HomeMy WebLinkAboutAgenda Packet - CC - 2020.03.11City of Burlingame BURLINGAME CITY HALL
501 PRIMROSE ROAD
BURLE BURLINGAME, CA 94010
Meeting Agenda - Final
City Council
Wednesday, March 11, 2020 6:30 PM Council Chambers
2019-2020 Mid Year Budget Study 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)
a. Adoption of a Resolution Amending the FY 2019-20 Operating and Capital Budgets to
Reflect the Recommended Mid-vear Adiustments
Attachments: Staff Report
Resolution
b. Review of Draft FY 2020-21 General Fund, Parkina Enterprise Fund. Gas Tax. Measure
A, Measure I, Measure M, and Senate Bill (SB 1) Funded Capital Improvement Program
Attachments: Staff Report
PowerPoint Presentation
6. ADJOURNMENT
City of Burlingame Page 1 Printed on 31612020
City Council Meeting Agenda - Final March 11, 2020
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 16, 2020
VIEW REGULAR COUNCIL MEETING ONLINE AT www.burlingame.org/video
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.
Cify of Burlingame Page 2 Printed on 31612020
STAFF REPORT AGENDA NO: 5a
MEETING DATE: March 11, 2020
To: Honorable Mayor and City Council
Date: March 11, 2020
From: Carol Augustine, Finance Director — (650) 558-7222
Subject: Adoption of a Resolution Amending the FY 2019-20 Operating and Capital
Budgets to Reflect the Recommended Mid -year Adjustments
RECOMMENDATION
Staff recommends that the City Council accept the FY 2019-20 Mid -year Financial Summary and
Five -Year Financial Forecast, and adopt the attached resolutions amending the FY 2019-20
Operating and Capital Budgets to reflect the recommended mid -year adjustments.
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 2019-20 fiscal
year. Revised forecasts incorporate final 2018-19 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 provides 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, 2020, but will also more accurately reflect the financial
condition of the City as it enters the FY 2020-21 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 unmet capital needs and other liabilities.
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
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.
1
2019-20 Mid -Year Report March 11, 2020
DISCUSSION
Economic Conditions
National Economy
At the time the City's FY 2019-20 budget was being prepared, the national economy continued to
hold promise after a year of moderate growth in 2018. U.S. real GDP had increased 2.9 percent in
2018, a modest uptick from 2017 and 2016, and the highest rate of growth since 2015. Exports
had experienced a good year of growth, reflecting relative strength in the global economy. The
U.S. unemployment rate had dropped to 3.8 percent (in March 2019), which is largely accepted as
full employment, as a result of a tight labor market and more full-time hiring. The continued growth
in payrolls resulted in a healthy increase in consumer spending as US retail trade grew. Supported
by personal consumption expenditure, private inventory investment, state and local government
spending, and nonresidential fixed investment, the U.S economy continued to grow in the first quarter
of 2019. And as consumer confidence indices remained quite high, prospects for the national
economy for the near -term exhibited good momentum. Most forecasts indicated that the economy
would continue to grow at a moderate pace in the near term.
Real GDP: Percent change from preceding quarter
4
3
2
1
0 -
7 02 Q3 G4 01 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2016 2017 2018 2019
U.S. Bwe of Economic Analysis Srasonally adjusted at annual ,aces
In the end, U.S. real GDP increased 2.3 percent in 2019, compared with an increase of 2.9 percent
in 2018, with the most acceleration seen in the first quarter. The growth again reflected positive
contributions from personal consumer spending, nonresidential fixed investment, federal
government spending, state and local government spending, and private inventory investment, all
partially offset by a decrease in residential fixed investment. While calendar year 2019 growth was
lower than experienced in 2018, it reflects steady growth despite a myriad of frantic headlines
surrounding trade tensions and political conflicts at home and abroad.
January 2020 marks the 1271h month of economic expansion following the end of the Great
Recession in June 2009. The current expansion is now the longest on National Bureau of
Economic Research record, which goes back to the 1850s. While the expansion has been long,
both the economy's average annual growth rate and the typical workers' earnings gains have been
relatively modest by the standards of earlier long expansions. According to Beacon Economics, a
leading independent economic research and consulting firm, there is no "timeline" for economic
expansions. Defining recession as an "anomaly caused by a large, rapid, and sustained shock to
2019-20 Mid -Year Report March 11, 2020
the system", Beacon Economics' founding partner Christopher Thornberg stated early in 2020 that
"Currently, there is little sign of the kind of collapsing imbalances or rapid shifts in aggregate
demand that would be capable of pushing the economy into a downturn or even a protracted slow
growth slump." But when the world's second-largest economy is brought to a virtual standstill of
unknown duration, as has occurred with the outbreak of the COVID-19 virus in China, the global
economy will suffer. China is the world's largest exporter by a large margin, and this disruption is
a major bottleneck to global supply. The demand -side effects are also very important - China is
now the largest source of external demand for most Asian economies, and America's third -largest
and most rapidly growing export market. Although many economists predict a two -quarter growth
shortfall for China, the trajectory of the virus will determine the full impact on the U.S. economy.
So the COVID-19 shock should not be taken lightly.
The Economy Has Been Growing Since
Mid-2009
Percent change in real GDP
Annualized change from previous quarter
—Change from same quarter in previous year
5
First quarter 2009:
�✓ American Recovery and
-5 Reinvestment Act of 2009
-- - Fourth quarter 2008:
Financial stabilization (TARP)
-10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Note Data are seasonally adjusted at annual rates.
Source Bureau of Economic Analysis
The U.S. unemployment rate was 3.6 percent in January 2020, up from 3.5 percent in the previous
month, but well below the 4 percent rate experienced in January 2019. The U.S, added 225,000
nonfarm jobs in January, beating expectations by a wide margin for the second straight month.
Notable gains occurred in construction (both residential and nonresidential), in health care, and in
transportation and warehousing. The uptick marked the highest labor force participation in four
years. With the economy entering its 11 th year of recovery, the nation's continued job growth defies
the orthodoxy of traditional economics that says job growth slows when the employment rate falls
below 4 percent.
Per Beacon, the U.S economy continues to grow because of this consistent job growth, rather than
in spite of it. "The health of the consumer, and therefore, the growth of the economy is being
supported by record tight labor markets ... the U.S. unemployment rate has trended below the
national jobs opening rate for two years. Competition for scarce labor resources has led many
workers to receive a significant increase in earnings, and a growing share of national income."
3
2019-20 Mid -Year Report
March 11, 2020
Falling Unemployment Supports Improved Consumer Confidence
---Conference Board ConSUmef Confidence dehl —Unemployment Rate (nghq
160 12%
140
10%
120
8%
100
80 6%
60
4
40
20
0 0°%
1980 1985 1990 1995 2000 2005 2010 2015
_e. 6(norwery. as-YD-1.7 3'. 20-y
Chart 1. Unemployment rate, seasonally adjusted,
January 2018 — January 2020
Percent
5.5
5.0
4.5
4.0
3.5
3.0
2.5
Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20
Lower unemployment typically pushes wages higher, and higher wages serve to bolster consumer
confidence, leading to potentially higher personal consumption expenditures. These trends would
be expected to move inflation higher as well. As a result, interest rates, both on the short end of
the yield curve and longer -term rates, should increase in the long run. However, mortgage rates
are still hovering well below 4 percent, down one percentage point from where they were a year
ago, and much lower than at any time between 1968 and 2008.
M
2019-20 Mid -Year Report
March 11, 2020
30-Year Fixed Rate Mortgage Average in the United States
a
M2 2004 2006 2008 2010 2012 201a 2016 rota 2.10
Shaded areas indicate u.S. reds Source: Freddie Mac myf.red19/G9t1
Consumer spending in the United States increased by 0.4 percent in the fourth quarter of 2019,
compared to the third quarter, ending the year 2.8 percent higher than in 2018. Consumer
sentiment remained high even through February.
In summary, calendar year 2020 began with general optimism that the long -running economic
expansion in the U.S. would continue, supported by a healthy job market, upbeat consumer
confidence and household spending, a rebound in manufacturing activity, a surging stock market,
and a pickup in global growth. Indeed, the U.S. economy is in the eleventh year of its current
expansion (the longest economic expansion in the nation's history), and prior to the COVID-19
outbreak, most economists found little reason to expect that this expansion would reverse or even
stall in the upcoming fiscal year. However, it is now clear that the spread of the virus, which now
threatens global economic growth, could have a significant impact on consumer spending in
general, and the U.S. economy, in the very short term.
The following chart of economic indicators reflects the most recently measured data as of March 3,
2020, from Trading Economics:
Overview
Actual
Q1/20
Q2/20
Q3/20
Q4/20
2021
GDP Growth Rate (%) Dec-19
2.1
1.8
2.4
2.5
2
1.7
Unemployment Rate (%) Jan-20
3.6
3.8
3.8
3.7
3.7
4.5
Inflation Rate (%) Jan-20
2.5
2
1.8
1.7
2.1
2
Interest Rate (%) Mar-20
1.25
2.5
2.5
2.5
2.5
2.5
Balance of Trade (USD Million) Dec-19
-48880
-55000
-51000
-49000
-62000
-53000
Government Debt to GDP (%) Dec-19
106.9
108
108
108
108
107
Government Budget (%of GDP) Dec-19
-4.6
-4.9
-4.9
-4.9
-4.9
-4.2
5
2019-20 Mid -Year Report
March 11, 2020
State Economy
California continues to enjoy a healthy fiscal situation. The state's economy reached a number of
significant milestones in the 2019 calendar year. The unemployment rate dipped to 3.9 percent,
representing a new record low, all while employment and wages reached all-time highs. Although
still higher than the national rate of 3.5 percent at the end of the year, the state has gained over 3.4
million jobs since the current economic expansion began in February 2010, accounting for more
than 15 percent of the nation's job gains over that same timeframe. In addition, the average weekly
wage in California increased more rapidly compared to the nation as a whole.
Unemployment Rate: California, National
10.0%
With the state's industries expanding in a tightening labor market, workers experienced wage
increases that generally outpaced inflation, giving workers more purchasing power to drive
spending and economic activity. And metro area labor force dynamics are such that rapidly growing
regions continue to attract workers, most notably in the San Francisco Bay Area and the Inland
Empire.
California Unemployment
Jan-00 to Dec-19
^, 19,500-
- 2
Q
19,000-
6
g 18,500-
18.000-
-8 c
2
t° 17,500-
a
>
g 17,000-
-g c
J
16,500-
-4 C:
Jar-00 Jar-05 Jar.-10 Jan-15 Jan-20
_ Libor Force uremplayment Rate
Source. CaWornia EDD and Beacon Economics, LLG
Over the period from December 2018 to December 2019, Educational Services saw the fastest
growth in the state (4.5%). This was followed by Construction (3.6%), Health Care (3.4%),
2019-20 Mid -Year Report March 11, 2020
Administrative Support (3.2%), Professional, Scientific, and Technical Services (2.4%), and Real
Estate (2.2%). Despite total job growth in the state, payrolls decreased in a handful of sectors in
December. Information posted the largest decline, where payrolls declined by 3,900. Still,
employment in the sector has expanded by 2.1% since December 2018. Payrolls in Leisure and
Hospitality (-2,400), Real Estate (-1,100), Wholesale Trade (-900), and Manufacturing (-600) also
contracted during the month
In 2018, while the U.S. economy expanded by 2.9%, California's grew by 4.3%. In 2019, economic
growth slowed to 2.3% in the U.S., and 2.6% in California. Earlier in the recovery (2014 and 2015),
California was the fastest growing state in the union by real gross state product. As of the third
quarter of 2019, the state appeared more susceptible to the national slowdown relative to other
states, ranking 23rd in terms of quarterly growth. Due largely to grim state and local statistics on
housing affordability and stagnant population growth, California's GDP growth is predicted to slow
to 2% in 2020, similar to the national growth prediction.
Yearly rate of change in gross domestic product
■ calitomia a Redotus
7.50%
5.00%
2.50%
0.00%
-2.50%
-5.00%
-7.50%
a O a 0 0 OO O O O O O a 0 a 0 0 0 0 0 0 0 0 0 0 0 0 0
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
0 0 0 0 0 0 � m a a.
0 0 0 0 0 0 0 0 0
Home price growth in California finally started to show signs of exhaustion in 2019. The median
price for a single-family home in California grew 2.2 percent, which when adjusted for inflation,
means that price growth was effectively flat. This should not be surprising, given the persistent
pace of appreciation that has occurred in recent years. Beacon concludes that the room for
sustained price inflation is limited. "To be sure, lower interest rates should spur home price growth
in the state, but it's unrealistic to expect the rate of growth we've seen in recent years to continue."
In recent years, the high cost of housing in California has emerged as a threat to the state's future.
Californians spend a disproportionate share of their income on housing, whether through
mortgages or rent. Housing is especially unaffordable in coastal areas, where two-thirds of
Californians reside. Throughout the state, home ownership remains low, vacancy rates are low,
and household sizes are high — especially for renters. Although the Governor and the State
Legislature have taken steps to spur housing production and address homelessness, there are no
quick fixes to the housing crisis, which has been decades in the making. The FY 2019-20 state
budget included $1 billion to address homelessness, a historic $1.75 billion investment in new
housing, and incentives for cities to approve new home construction. Despite these measures,
new housing permits are not meeting the demand. Estimates from Beacon Economics put the
2019-20 Mid -Year Report March 11, 2020
backlog of housing
units
at about 2.3 million
in 2017, but
only 104,000 residential permits were
issued in 2018; the
2019
projection 2019 was
about 95,000
permits.
HOME VALUES VARY WIDELY ACROSS THE STATE
►l
1,600,000
1,400,000
1,200,000
1,000,000
800.000
600,000
400,000
200,000
PO
2002 2004 2006 2008 2010 2012 2014 2016 2018 2019
San Francisco
Santa Clara
Orange
— Los Angeles
San Diego
�— California
Sacramento
Fresno
United States
SOURCE: Zillow.
NOTE: Values for selected counties, the state, and the United States are reported in September 2019 dollars from January 2002 through September 2019.
The Governor's FY 2020-21 budget proposal includes significant state funding for homelessness,
but it is unclear how these resources will be used to further the housing supply. Current -year efforts
at the state level must interact with local policies — the state's tight housing market reflects not only
a scarcity of developable land but also an array of policy choices. Changes to zoning and other
regulatory policies are needed to help reduce the cost of building housing, and coordinating these
changes takes time.
NEW HOME CONSTRUCTION PERMITS DIPPED IN 2019
250,000 -1 — Total
200,000 Multifamily
Single-family
Q 150,000 i...,..��
v
a,
Jy
Z 100,000
c
c
Q 50,000 _ �,,,,,,� -r►
0 -}-
2001
2003 2005 2007 2009 2011 2013 2015 20T7 2019
SOURCE: US Department of Housing and Urban Development Office of Policy Development and Research, State of the Cities Data Systems (SOCDS).
NOTE: September 2001 to September 2019.
With more than a decade of economic expansion, coupled with deliberate legislative action to put
the budget on better footing, the LAO concludes that the California state budget is in good condition.
Governor Newsom's January Budget Summary for FY 2020-21 estimates that a $7 billion surplus
will be available from continued, but slower, growth in General Fund revenues. The budget
continues the state's focus on building up discretionary reserves, but acknowledges growing
national and global economic risks from a near -term recession, global stock market volatility, and
political instability.
050
2019-20 Mid -Year Report March 11, 2020
Overall, the final quarter of 2019 exhibited a healthy momentum, largely attributed to the easing of
two major headwinds of the economy — labor shortages and the trade war with China. A slower
rate of job growth can be expected in 2020 than has been seen the past four to five years. Most
predictions are forjob growth in California at the rate of slightly below 2 percent — healthy, but below
that of previous years.
Local Economy
In California, there continues to be a marked difference between the coastal counties and the inland
counties in employment losses recovered since 2008. With its emphasis on the tech sector, the
San Francisco Bay Area economy continued to shine, with the lowest unemployment rate in the
state. The region is also atop national rankings in its commercial real estate market, with
commercial vacancy rates among the lowest, and the cost of rent among the highest in the nation.
The San Francisco Bay Area provided the most impressive performance of employment growth
within the state in 2019. The unemployment rate in the San Francisco Metropolitan Division (MD)
decreased 0.2 percent, from 2.2 percent in December 2018 to 2 percent in December 2019. During
the year, the total number of jobs in the area increased by 2.5 percent, or 28,900 jobs. Professional
and business services led the expansion in jobs, followed by private educational and health service,
leisure and hospitality, and information services. San Mateo County alone had the lowest
unemployment rate in the state, with an unemployment rate of 1.8 percent.
As the housing shortage dilemma worsens across California, it would be logical for employment in
the Construction sector (up 4.1 percent over the prior year) to have picked up more steam than it
has. Yet, construction labor in the region is tight, employment is volatile, and the overall
construction costs are among the highest in the state. Beacon Economics is forecasting strong
employment growth for San Francisco's Metropolitan District (MD), which includes San Francisco
and San Mateo Counties, but concedes, "Tight inventories in the residential housing market remain
a problem as new units are quickly being absorbed into the market"
San Francisco (MD) Unemployment
Jan-00to Dec-19
1,050- -t0
N u
g; 1,000- g m
g1O
950- 2
m -6
-4 O
$ 850- 8w- i 2 M
Jan-00 Jmr05 J0R10 Jarr15 J-20
Labor Force - unwr bymera Rite
Source: Cakfornia EDD and Beacon Economics, LLC
2019-20 Mid -Year Report March 11, 2020
Because the San Francisco Metropolitan area continues to be one of the United States' top tourist
and business destinations, Burlingame continues to see strength in hotel tax revenues and
consumer spending. However, the travel sector around the globe is taking a heavy hit as millions
of Chinese have been ordered to stay put and avoid travel as a new virus spreads. Tourism from
China was already weakening before the virus forced much of the country into a standstill. The
duration of the impact of the COVID-19 coronavirus on the travel industry is unknown at this time.
