increased nearly 4.7 percent in FY 2016-17 as compared
with the prior year ’s adjusted budget due to strategic increases in City -wide FTE (full time
equivalent) staff positions and personnel hours needed to carry out the City’s priorities,
largely in the area of public safety. A 0.4 percent budget increase is re commended for the
FY 2016-17 General Fund appropriations. The $185,000 budget increase is largely due to
unanticipated operational needs.
Administrative Services – The budget for this group of departments supplies the resources that
support services often referred to as “general government” activities. Although each department
is bound by a separate budget, recommended adjustments are fairly minor, and they are
combined in this report to give an overall context to the administrative costs of the City.
The budget for the City Attorney’s Office has included funding for a full-time Code Compliance
Officer for the last two years. However, the department has been well served in this area with
contract services provided by CSG Consultants. This contract will remain in effect for the
remainder of the current fiscal year. Therefore, a mid-year budget adjustment is proposed to
move $77,000 from the City Attorney’s regular salaries budget to its contractual services budget.
In addition, an appropriation for part-time salaries was included in the FY 2016-17 budget to fund
2016-17 Mid-Year Report March 15, 2017
44
part-time unbenefited professional assistance to the office, with an emphasis on special projects
and anticipated development-related activity. The City Council has indicated that an increase in
the hours provided by this additional resource is appropriate; an increase in this expenditure
category of $13,000 is proposed.
The City Clerk administers City elections and maintains files for all documents related to
elections. Since fiscal year 2016 -17 was not an election year, no appropriation for these
activities was included in the current year budget. However, enough signature s were
gathered to place Measure R on the November 8, 2016 ballot. The estimated cost from the
County for the election is estimated to be approximately $4 1,000. In addition, the City Clerk
is responsible for mailing a notice to all registered voters in t he City of Burlingame to inform
them of the changes made (pursuant to SB 415, the “California Voter Participation Rights
Act”) in the general municipal election date and in the length of terms for Councilmembers
elected in 2017 and 2019 . An estimated $9,000 is needed for printing and mailing these
notices after approval of these changes in the City election ordinance by the County Board of
Supervisors.
The Human Resource Department experienced significant staff turn-over in the current fiscal
year. While the department should experience some budgetary savings due to the temporary
vacancies in two full-time employee positions, these savings are only sufficient to cover the
necessary increase in part-time salaries and professional services costs needed to cover the
workload. In addition to an adjustment to cover the pay-out of compensated absences to former
employees ($10,000), a $20,000 increase in contractual services is requested to cover the cost of
unanticipated recruitment services.
Finally, an increase in General Government appropriations of $6,600 is proposed for the City
Council’s budget, as the original budget for the annual tree lighting did not anticipate the need for
re-stringing the tree with lights.
Several small adjustments are recommended to the 2016-17 fiscal year budget for the Parks
Division. Although the cost of maintenance and repairs has been generally less than expected
for the grounds and park facilities, increased funding is needed for the purchase of plant material
for the hanging baskets along Burlingame Avenue. In addition, the Broadway BID has asked for
new landscape in the bulb outs as part of the tree replacement project. An additional $10,000
appropriation is recommended for these landscaping expenses, offset by a decrease in the
maintenance budget of $5,000.
The Recreation Division budget will require an additional $7,200 in the category of Non-Capital
Equipment to fund the procurement and website installation of field scheduling software. Current
fiscal year costs will include training and the annual maintenance fee. The software should help
streamline the field rental and allocation processes.
Early in the fiscal year, several officers were out on injury/disability status in the Police
Department, requiring backfill overtime for patrol. A $20,000 increase in the overtime budget can
be offset by an equal decrease in part-time salaries and will safeguard the budget against further
unanticipated overtime needs in the current fiscal year.
The Police Department contractual services budget needs a slight adjustment to cover needs that
were unanticipated or simply overlooked in the development of the current fiscal year budget.
Annual maintenance renewals for several software programs (such as the Citizen’s On-line
reporting program and for Cradlepoint coverage in vehicles) will require an adjustment of $7,000.
In addition, a major virus infiltration early in the fiscal year required contracting with a virus
infiltration protection company ($4,000). The department also decided to rent six additional
2016-17 Mid-Year Report March 15, 2017
45
automated citation ticketing handheld machines. Although the devices will assist in maintaining
parking compliance activities and related violation revenues, they come at a cost of approximately
$13,000. Together these costs will exceed the contractual services budget by about $12,000.
