Legislation Details

File #: HIST-7585    Version: 1 Subject:
Type: Historical Status: Historical
In control: HISTORICAL - REDEVELOPMENT
On agenda: 2/25/2008 Final action: 2/25/2008
Title: A Joint Item before the City Council and the Redevelopment Agency: Mid-Year Budget Review for Fiscal Year 2007/2008 and Approval of Related Budget Amendments.
Attachments: 1. A Joint Item before the City Council and the Redev - J2 Financial Budget Report FY07-08.pdf, 2. A Joint Item before the City Council and the Redev - J2 Financial Budget Report FY07-08 Attachments.pdf
City of Culver City, California City Council Agenda Item Report J2-1 RECOMMENDATION: Staff recommends the City Council and Redevelopment Agency receive a presentation on the Fiscal 2007-08 Mid-Year Budget and adopt proposed budget amendments. For the City Council, Budget amendments require a 4/5 ths vote. BACKGROUND / DISCUSSION: The Budget & Finance division periodically prepares Budget Monitoring Reports for the City Council once the City Treasurer’s Office has closed the books for the respective time periods. Due to the significant amount of activity by the Redevelopment Agency, the Budget & Finance division has also begun preparing a Budget Monitoring Report for the Redevelopment Agency Board. This mid-year Budget Monitoring Report represents the first of these Reports and provides the Agency with a snapshot of expenditures and revenues through the first half of Fiscal Year 2007/2008 as well as any financial issues as they relate to the budget. City of Culver City General Fund Through the first six months of Fiscal Year 2007-08, total General Fund actual expenditures are $38,844,000, or 45.6% of the adjusted budget. General Fund actual revenues are $27,481,000, or 33.3% of the adjusted budget. As a point of reference, over the last three fiscal years (2004-05 through 2006-07), the average Meeting Date: 02/25/08 Item Number: J-2 AGENDA ITEM: Fiscal 2007-08 Mid-Year Budget Report and Adoption of Proposed Budget Amendments Contact Person/Dept.: Jeff Muir, Chief Financial Officer Phone Number: (310) 253-6012 Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No [] Public Hearing: [] Action Item: [X] Attachments: [X] Public Notification: Master Notification List 02/20/08 Department Approval: Jeff Muir (02/19/08) City Attorney Approval: Carol Schwab (by H. Baker) (02/19/08) Fiscal Impact Review: Jeff Muir (02/19/08) City Manager Approval: Jerry B. Fulwood (02/21/08) City of Culver City, California City Council Agenda Item Report J2-2 expenditures at mid-year are 46% and the average revenue receipts at mid-year are 35%. Note: A majority of General Fund revenues are received AFTER mid-year, including Business Tax (beginning in February), Sales Tax In-Lieu (January and May), and State Motor Vehicle In-Lieu Fee (January and May). General Fund expenditures are on target, and are expected to come in slightly below the 96.5% spending assumption. This is partially due to vacancies in several Departments. Human Resources is working closely with Departments on recruiting, although some of these positions may remain open through the end of the fiscal year. A discussion and analysis regarding Department and Division expenditures is included in the mid-year Budget Monitoring Report (Attachment 1) Overall, General Fund revenues are lagging somewhat behind projections, most notably in Sales Tax. Sales Tax receipts through mid-year also lag behind last year at this same time. The City lost another automobile dealership near the beginning of the fiscal year, which was not factored into Sales Tax projections during the budget process as it was not known to happen at the time. Although the City is seeing growth through new development activity, this is not enough to offset the immediate loss of large sales tax generators. Also, with the weakening economy, struggling housing market, and sub-prime mortgage crisis, all of these factors directly affect consumer spending. This is being felt nationwide, including California and Culver City. Closer to home, the Writer’s Guild strike has had a direct effect on the local economy, although the magnitude of this impact is unknown at this time. Fortunately, as the City Council is aware, the strike ended in early February. New development activity mentioned above has brought the City a much needed boost. In upcoming fiscal years, there will be an increase in sales tax, utility tax, and business tax revenues. However, these revenues are not expected to be realized for a few years, and most likely will not be fully on-line until fiscal 2009-10. Most other major General Fund revenues are slightly behind mid-year projections, but are expected to meet year-end projections. These include Utility Users Tax, Transient