With an 89.4 percent occupancy rate in the first six months of this fiscal year, hotels in the area
have been among the most occupied in the country. (The nationwide average for hotel occupancy
rates in 2019 was 66.2 percent.) However, revenues in the same period were down 0.8 percent
from the same period last year. As noted in the General Fund Revenue analysis (Attachment A),
transient occupancy (hotel) tax revenues are very sensitive to the economy. Travel restrictions and
other impacts of the coronavirus are expected to negatively impact tourism and the area's
occupancy rates in the months to come.
Trends in consumer spending are largely reflected in sales tax receipts. Burlingame sales tax
receipts from July through September 2019 (the most recent data available) were 15.3 percent
below the third quarter in 2018. However, this comparison is skewed due to the State's transition
to a new reporting system in the prior year, when the City received additional payments. Excluding
reporting aberrations, actual sales were down 2.8 percent. This decrease was largely expected,
due to several one-time anomalies in the prior year. Generally, the City experienced a solid quarter
in most major business categories.
SALES PER A.
516.000
$12,000
$8,000
$4,000 ,
$o
03 Q3 Q3 03
16 11 18 19
Burlingame County California
rr .•i..ns have been adlw Pert !c r08ect Sales activity
Although continued increases in incomes and wages among local residents have helped fuel
taxable sales in recent years, 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.
- 10
2019-20 Mid -Year Report
March 11, 2020
Economic Sustainability
Even with the positive economic trends of recent years, budgets have been developed with a
relatively conservative approach. 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 an 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 are allowed to grow.
The establishment of the Other Post -Employment Benefits (OPEB) trust account was a significant
step in assessing unfunded retiree medical liabilities and systematically providing for them within
the operating budget. The establishment of a § 115 trust fund (and a plan to annually fund the
trust) in 2017 reflected the City's commitment to meet its growing pension obligations without
burdening future operating budgets with unsustainable pension costs.
The transaction tax that resulted from the passage of Measure I, effective April 1, 2018, is funding
additional safety services and enhanced streets and sidewalk maintenance activities, as well as
providing partial support for the construction of a new Community Center, which is long overdue
for replacement. Other liabilities await funding, however, and the major capital projects that have
emerged as priorities for Burlingame are costly — far beyond the City's capacity to fund even over
many years. Even if outside grant funding becomes available, these projects will no doubt require
significant funding from the City. Staff will continue to identify capital and other unfunded needs,
and recommend their systematic funding within the operating budget (of the appropriate fund)
whenever possible.
The City's FY 2019-20 budget anticipated another year of stable economic growth. Despite some
one-time positive revenue events, revenues were generally expected to outpace those of fiscal
year 2018-19 by a moderate margin. The budget supported continued funding of the City's
underfunded pension and retiree medical programs, as well as a $6.5 million contribution to the
Capital Investment Reserve. The budget also provided $2 million for the anticipated debt service
necessary to fund the new Community Center construction project; these bonds were issued in
December 2019.
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 $2.3 million higher than projected in
the FY 2019-20 adopted budget. Much of the growth comes from increased sales tax revenues,
as these were expected to level off following a year of prior -period corrections. An increase in
departmental charges for services is also now indicated, though these revenues are largely offset
with increases in the costs to provide the related services. Details of the City's General Fund
Revenue analysis at mid -year are provided in Attachment A of this report.
11
2019-20 Mid -Year Report March 11, 2020
Departmental 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 2019-20 budget was
proposed. The resulting departmental budgets should provide a clearer picture of operating needs
going forward. This is particularly important in establishing the framework for the FY 2020-21
budget, where funds needed for continued service levels will be considered in the context of the
City Council's established goals.
In addition to adjustments in departmental operating expenditures, only a small budget adjustment
is needed to transfers in/out of the General Fund.
Ltnir-TEMO-Firelm
The following table shows the mid -year assessment of fiscal year 2019-20 General Fund revenues.
There are three columns for the 2019-20 fiscal year: The "FY 19-20 Current Budget" column shows
the revenue budget that the City Council adopted last June, and budget amendments approved by
the City Council since that time; the "FY 19-20 Midyear Projection" column shows the most current
projection for the fiscal year; and the "FY 19-20 Midyear Amendment" column reflects a summary
of proposed revenue amendments to the FY 19-20 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 2018-19, 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 2019-20 projection.
CITY OF BU RLI NGAM E, CA
SUMMARY OF GENERAL FUND REVENUES
Property Tax
Sales and Use Tax
Transient Occupancy Tax
Other Taxes
Franchise Tax
Business Licenses
Real Property Transfer Tax
State HOPTR
Licenses & Permits
Fines, Forfeitures and Penalties
Use of Money & Property
Charges for Services
Other Revenue
State Subventions
Interest Income
Total, General Fund Revenue
FY19-20
FY19-20
FY19-20
FY17.18
FY18-19
Current
Midyear
Midyear
Adjustment
Actuals
Actuals
Budget
Projection
Amendment
Up (Down) %
$ 20,334,818
$ 21,955,938
$ 23,270,000
$ 22,840,100
$ (429,900)
-1.8%
12,819,794
17,819,970
14,760,000
16,860,000
2,100,000
14.2%
27,935,991
29,394,461
28,700,000
28,200,000
(500,000)
-1.7%
1,675,891
1,657,802
1,724,000
1,672,000
(52,000)
-3.0%
1,053,991
1,039,154
1,020,000
985,000
(35,000)
-3.4%
425,143
476,852
420,000
420,000
0
0.0%
61,177
59,592
60,000
60,000
0
0.0%
82,630
84,610
79,500
79,500
0
0.0%
977,121
1,255,675
978,000
878,000
(100,000)
-10.2%
177,887
179,055
130,000
130,000
0
0.0%
5,515,794
6,282,169
5,490,000
6,388,000
898,000
16.4%
29,321
59,071
30,000
30,000
0
0.0%
300,709
211,117
140,000
140,000
0
0.0%
332,714
4,071,886
1,970,000
2,400,000
430,000
21.8%
$ 71,722,980
$ 84,537,352
$ 78,771,500
$ 81,082,600 $
2,311,100
2.9%
12
2019-20 Mid -Year Report March 11, 2020
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 TOT - Transient Occupancy Tax) is
not only based on the previous year's receipts, but also on the strength of the local economy as
reflected in cash receipts for the current fiscal year. Although some slowing is indicated in the
City's TOT, the City's major revenue sources are generally keeping pace with the FY 2018-19
actual amounts, with most comparing favorably to the prior fiscal year. The recommended
adjustments equate to a 3.0 percent increase in General Fund revenues when compared to the FY
2019-20 adopted budget.
Note that FY 2018-19 actual amounts are taken from the City's Comprehensive Annual Financial
Report and therefore reflect interest income adjusted for a reduction in the City's investment
portfolio at the fiscal year end. The adjustment is required by governmental accounting standards,
but it creates large variations from year to year in the amount of interest income reported. As
explained in Attachment A, the budget for this line item assumes no change in the market value of
the City's portfolio, as this measure is difficult to anticipate and does not adequately reflect the
City's true return on investments. Not taking into account the FY 2018-19 year-end mark -to -market
adjustment in interest income (nearly $1.7 million), these revenues are anticipated to remain fairly
flat for the current fiscal year.
reTT, 1. .- r
The following table shows the mid -year assessment of FY 2019-20 General Fund expenditures by
critical service area:
CITY OF BURLINGAME, CA
SUMMARY OF GENERAL FUND EXPENDITURES
FY19-20 FY19-20 FY19-20
FY17.18 FY18-19 Current Midyear Midyear Adjustment
Actuals Actuals Budget Projection Amendment Up (Down) %
By General Fund Program
General Government
$ 5,132,958
$ 5,513,693
$
6,580,069
$
6,729,099 $
149,030
2.3%
Public Safety
26,413,818
$ 27,758,430
$
29,336,507
$
29,699,707
363,200
1.2%
Public Works
5,645,705
$ 5,934,117
$
6,352,940
$
6,533,410
180,470
2.8%
Community Development
1,799,124
$ 1,709,736
$
2,019,157
$
2,189,507
170,350
8.4%
Leisure & Culture
14,645,653
$ 14,847,131
$
15,998,263
$
16,610,808
612,545
3.8%
Total Expenditures
$ 53,637,258
$ 55,763,107
$
60,286,936
$
61,762,531 $
1,475,595
2.4%
Again, there are three columns for fiscal year 2019-20. The "FY 19-20 Current Budget" column
shows the budget that the City Council adopted in June 2019 and budget amendments approved
by the City Council since that time. Departmental budgets were also internally adjusted for
encumbrances of the prior fiscal year, but these amounts are not included in this analysis. The
second FY 2019-20 column shows the new mid -year projection for each program area's current
year expenditures. The third FY 2019-20 column shows the resulting proposed amendments to
the FY 2019-20 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 years 2017-18 and 2018-
19. All departments experienced budgetary savings (positive expenditure variances) within the
General Fund in fiscal year 2018-19, resulting in expenditures of $4.3 million (roughly 7.1 percent)
13
2019-20 Mid -Year Report March 11, 2020
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.
Staff is recommending more adjustments to the expenditure budgets in this analysis than usually
recommended at the mid -year review. Expenditure adjustments were needed for higher personnel
costs, due partly to increased FTE (full-time equivalent staff positions), and partly to a one-time
retroactive benefit change. Operational adjustments were needed, especially in contract services
(largely offset by related increased revenues from departmental services). And smaller expenditure
adjustments were often offset by operational savings elsewhere within 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 established
within each category of departmental expenditures, budgetary savings tend to average 3-5 percent
of the annual expenditure budget. The City may experience larger variances, especially in the area
of personnel costs, in years when there are a high number of position vacancies. For this reason,
staff anticipates that the City will experience budgetary savings in the departmental budgets in the
range of $2 - $3 million in the current fiscal year, largely from non -personnel budgets.
Only a slight adjustment is needed in the mid -year budget resolution to increase the Transfers Out
of the General Fund in fiscal year 2019-20, reflecting an increase ($20,000) in a capital project
budget as explained in the discussion of the Capital Projects Fund.
General Fund Operatina 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:
CITY OF BURLINGAME, CA
GENERAL FUND OPERATING SUMMARY
Total Revenue
Expenditures
Departmental Expenditures
Transfers to Debt Services
Other Transfer In (Out)
Total Expenditures
Net Operating Surplus
Transfer to Capital Investment Reserve
Change in General Fund Balance
FY19-20
FY17-18 FY18-19 Current
Actuals Actuals Budget
$ 71,722,980 $ 84,537,352 $ 78,771,500 $
FY19-20
Midyear
Projection
81,082,600 $
FY19-20
Midyear
Amendment
2,311,100
(53,637,258)
(55,763,107)
(60,286,936)
(61,762,531)
(1,475,595)
(5,579,688)
(4,684,811)
(4,708,763)
(4,708,763)
0
(4,106,256)
(8,293,863)
(6,764,681)
(6,784,681)
(20,000)
(63,323,202)
(68,741,781)
(71,760,380)
(73,255,975)
(1,495,595)
8,399,778 15,795,571 7,011,120 7,826,625 815,505
(5,300,000) (3,000,000) (6,500,000) (6,500,000) 0
$ 3,099,778 $ 12,795,571 $ 511,120 $ 1,326,625 $ 815,505
14
2019-20 Mid -Year Report March 11, 2020
Adjusted by the recommended amendments in this report, the General Fund shows a $1.3 million
projected surplus (positive net operating revenues) for fiscal year 2019-20, a slight improvement
over the $511,120 surplus provided in the current budget.
General Fund Balance
Once all the mid -year adjustments are posted, the General Fund shows a projected total fund
balance of over $50.5 million at the end of the 2019-20 fiscal year.
CITY OF BURLINGAME, CA
CHANGES TO GENERAL FUND BALANCE
FY 2019-20
Mid -Year
Projection
Beginning Fund Balance (audited) $ 49,167,751
Projected Revenues & Expenditures
Projected revenue performance 81,082,600
Projected departmental expenditures (61,762,531)
Subtotal, Revenues Net of Expenditures 19,320,069
General Fund Long -Term Debt (4,708,763)
Other Transfers In (Out) of General Fund (6,784,681)
Transfer to CIP Renewal & Replacement Reserve (6,500,000)
Ending Fund Balance (Projected) $ 50,494,376
Although last year's mid -year budget projections for fiscal year 2018-19 reflected a $3.5 million
increase in fund balance, the General Fund experienced a surplus of nearly $12.8 million for fiscal
year 2018-19. The budget surplus is largely reflected in the increased unassigned fund balance —
a $7.6 million increase, plus a $3.3 million increase in restricted fund balance reflecting General
Fund contributions to the § 115 Pension Trust Fund. The remaining $1.9 million served to increase
the reserves in accordance with the City's General Fund Reserve Policy.
The large increase in General Fund unassigned fund balance from FY 2018-19 provides the City
opportunities to make progress in funding long-term pension liabilities and/or setting aside
additional funds in the Capital Investment Reserve for infrastructure in the current fiscal year.
15
2019-20 Mid -Year Report March 11, 2020
CITY OF BURLINGAME, CA
GENERAL FUND BALANCE ASSIGNMENTS
FY18-19
FY19-20
Actual
Mid -Year
Results
Projection
Up (Down) $
Up (Down) %
Economic Stability Reserve
$ 18,837,000 $
19,460,000
$ 623,000
3.3%
Catastrophic Reserve
2,000,000
2,000,000
0
0.0%
Contingency Reserve
500,000
500,000
0
0.0%
Subtotal, Assigned Fund Balance
21,337,000
21,960,000
623,000
2.9%
Add: Restricted for Pension Trust Fund (PARS) 7,459,442 10,416,442 2,957,000 39.6%
Add: Unassigned Fund Balance 20,371,309 18,117,934 (2,253,375) -11.1%
Total, Ending Fund Balance $ 49,167,751 $ 50,494,376 $ 1,326,625 2.7%
As of June 30, 2020, the General Fund's projected fund balance of $50.5 million represents 68.9
percent of General Fund operating expenditures of $73.3 million. Because $10.4 million is
restricted for pension benefits through the § 115 Trust Fund, a better measure of coverage may be
that the unrestricted fund balance of nearly $40.1 million equates to 54.7 percent of the fund's
operating expenditures. 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.
Once funded according to the policy, the City's reserves (nearly $22 million) comprise the largest
portion of the General Fund's ending balance, an amount equal to 27.1 percent of projected
General Fund 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. This leaves an unassigned fund balance of $18.1 million.
In past years, staff had recommended that surpluses of the prior year be used to provide additional
funding to the Capital Investment Reserve at midyear. Staff now recommends that a portion of the
General Fund surplus from FY 2018-19 be used to increase contributions to the § 115 trust fund
for pensions that was established in 2017.
In the past, the City Council has been comfortable with a $9-10 million unassigned fund balance
for the General Fund. Because the pension trust fund is able to provide a better return on the City's
investments than can be obtained in its general portfolio, staff recommends a $6 million transfer to
the pension trust fund held by Public Agency Retirement Services (PARS). The trust fund is
ultimately a very flexible placement of the City's funds. Although the funds can only be used to pay
for retirement obligations through CalPERS, the City's required contributions to CalPERS will be
over $7.5 million in the current fiscal year, and increasing in future fiscal years. Should funds be
needed for other purposes, the CalPERS contributions could be paid directly from the trust fund,
freeing up the General Fund monies for other desired uses.
General Fund Reserve Policy and Capital Investment Reserve — Early in 2015, the City Council
approved a General Fund Reserve Policy that recognized the need for adequate reserves to guard
16
2019-20 Mid -Year Report March 11, 2020
against future economic downturns, as well as to provide a hedge for catastrophic events. The
policy dictates an annual review and adjustment in the Economic Stability Reserve. 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 Capital Investment Reserve within the Capital Improvement Projects (CIP) Fund. The purpose
of the Capital Investment Reserve was to offset the further accumulation of unfunded liabilities that
aging facilities represent. The reserve was initially funded with a General Fund transfer of $3
million, a reflection of the fund's operating surplus in fiscal year 2013-14. Since that time, the
Capital Investment Reserve has been funded with each annual operating budget in the base
amount of $3 million. The reserve has also grown as a result of surpluses generated during the
continued economic expansion of recent years. The Council approved a $6.5 million appropriation
in the current fiscal year.
CITY OF BURLINGAME, CA
CHANGES TO CAPITAL INVESTMENT RESERVE
Beginning Balance Established 3/31/15 (FY14-15)
$
3,000,000
Budget Transfer from General Fund in FY 2015-16
3,000,000
Add'I Budget Transfer from General Fund in FY 2015-16 (mid -year)
5,000,000
Decrease in Catastrophic Reserve Fund (mid -year)
2,500,000
Ending Balance 6/30/16
$
13,500,000
Budgeted Transfer from General Fund in FY 2016-17
3,000,000
Add'I Budget Transfer from General Fund in FY 2016-17 (mid -year)
4,000,000
Ending Balance 6/30/17
$
20,500,000
Budget Transfer from General Fund in FY 2017-18
3,000,000
Add'I Budget Transfer from General Fund in FY 2017-18 (midyear)
2,300,000
Ending Balance 6/30/18
$
25,800,000
Budget Transfer from General Fund in FY 2018-19
3,000,000
Ending Balance 6/30/19
$
28,800,000
Budget Tra nsfer from General Fund in FY 2019-20
6,500,000
Budgeted Ending Balance 6/30/20
$
35,300,000
Note that, unlike other amounts reflected in the fund balance of the Capital Projects Fund, Capital
Investment Reserve funding will not be appropriated to a specific project. Rather, the reserve
accumulates for capital projects to be initiated when timing is optimal and sufficient other funding
is identified. For example, the City netted $38.9 million in proceeds from the issuance of the 2019
Lease Revenue Bonds, which will help fund the construction of the new Community Center that is
estimated to cost approximately $52 million. Once the proceeds are fully drawn down, the
remaining costs of the project will need to be funded from other sources, and an appropriation from
the Capital Investment Reserve can be made with the adoption of the FY 2020-21 Budget.
Generally, recommendations for funding this reserve will be executed with each budget adoption
and again with the annual mid -year analysis.
Finance staff reviewed all City funds for this mid -year analysis. There are two budget adjustments
that impact all funds: an annual mid -year adjustment of investment revenue, and a one-time
adjustment to reflect retroactive employee benefit payments.