The department feels that its budget for office expenses can be decreased this amount to offset
the additional appropriation for contractual services.
Several adjustments are recommended in the Planning Division budget. Part-time assistance
has been utilized to a greater extent than anticipated due to continually high volumes of planning
and building applications, and the need to back-fill for staff on unexpected leave. The volume of
planning applications has been consistently high since rising in 2013. During these years, there
has been a need to engage part-time staff for some tasks, balanced with overtime. The number of
applications in 2016 was slightly less than in 2015 and 2014, but not substantially less, so there
continues to be a need for part-time assistance to keep pace with current planning and building
applications. An adjustment to the current year budget to increase part-time salaries by $20,000
and overtime by $15,000 is recommended for the department.
In addition, an increase in the Planning Division’s contractual services budget of $25,000 is
proposed to fund ongoing contractual costs to date. Specifically, work on the Parking Lot E
evaluation and negotiations performed through a contract with Economic Planning Systems
(EPS) are expected to continue through the remainder of the fiscal year.
Public Works – Although some budget adjustments were needed between categories for Public
Works activities, the General Fund budget was found to be adequate for regular, ongoing
operations of the department. For example, higher costs for electric and gas utilities are being
experienced in the Streets and Storm Drainage Division, possibly due to the heavier-than-normal
rainy season. But the additional funding needed ($10,000) can be offset from anticipated savings
in the budget for contractual services in the same division.
2016-17 Mid-Year Report March 15, 2017
46
City of Burlingame
FY 2016-17 Mid-year Report
Attachment C – General Fund Five-Year Forecast
(Revised)
Budget Forecast Forecast Forecast Forecast Forecast
Revenue Categories 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Property Tax 18,851,000$ 19,189,000$ 20,179,000$ 21,325,000$ 22,423,000$ 23,592,000$
Sales Tax 12,150,000 12,409,000 12,744,000 13,058,000 13,388,000 13,729,000
Transient Occupancy Tax 26,216,000 26,871,000 27,543,000 26,710,000 27,370,000 28,046,000
Other Taxes - Franchise Tax 1,614,000 1,630,000 1,646,000 1,696,000 1,747,000 1,799,000
Other Taxes - Business Licenses 990,000 994,000 998,000 1,020,000 1,042,000 1,046,000
Other Taxes - State HOPTR 62,000 62,000 62,000 62,000 62,000 62,000
Other Taxes - Transfer Tax 292,000 360,000 369,000 378,225 387,681 397,373
Licenses & Permits 88,000 88,000 89,000 89,000 90,000 90,000
Fines, Forfeitures & Penalties 942,000 942,000 951,000 961,000 971,000 980,000
Use of Money & Property 161,000 165,000 169,000 173,000 178,000 182,000
Charges for Services 5,247,200 5,352,000 5,486,000 5,623,000 5,764,000 5,908,000
Other Revenue 30,500 31,000 31,000 31,000 31,000 31,000
State Subventions 234,000 234,000 234,000 234,000 234,000 234,000
Interest Income 630,000 945,000 1,040,000 1,144,000 1,258,000 1,384,000
Total Revenues 67,507,700$ 69,272,000$ 71,541,000$ 72,504,225$ 74,945,681$ 77,480,373$
Expenditure Categories
Salaries & Wages (17,335,453)(18,034,000)(18,663,000)(19,256,000)(19,814,000)(20,353,000)
Benefits (9,905,600)(10,472,000) (11,519,000) (12,632,000) (13,627,000) (14,593,000)
Operating Costs (21,259,341)(22,232,996)(23,260,100)(24,315,483)(25,411,457)(26,553,856)
Internal Services (3,586,234)(3,693,821)(3,804,636)(3,918,775)(4,036,338)(4,157,428)
Capital Outlay (229,500)(236,385)(243,477)(250,781)(258,304)(266,053)
Total Expenditures (52,316,128)(54,669,202)(57,490,212)(60,373,039)(63,147,099)(65,923,337)
Operating Revenue 15,191,572 14,602,798 14,050,788 12,131,186 11,798,581 11,557,035
Transfers In (Out)(2,284,270)(5,680,000)(5,772,000)(4,236,000)(3,956,000)(3,933,000)
Capital Renewal & Replacement Reserve (3,000,000)(3,000,000)(3,000,000)(3,000,000)(3,000,000)(3,000,000)
Debt Service (5,756,745)(3,230,000)(2,686,621)(2,710,573)(2,724,764)(1,585,048)
Change in Fund Balance 4,150,557$ 2,692,798$ 2,592,167$ 2,184,613$ 2,117,817$ 3,038,987$
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME
APPROVING ADJUSTMENTS TO ESTIMATED REVENUES AND APPROPRIATIONS
IN THE FISCAL YEAR 2016-17 BUDGET
RESOLVED, by the CITY COUNCIL of the City of Burlingame, California and this
Council does hereby APPROVE and AUTHORIZE the Finance Direc tor & Treasurer to