Occupancy Tax (TOT), Property Tax, and Real Property Transfer Tax. Utility Users Tax is slightly behind projections, and one category, Gas UUT, historically comes in higher (approximately 67% of budget) during the second half of the fiscal year. TOT revenues are on line to meet projections. Property Tax and Real Property Transfer Tax will be tight, but year-end projections based on mid-year activity show the revenues meeting their targets. Sale of property is down from last year given the current market, but prices have remained relatively stable. Property Tax estimates are in line with last year, and with the reported “assessed valuation” from the County, it is anticipated to meet projections. A discussion and analysis regarding the various revenues is included in the mid-year Budget Monitoring Report (Attachment 1). City of Culver City, California City Council Agenda Item Report J2-3 The General Fund beginning balance for fiscal 2007-08 is $31.9 million, or 41.4% of fiscal 2006-07 General Fund operating expenditures. The adjusted 2007-08 budget includes approximately $4.5 million in appropriations for capital projects, which was funded using a significant portion of the surplus monies (approximately $3.2 million) realized at the end of fiscal 2006-07. The fund balance at the end of fiscal 2007-08 is currently estimated at $29.3 million. If the proposed budget amendments are adopted (see proposed amendments below), the General Fund reserve would be reduced to approximately $28.8 million, which is just below 33.8% of 2007-08 operating expenditures. The ending fund balance includes the repayment of the $9 million loan to the Redevelopment Agency. Per the language in the General Fund Reserve Policy, the loan is considered a part of the reserve calculation. At the direction of the City Manager, the Chief Financial Officer will be performing a thorough review of capital improvement projects. During the upcoming Capital Improvement Project budget process for fiscal 2008-09, we will be changing the practice of automatically carrying over available funds in Fund 420 for projects that have not yet been initiated, or for projects where little or no activity has been done for a long period of time. In many cases, funding has been appropriated for these projects, and too often the funding carries over from one year to the next without any activity occurring on the project. This ties up funding that could be used for other purposes or projects. Departments will need to resubmit justification for the funding needs of the projects, and acquire approval. Proposed Budget Amendments: General Fund: 1. Decrease adopted Sales Tax budget amount by $500.000. Current budget projection for Sales Tax is $18,800,000. Due to the closing of a car dealership, weakening economic outlook, and combined analysis with the City’s Sales Tax auditors, staff believes it is prudent the adopted Sales Tax projection be reduced from $18,800,000 to $18,300,000 for fiscal 2007-08. Further analysis will be done, and the fiscal 2008-09 approved amount will also be reviewed and adjusted accordingly during the upcoming budget process. 2. Increase the Sr. & Social Services Division expenditures by $25,300. This increase is necessary to increase part-time position salaries, which should have been increased during the fiscal 2007-08 due to approved salary survey increases for part-time positions. The positions include Sr. Recreation Leader and Recreation Leader II. City of Culver City, California City Council Agenda Item Report J2-4 3. Increase one (1) Fire Captain position, and decrease one (1) Communications Supervisor position in the Fire Department. Currently, a Fire Captain is overseeing the Communication Division due to the difficulty in recruiting a qualified Communications Supervisor. Two recruitments have failed to produce a qualified candidate over the last two and a half years, with the second being an open “until filled” recruitment, and the Fire Department is requesting to maintain the current staffing with the Fire Captain. Total increase is $82,110 ($32,850-General Fund [40%]; $16,420-Refuse [20%]; $16,420-Transit [20%]; $16,420-Sewer [20%].) Enterprise Funds 1. Increase Transportation Department Garage Expenses account by $275,000. Approximately 2,000 additional labor hours are expected for expanded transit projects in Transit Operations. These are directly related to the new Smart Bus/Orbital system, farebox (GFI to Cubic) changeouts, and bus shelter improvements. There are also increases in commercial labor and parts, which have added to the increased costs. The increase in expenses will be paid with Prop A fund reserves. There are no significant budgetary issues in the Refuse and Sewer Funds at this time. Internal Service