17
2019-20 Mid -Year Report March 11, 2020
The recommended revenue adjustment for the City's individual funds is largely the result of the
decreased earnings allocations anticipated from the City's investment portfolio, explained in the
General Fund Revenues section of this report (Attachment A). The increase in the General Fund
interest earnings is due to the larger cash balances in recent years; the increase in Debt Service
earnings is from investment of the 2019 Lease Revenue bond proceeds, which will be drawn down
as the new Community Center construction progresses. The recommended adjustments for
interest income in each of the larger funds are shown below:
CITY OF BURLINGAME, CA
INTEREST INCOME AMENDMENTS
FY19-20
FY19-20
FY19-20
FY18-19
Current
Midyear
Midyear
Adjustment
Actual*
Budget
Projection
Amendment
Up (Down) %
General Fund
$2,380,791
$1,970,000
$2,400,000
$430,000
21.8%
Water Fund
$252,020
438,000
250,000
(188,000)
-42.9%
Sewer Fund
$179,165
465,000
180,000
(285,000)
-61.3%
Parking Enterprise Fund
$139,051
229,000
140,000
(89,000)
-38.9%
Building Enterprise Fund
$170,943
246,0D0
170,000
(76,000)
-30.9%
Storm Drain Fund
$190,337
311,000
190,000
(121,000)
-38.9%
Debt Service Fund
$188,172
104,000
520,000
416,000
400.0%
*Excludes June 30, 2019 Mark -to -Market Adjustment
The second citywide adjustment is the result of negotiations with City employee bargaining units,
which began last fiscal year and resulted in additional employer contributions to employees' Health
Reimbursement Arrangement (HRA) accounts. HRA contributions are not considered PERSable
compensation, so this benefit does not increase the City's pension costs. However, as a defined
contribution benefit, HRA accounts do provide a flexible form of coverage to employees for post -
employment medical expenses. For retiree health "Tier 3" employees (those hired after November
2010 — January 2012 ,depending on bargaining unit) the City now contributes 2 percent of an
employee's base pay at the time of hire, increasing to 3 percent starting at five years. This is in
addition to an ongoing City contribution of one percent for all employees, and any employee
matching contributions that may have been negotiated. The Council also authorized retroactive
contributions to Tier 3 employees. Although increases in the City's regular HRA contributions were
anticipated during the development of the 2019-20 fiscal year budget, the retroactive payments,
which affected all operating funds, had not yet been determined. These retroactive contributions,
paid in August 2019 through January 2020, totaled $359,400 for all funds combined.
City of Burlingame
FY 2019-20 Mid -Year Budget Adj.
HRA Retro
General Fund
298,600
Water Enterprise Fund
16,100
Sewer Enterprise Fund
24,300
Solid Waste Fund
6,500
Building Enterprise Fund
10,200
Internal Service Fund - Fleet
3,700
359,400
2019-20 Mid -Year Report March 11, 2020
Capital Projects Fund — Staff identified several adjustments for the City's Capital Projects Fund.
Although not all of the projects will result in additional capital assets, they are best tracked in this
fund due to the multi -year nature of the projects and significant long-term impacts for the City.
As reported to the City Council in May 2019, a geotechnical evaluation was needed in order to
complete the construction documents for the Skyline Park Project. The additional costs were not
anticipated when the project budget was developed, so an additional $20,000 was requested from
the General Fund.
The City Council originally authorized $100,000 to start the planning phase of the Murray
Playground Renovation as part of the fiscal year 2018-19 Parks & Trees Capital Improvement
Program. Subsequently, the project to renovate Murray Field was completed, and the remaining
budget of $242,847 was earmarked for use on the Murray Natural Playground project. In February,
the Council approved execution of the main construction contract and reviewed the estimated
project expenditures. In order to complete funding for the project, funds remaining from the Murray
Lights Retrofit project ($25,003) and the Paloma Playground project ($49,479) will also be used.
In November 2019, the Burlingame Recreation Foundation donated $20,000 to the City to provide
additional funding for the Bay Trail Fitness Equipment project. In January 2020, the Foundation
contributed $25,000 to augment the Washington Park Ballfield Lighting project. An adjustment to
reflect both donations is needed to increase the budget for these two capital projects.
The remaining mid -year budget adjustments impact the City's Parking & Garages Capital
Improvement Program. The City's downtown area will be significantly impacted by the Village at
Burlingame project, as the transformation of the City's existing Parking Lot F into an affordable
housing development will take place simultaneously with the construction of the proposed parking
garage on the adjacent Parking Lot N. A CIP project, funded by the Parking Enterprise Fund, was
established to track the City's $1.85 million portion of the project, as well to support the parking
mitigation strategy that will be necessary. The project was initially funded ($200,000) last fiscal
year to cover the estimated cost of a project manager and public relations firm to ensure the smooth
execution of the project. The additional contractual resources are being used to assist the City in
planning alternate vehicle and pedestrian traffic routes, allowing for project deliveries, and initiating
parking arrangements (including development of RFPs and analyzing and selecting firms). Project
management also involves communication and coordination with stakeholders including the
Downtown Business Improvement District, the Chamber of Commerce, merchants, the project
developer, and various permitting agencies/departments.
Two adjustments are needed to the project's budget to reflect City Council directives in the current
fiscal year In August 2019, the City Council approved funding of $222,000 to implement certain
parking mitigation measures, including valet -assist parking services three days per week, lease of
a portion of the Caltrain parking lot at the Burlingame Station, and incentive programs for workers
in the downtown area. Also specific to the Village at Burlingame project, $208,320 in funding was
approved in November for project management and construction inspection services.
The Council authorized an additional $60,000 for the Wayfinding Signage Improvements project in
September 2019. The funds are to be used to conduct a 12-month pilot program for dynamic
19
2019-20 Mid -Year Report March 11, 2020
wayfinding signage for parking availability in three parking lots in the Burlingame Avenue Downtown
District and the Broadway Commercial District. Particularly in light of the shortage of parking during
construction on Lots F and N, this project will assist the City in maximizing the parking infrastructure
that currently exists in the area. This project is also funded from the Parking Enterprise Fund.
Phase I of the Community Center Project, which provided for installation of a new playground, a
new sports court relocated to the large picnic area adjacent to the first baseline of the small ballfield,
and a new small picnic area adjacent to the new playground, has recently been completed. The
budget for Phase I was established as a standalone project. The work was necessary to allow for
the beginning of Phase 11, which includes demolition of the existing Recreation Center and the
construction of the new Community Center, associated site work, and underground parking.
Modular buildings were delivered and installed in February to serve as temporary recreation
facilities during Phase 11.
As the total costs of Phase II are expected to exceed $50 million, the City Council approved the
issuance of the 2019 Lease Revenue Bonds, to be financed with a $2 million annual debt service
appropriation: $1 million per fiscal year will be funded from Measure I revenues, and an additional
$1 million will be transferred annually from other General Fund revenues. The bonds were issued
in December, yielding over $38.9 million in bond proceeds for the project. A budget for the
construction of this major community facility will be established once the main contractor has been
selected later this fiscal year.
Debt Service Fund — Mid -year adjustments to the adopted budget for fiscal year 2019-20 are
needed to reflect issuance and administrative costs of the 2019 Lease Revenue Bonds sold in
December, along with the debt service payments in the current fiscal year.
CITY OF BURLINGAME, CA
GENERAL FUND DEBT SERVICE OBLIGATIONS
FY19.20 FY19-20 FY19-20
FY18-19 Current Midyear Midyear
Description Maturity Adopted Budget Projection Amendment
2006 Pension Obligation Bonds FY2036 $956,648 $976,500 $976,500 $0
2010 Lease Revenue Bonds (Corp Yard)
2012 Lease Revenue Bonds (Burl Ave Streetscape)•
2019 Lease Revenue Bonds (Community Center)
Cost of Issuance for 2019 Lease Rev Bonds
Debt Administration Costs
Subtotal, Principal and Interest
Contributions from Other Funds
Net General Fund Debt Service
FY2021 1,164,275
1,167,775
1,167,775
0
FY2042 550,888
551,488
551,488
0
0
0
1,997,334
1,997,334
0
0
303,054
303,054
13,000
13,000
20,950
7,950
2,684,811
2,708,763
5,017,101
2,308,338
(1,574,872)
(1,583,218)
(1,583,218)
0
$1,109,939
$1,125,545
$3,433,883
$2,308,338
*100%reimbursed by the Special Assessment District and Parking Enterprise
Funds for the first debt service payment (due July 1S1) were set aside with General Fund and
Measure I transfers in both fiscal years 2018-19 and 2019-20. Therefore, an additional $2 million
will remain in the debt service fund for debt service payments beyond the current fiscal year. It is
recommended that these funds be used to help fund the Community Center's construction budget,
thus reducing the amount of funding to be required from General Fund reserves for the project.
20
2019-20 Mid -Year Report March 11, 2020
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 2018-19 revenues from Measure A totaled $793,000. The FY 2019-20 budget was set at
$860,000, and it appears that this level of funding will be achieved. No budget adjustment is
recommended at this time. $750,000 of Measure A Funds is appropriated for transportation -related
capital programs in the current fiscal year.
Measure W Fund — In November 2018, San Mateo County voters approved Measure W, a half -
cent sales tax providing the county with additional resources to improve transit and relieve traffic
congestion. Fifty percent of the funds are administered by SamTrans, while the remaining funds
flow to the San Mateo County Transportation Authority (TA). The measure went into effect in July
of 2019. The FY 2019-20 TA budget allows for a $9.1 million allocation of Measure W funds to
cities based on a formula that considers population and street miles. The City of Burlingame will
receive approximately $350,000 from Measure W funding in the current fiscal year. These funds
will be used to support future projects in the Streets Capital Improvement Plan.
Gas Tax (HUTA) and Road Repair and Accountability Act (RRAA) of 2017 — The Gas Tax is a
special revenue fund 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, so they have always been an important revenue source for the City's
Streets Capital Improvement Program. However, prior to the Road Repair and Accountability Act
of 2017 (SB 1), Highway Users Tax (HUTA) revenues were in large part tied to gasoline sales. As
a result of downward trends in taxable sales of gasoline, road and transit investments were not
keeping pace with the growth in transportation needs across the state.
The RRAA provides a significant new investment in California's transportation systems - about $5.2
billion per year over the next decade, split equally between state and local investments. The Act
enhanced HUTA allocations through increases in per gallon fuel excise taxes, diesel fuel sales
taxes, and vehicle registration taxes; stabilization of the problematic price -based fuel tax rates; and
inflationary adjustments to rates in future years. The Act more than doubled local streets and road
funds allocated from HUTA by also providing funds from new taxes through a new Road
Maintenance and Rehabilitation Account (RMRA). The RMRA allocations include funds from the
additional taxes enacted by SB 1: a 12 cent gasoline excise tax, a 20 cent diesel fuel excise tax,
and transportation improvement fees (vehicle registration taxes). In addition, the Act provides for
the payment of $225 million of transportation loans to be repaid over three years (FY 2019-20 is
the last year for these repayments.)
The State distributed revenues from the first full year of RMRA in fiscal year 2018-19. In total, the
FY 2019-20 budget reflected an increase over the prior year due largely to a HUTA § 2103 rate
reset on July 12, 2019. The California Department of Finance (DOF) provided new revenue
estimates for transportation tax revenues in January. Estimates for the current fiscal year are
adjusted modestly based upon these new estimates, resulting in an increase of $34,200 over the
revenues initially projected.
21
2019-20 Mid -Year Report March 11, 2020
CITY OF BURLINGAME, CA
GAS TAX ALLOCATIONS
Description
2017-18
Actual
2018-19
Actual
2019-20
Adopted Budget
2019-20
New Estimates
FY19-20
Mid -Year
Amendment
2103 State Gasoline Tax
$ 117,404 $
101,204
$ 258,000
$ 251,700
$
(6,300)
2105 State Gasoline Tax
163,603
166,212
170,000
166,000
$
(4,000)
2106 State Gasoline Tax
121,424
124,174
124,000
124,000
$
-
2107 State Gasoline Tax
212,920
209,030
221,000
208,000
$
(13,000)
2107.5 State Gasoline Tax
6,000
6,000
6,000
6,000
$
-
RMRA (S131)
138,972
546,154
501,000
558,500
$
57,500
TCRF (SB1) Loan Repyment
34,273
34,163
34,000
34,000
$
-
$ 794,595 $
1,186,937
$ 1,314,000
$ 1,348,200
$
34,200
Storm Drainage Fund - The Storm Drainage Fund accounts for the storm drainage fees collected
due to an assessment approved by parcel owners in the city at a special election in May 2009. The
storm drainage fees (approximately $3.0 million in the current fiscal year) have supported three
issuances of bonds (Storm Drainage Revenue Bonds Series 2010, 2012, and 2016). The bond
proceeds, which total nearly $26.7 million from the three issuances, are used to fund infrastructure
improvements in the City's Storm Drain Capital Improvement program. Approximately $3.4 million
of the bond proceeds remain in the Debt Service Fund; these proceeds should be totally drawn
down in the current fiscal year as existing projects are completed. No adjustments are needed to
the fund's 2019-20 fiscal year adopted budget.
Water & Sewer Funds - Due to the reduced water consumption that resulted from state mandates
during the drought conditions of 2012-2017, and increased capital and operating costs of the water
system -including the cost of wholesale water -the City found it necessary to raise water rates.
After the City completed a water rate study in 2016, the City Council approved rate increases
equivalent to 9 percent in 2017, 7.5 percent in 2018, and 7.5 percent in 2019. The rate increase
implemented on January 1, 2019 is the last approved rate increase for the water system; sewer
rates have remained the same since 2012.
Winter rains in 2017 brought an end to drought conditions in Northern California; water consumption
increased, and the San Francisco Public Utilities Commission (SFPUC) has kept the rate of
wholesale water flat. Because sewer charges are based on indoor water usage, these revenues
are very stable. As such, only minor adjustments are required to the revenues of both funds for
the current fiscal year - an increase of $400,000 (less than 2 percent) for the Water Fund for a new
projection of $20.8 million for water sales is indicated. A combined increase of $28,000 in other
Water Fund services (largely taps for new meters) is also projected. Within the Sewer Fund,
revenues from Hillsborough sewer charges are projected to increase ($58,000 higher than
projected in the current year budget) based on year-to-date discharge flow meter readings. In
addition, sewer connection fees are projected to be $150,000 higher than budgeted due to
development projects that will soon move into the construction phase.
With commercial and residential development coming on-line, revenues in both funds are expected
to rise moderately. A sewer master plan is currently underway, and an extensive sewer rate study
22
2019-20 Mid -Year Report March 11, 2020
will follow, probably in the next fiscal year. This will ensure that future rates are able to support the
necessary improvements indicated for this aging infrastructure.
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 2019-20 budget; other than an increase in
the General Fund budget for the Parks Division for water, these costs appear to be in line with
amounts in the adopted budget.
One slight budget adjustment is recommended for the Sewer Fund: the Public Works Sewer
Division received a notice of violation (NOV) from the County's Environmental Health Services
inspector at two pump stations (1740 Rollins &1301 Old Bayshore). To resolve the violations, the
Division will need to have the ground fuel tanks at these locations pressure -tested and all corrosion
removed, and then have the tanks painted, at a cost of approximately $7,500.
Historical Water Consumption Billed
Last Seven Fiscal Years
16,000,000
14,000,000
12,000,000
10,000,000
C)
8,000,000
O
� 6,000,000
4,000,000
2,000,000
2M3-24 2014-15 2015-16 2026-17 2017-18 2018-19 2019-20
Actual Actual Actual Actual Actual Actual Projected
Staff has recently implemented the requirements of Senate Bill 998, which places new restrictions
on residential water service discontinuation when customers are delinquent in paying their water
bills. This new legislation requires cities to have a written policy on discontinuation of residential
service. It also prohibits cities from discontinuing service for non-payment unless the account is
late for over 60 days, and it outlines several circumstances in which water service cannot be shut
off for non-payment. Although Burlingame currently has a well -controlled delinquency rate, staff
anticipates additional administrative costs in future fiscal years for translation and noticing, as
well as increased costs associated with the appeals, extensions, and alternative repayment
options required by the bill. However, no significant increase in bad debt expense is anticipated.
Solid Waste and Landfill Funds — Although increases in Solid Waste rates were approved for
three subsequent calendar years (2019, 2020 and 2021), the Solid Waste Fund is expected to
experience a slight deficit, requiring a draw down on the fund's rate stabilization reserve in the
current fiscal year. For calendar year 2019, estimated revenues from collections from Burlingame
customers ($11.7 million) will fall short of the costs of the City's collection contractor (Recology) of
$5.8 million; disposal & processing fees of $4.3 million; franchise fees of $812,000; funding of the
City's landfill post -closure costs ($505,000); and $620,000 for costs borne by the City, including
23
2019-20 Mid -Year Report March 11, 2020
street sweeping and steam cleaning and maintenance of public receptacles. The shortfall is
currently estimated to be $330,000 for the calendar year. The budget provides for an expense of
$140,000 for the operational shortfalls attributable to the first half of the current fiscal year, so a
$25,000 increase in the fund's contractual expense budget is proposed to cover the shortfall. The
rate increase of 6 percent effective January 1, 2020, should nearly eliminate any shortfall for the
last half of the fiscal year. The additional expense should create only a small reduction in the
utility's fund balance, as the fund is credited with interest earnings and revenues from forfeited C&D
deposits.
Healthy reserve levels in the Solid Waste Fund allowed the City to avoid rate hikes prior to the
increases beginning in 2019; the increases will insure that the fund is in good fiscal position when
the current franchise agreement with Recology terminates at the end of 2020. The new agreement
allows for an extension of the services provided by Recology through the year 2035.
Solid waste rates also include a 5 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 $1.8 million fund deficit that results from the liability recorded for
future post -closure costs.
Building Enterprise Fund — Revenues in the Building Enterprise Fund (largely construction
permits and building plan check fees) are showing greater -than -anticipated activity in fiscal year
2019-20. Construction permit revenues are anticipated to exceed the adopted budget (and prior
year results) by over $720,000, for a total adjusted budget of $1.9 million.
Two very large development projects last year created a spike in building plan check service fees.
Although plan checking fees this fiscal year will not approach the results of fiscal year 2018-19
(over $2 million), staff anticipates that these fees will exceed the current year budget of $800,000
by $300,000. As the current year volume of plan checks has increased, an upward adjustment for
imaging fees is also proposed.