amend the current Fiscal Year 2016-17 Budget as outlined below to reflect actual fiscal
conditions and projections outlined in the Mid-Year Report:
Amendments to Estimated Revenues:
General Fund:
Property Tax $ 825,000
Sales and Use Tax 181,000
Transient Occupancy Tax 216,000
Other Taxes – Franchise Tax 16,000
Other Taxes – Real Property Tax (185,000)
Other Taxes – State HOPTR (4,000)
Use of Money and Property (45,000)
Charges for Services 422,000
Other Revenue 30,000
State Subventions (20,000)
Interest Income 241,000
Other Funds:
Special Assessment Revenue 16,116
Gas Tax (HUTA) (27,000)
Caltrain Electrification Revenue 34,000
Steam Cleaning Downtown 41,500
Street Sweeping Fee 28,300
City Management Fee (28,600)
Rate Stabilization Fee (61,000)
Other Revenue 31,200
Electric Vehicle Charging Station 12,000
Monthly Parking Permits 34,000
Building Plan Check Fees 519,000
Sale of Property 6,000
Interest Income 623,400
Amendments to Appropriations:
General Fund:
City Council $ 6,600
Elections 50,000
City Attorney 13,000
Planning 60,000
Communications 25,000
Parks 5,000
Recreation 7,200
Library (12,000)
Human Resources 30,000
Other Funds:
Building $ 519,000
Admin/IT Services 35,000
Street CIP 34,000
Revisions to Transfers In / Out:
Transfer Out from the General Fund (to
Capital Projects Fund – Streets) $(500,000)
Transfer In Capital Projects Fund - Streets
(from General Fund) 500,000
Transfer Out from General Fund (to
Equipment Services Fund) 102,512
Transfer In Equipment Services Fund (from
General Fund) (102,512)
Transfer Out from General Fund (to Capital
Project Fund - Parks & Trees)
(40,000)
Transfer In Capital Project Fund - Parks &
Trees (from General Fund)
40,000
Transfer Out from Solid Waste Fund (to
General Fund) 28,600
Transfer In General Fund (from Solid Waste
Fund) (28,600)
_____________________________
Mayor
I, MEAGHAN HASSELL-SHEARER, City Clerk of the City of Burlingame, do hereby
certify that the foregoing Resolution was adopted at a special meeting of the City
Council held on the 15th day of March, 2017 and was adopted thereafter by the
following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
_____________________________
City Clerk
RESOLUTION NO.________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME
APPROVING THE TRANSFER OF $4 MILLION FROM THE GENERAL FUND TO
THE CAPITAL PROJECTS FUND – RENEWAL AND REPLACEMENT RESERVE IN
THE FISCAL YEAR 2016-17 BUDGET
WHEREAS, the City of Burlingame’s General Fund Reserves Policy was developed to ensure
optimum reserve levels specific to the City and to provide options for responding to unexpected issues
and a buffer against economic downturns and other forms of risk; and
WHEREAS, the General Fund experienced a surplus $2.9 million higher than anticipated in
the budget for the fiscal year ended June 30, 2016; and
WHEREAS, based on the City’s mid-year fiscal analysis, the General Fund shows a projected
total fund balance of $33.8 million at the end of the 2016-17 fiscal year; and
WHEREAS, the Renewal and Replacement Reserve in the Capital Projects Fund was
established with the intent of providing funding for the replacement of City assets; and
WHEREAS, in recognition of the City’s large backlog of facility needs, staff has recommended
that the Renewal and Replacement Reserve be funded by an additional $4 million.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BURLINGAME DOES HEREBY
RESOLVE AND ORDER AS FOLLOWS:
APPROVE and AUTHORIZE the Finance Director & Treasurer to amend the current Fiscal Year
2016-17 Budget as outlined below:
General Fund Transfers In (Out):
Transfer to Capital Projects Fund - Renewal and
Replacement Reserve (from General Fund) (4,000,000)
Transfer from General Fund (to Capital Projects
Fund – Renewal and Replacement Reserve) 4,000,000
_____________________________
Mayor
I, MEAGAN HASSEL-SHEARER, City Clerk of the City of Burlingame, do hereby certify that the
foregoing Resolution was adopted at a special meeting of the City Council held on the 15th day of
March, 2017 and was adopted thereafter by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
_____________________________
City Clerk
1
STAFF REPORT
AGENDA NO:
MEETING DATE: March 15, 2017
To: Honorable Mayor and City Council
Date: March 15, 2017
From: Syed Murtuza, Director of Public Works – (650) 558-7230
Subject: Review of Draft FY2017-18 General Fund, Gas Tax, Measure A, Measure M
and Federally Funded Capital Improvement Program (CIP)
RECOMMENDATION
Staff recommends that the City Council review the proposed draft General Fund, Gas Tax,
Measure A, Measure M and Federal funds CIP, and provide feedback.