Funds There are no significant budgetary issues to report in the Equipment Replacement, Equipment Maintenance & Fleet Services, and Central Stores funds at this time. The Self Insurance Fund began the year with a reserve balance of $5 million, its healthiest cash reserve balance in approximately three years; however, the Self Insurance Reserve Fund will be significantly reduced by almost $4 million due to costs related to the Culver Crest hillside litigation. Additionally, pending General Liability costs may further impact the fund balance. During the upcoming budget process, staff will develop a strategy to re-establish the fund reserve, and will assess if an increase in liability reserve charges to operating departments is needed over the next few years Workers’ compensation and insurance costs are expected to meet the current budget. City of Culver City, California City Council Agenda Item Report J2-5 Culver City Redevelopment Agency Unrestricted Fund Unrestricted funds are funds that are available to provide financial assistance for projects and/or programs that meet the goals of the redevelopment plan. These funds consist primarily of tax increment revenues, but also include other revenues generated from the Agency’s business operations (e.g. revenues from RDA owned parking lots). The beginning unrestricted fund balance for 2007-08 was approximately $12.5 million. The projected ending fund balance, assuming that a number of parcels are sold in this fiscal year and the $9 million loan to the City is fully repaid, is approximately $3.4 million. Revenues: During the preparation of the annual budget for Fiscal Year 2007/2008, staff received a projection of tax increment revenues from the Agency’s fiscal consultant, Keyser Marston Associates (KMA), which was based on the 2007-08 County Assessor’s Assessed Value Report. Subsequent to the adoption of the 2007-08 Redevelopment Agency budget, KMA provided staff with an updated tax increment projection based on the 2008-09 Assessed Value Report. The updated projection of $29.6 million represents a significant increase from the original projection of $26.6 million. The increase is a result of higher than anticipated property valuations|1010|. Mid- year receipts to date support KMA’s revised projection. Therefore, staff is recommending that the original tax increment revenue estimate of $26.6 million is increased to $29.6 million. Additionally, revenues from the Ince parking structure are very strong through mid- year and are expected to exceed the budget projection of $380,000. A significant amount of the use of the Ince parking structure comes from businesses related to filming and operations at Sony and Culver Studios. Despite the Writers’ Guild strike, film parking at Ince has remained relatively strong as many of the game shows and reality type shows filmed at Culver Studios have not been significantly impacted by the strike. Therefore, staff is recommending that the Ince parking structure budget estimate of $380,000 is increased to $420,000. Over the last few years, the Redevelopment Agency has acquired a number of blighted properties throughout the Redevelopment project areas. The Agency is |1010| More information on the 2008-09 Assessor’s Report can be provided to the Agency Members at their request. City of Culver City, California City Council Agenda Item Report J2-6 now moving forward with selling many of these properties for various redevelopment projects, including Parcel B, the Baldwin Hotel site, and Washington/Centinela. The adopted budget includes the projected sale of those properties. However, staff does not expect to receive land sale proceeds revenues from all of those properties in this fiscal year. Therefore, staff is recommending to amend the budget accordingly All other revenues appear to be on track. No other revenue amendments are recommended at this time. Expenditures: There are a number of payments that the Redevelopment Agency is required to pay per State statute. These required payments include the 20% Housing set-aside, pass through agreements with other taxing agencies, and administrative fees to Los Angeles County. These payments are all calculated as a set percentage of the total tax increment that the Agency receives. Consequently, as the tax increment revenue increases, there is a corresponding increase in Housing set-aside and statutory pass through payments. Therefore, staff is recommending that the Housing set-aside payment be increased from $5.3 million to $5.9 million and the statutory pass through payments be increased from $2.99 million to $3.75 million (see table below for more information). Revenue Description Actual 2006-07 Expense Adjusted 2007-08 Budget Revised 2007-08 Estimate 20% Housing Set