CITY OF BURLINGAME, CA
BUILDING FUND REVENUES
FY19-20
FY19-20
FY17.18
FY18-19
Adjusted
FY19-20
Midyear
Adjustment
Description
Actual
Actual
Budget
Projection
Amendment Up (Down) %
Construction Permit Fee
$ 3,645,248
$ 1,126,935
$ 1,180,000
$ 1,904,000
$ 724,000
61.4%
Building Plan Check Fees
614,822
2,048,931
800,000
1,100,000
300,000
37.5%
Microfilm Fees
153,304
45,278
40,000
57,000
17,000
42.5%
Other Revenues
58,459
62,974
0
0
0
n/a
Total
$ 4,471,833
$ 3,284,119
$ 2,020,000
$ 3,061,000
$ 1,041,000
51.5%
Offsetting these increased revenues is a $700,000 increase in the Building Enterprise Fund
expense budget for contractual services. In November, the City Council authorized the negotiation
and execution of an amendment to the professional services agreement with Bureau Veritas North
America. The agreement provides for additional plan check and building inspection services in the
current fiscal year as a result of an increase in the submittal of building permit applications to the
Building Division. Much of the demand increase was due to the plan check and inspection services
24
2019-20 Mid -Year Report March 11, 2020
created by an accelerated timeframe for required tenant improvements associated with the
Burlingame Point project.
However, as a result of regulatory changes in employment law, a review of the staffing configuration
within the Building Division was conducted, including the Division's use of contractors. It was
determined that the City was relying on contractors to perform building inspections and permit
technician work when these services should be the responsibility of City employees. These
changes do not result in any additional individuals providing services, but they shift the model from
contractors to employees providing the services. The addition of two full-time equivalent (FTE)
employees (a Permit Technician and a Senior Building Inspector/Plan Checker) will require an
increase in the Division's personnel budget (approximately $74,000 for the remainder of the current
fiscal year), but will also support a decrease in the contractual services budget of $72,000.
Smaller adjustments are proposed to cover the needs resulting from the unanticipated increase in
Building Division activities. $11,000 is needed for the Division's increased office expenses, and
$20,000 should cover the increase in credit card fees charged on the higher volume of payments
accepted from applicants.
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 electric vehicle (EV) charging stations in City lots. As the downtown area is in the midst of
significant development activity, the impacts to the fund's various revenue streams have been
significant. Parking Fees are below projections ($60,000), probably due to the shut -down of Lot N
and a portion of Lot F beginning in October 2019. Employees are finding alternative transportation
and/or are parking in alternative long-term lots that are less expensive. Similarly, revenues from
the sale of parking permits for the downtown area should be adjusted downward ($40,000), as
prior -year projections were too high, and anticipated growth in the use of the permits was optimistic.
In addition, several larger employers are no longer buying the permits for their employees, thus
reducing permit volume.
Revenues from electric vehicle charging stations exceeded the budget last fiscal year, with $18,200
from this source. With an increased number of electric vehicle charging stations now being utilized,
this line item revenue projection can be increased $5,000 (to $20,000).
The use of smart meters has increased the credit card fees charged to the City, resulting in costs
that exceeded the prior -year budget for this line item expense by $25,000. The original budget for
credit card fees in the Parking Enterprise Fund for the current fiscal year is $100,000; it should be
increased by $25,000 to cover the costs that are expected to be at the same level as experienced
last year.
And finally, funding for the costs of parking capital improvements also requires upward adjustments
to the budget. In addition to funding $60,000 for a wayfinding signage pilot program, the temporary
loss of parking during construction of the Village at Burlingame project also is being addressed:
$222,000 will fund numerous mitigation measures (including valet -assisted parking and lease of a
portion of the Caltrain parking adjacent to Lot O), and $208,320 is needed to fund the management
and construction inspection services associated with this project. These measures are explained
25
2019-20 Mid -Year Report March 11, 2020
in the Capital Improvement Projects section this report, and were approved by the Council earlier
this 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 internal 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.
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. Only one adjustment is requested to this Internal Service Fund for the current fiscal
year: a five-year lease of equipment designed for efficient mail sealing, postage metering, and
reporting comes to an end in March. New equipment will be purchased at a cost of $7,800.
Offsetting decreases in rental costs will be reflected in future years' budgets.
Note that in early October, 2018, the City Manager executed an agreement with Tyler
Technologies, Inc. for implementation of the Munis® Enterprise Resource Planning (ERP) System.
The consultant costs for assistance in the RFP development and selection process, along with the
one-time cost of the Tyler Munis System (license and implementation), were included in the FY
2018-19 CIP budget, for a total of $815,000. Phase I of the project, which consists of the financial
modules (General Ledger, Accounts Payable/ Purchasing, Accounts Receivable, Budget, etc.) was
implemented on October 1, 2019. Phase 2 of the project, Human Capital Management (Payroll
and Human Resources modules), will be implemented in the coming months, with certain features
to be rolled out in the 2020-21 fiscal year. Phase 3 of the project, the Utility Billing modules, will be
implemented in FY2020-21 as well. The annual maintenance fees for all the Tyler Munis System
modules are included in the City's Admin/IT Internal Service Fund.
Workers' Compensation Fund — Premiums for the City's Workers' Compensation excess
insurance renewal have gone down this year, even though payroll has gone up and premiums are
based on a percentage of payroll. This is owed in part to a decrease in overall claims experience.
Burlingame's claims experience compared to other agencies with the same excess reserve policy
(covering claims over $500,000) is better than average, and shows continued improvement. In the
chart below, experience modification factors (ex -mod) of less than 100% indicate that the City's
loss rate compares favorably with other agencies. The most immediate impact of this recent data
is a slight decrease ($20,000) in excess Workers' Compensation insurance.
EWC EzMod History
93 %
92%
91%
90%
89%
88%
87%
18/19 19/20 20/21
max -mod 2
92% 92% 89%
26
2019-20 Mid -Year Report March 11, 2020
The City's ex -mod has been calculated for FY 2020-21 using updated payroll and loss data. The
lower ex -mod should somewhat offset rising excess and reinsurance rates. Along with higher
investment earnings on the fund's reserves, slightly lower charges to City departments and
programs can be anticipated for the upcoming fiscal year.
The identification and funding of capital projects and otherwise unfunded, long-term needs of the
City has been a priority of the City Council for many years. Since developing and prioritizing an
initial list of unfunded needs in fiscal year 2014-15, staff has explored various options to address
the large liabilities represented by the City's aging facilities. In February 2018, the Council
approved a Measure I spending plan that included partial debt financing of a new Community
Center. The 2019 Lease Revenue Bonds were issued for this purpose, resulting in $38.9 million
in bond proceeds.
A large number of City facilities (other than the Recreation Center) 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. A Building
Facilities Condition Assessment Study and Capital Improvement Master Plan, performed in 2016,
concluded that the City should consider replacing older buildings before maintenance costs
increase significantly.
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. Although funds are being set aside in the City's Capital Investment Reserve, major
projects, such as the Broadway Grade Separation project, will require a financing package of
hundreds of millions of dollars, well beyond the City's budgetary or financing capacity. In addition,
the reserve is being funded by annual surpluses and one-time revenues, and as such will be the
first funding to be reduced or eliminated when the economy inevitably retracts. Non -capital
needs, such as accrued pension liabilities, present additional challenges that 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 2019-
20 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.
27
2019-20 Mid -Year Report March 11, 2020
Revenues associated with the Measure 1 '/4 % transaction/sales tax are now included in the City's
five-year forecast, as are the offsetting expenditures identified in the Measure I spending plan.
Measure I revenues and expenditures are accounted for in a subfund of the City's General Fund to
provide maximum transparency as to the use of these resources, but are always included when
reporting General Fund activities.
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
Annual Growth
Explanatory Comments
Assumption
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
continues to experience low turnover, but
Secured 5% - 6.5%
moderating home prices and continued Bay
Property Tax
Area growth is expected. In FY 2020-21, the
Burlingame Point project will be included in
the City's assessed valuation data. Assume
VLF shortfalls are covered by State
appropriations in the following year.
The Educational Revenue Augmentation
Fund (ERAF) rebate is held flat for projection
ERAF Rebate
Held flat
purposes. Growing demands on ERAF
monies are anticipated as the economy
slows, which should decrease this revenue
source.
Sales Tax
0% - 1.5%
This assumption is based upon recent Q3
2019 sales tax data and the HdL Companies'
2019-20 Mid -Year Report
March 11, 2020
Revenue Description
Annual Growth
Explanatory Comments
Assumption
long-term forecast. Although these revenues
remain very strong, growth is expected to
level off somewhat. Despite the Wayfair
decision that provides collection of use tax
for out-of-state internet sales, a general shift
of consumer spending (towards services
rather than taxable goods) is projected to
limit taxable transactions in the future.
Measure I revenue projections (included) will
follow the same growth.
This assumption is based upon the past few
years of more moderate growth, as well as a
slowdown in the current year due to global
travel restrictions prompted by COVID 19
Transient Occupancy Tax
0% - l%
virus concerns. As demands for visitor
lodging decrease, average daily room rates
should soften. No change in the total of
hotel rooms available is assumed in any
forecast year.
This assumption is based upon expected
gross revenue changes for PG&E, an increase
Other Taxes - Franchise Tax
1.0% - 3.0%
in garbage rates in the next fiscal year, and
moderate growth in cable/internet services.
Despite record highs in passenger traffic at
SFO, a decline in growth is expected from the
long-term parking business licenses tax,
Other Taxes -Business
1%
which is based on gross receipts. Growth will
Licenses
be subdued in general business license
revenue, as it is based upon volume of
businesses rather than gross receipts.
Limited to growth in the number of
Other Taxes - State HOPTR
0% -1.0%
homeowner occupied parcels.
The transfer tax assumption is based upon
historical patterns and consistently low
Other Taxes - Transfer Tax
5.0%
inventories of properties for sale. Average
turnover rates and general increases in
property values are assumed.
This assumption is based primarily on
no/slight annual adjustments to fees, and a
Licenses & Permits
very small increase in volume.
Fines, Forfeitures & Penalties
Flat
Not included here is an assumption for
added parking lots or garages over the next
five years due to unknown implementation
dates and impacts on citation volume.
Growth in charges for services is based
Charges for Services
-2.0% - 3.0%
primarily on consumer price index
adjustments to fees. Programming at the
new Community Center will increase these
29
2019-20 Mid -Year Report March 11, 2020
Revenue Description
Annual Growth
Explanatory Comments
Assumption
revenues after a 2-year lull from closure of
the current facility.
The assumption is based upon current long-
term lease information, which has shown a
Use of Money & Property
Flat
general decline in recent years as City
facilities are temporarily repurposed. This
does not include any assumptions about the
Top Golf lease.
Other Revenue
Flat
No growth is projected due to one-time
revenue.
The forecast assumes no further mandated
State Subventions
Flat
cost recoveries, and limited additional state
subvention programs.
This growth assumption is based upon cash
1% in 2020-21; 2.5%
balances remaining fairly level, and only
Interest Income
thereafter
modest (if any) increases in interest rates in
the next five years
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. Growth in Burlingame's assessed value in fiscal year 2018-
19 was 6.25 percent, and current -year property tax revenue was based on a roll 7.28 percent
higher; growth in the roll so far for fiscal year 2020-21 indicates that an increase of at least 5.1
percent in property taxes can be anticipated. This rate includes an inflationary factor of 2 percent
as reported by the State Board of Equalization for December 2019. (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 does not weaken, assessed values should
continue to increase steadily, and the inflationary factor will most likely stay at the 2 percent level
in future years. As a result, the assumed growth factor is 6.5 percent for secured property taxes in
fiscal year 2020-21, followed by 5 percent growth each year through FY 2024-25. This allows for
a slight bump -up in assessed values in fiscal year 2020-21 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 slightly lower rate of growth than secured property taxes
in the five-year forecast due to the inclusion 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 continues to be
uncertain. In recent years, the growing economy has yielded more adequate funding for local
schools, reducing the need for draws on these funds within the County of San Mateo. However,
offsetting this positive development is uncertainty in the future funding of the Property Tax in Lieu
of VLF, which is currently funded from the same ERAF, but with no required funding from the State
in the event of a shortfall. In addition, when the economy slows, school funding needs may
intensify, decreasing the amounts available for refunding. These ERAF refunds may even come
to an end if the State's uses of ERAF are expanded. Because of the many unknowns surrounding
the allocation of ERAF funds, the five-year forecast assumes these refunds will remain flat.
30
2019-20 Mid -Year Report March 11, 2020
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 37.6 percent increase in the City's TOT revenues in the five years ended June 30,
2019. The rate was last increased — effective January 1, 2010 — from 10 to 12 percent, 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 3,700+ 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. Even as more hotel rooms are projected to be online in
the next five years, the economy is a much greater factor in both occupancy levels and room rates.
The current year projection for Burlingame's TOT revenues has been adjusted downward due to a
slightly slowed pace year-to-date, coupled with recent uncertainties surrounding the spread of the
coronavirus (COVID-19). After this reduction and leveling off in fiscal year 2020-21, a growth rate
of 1.0 percent is applied to the City's base TOT revenue for the following four years of the forecast.
The City's sales tax base has continued to grow moderately with the economic recovery of past
years. After correcting for one-time events in fiscal year 2018-19, the forecast for the upcoming
fiscal year projects a 1.5 percent growth, followed by an additional 1 percent growth for each of the
next two years, and then leveling out for the last two years of the forecast. 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. While current economic
conditions appear to be fairly solid, there are several factors converging that increase the level of
uncertainty for this revenue source in the future, not least among them the impact of the coronavirus
on travel and industry. In addition, the overall growing cost of general goods may begin putting
pressure on the California spending economy. Larger mortgage payments, new restrictions on
federal income tax deductions, and essential spending on non-taxable household needs (such as
health care services) result in fewer resources being available for consumers to spend on taxable
merchandise.
Income from the City's investments has increased steadily with the growing economy, largely due
to the growing portfolio associated with increased reserves. Though yields on the short-term, risk -
averse investments (typical for inclusion in municipal portfolios) have been extremely low for many
years, interest rates have risen only slowly over the past two years and are not expected to
accelerate dramatically in the next five years. As the City continues to set aside funds for previously
unfunded liabilities and future needs, staff anticipates these revenues to increase irrespective of
changes in investment yields. However, with rates being so low, any increase in yield rates will
result in significant growth factors. For example, if a 2 percent investment yield grows moderately
to 3 percent in the fifth year of the forecast, this represents a 50 percent growth over the period.
Staff does not anticipate such an increase. After an initial increase of 1 percent in fiscal year 2020-
21, a 2.5 percent increase is projected for the remaining four years of the forecast. Staff will
continue to optimize the portfolio's performance while balancing the priorities of safety, liquidity,
and yield.
The limited revenues received in the categories of Licenses and Fines are assumed to stay flat for
purposes of the five-year forecast. Charges for Services are forecast to decrease 2 percent next
31
2019-20 Mid -Year Report March 11, 2020
year as development activities subside from their current pace and recreation programs are housed
in temporary buildings. After levelling off in FY 2021-22, an annual 3 percent rise is forecast for
subsequent years. Fees for discretionary services are generally anticipated to keep pace with the
cost of those services, as charges for the City's services are reviewed annually with the
development of the Master Fee Schedule. However, 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.
Forecasted Expenditure Assumptions
Expenditure Description
Explanatory Comments
Includes effect of current collective bargaining
agreements, including recently approved
agreements with labor groups and increased
Salaries &Wages
wages for part-time employees effective January
1. Assumes an annual growth in salaries of 3% for
out years, as well as normal merit step increases.
Includes an annual growth rate of 5% for each
January 1 change in health care rates. Also
includes expected PIERS contribution rate
increases (7.7 average annually for Safety and
7.1% for Misc. employees) coupled with forecast
Benefits
increases in salaries & wages.
Also included are employee contributions to
health care and PERS in accordance with current
MOUs. Growth in other benefit costs — 3%
annually.
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 5%
Operating Costs
escalation factor for service from Central County
Fire is also assumed.
Operating costs include a payroll surcharge
assessed on full-time employees to fund
previously incurred costs associated with retiree
medical benefits (OPEB) for former employees
Based upon various escalation factors; IT costs to
increase 8% in FY 2021, then 4% thereafter;
Vehicle and Facilities Central Services to grow 3%
Internal Services
and 4%, respectively. General liability will grow
4-5% based on the increased cost of coverage and
litigation.
Includes a base of $o250k (2021-22) based upon
Capital Outlay
historical use and 3/o growth rate.
32
2019-20 Mid -Year Report March 11, 2020
Expenditure Description
Explanatory Comments
Assumes reimbursements for debt service,
increasing General Fund investments in Capital
Transfers In (Out)
Projects, and support of City shuttle programs;
offset by transfers to the fund for administrative
support of enterprise operations.
Includes actual debt service for all current
Debt Service
outstanding bond issues. (2020-21 last year for
2010 Corp Yard Bonds.) Assumes no refinancing
of current debt.
With revenues forecasted to grow an average of only 2.2 percent annually 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
slightly 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 attempts to
restrict the growth of unfunded pension obligations.
The City of Burlingame offers its permanent employees a defined benefit pension plan that is
administered by the California Public Employees' Retirement System (CalPERS). Retirement costs
continue to rise in part due to actions taken by the CalPERS Board. In December 2016, the Board
adopted a policy to reduce its investment return assumption (discount rate) from 7.5 percent to 7
percent over the course of three years, beginning with fiscal year 2018-19. The action was a
consequence of the weak performance in recent years of the CalPERS investment portfolio, a
prolonged low -interest rate environment, and attempts to limit future volatility in investment returns.
Decreasing the discount rate increases the likelihood that assets set aside to fund retirement
obligations will be sufficient to meet the demand of retiring workers. Investment returns will be
relied upon less, and contributions relied upon more, in order to fund pension obligations. The
resulting higher contribution rates for employers and employees will exacerbate existing pension
funding challenges. Whereas the impact of this discount rate reduction will not be fully realized
until fiscal year 2024-25, outside investment advisors generally believe that investment returns over
the next 10 years will be below 7 percent.