BACKGROUND
Historically, staff has presented the City Council with a draft of the proposed General Fund CIP
as part of the mid-year budget update study session in order to receive Council feedback with
sufficient time to incorporate any changes prior to the adoption of the budget. The proposed draft
CIP includes General Fund, Gas Tax, Measure A, Measure M, and federally funded projects.
Staff will be presenting the CIP Program for the Storm Drainage System, Drinking Water System,
and Sanitary Sewer System at a future meeting as part of the overall budget presentation.
DISCUSSION
GENERAL FUND CIP
In developing the FY2017-18 CIP, staff conducted a needs assessment of various infrastructure
owned by the City, and identified a total of approximately $38.4M of General Fund projects. After
further review and analysis of these needs, and taking into consideration the existing available
funding through fund balances and grant opportunities, staff refined the CIP requests list to a total
of approximately $18.9M. Upon further analysis of the CIP requests from the perspective of
prioritizing projects based on risk management principles, public health and safety needs, and
staff’s capacity to undertake the projects in the context of existing work load and other priorities,
staff is recommending a total of approximately $6.3M of General Fund CIP for FY2017-18.
Please refer to the attached spreadsheet for project details and costs.
The proposed FY2017-18 projects are basic and essential infrastructure needs to provide quality
public services to the community. It should be noted these projects are in addition to the ones
previously identified as big-ticket item projects in the City’s Unfunded Needs list. Below is a
summary table of the proposed Draft FY2017-18 CIP. Staff will be providing the City Council with
a detailed presentation of these projects at the March 15th Mid-Year Budget Study Session.
FY2017-18 General Fund, Gas Tax, Measure A, Measure M and Federally Funded CIP March 15, 2017
2
GAS TAX, MEASURE A, MEASURE M AND FEDERALLY FUNDED CIP PROJECTS
Based on condition assessment of 84 miles of existing street infrastructure, staff is proposing a
total of $4.2M of CIP funding from a combination of Gas Tax, Measure A, Measure M, and
Federal grant funds for next fiscal year’s street improvement program as follows:
Broadway Commercial Corridor from El Camino Real to California Drive
Cadillac Way from Rollins Road to Carolan Avenue
California Drive from Peninsula Avenue to Burlingame Avenue.
California Drive from Burlingame Avenue to Oak Grove Avenue (as part of Roundabout
Project)
Humboldt Avenue from Rollins Road to Peninsula Avenue (shared with San Mateo)
Trousdale Drive from California Drive to Marco Polo Avenue.
It is important to note that the City has applied for and is eligible to receive $546,000 in federal
funds for resurfacing the arterial streets. The City will be utilizing a total of $3,654,000 from a
combination of Gas Tax, Measure A, and Measure M funds to resurface the above-identified
streets as part of the annual street resurfacing program and to provide additional funds for the
California Drive Roundabout Project.
FISCAL IMPACT
General Fund CIP
The total estimated cost of the recommended Draft General Fund CIP program is $14,540,000;
$6,288,000 of this amount is recommended in new General Fund appropriations for FY2017-18,
and $8,252,000 is available from a combination of outside grants and available project fund
balances.