Aside 5,692,215 5,329,800 5,918,600 Total Housing Set Aside $5,692,215 $5,329,800 $5,918,600 Pass Through Pymnts LA County – General 1,452,081 1,350,104 1,694,514 LA County Fire Dept 9,987 9,265 11,628 LACCD 40,497 37,568 47,152 LA West Vector Control 501 465 583 LA County Flood Contrl 18,153 16,840 21,136 LA County School Serv 5,606 5,201 6,527 CCUSD 1,217,774 1,383,111 1,735,940 City of Culver City 164,414 152,523 191,431 LA County Library 38,725 35,924 45,088 Total Pass Through $2,947,737 $2,991,000 $3,754,000 Due to the uncertainty related to relocation costs for the Washington/National project, sufficient funding for relocation services was not originally included in the City of Culver City, California City Council Agenda Item Report J2-7 adopted 2007-08 budget. Therefore, staff is recommending a budget amendment to increase relocation services in the Washington/National project by $250,000. All other expenditures appear to be on track. No other expenditure amendments are recommended at this time. Recap. of Proposed Budget Amendments: 4. Increase tax increment revenues by $2.9 million; 5. Increase the Ince parking structure revenue by $40,000; 6. Decrease Land Sale Proceeds by $5.4 million; 7. Increase Housing set-aside expenditures by $589,000 from the Tax Increment Fund and Increase the revenues to the Low/Moderate Housing fund by $589,000); 8. Increase statutory pass through payments by $763,000; 9. Increase Land Acquisition costs by $1,093,000; 10. Increase relocation services in the Washington/National project (55092620.610500) by $250,000. Tax Exempt Bond Funds The beginning restricted tax exempt bond fund balance for 2007-08 is approximately $23.5 million. Approximately $770,000 is anticipated in interest income and $9 million is currently appropriated for capital projects. Therefore, approximately $15 million is currently available to be appropriated for projects that meet the restrictions of tax exempt bond funding. There are a number of high profile capital projects that are funded, at least partially, with tax exempt bond funds. These projects include the construction of Fire Station #3, the realignment of Washington Boulevard, and the Town Plaza expansion. All of these projects are underway. No budget amendments are recommended at this time. Low/Moderate Income Housing Fund The beginning Low/Moderate Income Housing Fund balance for 2007-08 is approximately $15.1 million. Other than an increase of $589,000 in Housing set- aside revenues discussed earlier in the report, there are no significant budgetary issues in the Low/Moderate income housing fund. Housing and Community Development staff are currently developing strategies to program the Low/Moderate Income Housing funds and develop a long term work program, which will be presented to the Redevelopment Agency at a later date. Initial work indicates there City of Culver City, California City Council Agenda Item Report J2-8 are sufficient projects to allocate the entire balance of the Low/Moderate Income Housing Fund. Proposed State Budget Analysis In January, the Governor released his proposed 2008-09 budget for the State, which included across the board cuts to State programs, especially to education. He also declared a ‘fiscal emergency’ which required the legislature to provide a spending reduction plan for the current fiscal year to the Governor within 45 days. The proposed State budget for 2008-09 does not currently include direct recommendations to divert critical revenues from cities or from transportation, but even the cuts proposed would have an effect on Culver City. In terms of direct results to cities, the proposed budget would delay monthly Highway User Tax payments for April through August until September of 2008. Culver City uses these funds for street maintenance as well as matching funds for street and signal improvements. This delay in receipt of funds ($322,960) will impact our ability to move forward with some of these projects. The State budget also proposes reducing payments to Counties for Local Detention Facilities. Because the proposed funding falls below $35 million, the County may impose booking fees on Culver City. This would represent charges the City did not have to make in the current year and would affect our budget, although it is not expected to be significant. It would also reduce the local law enforcement discretionary grants by 10%, affecting our ability to fund supplemental law enforcement programs. The budget would also extend the sunset of the triple flip mechanism to at least 2012. This would continue to affect our cash flows due to the portion of sales tax funds that used to be received monthly that is now being backfilled with property tax and being remitted in January and