In February 2018, CalPERS changed its amortization policy from 30 years to 20 years for all
investment gains and losses. These changes, which will also serve to push pension costs higher,
will be reflected in the June 30, 2019 valuation reports, affecting agencies' budgets in FY 2021-22.
As a result of these actions and other actuarial assumption changes, the employer required
contributions toward the City's unfunded CaIPERS liabilities are set to increase 40% ($2.1 million)
over the course of the next five years. In order to smooth the impact of pension rate increases to
future operating budgets, the City established a § 115 pension trust fund with Public Agency
Retirement Services (PARS). A prefunding strategy was adopted utilizing a "target" rate of funding,
representing the average rate of projected employer contributions that would be required from
CalPERS over the next 15 years. (Target rates were established separately for the City's Safety
33
2019-20 Mid -Year Report March 11, 2020
and Miscellaneous pension plans with CalPERS.) Pursuant to this strategy, the required funding
would be paid to CalPERS each pay period, and, to the extent that the target rate was higher than
the required CalPERS employer contribution rate, amounts would be contributed to a dedicated
trust or reserve fund, to be drawn upon when the required employer rate invariably exceeded the
target rate. Contributions to the § 115 Trust for pensions will not impact total fund balance, but
merely be reflected as "restricted" fund balance for financial statement purposes.
A revised actuarial study for the City's pension plans with CaIPERS will be performed in fiscal year
2020-21. For purposes of the five-year forecast, the threshold rates used to determine the amount
of contributions to the pension trust fund remain at 76.9 percent for the Safety plan and 37.7 percent
for the Miscellaneous plan. Although CalPERS projections for Burlingame's employer contributions
for the next five years are slightly lower than initially anticipated when the trust fund was
established, maintaining these thresholds at the higher rates provides conservative funding
guidelines for the City's long-term pension liabilities.
CITY OF BURLINGAME, CA
CONTRIBUTION TO PENSION
(BY FUND)
TRUST
FY 17-18*
FY 18-19
FY 19-20**
TOTALS
General Fund
4,139,920
2,838,000
2,957,000
9,934,920
Admin/IT
5,641
5,200
3,950
14,791
Building Enterprise
82,011
75,900
57,900
215,811
Facilities
56,212
51,900
39,300
147,412
Fleet/Equipment
36,669
30,100
23,460
90,229
Landfill Fund
4,752
4,600
3,490
12,842
Parking Enterprise
19,122
17,500
13,200
49,822
Sewer Enterprise
169,791
158,200
117,700
445,691
Solid Waste Enterprise
30,101
28,000
20,000
78,101
Water Enterprise
205,573
188,300
143,000
536,873
4,749,792
3,397,700
3,379,000
11,526,492
* Includes additional $1 million
General Fund
contribution at
mid -year.
** Includes additional $800,000 General Fund contribution for CCFD.
The City has always reflected a conservative CaIPERS rate in its five-year forecast. However, the
impact of the changes to the CalPERS assumptions is severe. The rates shown below reflect rates
provided by CalPERS (through FY 2020-21); subsequent year rates are based on an actuarial
study completed by Bartel Associates in January 2019. Again, the most immediate impact of the
discount rate assumed by CalPERS will be seen in a large increase in the UAL (unfunded accrued
liability) of prior years.
34
2019.20 Mid -Year Report March 11, 2020
Estimated CaIPERS Rate
Misc.
Rate
Safety Rate
Fiscal
UAL
Total
Total as%
UAL
Total
Total as%
Year
Normal Cost
Payment
Contributions
of Payroll
Normal Cost
Payment
Contribution
of Payroll
2019-20
1,848,000
+
2,875,000
4,723,000
29.10%
1,175,000
+ 1,818,000
2,993,000
56.80%
2020-21
2,048,000
+
3,132,000
5,180,000
31.10%
1,293,000
+ 2,029,000
3,322,000
61.50%
2021-22
2,075,000
+
3,533,000
5,608,000
32.80%
1,306,000
+ 2,325,000
3,631,000
65.40%
2022-23
2,136,000
+
3,957,000
6,093,000
34.70%
1,342,000
+ 2,620,000
3,962,000
69.50%
2023-24
2,232,000
+
4,267,000
6,499,000
36.00%
1,399,000
+ 2,845,000
4,244,000
72.50%
2024-25
1 2,293,000
+
4,619,000
6,912,000
37.30%
1 1,435,000
+ 3,091,000
4,526,000
75.20%
Source of information: Bartel Associates' CalPERS acutarial analysis, January 2019
Since personnel costs are such a large portion of the General Fund budget, these changes in
employer contribution rates 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 benefits. 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 2013-14 fiscal year, the cost of these benefits, largely
incurred in prior years, is now being pre -funded through an (external) irrevocable trust. These costs
represent a surcharge of approximately 22 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. An actuarial valuation as of June 30, 2019 is
currently being performed to confirm the amount of the surcharge needed to continue funding these
benefits for the next two fiscal years.
As noted previously in this report, the City's contributions to employees' Health Reimbursement
Arrangement (HRA) accounts were recently negotiated and caused a one-time bump up due to the
retroactive contributions made in the current fiscal year. This benefit was needed to replace the
much more expensive retiree medical care programs offered to new employees prior to FY 2011-
2012. HRA employer contributions are not included in PERSable compensation, and as a defined
contribution benefit, will not increase the City's post -employment liabilities.
With respect to non -personnel expenditures, it should be noted that the General Fund transfer out
(expenditure) for the CIP was previously based on a set portion of the City's TOT revenues (2 of
the 12 percentage point TOT rate) — about $4.7 million for FY 2019-20. 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 in recent years, and the recognition
that the City's aging facilities are getting more costly to maintain, the transfer amount based on
TOT revenue is now considered a minimum annual transfer amount.
35
2019-20 Mid -Year Report March 11, 2020
Although capital spending has been able to proceed at a rate higher than other General Fund
expenditures, beginning with the 2016-17 fiscal year budget, staff has recommended that the
budgeted transfer from the General Fund to the Capital Projects Fund be established based on the
City's capital needs for the upcoming fiscal year (as opposed to a portion of TOT revenues), to the
extent there is staff capacity in the organization to accomplish the identified projects. In addition to
the $6.5 million set aside in the current fiscal year for the Capital Investment Reserve, transfers
from the General Fund to support specific governmental capital projects were nearly $9.2 million in
the FY 2019-20 adopted budget. The five-year forecast shows a transfer of $9.6 million, though
the transfer that will be needed for FY 2019-20 has not yet been solidified. As the Council has
prioritized several large infrastructure improvement projects, including the aforementioned
Broadway Grade Separation Project and Sea Level Rise Shoreline Protection Improvements,
which may require significant City funding, the transfer for capital projects is the single largest
variable in the General Fund five-year forecast. A 5 percent growth factor is applied to this transfer
for all years in the forecast.
Annual funding of $3 million for the Capital Investment Reserve in the Capital Projects Fund has
been assumed in prior forecasts. For purposes of the five-year forecast, it is assumed that this
same level of funding will continue until year FY 2024-25, where it appears that this level of funding
may not be feasible. In addition, the General Fund will continue to provide $2 million annually to
service the debt for the new Community Center.
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 —for continued surpluses in the 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
revenues in the 2020-21 fiscal year in acknowledgement of the Burlingame Point development, but
no other assumptions (in revenues or expenditures) were modified for the project. Nor are the
revenues and accompanying expenditure increases associated with the Top Golf development
included in the forecast. Staff has endeavored to provide the most realistic budgetary projections
possible using the most recent data available. Analysis of the General Fund and City operations
as a whole will continue through the development of the fiscal year 2020-21 budget, and will
undoubtedly provide 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 the City Council's attention through the
budget, mid -year analysis, and other financial reporting processes currently in place.
36
2019-20 Mid -Year Report
March 11, 2020
FISCAL IMPACT
Authorization of the budget amendments described in this report updates the previous allocation of
City resources for the 2019-20 fiscal year, reflecting changes in economic conditions and the City's
current fiscal year-to-date performance. The City Council may consider revisions to the mid -year
adjustment in the attached budget resolution, and/or additional amendments to the FY 2019-20
budget. For example, the Council may want to consider the use of some portion of the General
Fund's unassigned fund balance to further fund the § 115 Pension Trust, contribute additional sums
to the Capital Investment Reserve, or use the monies for some other purpose. The overall goal is
to provide the most accurate picture of the 2019-20 fiscal year's standings in preparation for the
FY 2020-21 budget and to assist decision makers in planning for the City's needs in the long-term.
Exhibit:
• Mid -year Budget Amendments Resolution
37
2019-20 Mid -Year Report March 11, 2020
City of Burlingame
FY 2019-20 Mid -year Report
Attachment A — General Fund Revenues
Property Taxes — The San Francisco Bay Area housing sector has been a sustaining factor in the
local economy throughout the most difficult of past economic downturns. Property tax revenues
leveled off in fiscal years 2010-11 and 2011-12, but have increased by 67.1 percent since that time,
and 37.0 percent in the last five years. Assessed property values continue to rise, increasing 7.28
percent in the past year, after rising 6.25 percent in the prior year. The local housing market is
very strong, despite a persistent lack of inventory. And though credit conditions remain relatively
tight, mortgage/lending rates are low, and recent years have seen a renewed interest in both
residential and commercial real estate development.
Property tax rolls are established prior to the beginning of the fiscal year. In FY 2019-20,
Burlingame's roll value (land and improvements) has increased 5.05 percent, including an
inflationary factor of 1.02 percent applied to all California property assessments. This is slightly
above the growth experienced in the rolls at this time last year. 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.
CITY OF BURLINGAME, CA
PROPERTY TAXES
FY19-20
FY19-20
FY17-18
FY18-19
Current
FY19-20
Midyear
Adjustment
Actual
Actual
Budget
Projection
Amendment
Up (Down) %
Current Secured Property Tax
$ 13,830,419
$ 14,649,598
$ 15,665,000
$ 15,820,000
$ 155,000
1.0%
Secured Supp. Property Tax
445,648
516,148
545,000
545,000
-
0.0%
Current Unsecured Property Tax
761,571
779,370
855,000
821,000
(34,000)
-4.0%
Property Tax in Lieu of VLF
3,272,197
3,465,699
3,725,000
2,963,800
(761,200)
-20.4%
ERAF Refund
1,720,433
2,252,373
2,140,000
2,374,300
234,300
10.9%
Unitary Tax
304,550
316,284 .
340,000
316,000
(24,000)
-7.1%
Total, Property Taxes
$ 20,334,818
$ 21,979,473 :',
$ 23,270,000
$ 22,840,100
$ (429,900)
-1.8%
In FY 2018-19, actual property tax revenue receipts were within '/2 percent of the budget (as
adjusted at mid -year), representing an 8.1 percent increase in property taxes over the prior year.
Revenues from secured property taxes were expected to rise approximately 6.7percent in FY 2019-
20, and the final assessed roll for Burlingame (received from the County Controller in August)
indeed reflects a 7.24 percent rise over the prior year. Therefore, a slight increase in the Secured
Property Taxes budget is indicated. However, revenues from unsecured property taxes (assessed
on business fixtures, business personal property, boats, aircraft, etc.) fell short of the prior year
budget projections, so this revenue line item should be reduced for the current fiscal year.
Supplemental Property tax revenues are dependent on the volume and value of property transfers
and new construction, so they vary significantly from year to year. Unitary taxes met last year's
m
2019-20 Mid -Year Report March 11, 2020
projection, but are coming in at about the same pace. A $24,000 downward adjustment is
appropriate due to the lack of growth in this line item.
Excess ERAF (Educational Revenue Augmentation Fund) refunds have varied considerably over
the years. Only in recent years has this revenue line item been fully budgeted, due to the
possibility that the State's school funding formulas could change and require higher draws on the
County's ERAF. However, the improved economy has had a positive effect on the County's
ERAF, as it appears that the State can meet its obligations to educational agencies because of
improved property tax revenues in the area. In fact, higher property tax revenues result in more
funds from local agencies being held back for the ERAF, while fewer demands for education
funding are being made on these funds. Therefore, the full amount of anticipated ERAF refunds
($2.1 million) was included in the property tax projection for fiscal year 2019-20.
Excess ERAF reserves are held by the County and distributed back to the contributing agencies
when obligations of the funds to education agencies have been met. The County allocated excess
ERAF funds back to the jurisdictions early in January. Changes in the method of allocation last
year (over a two-year, as opposed to a three-year, rolling period) accounted for a one-time bump -
up in these funds of nearly $265,000 in fiscal year 2018-19. This was a one-time impact, as the
City merely received its share of ERAF refund more rapidly than in the past. Despite the
additional amount, the City's ERAF refund for fiscal year 2019-20 was $122,000 (5.4 percent)
higher than the ERAF received last year, reflective of continued property tax growth and reduced
demands on the County's ERAF fund for school funding. This amount is $234,300 more than
projected in the adopted budget for the current year.
However, a significant downward adjustment ($761,200) in total property taxes for the current fiscal
year is recommended for Property Tax In Lieu of VLF. These revenues are allocated based on
growth in the County's secured property tax roll but are funded from the countywide ERAF, and
then from the property tax revenues of non -basic aid school districts. (Any monies taken from the
non -basic aid school districts are back -filled by the State.) The large majority of school districts in
the County are classified as basic aid, i.e, the property taxes within the district are sufficient to fund
the schools, without funding from the County's ERAF fund. The number of non -basic aid school
districts in the County has fallen over recent years, resulting in less available property tax revenues
to fund VLF. For FY 2019-20, the total VLF amount due to the County and cities is $207,943,589.
There is only $165,506,767 available in ERAF and from non -basic aid school district property taxes
to fund VLF, resulting in a county -wide shortfall of over $42.4 million. As there is no statutory
mechanism for the State to fully reimburse cities and counties for this shortage, the County is
working with its legislative advocates to request that the FY 2019-20 VLF shortfall amounts be
appropriated in the State's FY 2020-21 budget. Unfortunately, these funds will not be recovered in
the current fiscal year, if at all.
Sales and Use Taxes — The table below shows the City's sales tax revenues over the past ten
years, as well as a projection for the current fiscal year. The first two line items, "Sales & Use Tax"
and "Sales Tax Compensation Fund", comprise sales tax receipts from the Bradley Burns (local 1
%) allocations from the California Department of Tax and Fee Administration (CDTFA). The
recession was obviously marked by a severe decline in consumer spending and associated taxable
transactions. With the economy recovering, sales tax revenues surged upward in FY 2010-11, and
they have continued to grow at an impressive pace. The "Triple Flip" (a State revenue swapping
39
2019-20 Mid -Year Report March 11, 2020
scheme that began in 2004) process was wrapped up in May 2016, creating a one-time bump in
sales tax revenues of nearly $1 million for that fiscal year, and eliminating the need for the Sales
Tax Compensation Fund. But with this aberration excluded, it appears that taxable sales
transactions have remained healthy for the past few years. The addition of the City's Measure I
tax, which was effective April 1, 2018, has further bolstered this revenue line item. Although
Measure I revenues and expenditures are tracked internally in a separate sub -fund, they are
included as General Fund transactions for financial reporting purposes.
Description
Sales & Use Tax
Sales Tax Compensation Fund
Public Safety Fund -Sales Tax
Measure 1(0.25% Sales Tax)
Total
Year -over -year change
City of Burlingame
Fiscal Year 2010-20 Sales & Use Tax Revenue
(in millions)
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
$ 5.00 $ 6.15 $ 6.33 $ 6.90 $ 7.48 $ 8.36 $ 10.20 $
1.27 1.89 2.16 2.17 2.57 2.59 2.48
0.11 0.11 0.12 0.13 0.14 0.15 0.15
FY2017 FY2018
11.94 $ 12.19
0.15 0.16
0.47
FY2020
FY2019 Est.
$ 15.14 $ 14.30
0.17 0.16
2.51 2.40
$ 6.38 $ 8.15 $ 8.62 $ 9.20 $ 10.20 $ 11.10 $ 12.83 $ 12.09 $ 12.82 $ 17.82 $ 16.86
-23.68% 27.74% 5.71% 6.73% 10.84% 8.87% 15.56% -5.76% 6.04% 39.00% -5.39%
Because of the time lag in the reporting and submission of sales taxes to the CDTFA, only one
quarter's data (third quarter of 2019) is available from which to project the City's FY 2019-20
revenues from this source. Unfortunately, issues surrounding the implementation of the State's
new computerized reporting system created shortfalls from delayed payments in the 2018 second
quarter, which skewed the third quarter results of 2018, which are used for prior -year comparison.
The City's Sales Tax consultant, HdL, has adjusted the data for these aberrations to provide a
clearer picture of actual economic activity behind the sales tax receipts, resulting in the charts and
graphs which follow. A review of Burlingame's third quarter data for 2019 (taxes remitted to the
CDTFA in October - December 2019) indicates a decline in taxable transactions of approximately
$107,000 (2.8%). Nevertheless, the chart below shows that sales tax revenues continue to be
strong, with many major industry groups reporting a positive change compared to the same quarter
of 2018. However, the Autos and Transportation sector, which comprises nearly a third of the City's
taxable transactions, reflected an anticipated decline in new auto sales in the third quarter of 2019.
$1,400K
$1,200K
$1,OOOK
$800K
$600K
$400K
$200K
$OK
Autos
and
Transportation
3018 Compared To 3019
3018 3019
Ar
State and Restaurants General Building Business Fuel and
County and Consumer and and Service
Pools Hotels Goods Construction Industry Stations
Food
and
Drugs
Eft
2019-20 Mid -Year Report March 11, 2020
Growing faster than most other components of local sales tax receipts in recent years, the allocation
of taxes from the countywide use tax pool constitutes a larger portion of total sales tax revenues
than ever before. 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. As these receipts
now represent over 17 percent of the total sales tax revenues, the increase reflects a continued
acceleration of online shopping for merchandise shipped from out of state. In addition, early results
from the Wayfair decision implementation, which provides for the remittance of more sales tax on
out-of-state/on-line transactions, was launched in the second quarter of 2019, adding new revenues
in this category. This trend, along with a shift in consumer spending habits to non-taxable goods
and services, puts pressure on brick -and -mortar retailers, which previously served as the
underlying sales tax base for local governments.