FY2017-18 General Fund, Gas Tax, Measure A, Measure M and Federally Funded CIP March 15, 2017
3
Gas Tax, Measure A, Measure M and Federal Funds CIP
The estimated cost of the Street Improvement Program is $4,200,000; $546,000 of this amount is
available from federal funds through the OBAG2 Program, while the remaining $3,654,000 is
available from a combination of Gas Tax, Measure A, and Measure M funds.
Exhibits:
FY2017-18 General Fund CIP Program Spreadsheet
PowerPoint Presentation
FY2017-18 Draft General Fund Capital Improvement Program 3/15/2017
Projects Description Project Costs
Existing
Funds/Grants
FY-17-18 CIP
Requests
Draft
Recommendations
(in thousands)(in thousands)(in thousands)(in thousands)
A Building Facilities Improvements
1 City Hall - HVAC and Plumbing Improvements and Asbestos Abatement 5,200 - 5,200
2 Parks Corporation Yard Renovation 1,750 - 1,750
3 Carriage House Improvements 1,300 - 1,300
4 FS #35 HVAC, Roof Replacement and Living Quarters Improvements 1,200 450 750 750
5 Energy Efficiency Improvements 1,000 - 300 300
6
Recreation Center Roof Replacement, Fire Sprinklers and Emergency
Generator Improvements 900 - 900
7 Fire stations emergency generators upgrade project (FS 34, 35 and 36)700 - 150 150
8 Donnelly Parking Garage Deck Coating 575 70 505
9 FS #36 Foundation Rehabilitation 350 - 350
10 FS #34 Roof Replacement and HVAC upgrades 300 - 300
11 PW Corporation Yard Roof Repairs 210 - 210
12 Fuel Pump Station Improvements at Corp Yard 200 - 200 100
13 Library Basement Flood Protection Improvements 200 - 200
14 Easton Library HVAC Improvements 115 - 115
15 Building Facilities ADA Improvements 100 - 100 100
Building Facilities Improvements Total 14,100 520 12,330 1,400
B Bicycle, Pedestrian and Traffic Safety Improvements
1 California Drive Class I Bike/Ped Track Project (Long Term Solution)10,000 - - -
2 California Drive Class II Bike Lane Project (Near Term Solution)500 - 500 500
3 Broadway Grade Separation Project (PA/ED Phase)4,350 4,350 - -
4 Sidewalk Repairs Program and ADA improvements 1,000 1,000 - -
5 Hoover School Sidewalk Improvements (local match for federal grant)900 700 200 200
6 Broadway Pedestrian Lighting (local matching funds for federal grant)900 720 180 180
7 Residential Traffic Calming Program 100 - 100 100
8 Bike Boulevards Implementation Feasibility Study 70 - 70 70
Bicycle, Pedestrian and Traffic Safety Improvements Total 17,820 6,770 1,050 1,050
C Parks & Recreation Improvements
1 Murray Synthetic Turf Installation Project 2,200 450 1,750 1,750
2 Burlingame High School Aquatic Center Pool Deck Replacement Project 1,200 - 1,200 90
3 Ray Park Playground Upgrade 800 372 428 428
4 Burlingame Square Improvements 600 140 460
5 Paloma Park Playground - Fire Damage Replacement 325 - 325 325
6 City Parks Master Plan 275 - 275 275
7 Washington Park Restroom Replacement 250 250 250
8 Bay Trail Fitness Equipment Upgrade.150 - 150
9 Playground Repairs and Trees Planting 60 60 60
10 Playground Resilient Surfacing Repairs 50 - 50 50
Parks & Recreation Improvements Total 5,910 962 4,948 3,228
D Finance
1 New Financial System 200 - 200 200
Finance 200 - 200 200
E Police
1 Digital portable radio replacement 80 - 80 80
2 Police Dispatch Furniture Upgrades 80 - 80 80
Police 160 - 160 160
F City Clerk
1 Electronic Records Management System 250 - 250 250
City Clerk 250 250 250
Total 38,440 8,252 18,938 6,288
City Council
Mid-Year Budget Study Session
Draft Capital Improvement Program FY 2017 -18
March 15, 2017
Overview
•General Fund Projects
•Gas Tax & Measure A & M Projects
•Summary
•Council Feedback & Direction
FY 2017-18 General Funds CIP
•The City has over $100 million of unmet infrastructure
needs such as the WWII-era Rec Center, a parking
structure, and other public facilities identified in the
City’s Unfunded Needs analysis.