May. Proposed reductions to Medi-cal and other health programs will certainly have an effect on the already troubled health-care industry. Culver City has a hospital that is already facing bankruptcy proceedings and further reductions in Medi-cal reimbursements could increase the likelihood of the hospital no longer operating. This will have impacts on our community of having to travel further for medical care and economic impacts based on the number of people employed there, the suppliers they use, etc. While it is fortunate from a city perspective that the proposed State budget looks to primarily solve its problems within its own programs, some of these reductions will also have a direct impact on the City as well. The dramatic reduction of proposed City of Culver City, California City Council Agenda Item Report J2-9 education funding will likely lead first to reductions in “non-core” educational programs like after-school and enrichment programs. This could greatly increase the demand on some of the programs and services offered by the City, increasing our costs to operate or forcing us to turn people away. Proposition 42 transportation funds are proposed to be fully funded after a two year gap. To address both current and deferred maintenance items, Culver City has a pressing need for funds to improve its local streets and roads. And although we can look forward to receiving the first half of the Proposition 1B funds released by the State in Fiscal Year 2007-08, we were hoping to see additional funds allocated in 2008-09, which is not included in the current proposed State budget. In summary, considering the reported deficit faced by the State, the current proposed budget does not look to be as damaging to local governments as in the past. However, it is widely agreed upon that the final adopted budget will be dramatically different from the proposed budget. For this reason, there is still concern that local government revenues may be diverted. Proposition 1A should provide more protection to our local dollars than in the past, but the State is still able to ‘borrow’ tax revenue from local governments twice in any ten year period with a two-thirds vote of the legislature. Redevelopment agencies may also be raided again as well. Staff will be monitoring upcoming State budget deliberations carefully as they progress. When Governor Schwarzenegger declared a fiscal emergency in January, it triggered constitutional provisions under Proposition 58 (2004) that required the Legislature to send the Governor legislation to address the fiscal crisis within 45 days. That deadline was Saturday, February 21, 2008. On Friday, February 15, 2008, both houses approved a reduction package containing a variety of program cuts, payment deferrals and other mechanisms designed to address cash flow issues in the current fiscal year. Among other things, it cuts about $400 million in school spending and reduces rates paid to doctors who care for the poor, which would save about $550 million next year. Included is the five month deferral of the Highway User Tax Account (HUTA), mentioned previously. Additionally, on February 19, 2008, the Governor signed an executive order freezing state hiring and halting nonessential service contracts -- a move he said could save the cash- strapped state $100 million by June 30. Proposed Federal Budget Analysis In early February, the proposed $2.9 trillion budget for fiscal year 2008 submitted by the President would balance the budget by 2012, while continuing to cut taxes by eliminating or severely reducing billons of dollars in spending for programs critical to our nation’s cities. City of Culver City, California City Council Agenda Item Report J2-10 Funding for Community Development Block Grant (CDBG), transit programs, Amtrak, first responders, emergency management training, and the COPS program would be reduced or eliminated. The budget requests $145.2 billion for the war in Iraq and Afghanistan for fiscal year 2008 in addition to a supplemental request for $99.6 billion for the rest of this fiscal year. In order to balance the budget by 2012, spending for nonmilitary and homeland security programs would grow by one percent. Even in the public safety and homeland security area, funds to help cities combat violent crime, prepare for and respond to emergencies would be cut back from current levels. With the submission of the President’s budget, Congress will begin the 2008 budget cycle with hearings on spending requests before the Appropriations Committees in the House and action on an overall spending package by the Budget Committee. FISCAL ANALYSIS: City of Culver City Given this mid-year data, General Fund expenditures are projected to come in below the 96.5% spending