Sales Tax by Maior industry Group
$1,600K
Autos And Transportation
Count 149
State & County Pools - $1,400K
Restaurants And Hotels $1,200K
Count 1�47 11
General Consumer Goods
Count 736
Building And Construetien
Count- 62
Business And Industry
Count: 545
Fuel And Service Stations
Count- i i
Food And Drugs
Count ',7 .
30 40 10 20 3Q 40 10 20 30 40 10 20 30
16 16 17 17 17 17 18 18 18 18 19 19 19
$1,000K
$800K
$600K
$400K
$200K
$OK
Though not a large piece of the City's sales and use tax receipts, the graph shows a marked growth
in the Building and Construction sector. This is largely attributable to the jobsite-specific sub -
permits obtained for the Burlingame Point development project. Application of this sub -permit
allows for the direct allocation of the use tax collected on out-of-state purchases on materials and
fixtures associated with the development. Through the third quarter of 2019, the City has netted
an additional $276,000 in additional use tax from purchases related to this jobsite in the past two
years.
41
2019-20 Mid -Year Report March 11, 2020
The City's FY 2019-20 adopted budget assumed a 4.6 percent decline in sales tax revenues from
prior year actuals, due largely to several one-time factors that skewed results in fiscal year 2018-
19 and created a 26.3 percent surge in local sales tax receipts. In addition, the slowdown in auto
sales that has been anticipated for the past three quarters is being realized. Year-to-date receipts
indicate that sales and use tax revenues will indeed fall short of those in the prior year. However,
the prior -year projection did not accurately project the local sales tax revenue results of $15.1
million for the 2018-19 fiscal year, which exceeded the budget by over $1.9 million (14.7 percent).
The new projection for these revenues in fiscal year 2019-20 is $14.3 million, a $1.7 million increase
from the adopted budget. While the current projection for Public Safety Sales Tax ($160,000) is
still valid, Measure I revenues are also expected to come in approximately $400,000 higher than
the $2.0 million initially projected for the current fiscal year. These adjustments bring the FY 2019-
20 projections in line with those suggested by the City's sales tax consultant; a 5% decrease in
these revenues is anticipated due to the one-time factors involved in the prior fiscal year's results.
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,
2019 reflect the first six months of the fiscal year. The budget for FY 2019-20 was established
based on TOT collections through March 2019, when 2018-19 fiscal year-end results were
projected to be approximately $28.5 million. Continued low vacancy rates, a levelling off in average
daily room rates (ADR), and consideration of the new 350-room hotel at SFO in the summer of
2019 supported the original fiscal year 2019-20 budget projection of $28.7 million — a projected
growth of less than one percent in TOT revenue.
In fact, the City ended the 2018-19 fiscal year with nearly $29.4 million in TOT revenues (see graph
below, where Q1 shows results for July through September of each fiscal year). And the SFO hotel
did not open until October 2019. Occupancy rates as reported by the City's hotels remained robust
in the first half of the current fiscal year. Burlingame hotels reported an average occupancy rate of
89.4 percent between July and December 2019 and an ADR of approximately $213, nearly on par
with the prior year. Although revenue dipped slightly in October (compared with the prior year),
November showed an improvement over the same month in 2018. If the current level of activity
were expected to continue for the remainder of the current fiscal year, Burlingame's TOT revenues
should be only slightly less than the FY 2018-19 year end results. However, it is difficult to project
the extent to which the recent outbreak of the coronavirus in China will eventually impact domestic
travel.
Per an update from the San Mateo County/Silicon Valley Convention and Visitors Bureau, China
has historically been the leader in overseas visitors to California — 45,000 airline seats per week.
The health scare has forced many Chinese visitors to stay home, as authorities impose travel
restrictions and flights to/from China have been suspended through at least the end of April.
Several large/high profile tech conferences have been cancelled or are expecting severely cut
attendance for the next couple of months. Statewide, a visitor decrease of 7 to 27 percent in
projected. As more outbreaks are reported outside of China, airport closures, flight cancellations,
and shuttered borders may prevail through the end of the current fiscal year. Burlingame will most
likely begin to experience a negative impact in TOT revenues. Data for the month of February will
not be available until early April. For this reason, a $500,000 downward adjustment (to $28.2
42
2019-20 Mid -Year Report
March 11, 2020
million) is recommended for the City's projected TOT revenues for the current fiscal year. As such,
the budget represents a 3.9 percent decline from the 2018-19 fiscal year.
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 in
recent years has far outpaced local pricing indices as well as inflation, and price elasticity tends to
constrain growth. However, the opening of the new on -site 351-room Grand Hyatt hotel at SFO
appears to have had no immediate impact on Burlingame hotels. The City of Burlingame has
approved an application to redevelop the property at 1499 Bayshore Highway with a 404-room, 11-
story hotel. The impact of the additional supply of rooms in Burlingame is not considered in the
City's five-year forecast, as ground has not yet broken on this project. The current health scare is
anticipated to pass, and tourism should regain strength in the beginning of fiscal year 2020-21.
However, with the virus now developing infection hotspots in Europe and the Middle East, there
will be much focus in the weeks ahead on the observed "R-naught" (transmission rate) outside of
the scope of rigid Chinese containment measures. Burlingame's TOT revenue projection for fiscal
year 2020-21 will consider the most recent data available, and may change from the amount shown
in the five-year forecast.
Historical Transient Occupancy Tax Revenue by Quarter
9
8
�7.8
7
7.5
7.3
7.
7
7 ?--------7.3
_.
6.8__ _. 7.2
--
6.7
6.6 6:5 .6
6.
6.1 .4
--- 2019-20
5.6�
—2018-19
5.6 . 6
�...._._..
—
_e
2017-18
4.5
�^--
—2015-16
4
4.2
4.0 4.3
2014-15
3.9 3.8
2013-14
3
_ __
------2012-13
—2011-12
2
Q1
Q2 Q3 Q4
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 have been reviewed for the most accurate projection of FY 2019-20
year-end results.
Real Property Transfer Tax — The City receives property transfer tax revenue the month following
a real property transaction, splitting the 0.11 percent tax evenly with the County. Although
improved home values have pushed these receipts higher in recent years, property turnover in
the area continues to be relatively low. Month to month variation in real estate sales makes this
revenue difficult to project, as the sales of significant properties can cause "spikes" in the amount
of taxes collected.
43
2019-20 Mid -Year Report March 11, 2020
Burlingame ended the 2018-19 fiscal year with property transfer tax revenues of nearly $477,000.
Receipts for the first half of the current fiscal year are falling behind the rate of the prior year by
approximately 15 percent, with a slightly lower number of real property sales transactions. So the
current year $420,000 budget for this line item appears to be appropriate.
City of Burlingame
Real Property Transfer Tax Revenue
Fiscal Years 2011- 2020
$600.000
$500,000
W0,000
$300,000
$200,000
$100,000
5
2010-11 2011-12 2012-13 2013.14 2014-15 2015-16 201E-17 2017-18 2018-19 2019-20
(Esc.)
Business License Tax — Year-to-date business license tax revenues are coming in at a slightly
lower rate than last year. This includes the special business license tax (5 percent of revenues)
assessed on airport parking enterprises, which comprises over 42 percent of this line item. While
revenue from the volume of annual business licenses remains steady, revenues from airport
parking enterprises have experienced moderate declines in recent years as ride -sharing services
have become more prevalent. Year-to-date receipts show a 10.8 percent decline over the same
period last fiscal year. Therefore, a reduction of $35,000 in the projection for this special business
license revenue is proposed. After this adjustment, the City's business license revenue budget in
total ($985,000) for the current fiscal year represents a 4.6 percent decrease from the 2018-19
fiscal year results. While a higher volume of licenses might be expected in a growing economy,
the cost of an annual business license in Burlingame is small ($100 for most businesses). The rate
was established by ordinance in 1978 and has not been adjusted since 1993. Therefore, the
business license tax remains a relatively small and somewhat fixed revenue source for the City.
Franchise Fees — 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
solid waste rates have been increased 6 percent for the 2020 calendar year, an increase was
provided for in the FY 2019-20 adopted budget. And as service account volumes have not
increased significantly from the prior year, no changes to the budgetary projection are needed
for the solid waste utility.
Franchise fees for the provision of gas and electric utilities were slightly under the estimated
budgets in the prior fiscal year. Although the City does not receive these revenues until April,
there is no indication that the current year's revenues will deviate significantly, so downward
adjustments have been proposed. However, staff proposes a downward adjustment ($10,000)
2019-20 Mid -Year Report March 11, 2020
for cable franchise fee revenues, as these came in slightly below budget in fiscal year 2018-19,
and current fiscal year receipts are coming in lower than experienced at this same time last year.
An additional decrease in video service franchise fee revenues reflects a continued decline in
demand for these services.
CITY OF BURLINGAME, CA
FRANCHISE TAXES
FY19-20
FY19-20
FY17-18
FY18-19
Current
FY19-20
Midyear
Adjustment
Actual
Actual
Budget
Projection
Amendment
Up (Down) %
Gas
$ 129,951
$ 119,672
$ 156,000
$ 121,000
$ 135,000)
-22.4%
Electric
268,927
269,874
278,000
271,000
(7,000)
-2.5%
Garbage
743,450
772,154
812,000
812,000
0
0.0%
AT&T Cable TV
433,554
406,107
390,000
380,000
(10,000)
-2.6%
Wave Astound
23,979
23,385
24,000
24,000
0
0.0%
AT&T Video Service
76,031
66,611
64,000
64,000
0
0.0%
Total, Franchise Taxes
$ 1,675,891
$ 1,657,802
$ 1,724,000
$ 1,672,000
$ (52,000)
-3.0%
Licenses and Permits — General Fund revenue in this category consists largely of alarm and
overnight parking permit fees, along with taxicab licenses. With a budget of less than $80,000,
these receipts account for a very small part of total General Fund revenues. Last year, this
revenue source was decreased at mid -year, due largely to a decrease in the volume of
applications for taxi licenses. Legislation effective January 1, 2019 allows local regulatory fees
on taxicabs only in the jurisdiction where they are "substantially located". At $60,000, alarm permit
fees now account for the vast majority of this revenue category.
Fines, Forfeitures and Penalties — This category consists largely of revenue from parking
citations and vehicle code violation fines. The Police Department has refined their projections to
reflect a lower volume of parking citations, resulting from short staffing in the first half of the fiscal
year (a Parking Enforcement Officer was off duty for four months due to injury). In addition,
Parking Lot N and part of Lot F were shut down beginning in October. A $100,000 decrease in
the budget for parking citations revenues is indicated (to $800,000). Vehicle Code Fines are also
slightly below prior -year results, but any adjustment would be minimal.
Investment Income — Yields on municipal portfolios dropped steadily following the 2008 market
downturn. To enable monetary recovery from the recession, the Federal Reserve has
implemented monetary policies to keep credit affordable and inflation in check. 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 continued to hover at historic lows for the
last ten years, rising only slightly in recent years.
Maintaining its focus on safety and liquidity, the City maintains funds in the State's Local Agency
Investment Fund (LAIF) and the California Asset Management Program (CAMP). CAMP and
LAIF are permitted investments for all local agencies under California Government Code
§53601(p). Although both pools have similar terms and offer daily liquidity, many public agencies
use both LAIF and CAMP funds in order to diversify the liquid portion of their investment holdings.
Currently, LAIF offers a slight yield advantage.
45
2019-20 Mid -Year Report March 11, 2020
In this midyear report, staff takes the opportunity to adjust the budget for interest income
projections. Income from the City's investment holdings has always been difficult to forecast due
to the requirement to "mark -to -market" the portfolio at each year end. As shown in the chart
below, the change in market value has a significant impact on the reported earnings of the
portfolio. A yield to maturity at cost on the main portfolio of securities was 2.22% as of December
31, 2019, compared to a "total return" of 4.61 percent if the change in the portfolio value is
included.
Interest Earned
+ Change in Value
= Portfolio Earnings
Total Return
Quarter -over -Quarter Change in
2-Year U.S. Treasury Yield
Main Portfolio Earnings Analysis
As of December 31, 2019
$610,220
S947,863
S650,553
$1,457.180
$659,683
$430,620
$1.558,083 $2.107.733 $1.090,302
1.41 %
•0.23%
1.81 %
•0.51 %
0.92%
•0.13%
$661,717
-$179.325
$482.393
0.40%
-0.05%
$2.582,173
$2,656.338
$5,238,511
4.61 %
-0.92%
Wes
• Performance on a trade4ate basis, gross (i e., before fees) in accordance mth the CFA Institutes Global Investment Performance Standards (GIPS)
• Ouartedy returns are presented on an unannualized basis
• May not sum to total due to roundinq-
For this reason, the City's budget reflects investment income with the mark -to -market adjustment
removed for all funds. Such treatment recognizes that the City typically holds its investments to
maturity, and removes the uncertainty of the market place from the City's revenue forecasts.
Therefore, "actual" interest income received in the prior year has been restated to reflect earnings
unadjusted for market value as of June 30, 2019, and budgets have been established to reflect
interest earning prior to the market adjustment at year end.
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 2.55 years. The market value of the portfolio as of December 31, 2019, was nearly
$191 million, consisting of a $119.5 million managed pool of top -rated securities, $30.2 million in
the State Local Agency Investment Fund (LAIF), and $41.3 million in the California Asset
Management Program (CAMP). The City's aggregate investments (including the very liquid
investments in LAIF and CAMP) averaged a yield to maturity of 2.22 percent.
Elm
2019-20 Mid -Year Report March 11, 2020
This aggregate yield to maturity on the City's investments is slightly lower when compared to the
2.33 percent reported in last year's mid -year analysis. LAIF, which holds the majority of the City's
idle cash, was yielding 2.04 percent, down from 2.29 percent one year ago (average monthly
yield in December). CAMP earned an annualized rate of 1.8 percent in December. Note that as
of December 31, 2018, the U.S. Treasury yield curve was significantly inverted between the 1-
year and 5-year durations (short-term interest rates were higher than long-term rates.) One year
later, the yield curve had un-inverted (short-term rates are now below long-term rates), and yields
are lower across the range of maturities. Therefore, despite anticipated growth in cash balances
for the remainder of the fiscal year, revenues from the City's investments in total are anticipated
to be similar to interest earnings of the prior fiscal year. 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. Interest earnings were originally projected
to be higher ($4.4 million in total) for the 2019-20 fiscal year, but in the current rate environment it
appears that most of the projections (by fund) should be reduced. Excluding the $340,000 increase
in the Debt Service Fund investment earnings on the unspent 2019 Lease Revenue Bonds
proceeds, the budget for interest income for all funds should be decreased by $396,000. These
mid -year adjustments will provide a more accurate projection of interest earnings to the various
funds for future budgets.
On March 3, 2020, the U.S Federal Reserve delivered an emergency half -percentage point interest
rate cut in a bid to protect the longest -ever economic expansion from the spreading coronavirus.
Such moves have immediate impacts on the market value of the City's investments, both in its main
portfolio and in the trust accounts established to fund its long-term liabilities. However, short-term
investments are selected for safety above yield, and long term investments are based on a
consistent program of funding, with portfolios that balance risk and return. These solid investment
plans should not be altered to respond to the volatilities in the markets. Given the uncertainty
regarding the potential impact of the coronavirus outbreak on global growth and interest rates, the
City and its investment advisors will maintain durations in line with benchmarks. And although the
City's fund are invested in high credit quality investments and continue to meet the City's goals of
safety, liquidity and yield, interest earnings cannot be relied upon as a critical part of the
government's operating revenue stream.
State Subventions (Intergovernmental Revenues) — This revenue line item in the General Fund
now consists largely of the State's COPS (Citizens' Option for Public Safety) program revenues.
These funds are allocated to the counties and then distributed to the various agencies within each
county, with a minimum of $100,000 to each law enforcement jurisdiction. Burlingame has received
an increased allocation of COPS funding in recent years, and year to date this allocation is 9%
higher than last year. Therefore, a $20,000 increase (for $160,000 total) is projected in this revenue
line item.
Charges for Services — As seen in the chart below, most departments generate some amount
of receipts in this revenue category. With a revised budget of nearly $6.4 million, these receipts
account for approximately 7.9 percent of Burlingame's total General Fund revenues.
47
2019-20 Mid -Year Report March 11, 2020
CITY OF BURLINGAME, CA
CHARGES FOR SERVICES BY DEPARTMENT
FY19-20
FY19-20
FY19-20
FY17-18
FY18-19
Current
Midyear
Midyear
Adjustment
By Department
Actual
Actual
Budget
Projection
Amendment
Up (Down) %
Police
$79,416
$91,570
$87,000
$363,500
$276,500
317.8%
Parks
116,197
127,470
120,000
150,000
30,000
25.0%
Recreation
3,008,863
3,374,909
3,000,000
3,304,000
304,000
10.1%
Aquatics
299,017
697
0
0
0
n/a
Planning
555,671
1,057,703
837,000
987,000
150,000
17.9%
Public Works
658,704
861,185
679,000
811,000
132,000
19.4%
Library
784,985
759,320
758,000
763,500
5,500
0.7%
Other
12,940
9,315
9,000
9,000
0
0.0%
Total, Departmental Fees
$5,515,794
$6,282,169
$5,490,000
$6,388,000
$898,000
16.4%
General Fund revenues in this category increased considerably in FY 2018-19 compared to the
previous years, due largely to an increase in development services rendered from the Planning
Division and Public Works Department. Recreation programs also continued to gain in popularity.
The projected budget for these fees assumed that development applications would slow, and that
the mid -year demolition of the Recreation Center would also decrease fee revenues for fiscal year
2019-20. However, upon review of charges for services in the current year, staff projects that these
revenues will match or exceed those of the prior year.
Based on year-to-date volumes of ongoing application and permit activity, Planning fees are
anticipated to be a bit less than in fiscal year 2018-19. A downward adjustment of $100,000 will
bring this budget line item to $500,000, about 10 percent less than experienced last year. Plan
checks (performed within the Planning Division), on the other hand, continue at last year's fast
pace. These fees are projected to be approximately $450,000 in the current fiscal year, only slightly
less than last year's results, but a $250,000 increase from the 2019-20 fiscal year adopted budget.