•These significant safety and quality of life projects do
not include ongoing maintenance and capital upgrade
needs such as sidewalks, parks, building safety
maintenance, pedestrian/bike & traffic safety, etc.
•As part of preparing the FY2017-18 CIP, staff conducted
a needs assessment that identified a total of
approximately $38.4M projects.
•For FY2017-18, a total of $18.9M is requested for
various projects.
FY 2017-18 General Funds CIP
•Approximately $8.2M is available through grants/
existing fund balances to fund some of the requests.
•Based on risk management, safety needs, and staff’s
capacity and resources to work on projects with current
workload, approximately $6.3M is recommended for
FY2017-18 from General Funds
•Staff will prioritize the remaining unfunded projects in a
five-year CIP program for future funding and also look
for grant opportunities.
•However, relying on these sources alone will not be
adequate to address the entire range of infrastructure
needs, which will only become more costly as time goes
on.
Summary of Department
Requests
Departments Project Costs Existing
Funds/Grants
FY-17-18 CIP
Requests
Draft
Recommendations
(in thousands) (in thousands) (in thousands) (in thousands)
Building Facilities 14,100 520 12,330 1,400
Bicycle,Pedestrian & Traffic
Safety 17,820 6,770 1,050 1,050
Parks & Recreation 5,910 962 4,948 3,228
City Clerk 250 250 250
Finance 200 200 200
Police 160 160 160
Department Totals $38,440 $8,252 $18,938 $6,288
Building Facilities Projects
Project Descriptions Project Costs Existing
Funds/ Grants
FY-17-18 CIP
Requests
Draft
Recommendations
(in thousands) (in thousands) (in thousands) (in thousands)
City Hall -HVAC and Plumbing Improvements and Asbestos
Abatement 5,200 -5,200
Parks Corporation Yard Renovation 1,750 -1,750
Carriage House Improvements 1,300 -1,300
Fire Station #35 HVAC, Roof Replacement and Remodel 1,200 450 750 750
Energy Efficiency Improvements 1,000 -300 300
Recreation Center Roof Replacement, Fire Sprinklers and
Emergency Generator Improvements 900 -900
Fire stations emergency generators upgrade project
(FS 34, 35 and 36)700 -150 150
Donnelly Parking Garage Deck Coating 575 70 505
Fire Station #36 Foundation Rehabilitation 350 -350
Fire Station #34 Roof Replacement and HVAC upgrades 300 -300
PW Corporation Yard Roof Repairs 210 -210
Fuel Pump Station Improvements at Corp Yard 200 -200 100
Library Basement Flood Protection Improvements 200 -200
Easton Library HVAC Improvements 115 -115
Building Facilities ADA Improvements 100 -100 100
Building Facilities Improvements Total 14,100 $520 $12,330 $1,400
Building Facilities Projects
Fire Stations 34, 35 and 36 Emergency Generator UpgradeFire Station 35 HVAC, Roof Replacement and Living
Quarters Improvements
Fuel Pump Station Improvements at Corporation Yard Building Facilities ADA Improvements
Bicycle, Pedestrian and Traffic
Safety Improvements
Projects Description Project Costs Existing
Funds/Grants
FY-17-18 CIP
Requests
Draft
Recommendations
(in thousands) (in thousands) (in thousands) (in thousands)
California Drive Class I Bike/Ped Track Project
(Long Term Solution)10,000 --
California Drive Class II Bike Lane Project
(Near Term Solution)500 -500 500
Broadway Grade Separation Project
(Environmental Studies & Preliminary Engineering Phase)4,350 4,350 --
Sidewalk Repairs Program and ADA Improvements 1,000 1,000 --
Hoover School Sidewalk Improvements
(local matching funds for federal grant)900 700 200 200
Broadway Corridor Pedestrian Lighting Improvements
(local matching funds for federal grant)900 720 180 180
Residential Traffic Calming Program 100 -100 100
Bike Boulevards Implementation Feasibility Study 70 -70 70
Bicycle, Pedestrian &Traffic Safety Improvements Total $17,820 $6,770 $1,050 $1,050
Bike/Ped & Traffic Safety Improvements
California Drive Class II Bike Lane
Hoover School Sidewalk Improvements
Broadway Pedestrian Lighting
Sidewalk Repairs & ADA
Improvements Program
Parks & Recreation Projects