assumption for the full fiscal year, which is primarily due to vacancies in several Departments. This will help offset any potential gap from less than stellar recurring revenue activity. It does not, however, solve the City’s ongoing operating deficit issue. If the economy continues to weaken, and revenues continue to lag, the City will be faced with difficult financial decisions in the future. The General Fund has been able to hold up well these last few years due to a healthy economy and increased new development activity around the city. There have also been one-time revenues, such as the sale of the Warner Parking Lot, that have enabled the funding of capital projects. The reduction of the Sales Tax amount, though, is felt to be a necessary adjustment due to current economic trends. There is currently a sufficient fund balance to absorb this decrease. There is also a potential for additional new development activity revenue that was not known to be realized this fiscal year. This could also help offset the decrease, although it would be one-time revenue filling a gap left by the loss of recurring revenue. Overall, the General Fund will end the year above the 30% reserve policy level. Transportation will be using Prop A reserves to fund the additional request of $275,000 for Garage Expenses. There is sufficient funding in this reserve to fund this request. City of Culver City, California City Council Agenda Item Report J2-11 Culver City Redevelopment Agency As with the City, the Redevelopment Agency also impacted by the effects of the current economy and slumping housing market. In fact, the RDA’s primary source of revenue, tax increment, is directly related to property values. The RDA has experienced significant growth in tax increment revenues over the past five years. However, with the slumping housing market, that growth is expected to slow over the next few years. As a result, staff has taken a conservative approach to projecting future tax increment revenues. Additionally, the State’s cash flow problems and projected $14+ billion budget deficit in 2008-09 may have an impact on the RDA’s cash flow as the Governor and Legislature look for ways to raise funds and balance the State’s budget. There is a distinct possibility that state mandated contributions to the Educational Revenue Augmentation Fund (ERAF)|1010|, or some other method of shifting funds from the RDA, may be imposed on RDA’s state-wide. Staff will continue to monitor the State’s budget process. ATTACHMENTS: 1. Fiscal 2007-08 City Mid-Year Budget Report 2. Fiscal 2007-08 City Mid-Year Revenue Summary 3. Fiscal 2007-08 City Mid-Year Expenditure Summary 4. Fiscal 2007-08 RDA Mid-Year Budget Report a. Unrestricted Funds Cash Flow b. Tax Exempt Bond Funds Cash Flow MOTION: That the City Council: (1) Receive the presentation of the Fiscal 2007-08 Mid Year Budget Report; and (2) Adopt proposed amendments to the Fiscal 2007-08 Budget: |1010| In 1992, the state enacted legislation that partially shifted their financial responsibility for funding education (under Prop 98) to local governments by diverting part of the property tax allocation from local governments into “Educational Revenue Augmentation Funds” to support schools. City of Culver City, California City Council Agenda Item Report J2-12 A. Reduce adopted 2007-08 Sales Tax revenue amount by $500,000 (10115100.313000); B. Increase the Sr. & Social Services Division budget in the Parks, Recreation and Community Services Department by $25,300 (10134100.xxxxxx) to cover salary survey approved increases for part-time positions not originally included in 2007-08 budget process; and C. Increase the Fire Department Budget (10145900.xxxxxx) by $32,850; Refuse Fund (20299900.952101) $16,420; Transit Fund (20399900.952101) $16,420; and Sewer Fund (20499900.952101) $16,420; and D. Increase Transportation Department Garage Expenses account by $275,000 (20368300.600800) due to increased labor expenses for capital projects; and E. Transfer $275,000 from Prop A Fund reserves (42499900.952203) to Transportation Department (20399900.391424). A budget amendment requires 4/5 ths vote That the Culver City Redevelopment Agency: (1) Receive the presentation of the Fiscal 2007-08 Mid Year Budget Monitoring Report; and (2) Adopt the following amendments to the Fiscal 2007-08 Budget: A. Increase tax increment projected revenues by $2,944,000 million in the following areas; a. Project Area 1 (51290000.311210): $1,043,000 b. Project Area 2 (52290000.311210): $493,000 c. Project Area 3 (53290000.311210): $812,000 d. Project Area 4 (54290000.311210): $596,000 B. Increase the Ince parking structure projected revenue (55093800.372130) by $40,000; C. Decrease the Land Sale Proceeds revenue (55096000.386350) by $5,400,000; City of Culver City, California City Council Agenda Item Report J2-13 D. Increase Housing set-aside by $589,000 (this increase will be reflected as an increased expenditure from RDA and an increased revenue for the Low/Moderate Housing fund); Increase Transfer-Out (Tax Increment Accounts) Increase Transfer In (Low/Mod Income Housing Accounts) 51299900.952554: $288,000 55499900.391512: $288,000 52299900.952554: $99,000 55499900.391522: $99,000 53299900.952554: $83,000 55499900.391532: $83,000 54299900.952554: $119,000 55499900.391542: $119,000 E. Increase statutory pass through payments by $763,000; a. Project Area 2 (52292000.517500): $352,829 b. Project Area 4 (54292000.517500): $410,171 F. Increase relocation services in the Washington/National project (55092620.610500) by $250,000. MEETING DATE: 2/25/08 AGENDA ITEM: Fiscal 2007-08 Mid-Year Budget Report and Adoption of Proposed Budget Amendments ATTACHMENTS Pages 1. Fiscal 2007-08 City Mid-Year Budget Report 1 - 10 2. Fiscal 2007-08 City Mid-Year Revenue Summary 11 - 12 3. Fiscal 2007-08 City Mid-Year Expenditure Summary 13 - 14 4. Fiscal 2007-08 RDA Mid-year Budget Report 15 - 25 a. Unrestricted Funds Cash Flow 26 - 27 b. Tax Exempt Bond Funds Cash Flow 28 - 29 2007-2008 Budget Monitoring Report Mid-Year Report Introduction: This report includes the revenue and expenditure analysis through December 31, 2007. The revenues reported include outside revenue sources and transfers-in from other funds. The expenditures analysis includes expenditures by fund and transfers-out to other funds. For the purposes of this report, encumbrances have not been included as expenditures. Encumbrances will be included when the money is actually relieved. General Fund Summary: For the most part, General Fund operations are in good financial health through the first six months of 2007-08. General Fund expenditures are on track, and revenues appear to be relatively stable through the first six months, except for Sales Tax receipts, which are lower than anticipated. Budget staff will continue to monitor expenditures and revenues throughout the second half of the fiscal year. The General Fund beginning fund balance for 2007-08 is $31.9 million, which represents 41.4% of fiscal 2006-07 operational expenditures. The ending balance for 2007-08 is projected to be $29.3 million. If the proposed budget amendments are adopted, the projected ending General Fund balance will be $28.8 million, which is approximately a 33.8% reserve. The ending fund balance assumes the $9 million loan to the Redevelopment Agency will be fully repaid this fiscal year. Summary of Revenues General Fund revenue receipts to date are approximately 33.3% of the estimated budget amount. Last year at this time, the revenue receipts for the General Fund were 37.5%. The three year average revenue receipts at mid-year is approximately 34.8%. As illustrated in Chart 1, approximately $27.5 million has been collected through December 2007 compared to $28.1 million in 2006. One factor in this drop from last year are one-time classified revenues, such as a Transient Occupancy Tax (TOT) bankruptcy settlement, recorded in December 2006 that skews the comparison. Revenues in general, though, are lower than anticipated at mid-year. The “Revenue Detail” section below provides a more in depth discussion and analysis of General Fund revenues. Summary of Expenditures General Fund Expenditure Target: 48.25% To date, General Fund departments have expended 45.6% of the adjusted budget as compared to 46.9% last fiscal year. The three year average for percent expended at mid- year is approximately 45.6%. As illustrated in Chart 2, approximately $38.3 million has been expended through December 2007 compared to $36.3 million in 2006. The major factor in this increase is the transfer of funds (approximately $1.5 million more than last year this time) from the General Fund Fund Balance to the I & A Fund to fund capital projects. The “Expenditure Detail” section provides a more in depth discussion and analysis of General Fund expenditures. Page 1 of 29 2 General Fund Analysis: Revenue Detail Revenue receipts through the first half of fiscal 2007-08 are sluggish compared to growth between mid-year receipts of 2005-06 and 2006-07. Except for Charges for Services (which is partially higher due to Council approved fee increases), Interfund/Departmental Charges, and Other Revenue, almost all other categories are lower than, or show little growth over, mid-year receipts of fiscal 2006-07. The following charts and narrative detail the categories increase/decrease over the prior mid-year receipts: Increases Revenue Description Mid-year Receipts 2006-07 Mid-year Receipts 2007-08 $$ Increase/ from fiscal 