The Public Works Department is experiencing a higher -than -anticipated volume of requests for
engineering services related to development projects. Revenues to date indicate that these
revenues will come close to those experienced last year, and support a new projection of
$786,000. The recommended budget adjustment for revenues from engineering services is an
increase of $132,000 for the current year.
Following a successful automatic renewal pilot program, the Peninsula Library System launched
the program system -wide early in December 2018. The decision was made to remove barriers
for low income library patrons, as well as increase library usage by young adults. At that time,
staff estimated a decrease in fines/fees revenues of approximately 21 % going forward Based
on the continuing decline of fines in the current fiscal year, staff is projecting this line -item revenue
to be approximately $46,000, a decrease of $8,000 more than the amount anticipated in the
adopted budget. However, the amount due for library services charged to Hillsborough residents
will increase. The amount is based on the average of yearly per capita spending of all PLS
libraries, and will increase approximately $15,400 for the current fiscal year.
2019-20 Mid -Year Report March 11, 2020
Last year, the library increased the hours of operation for its convenient passport intake services.
However, due to staffing issues during the holidays, the volume of such services declined slightly.
A reduction of approximately $1,900 (3.5 percent) in passport intake fees is anticipated.
Receipts from recreational services in fiscal year 2018-19 were nearly $3,375,000, over 12.1
percent above that experienced in the prior fiscal year, indicating a continued demand for
recreational offerings. The current year budget projected a decrease in revenues due to the need
to vacate the Recreation Center at mid -year and move certain classes and programs to other sites.
However, year-to-date receipts are strong. Although some decrease from prior -year revenue is still
expected for the remainder of the fiscal year, Recreation fee revenue is anticipated to end the year
approximately $230,000 over budget, for a new projection of $3.3 million. The adjustment reflects
an overall increase in contractual class enrollment, largely in after school enrichment classes and
sports camps, requiring an increase in contractual expenses as well.
In the Parks Division, a more effective method of collecting field use fees has resulted in more
timely and higher collections of park services fees, and the budget projection for these fees can be
increased in the current fiscal year by $40,000. This revenue increase will be somewhat offset by
a slight reduction in protected tree application fees. The current year-to-date pace of these
applications is much slower than in the previous year, and indicates a $10,000 reduction in these
fees from the amount projected in the adopted budget.
A significant adjustment is recommended to the General Fund revenue projections for the Police
Department. The adjustment is an increase in reimbursement revenues, which serves to offset
the overtime cost of providing the "special police services' ($262,500) for the Apple Store as well
as the department's assistance with the Kincade Fire in Sonoma County ($14,000).
Other Revenues — The City receives other miscellaneous revenues from time to time. The budget
for these miscellaneous revenues includes unclaimed property from the State, rebates,
miscellaneous reimbursements, and refunds of prior -year expenses. Such amounts average about
$30,000 annually, and there is no indication that this revenue category will need adjustment in the
current fiscal year.
49
2019-20 Mid -Year Report
March 11, 2020
City of Burlingame
FY 2019-20 Mid -year Report
Attachment B — General Fund Expenditures
The following table shows the FY 2019-20 mid -year assessment of departmental (operating)
General Fund expenditures:
CITY OF BURLINGAME, CA
SUMMARY OF GENERAL FUND EXPENDITURES
By General Fund Program
General Government
Public Safety
Central County Fire (Burling
Police & Dispatch
Public Works
Community Development
Leisure & Culture
Aquatic Center
Library
Parks & Recreation
Total Expenditures
FY19-20 FY19-20 FY19-20
FY17-18 FY18-19 Current Midyear Midyear Adjustment
Actuals Actuals Budget Projection Amendment Up (Down) %
$ 5,132,958 $ 5,513,693 $ 6,580,069 $ 6,729,099 $ 149,030 2.3%
10,694,035
11,042,679
11,782,359
11,792,359
10,000
0.1%
15,719,783
16,715,751
17,554,148
17,907,348
353,200
2.0%
5,645,705
5,934,117
6,352,940
6,533,410
180,470
2.8%
1,799,124
1,709,736
2,019,157
2,189,507
170,350
8.4%
439,627
267,212
309,000
309,000 -
0.0%
5,065,272
5,348,120
5,740,951
5,863,351 122,400
2.1%
9,140,754
9,231,799
9,948,312
10,438,457 490,145
4.9%
$ 53,637,258 $
55,763,107
$ 60,286,936 $
61,762,531 $ 1,475,595
2.4%
Although some 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 2019-20 budget was adopted.
CITY OF BURLINGAME, CA
SUMMARY OF GENERAL FUND EXPENDITURES
FY19-20
FY19-20
FY19-20
FY17-18
FY18-19
Current
Midyear
Midyear
Adjustment
Actuals
Actuals
Budget
Projection
Amendment
Up (Down) %
By Expense Categories
Salaries & Wages
$ 17,325,633 $
18,005,210
$ 19,667,799
$ 20,207,319
$ 539,520
2.7%
Benefits
10,281,413
10,936,641
12,260,661
12,648,341
387,680
3.2%
Operating Costs
21,733,221
22,512,011
23,969,724
24,478,119
508,395
2.1%
Internal Services
4,124,377
4,177,333
4,170,252
4,170,252
-
0.0%
Capital Outlay
172,614
131,913
218,500
258,500
40,000
18.3%
Total Expenditures
$ 53,637,258 $
55,763,107
$ 60,286,936
$ 61,762,531
$ 1,475,595
2.4%
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 significant savings and have assisted in achieving structural benefit changes
that will help control future employee benefit costs. For example, Burlingame employees pay a
portion of the employer's retirement rate in addition to the employees' rate, as well as a larger
50
2019-20 Mid -Year Report March 11, 2020
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. Still, 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 in future operating budgets. All these factors are considered in the
five-year forecast.
In the current more favorable economic environment, compensation increases are anticipated to
keep up with cost -of -living indexes. However, the very tight labor market in the Bay Area has
required public agencies to compete with the private sector for manpower. As the employment
needs of the City grow, management strives to attract, retain, and develop a highly skilled workforce
to meet the City Council's goals. In a February 18, 2020 staff report to the Council, changes in
personnel/positions were requested due to the impact of several concurrent dynamics in the
workplace. The effect of these changes on the current fiscal year, as well as previously authorized
personnel additions, are included in the Mid -year Budget Amendment, and are summarized by
department, below.
Within the City Manager's Office, both the Assistant to the City Manager and the Sustainability
Coordinator positions (previously casual non-benefitted positions) have been reclassified as
regular part-time employees, eligible for the same pro -rated benefits as other regular part-time
employees. As a result, personnel costs of the department will increase approximately $12,000 in
the current fiscal year.
The need to keep up with the service and regulatory demands of a growing City workforce, while
concurrently maintaining successful recruitment, onboarding, safety, development, and retention
programs and benefits, has resulted in a heavy workload for the lean Human Resources
Department. Especially in this time of transition to the Human Capital Management software
modules within the Tyler Munis® Enterprise Resource Planning (ERP) system, an additional
position (Human Resources Analyst II) is needed. The position will add approximately $41,000 to
the department's employee costs in the remainder of fiscal year 2019-20.
Earlier in the fiscal year a staff vacancy occurred in the Office Assistant II position that supported
both the Finance and City Clerk's departments equally. Upon a critical evaluation of the position
and the needs of both departments, staff requested and the City Council approved the addition of
an Administrative Assistant, allocating the position 80 percent for the City Clerk's Office and 20
percent for the Finance Department. The Administrative Assistant was recruited and started
employment in October. Subsequently, the City Council approved the addition of a Management
Analyst position for the Finance Department. The Management Analyst will begin employment in
late March. As a result, personnel costs within the City Clerk's Office for the current fiscal year will
increase approximately $20,000; the net increase in cost for Finance is approximately $16,000.
(Because the cost of the original Office Assistant position was allocated in part to the
IT/Administration Internal Service Fund, the General Fund cost in Finance will increase $33,000,
and the IT/Administration Fund will experience savings of $17,000).
In October 2019, the City Council authorized the deletion of one vacant Tree Worker position and
the addition of one Tree Leadworker Position in the Parks Division so as to provide more effective
51
2019-20 Mid -Year Report March 11, 2020
supervision in the field. However, the added position has just recently been permanently filled, and
budgetary savings from the vacancy should offset any fiscal impact in the current fiscal year. The
only personnel cost budget adjustment needed in the Parks & Recreation Department is the cost
increase associated with part-time staff. The Parks Division has been utilizing additional part-time
employees to help with an increased workload while simultaneously experiencing staff absences
due to workers' compensation incidents. The current part-time budget for the Division is $120,000,
but about $170,000 of costs are projected for the current fiscal year.
In the Planning Division of the Community Development Department, a full time Senior Planner
position is being added to replace a 40-hour temporary staff position of the same title. The cost for
the remainder of the current fiscal year is approximately $32,000. In addition, the .75 FTE
Economic Development Specialist will assume Housing duties, resulting in a full FTE for this
position, at an added current fiscal year cost of $14,000. And finally, one FTE Associate Planner
is being added to the Planning Division. The additional $40,000 personnel cost for the remainder
of the fiscal year will be largely offset by a reduction in contractual labor.
An increase of two FTE positions in the Building Division is the result of the elimination of
contractor hours in the areas of permits, plan checking, and inspection. As all the costs associated
with the Building Division are supported through user fees (as opposed to the General Fund), these
changes are discussed in the section of this report related to the Building Enterprise Fund.
Personnel cost increases in the Police Department for fiscal year 2019-20 are limited to Police
and Dispatch Service overtime needs, as opposed to staffing changes. The Police Department's
budget for overtime wages will increase due to the additional detail provided on Burlingame
Avenue. An agreement with the Apple Store provides for a reimbursement of this cost. The
estimated cost to cover these additional services from the end of November through the end of the
current fiscal year is $262,500. In addition, the department also spent $14,000 in unanticipated
overtime sending officers to the Kincade Fire in Sonoma County. The costs of this mutual -aid
assignment will also be reimbursed, by the Sonoma County Office of Emergency Services. Both
reimbursements are reflected as an offsetting increase to the General Fund revenue budget in the
category of charges for services.
In addition, the department has experienced a staffing shortage when a dispatcher resigned during
training early in the fiscal year. Although a replacement has been hired, training will not be
complete until after the fiscal year ends. The estimated cost of additional overtime to maintain
coverage during the staff shortage is $60,000.
Several major transportation projects that will have substantial impacts to the City, coupled with a
significant backlog of traffic calming projects, prompted the addition of a Program Manager position
in the Public Works Department, to be dedicated to transportation and traffic programs. The
additional position will increase current -year personnel costs in the department by approximately
$50,000.
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 for vacancies have been made on a City-wide basis.
52
2019-20 Mid -Year Report March 11, 2020
It should also be noted that most health plan rate increases effective January 1, 2020 were not as
severe as anticipated. The rate increases for the plans most utilized by the City's active employees
averaged less than 1 percent, though the highest rate increase incurred was16.15 percent. On the
whole, a 5% increase was anticipated for the last six months of the year. For this reason, there
should be some minor savings in this benefit line item for most departments. Due to the small
impact overall, no adjustment is being made to the departmental budgets for the current fiscal year.
But the new rates have been considered in the five-year forecast.
The retroactive payments to the HRA accounts for employees in the retiree health Tier 3 (those
hired after November 2011), which affected all operating funds, requires a $298,600 increase to
employee benefits in the General Fund.
Note that personnel costs (and total operating expenditures) for the General Fund 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 reports specific to the City's program and its participants. Unlike
pension liabilities, the largest portion of the City's OPEB obligations is attributable to benefits that
are no longer offered to new employees. It can therefore be considered a "closed program", and
is less susceptible to volatile swings in annual contributions.
Pension costs (amounts sent directly to CaIPERS) for the General Fund were projected to increase
by 14.8 percent in FY 2019-20 and account for the largest increase in year -over -year personnel
costs. Only minor changes are proposed to the current —year budget for pension expense; these
are to provide for the new positions added, largely in the last quarter of the fiscal year. Note that
amounts deposited to the City's § 115 trust fund to fund future pension costs are not included as
budgetary expenditures. Trust fund amounts are shown only as a restriction of fund balance.
General Fund Non -personnel Appropriation Adjustments
Total General Fund expenditures increased 2.7 percent ($1.6 million) in the FY 2019-20 budget
(not including contributions to the pension trust fund) as compared with the prior year's adjusted
budget. The increase in the operating budget was largely due to an increase in the cost of wages
and benefits of full-time, part-time, and seasonal employees, as well as increased pension costs.
Note that debt service levels were kept fairly level with prior years in anticipation of a new debt
issuance for the Community Center construction project in fiscal year 2019-20. With this mid -year
analysis, a fairly significant increase in the operating expenditures budget (nearly $1.5 million) is
recommended for the FY 2019-20 General Fund appropriations, largely due to unanticipated
operational needs as described by department, below.
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.
53
2019-20 Mid -Year Report March 11, 2020
The City Council's budget falls within this group, and a $15,000 increase is needed to fund the
$15,000 in matching funds for holiday decorations on Burlingame Avenue and Broadway. The
Finance Department anticipates the procurement of an additional workstation for the newly added
Management Analyst position, and the Human Resources Department is preparing that office for
its new Human Resources Analyst II position. $3,000 is proposed in each of these departments
for the additional computer equipment that will be needed.
Emergency Preparedness — The San Mateo County Office of Emergency Services (OES)
provides essential services that prepare and assist San Mateo County agencies in the event of
disaster and other emergencies. The OES is partially funded through an agreement between the
20 incorporated cities and the County of San Mateo. The cities contribute money to fund a joint
powers authority (JPA) based upon a formula that takes into account the population and assessed
property value of each city. For the current fiscal year, the JPA's total cost share increased 6.6
percent from the prior year, but due to the allocation formula, Burlingame's share increased by
nearly $10,000. The increase was not anticipated in the Emergency Preparedness Budget as
adopted last June.
Library - The Library will be moving its operating software from hardware servers to the Cloud via
contract with the Peninsula Library System The move will allow broader (anytime/anywhere)
access to internet services, and will eliminate the need for dedicated hardware at each location,
decreasing hardware costs and the number of machines requiring support from the City's library
staff. The service provides a 99.99% up -time guarantee, which is very important for some Library
clients who have no access to computers or internet at home. The upfront cost of the service
implementation is $6,500.
An increase in the library's capital outlay expense is needed to replace seven self -check machines.
The machines are heavily used and save the City in staff time, while providing efficient customer
service. The current machines have been used almost constantly since their installation in fiscal
year 2012-13. By coordinating the purchase with the Redwood City Library, the City has the
opportunity to receive bulk discount pricing. The approximate cost of the machines for Burlingame
is $54,000.
Parks and Recreation — In addition to the need for increased part-time staff because of all the
park construction work currently underway, the Park Division expects a higher amount of rental
costs (an additional $2,000) for port -a -potties and associated equipment/supplies. Water
consumption for the parks over the past 12 months has jumped significantly, requiring a $140,000
increase in the Division's projected water expense budget.
Several small adjustments to the 2019-20 fiscal year budget are proposed for the Recreation
Division due to the varying registration numbers within the department's many class/program
offerings. For example, contractual services for the Division's most popular programs (especially
After School Enrichment classes and Sports Camps) need to be boosted due to increased
enrollment. An increase of $233,600 is proposed to fund the costs of contractual
instructors/programs services needed. However, this additional expense is more than offset by the
estimated higher fee revenues to be generated ($304,000) from the programs. (A total of $3.3
million in the Recreation Division's fee revenue is expected in the current fiscal year.)
54
2019-20 Mid -Year Report March 11, 2020
Community Development Department —A $44,000 increase is needed in the Planning Division's
contract services budget to fund several different consultant contracts: an additional $12,000 was
approved by the Council in October to cover additional consultant work to complete the analysis of
sea level rise adaptation strategies; $12,000 is proposed to study the possibility of office uses in
ground floor spaces behind retail stores within the Burlingame Avenue Commercial District; and an
estimated $20,000 is needed for a consultant to assist in the preparation of a short-term rental
ordinance and program. A decrease in contract expense ($38,250) will be experienced due to the
number of contractor hours associated with the addition of an Associate Planner position (described
in personnel cost adjustments).
A $50,000 increase is needed to fund the Economic Development Division's Facade Improvement
Grant Program in the current fiscal year. Last year, the Economic Development Subcommittee
developed a fagade improvement grant program to provide assistance with improving the
appearance of storefronts on Broadway. Over the course of several meetings, the subcommittee
provided staff with direction to prepare the various elements of a facade improvement grant
program, including project guidelines, and the application process. In May 2019, staff presented
the draft program to the full City Council, which then approved the Broadway Facade Improvement
Pilot Program to encourage more shoppers and residents to the Broadway commercial district. The
timing of the roll -out of the program was unknown at the time the fiscal year 2019-20 Budget was
being developed, but the application process is now underway, and runs until March 15, 2020. The
pilot program calls for a maximum of $10,000 in grant funding for any individual project, with a total
of up to $50,000 allocated for the program. A $50,000 budget has been added within the
Community Development Budget so the grant program can proceed in the current fiscal year.
Finally, an additional laptop computer ($2,500) is needed to allow for flexible hours for the Senior
Planner, who will be working offsite two days per week.
Public Works — The Public Works Department has contracted in two areas for work that was not
anticipated during the 2019-20 fiscal year budget development:
Early in the fiscal year, the paint and sign shop experienced a very low response to its summer
crew recruitment, and as a result was able to utilize only one temporary employee for curb painting.
In addition, the shop's leadworker has been on modified duty for a number of months due to a job -
related injury. The addition to the department's contractual services budget ($25,000) is needed
to catch up on the backlog in curb painting and street markings.
City staff is being utilized to conduct inspections at private development projects that have installed
stormwater treatment facilities. These inspections were previously conducted by Veolia staff, but
personnel transitions at the plant have caused a backlog in these inspections. A current contract
with CSG has been expanded ($12,000) to include cross -training staff to ensure that these
inspections are done properly.