Projects Descriptions Project Costs Existing
Funds/Grants
FY-17-18 CIP
Requests
Draft
Recommendations
(in thousands) (in thousands) (in thousands) (in thousands)
Murray Synthetic Turf Installation Project 2,200 450 1,750 1,750
Burlingame Aquatic Club Pool Deck Replacement
Project 1,200 -1,200 90
Ray Park Playground Upgrade 800 372 428 428
Burlingame Square Improvements 600 140 460
Paloma Park Playground -Fire Damage
Replacement 325 -325 325
City Parks Master Plan 275 -275 275
Washington Park Restroom Replacement 250 -250 250
Bay Trail Fitness Equipment Upgrade 150 -150
Playground Repairs and Trees Planting 60 -60 60
Playground Resilient Surfacing Repairs 50 -50 50
Parks & Recreation Improvements Total $5,910 $962 $4,948 $3,228
Parks & Recreation Projects
Murray Field Synthetic Turf Installation Aquatic Club Pool Deck Replacement
Ray Park Playground Upgrade Paloma Park Playground –Fire Damage Replacement
Washington Park Restroom Replacement
Finance, Police and City Clerk
Requests
Project Description Project Costs Existing
Funds/Grants
FY-17-18 CIP
Requests
Draft
Recommendations
(in thousands) (in thousands) (in thousands) (in thousands)
Finance
New Financial Software System 200 -200 200
Police
Digital portable radio replacement 80 -80 80
Dispatch furniture upgrades 80 -80 80
Police Improvements Total 160 -160 160
City Clerk
Electronic Records Management
System 250 -250 250
Gas Tax, Federal-Aid Funds Projects
City maintains 84 miles of streets valued at $150M
Estimated backlog is $20M
Resurfacing Projects for FY 2017-18
Federally Funded Resurfacing Projects:
Broadway -El Camino Real to California Dr.
Cadillac Way –Rollins Rd. to Carolan Ave.
California Dr. –Peninsula Ave. to Burlingame Ave.
Trousdale Dr. –California Dr. to Marco Polo Way
Other Funded Resurfacing Projects:
California Dr. –Burlingame Ave to Oak Grove Ave.
(as part of Roundabout Project)
Humboldt Dr. –Peninsula Ave to Rollins Rd.
(shared cost with City of San Mateo)
Funding Sources Project Cost
Federal-Aid Grant $546,000
Gas Tax,Measures A & M $3,654,000
Total Recommended:$4,200,000
Location Map of FY 2017-18
Street Resurfacing Program
Federally Funded Resurfacing Projects
Broadway –El Camino to California Dr.
Cadillac Way-Rollins Rd. to Carolan Ave.
California Drive-Peninsula Ave. to Burlingame Ave.
Trousdale Drive –California Dr. to Marco Polo Way
Other Funded Resurfacing Projects
California Drive –Burlingame Ave. to Oak Grove Ave.
Humboldt Avenue –Peninsula Ave. to Rollins Rd.
Federally Funded Resurfacing Projects
Other Funded Resurfacing Projects
Summary of Draft FY 2017-18
General Fund CIP
Recommendations
Projects Recommendations
(thousands)
Parks and Recreation Improvements $3,228
Building Facilities Improvements $1,400
Bicycle, Pedestrian and Traffic Safety
Improvements $1,050
Electronic Record Management System (City
Clerk)$250
Finance Software System $200
Police Radio and Dispatch Furnishings $160
Total:$6,288
Residents’ Views on Infrastructure Needs
•City residents clearly believe infrastructure needs are a priority.
In a survey conducted last year:
–97% said they want infrastructure addressed in a fiscally
responsible manner, before Burlingame’s streets, roads,
and sidewalks become more costly to fix in the future.
–95% say maintaining this infrastructure is extremely or very
important.
–90% say well-maintained streets, sidewalks, and parks are
important to maintaining Burlingame’s quality of life and
property values.
–And 75% say that maintaining recreation programs and the
facilities that house them is extremely or very important.
Conclusion
•The recommendations contained in this presentation prioritize
the most essential safety and quality of life needs as
recommended by specific City departments, and are an
important step forward
•Even with authorization to proceed with these upgrade
projects, additional revenue is still needed to address
remaining unmet infrastructure needs before they become
more costly.
City Council
Feedback & Direction