55
2019-20 Mid -Year Report
March 11, 2020
City of Burlingame
FY 2019-20 Mid -year Report
Attachment C - General Fund Five -Year Forecast
(Revised)
Forecast
Forecast
Forecast
Forecast
Forecast
Budget
Revenue Categories
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
Property Tax
22,840,100
24,175,000
25,269,000
26,417,000
27,623,000
28,889,000
Sales Tax
16,860,000
17,113,000
17,284,000
17,457,000
17,457,000
17,457,000
Transient Occupancy Tax
28,200,000
28,700,000
28,987,000
29,277,000
29,570,000
29,866,000
Other Taxes - Franchise Tax
1,672,000
1,728,000
1,762,000
1,778,000
1,795,000
1,812,000
Other Taxes - Business Licenses
985,000
995,000
1,005,000
1,015,000
1,025,000
1,035,000
Other Taxes -Transfer Tax
420,000
441,000
463,000
486,000
510,000
536,000
Other Taxes -State HOPTR
60,000
60,000
60,000
61,000
62,000
63,000
Licenses & Permits
79,500
80,000
80,000
80,000
80,000
80,000
Fines, Forfeitures & Penalties
878,000
878,000
878,000
878,000
878,000
878,000
Use of Money & Property
130,000
130,000
130,000
130,000
130,000
130,000
Charges for Services
6,388,000
6,260,000
6,260,000
6,448,000
6,641,000
6,840,000
Other Revenue
30,000
30,000
30,000
30,000
30,000
30,000
Federal & State Subventions
140,000
140,000
140,000
140,000
140,000
140,000
Interest Income
2,400,000
2,424,000
2,485,000
2,547,000
2,611,000
2,676,000
Total Revenues
81,082,600
83,154,000
84,833,000
86,744,000
88,552,000
90,432,000
Expenditure Categories
Salaries & Wages
(20,207,319)
(20,910,000)
(21,537,000)
(22,183,000)
(22,849,000)
(23,535,000)
Benefits
(12,648,341)
(12,752,000)
(13,591,000)
(14,369,000)
(14,972,000)
(15,604,000)
Operating Costs
(24,478,119)
(25,488,000)
(26,430,000)
(27,412,000)
(28,435,000)
(29,502,000)
I nterna I Services
(4,170,252)
(4,379,000)
(4,561,000)
(4,738,000)
(4,921,000)
(5,098,000)
Capital Outlay
(258,500)
(250,000)
(258,000)
(266,000)
(274,000)
(282,000)
Total Expenditures
(61,762,531)
(63,779,000)
(66,377,000)
(68,968,000)
(71,451,000)
(74,021,000)
Operating Revenue 19,320,069 19,375,000 18,456,000 17,776,000 17,101,000 16,411,000
Transfer In (Out)
Transfer to CIP Project Funds
(9,185,000)
(9,610,000)
(10,091,000)
(10,596,000)
(11,126,000)
(11,682,000)
Transferto Capital Investment
(6,500,000)
(3,000,000)
(3,000,000)
(3,000,000)
(3,000,000)
(3,000,000)
Transferto Debt Service Fund
(4,708,763)
(4,723,100)
(3,575,700)
(3,600,800)
(3,623,500)
(3,651,060)
Transfers In (Out) - otherfunds
2,400,319
2,288,200
1,376,100
1,403,900
1,595,500
1,777,060
Change in Fund Balance before
Adjustments 1,326,625 4,330,100 3,16S,400 1,983,100 947,000 (145,000)
Adjustments
Pension Trust 115 (2,957,000) (1,744,000) (1,337,000) (864,000) (517,000) (166,000)
Net Surplus/ (Deficit) (1,630,375) 2,586,100 1,828,400 1,119,100 430,000 (311,000)
2019-20
2020-21
2021-22
2022-23
2023-24
2024-25
Fund Balance, beginning of year
$ 49,167,751 $
50,494,376
$ 54,824,476 $
57,989,876 $
59,972,976
$ 60,919,976
Fund Balance, end of year
$ 50,494,376 $
54,824,476
$ 57,989,876 $
59,972,976 $
60,919,976
$ 60,774,976
Econ Stability Reserve
19,460,000
19,957,000
20,360,000
20,819,000
21,252,000
21,704,000
Catastrophic Reserve
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
Contingency Reserve
500,000
500,000
500,000
500,000
500,000
500,000
PARS restricted cash
10,416,442
12,160,442
13,497,442
14,361,442
14,878,442
15,044,442
Unassigned Fund Balance
18,117,934
20,207,034
21,632,434
22,292,534
22,289,534
21,526,534
56
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BURLINGAME APPROVING
ADJUSTMENTS TO ESTIMATED REVENUES AND APPROPRIATIONS FOR THE
FISCAL YEAR 2019-20 BUDGET
RESOLVED, by the CITY COUNCIL of the City of Burlingame, California which
APPROVES and AUTHORIZES the Finance Director & Treasurer to amend the current Fiscal
Year 2019-20 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
(429,900)
Sales and Use Tax
2,100,000
Transient Occupancy Tax
(500,000)
Other Taxes - Franchise Tax
(52,000)
Other Taxes - Business Licenses
(35,000)
Charges for Services
898,000
Fines, Forfeitures & Penalties
(100,000)
Interest Income
430,000
Other Funds:
Gas Tax - Highway User's Tax
(23,300)
Gas Tax - Road Repair & Accountability Act
57,500
San Mateo County Measure W
350,000
Water - Utility Sales
400,000
Water - Taps for New Meters, Inspection & Misc. Revenue
28,000
Sewer - Hillsborough Sewer Charges
58,000
Sewer - Connection Fees
150,000
Parking Enterprise - Parking Fees
(60,000)
Parking Enterprise - Monthly Parking Permits
(40,000)
Parking Enterprise - EV Charging Revenues
5,000
Building Enterprise - Permit Fees
724,000
Building Enterprise - Building Plan Check Fees
300,000
Building Enterprise - Imaging Fees
17,000
Interest Income (Various)
(486,000)
Amendments to Appropriations:
General Fund:
City Council
15,000
City Manager
11,780
City Clerk
19,800
Finance
58,200
Human Resources
44,250
Police & Dispatch
349,300
Parking Enforcement
3,900
Emergency Preparedness
10,000
Engineering
129,470
Streets and Storm Drainage
51,000
Planning
170,350
Recreation
275,545
Parks
214,600
Library
122,400
Other Funds:
Debt Service Fund
for the 2019 Community Center Bonds
2,308,338
Water Enterprise Fund
16,100
Sewer Enterprise Fund
39,300
Parking Enterprise Fund
25,000
Solid Waste Enterprise Fund
31,500
Building Enterprise Fund
741,600
Workers Comp Service Fund
(20,000)
Fleet/Equipment Service Fund
3,700
IT/Admin Service Fund
(9,500)
Revisions to Transfers In / Out:
Transfer Out from General Fund to CIP Fund 20,000
Transfer Out from Parking Enterprise Fund to CIP Fund 490,320
Transfer In to Capital Projects Fund for:
Skyline Park (85460) 20,000
Village at Burlingame (Lot F & N) (85550) 430,320
Pilot Project for Wayfinding - Parking (84000) 60,000
Amendments to Capital Improvement Project Budgets:
Parks & Trees Capital Improvement Projects:
Skyline Park (85460)
20,000
Bay Trail Fitness Equipment (85440)
20,000
Washington Park Ballfield Lighting (84050)
25,000
Citywide Playgrounds - Murray (85400)
317,329
Murray Field Renovation (84130)
(242,847)
Murray Lights Retrofits (83360)
(25,003)
Paloma Park Renovation (84940)
(49,479)
Parking Capital Improvement Projects:
Village at Burlingame (Lot F & N) (85550) 430,320
Pilot Project for Wayfinding - Parking (84000) 60,000
Emily Beach, Mayor
I, MEAGHAN HASSELL-SHEARER, City Clerk of the City of Burlingame, certify that the foregoing
Resolution was adopted at a special meeting of the City Council held on the 11th day of March,
2020 and was adopted thereafter by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
Meaghan Hassel -Shearer, City Clerk
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To:
Date:
Honorable Mayor and City Council
March 11, 2020
AGENDA NO: 5b
MEETING DATE: March 11, 2020
From: Syed Murtuza, Director of Public Works — (650) 558-7230
Margaret Glomstad, Director of Parks and Recreation — (650) 558-7307
Art Morimoto, Assistant Director of Public Works — (650) 558-7246
Andrew Wong, Senior Civil Engineer — (650) 558-7236
Subject: Review of Draft FY 2020-21 General Fund, Parking Enterprise Fund, Gas Tax,
Measure A, Measure I, Measure M, and Senate Bill (SB 1) Funded Capital
Improvement Program
RECOMMENDATION
Staff recommends that the City Council review the proposed draft FY 2020-21 General Fund,
Parking Enterprise Fund, Gas Tax, Measure A, Measure I, Measure M, and SB 1 funded Capital
Improvement Program (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 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, Parking Enterprise Fund, Gas Tax, Measure A, Measure I, Measure M, and SB 1
funded projects. Staff will present the CIP for the Storm Drainage System, Water System, Sanitary
Sewer System, and Waste Water Treatment Plant at a future meeting as part of the overall budget
presentation.
DISCUSSION
GENERAL FUND CIP
In developing the FY 2020-21 CIP, staff conducted a needs assessment of various infrastructure
owned by the City and identified $7.61 M in General Fund projects; $0.85M in Parking Enterprise
funded projects; $1.56M in Gas Tax, SB 1, and Measure M funded projects; and $2.OM in Measure
I projects, for a total of $12.020M for next year's CIP.
Below is a summary table of each of the CIP areas with project descriptions and costs. Staff will
provide the City Council with a detailed presentation of these projects at the March 11, 2020 Mid -
Year Budget Study Session.
1
FY 2020-21 General Fund, Gas Tax, Measure A, Measure 1, and Measure M funded C/P March 11, 2020
PARKS AND RECREATION IMPROVEMENTS ($3,255,000)
The Field Renovations and Americans with Disabilities Act (ADA) Improvements at Cuernavaca
Park project consists of improvements to the infield, outfield, dugouts, irrigation system, and
drainage facilities. The project will address ADA deficiencies at the field. Additionally, funds are
requested for improvements at Bayside Park, including parking lot resurfacing improvements, EV
charging stations, and addressing ADA issues.
The remaining projects on the list primarily consist of infrastructure maintenance projects based on
the needs assessment and replacement schedule as identified in the department's work program.
In addition, the list includes the continuation of annual funding in the amount of $200,000 and
$150,000 for future replacement of synthetic turf at Burlingame School District facilities (BSD) and
Murray Field, respectively.
BUILDING FACILITIES IMPROVEMENTS ($1,225,000)
2
FY 2020-21 General Fund, Gas Tax, Measure A, Measure 1, and Measure M funded C1P March 11, 2020
3 Fire Station 35 Traffic Signal Upgrades T-0
22-
v
4 Roof Repair and Replacement Plans - Depot, Police Station, Corp Yard, City $100
Hall, Fire Stations 34 and 36
5 Facilities ADA Improvements $100
6 Facilities CIP Program Management $50
Total: $1,225
The proposed HVAC upgrades and (EMS) Energy Management System projects at the Main
Library and Corporation Yard consist of replacing out of date HVAC equipment that is beyond its
expected service life of 15-20 years. The improvements will optimize energy efficiency in the
buildings. Funding is also requested to upgrade the traffic signal warning beacon at Fire Station
35. Additionally, funding to develop plans and specifications for roof repair/replacement of various
City facilities is proposed. Furthermore, funding is requested for ADA improvements as part of the
City's proactive effort to comply with ADA regulations, as well as consultant assistance in
implementing the CIP program.
BIKE, PEDESTRIAN AND TRAFFIC IMPROVEMENTS ($4,130,000)
Project Description
Requests
thousands)
1
Sidewalk Repair Program and ADA Improvements
(General Fund - $400k, Measure I - $1,000k) _
.
$1 400
2
Lyon Hoag Neighborhood Traffic Calming - Phase 1 Implementation
I
$950
3
Bicycle and Pedestrian Master Plan Improvements
$500
4
Oak Grove/Carolan Avenue Traffic Signal Improvements
$500
5
City Hall Traffic Improvements- Roundabout Concepts
$200
6
City-wide Traffic Signal Upgrade
$200
7
Neighborhood Traffic Calming Improvements
$100
8
Pedestrian Improvements (signage and striping)
$100
9
El Camino Real Consultant Assistance
$100
10
Traffic and Transportation Studies (On -call Outside Consultant Services)
$80
Total:
T
$4,130
The CIP includes $400,000 in new General Fund and $1 M from Measure I, for a total of $1.4M for
next fiscal year, for the sidewalk program and associated ADA improvements. The attached map
provides the general location of proposed sidewalk repairs and ADA improvements in the city.
3
FY 2020-21 General Fund, Gas Tax, Measure A, Measure 1, and Measure M funded CIP March 11, 2020
$950,000 is requested to implement the Phase 1 Improvements identified in the Lyon Hoag and
Adjacent Neighborhoods Traffic Calming Studies. The draft recommendations are being finalized
and will be presented to Council in April 2020. Additionally, $500,000 in preliminary funding is
being requested for anticipated improvements identified in the Bicycle and Pedestrian Master Plan.
The Bicycle and Pedestrian Master Plan is scheduled to be finalized at the end of summer 2020,
at which time the City Council may elect to appropriate additional funds for recommended
improvements.
Funding in the amount of $500,000 is being requested to supplement the existing Oak
Grove/Carolan Avenue intersection Traffic Signal Improvements to bring the total project budget to
$1,000,000. Additionally, $200,000 is requested for preliminary conceptual design development
and public outreach for City Hall traffic improvements, including the consideration of a roundabout.
Traffic signal upgrades are proposed to implement camera detection upgrades for vehicles and
bicycles at certain priority locations. Additionally, next year's work program includes funding for
continued implementation of pedestrian and traffic calming improvements identified in response to
studies or investigations that arise throughout the year.
Funding is also proposed for consultant assistance related to the Caltrans El Camino Real
Roadway Rehabilitation Project and ADA improvements, as well as citywide traffic studies initiated
through public requests.
It should be noted that the Broadway Grade Separation Project is not included in the list above for
the upcoming fiscal year as $19.8M is currently available to complete the final engineering design.
However, as the project moves forward, staff estimates that the City will need to contribute
approximately $15M as part of the local match for construction. The total project cost is estimated
at approximately $327M, of which approximately $26M has been previously funded through a
combination of Measure A grant and City funds. The City has applied for a $125M Federal INFRA
(Infrastructure for Rebuilding America) grant and has been working closely with regional and state
agencies to secure the remaining funding.
PARKING ENTERPRISE FUNDED PROJECTS
Parking Structure/Lot N Improvements - Pay Stations, Dynamic Signage, EV $350
Charging, and Security System ,
2 Downtown Parking Lot Resurfacing
$500
Total: $850
Funding is requested for enhancements to the new public parking garage at Lot N that are not
included in the project development agreement, such as pay stations, EV charging infrastructure,
signage, and security. Additionally, funds are requested for resurfacing treatments and ancillary
improvements in downtown parking lots as needed.
4
FY 2020-21 General Fund, Gas Tax, Measure A, Measure 1, and Measure M funded CIP March 11, 2020
GAS TAX, SB 1, MEASURE A, MEASURE 1, AND MEASURE M FUNDED PROJECTS
Based on the condition assessment of 84 miles of existing street infrastructure and the
recommendations from the Street Pavement Maintenance Software Program, staff is proposing a
total of $2.56M of CIP funding from a combination of Gas Tax, Measure A, Measure I, Measure M,
and SB 1 funds for next year's street repairs and resurfacing program as follows:
• Summit Drive — Burlingview Drive to Belvedere Court
• Bayview Place — Airport Boulevard to End
• Edwards Court — Rollins Road to End
• Guittard Road — Rollins Road to End
• Ray Drive — Quesada Way to Davis Drive
• Ray Court — Ray Drive to End
• Cabrillo Avenue — Adeline Drive to End
• Cortez Avenue — Adeline Drive to End
• Concord Way — Dwight Road to Channing Road
• Alpine Avenue — Carolan Avenue to Morrell Avenue
• Plymouth Way — Dwight Road to Bloomfield Road
• Balboa Avenue — Ray Drive to Adeline Drive
• Easton Drive — Vancouver Avenue to Benito Drive
• Loyola Drive — Frontera Way to Trousdale Drive
• Vancouver Avenue — Adeline Drive to End
• Bernal Avenue — Adeline Drive to Devereux Drive
• Cananea Avenue — Alturas Drive to Los Montes Drive
• Hunt Drive — Trousdale Drive to Rivera Drive
The above list is tentative and subject to change depending on the availability of funds and
construction costs. Of the total $2.56M proposed for next year, $1 M is from Measure I, and the rest
is from a combination of Measure A, Gas Tax, Measure M, and SB 1 funds.
FISCAL IMPACT
The estimated cost of the proposed CIP program as identified in this staff report is $12.020M as
follows:
• General Fund $ 7,610,000
• Gas Tax, Measure A, Measure M, and SB 1 $ 1,560,000
• Measure 1 ($1 M for sidewalks & $1 M for streets) $ 2,000,000
• Parking Enterprise Fund $ 850,000
Total $12,020,000
Exhibit:
• PowerPoint Presentation
5
MARCH 11, 2020
Mid -Year Budget
Study Session
FY 2020-2021 Draft Capital Improvement Program
�AJ
!`''lie
At
Proposed CIP Funding
General Fund Projects
Parking Enterprise Fund
Projects
Gas Tax & Measure A, I, & M
Projects
Summary
Council Direction & Feedback
$1,225,000
Building Facilities
$3,255-000
Parks &
$4,130,000
Bicycle/Pedestrian &
Traffic Improvements
(Includes $1M Measure I Funds)
FY 2020m2021
General Fund
CIP Requests
Total of Requests: $8,610,000
(Includes $1M in Measure I Funds)
ROLLINS ROAD
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J Traffic signal upgrade locations
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• Project design is at 35% completion
• Total project cost $327M ($26M funded)
• City applied for $125M from federal INFRA Grant
• City is working with outside agencies to secure funding
• City local match estimated $15M -----_ __
• Construction to begin in 2023(provided &ROAMAY B�NE
funding availability)
Council
Direction
'
A & Feedback
FY2O2O 2O2lDraft Capital |rnprovernent Program
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