2006-07 % Increase/ from fiscal 2006-07 Business Tax $ 502,952 $ 521,653 $ 18,701 3.6% Commercial/Ind. Tax $ 193,002 $ 229,345 $ 36,343 15.8% Licenses & Permits $ 807,809 $ 977,676 $ 169,867 17.4% Charges for Services $4,209,776 $4,820,278 $ 610,502 12.7% Fines & Forfeitures $2,247,297 $2,291,549 $ 44,252 1.9% Interfund/Departmental $2,581,122 $2,823,944 $ 242,822 8.6% Other Revenues $ 54,919 $ 358,491 $ 303,572 84.7% Transfers $ 719,467 $ 728,400 $ 8,933 1.2% Business Tax – Receipts to date for this category are slightly ahead of last year at this time. The bulk of revenue receipts for Business Tax are received in February and March of a fiscal year. There is no indication at this time that this revenue will not meet the budgeted projection. The percentage of receipts received to date is 5.7% of the budgeted amount, which is also the same as this time last year. Commercial/Industrial Tax – This is a fee levied on construction valued at $250,000 or more. The adopted fiscal 2007-08 budget anticipates some large new development collections that will be treated as one-time funding. This category brings in a range of amounts of development fees. Large projects, such as the expansion and renovation of Westfield and new building construction on the Sony lot, are not considered “routine” and monies for these are treated as “one-time.” These receipts are used to pay for one-time operating enhancements, or set-aside in the General Fund fund reserve to be used for Capital Projects during the next fiscal year’s budget process. Through mid-year, receipts in this category are only 22.9% of projections. We are ahead of last year’s mid-year actuals, and expect to meet projections during the second half of the fiscal year. Licenses and Permits – This revenue category is ahead of last year’s receipts at this time, and is currently 40.8% of adjusted budget projections. This category of revenue includes permits such as building, electric, plumbing and heating, and with known new development activity occurring this fiscal year, it will meet its estimated Page 2 of 29 3 budget projection at year end. These permits are a large portion of the $2.3 million budgeted revenue amount in this category. Charges for Services – This category is significantly up from the same period last year, specifically due to fees and charges increases approved by the City Council in April 2007. The City had not performed a fee study in several years, and an outside consultant was hired to do the study and ultimately recommended several fees and charges adjustments. These fees and charges adjustments went into affect on July 1, 2007. It is difficult to determine at this time specifically how much is due to the fees and charges increase, and how much may be due to increased, or decreased, activity. A full analysis will be performed at the end of the fiscal year, but revenue projections will meet their budgeted target in this category. Court Fines and Vehicle Code Fines – Fines and forfeits are slightly ahead of last year at this time, and are 51.9% of the adjusted budget amount. There is nothing out of the ordinary to report, and this category will meet projections. Interfund/Departmental – This category reflects the administrative cost allocation charges from other funds, including enterprise funds. Increases from last year include normal cost of business increases and negotiated personnel cost increases. Other Revenues – Miscellaneous revenue collected by Divisions is included in this category. This category includes revenues from the Fiesta La Ballona event that was not budgeted during the budget process, which inflates the current year actual amount over last year. There is also an amount from a “trust” that is being reflected in this category until approved arrangements can be made for the use of the funds. Budgeted projections include the final payment from the Warner Lot sale this fiscal year in the amount of $2.62 million. Transfers – Transfers from other funds are recorded in the General Fund on a monthly basis. Revenues in this category will meet budgeted projections. Decreases Revenue Description Mid-year Receipts 2006-07 Mid-year Receipts 2007-08 $$ (Decrease) from fiscal 2006-07 % (Decrease) from fiscal 2006-07 Property Tax $1,152,771 $1,144,730 $ (8,041) (0.7%) Sales Tax $4,683,456 $4,515,700 $(167,756) (3.7%) Public Safety Sales Tax $ 122,719 $ 122,104 $ (615) (0.5%) Franchise Tax $ 252,011 $ 98,109 $(153,902) (156.9%) Real Property Transfer Tax $1,311,167 $ 891,215 $(419,952) (47.1%) Utility Taxes $6,214,674 $6,026,806 $(187,868) (3.1%) Transient Occupancy Tax $1,804,523 $1,208,294 $(596,229) (49.3%) Intergovernmental $ 183,199 $ 109,996 $ (73,203) (66.6%) Use of Money & Property $1,020,762 $ 612,235 $(408,527) (66.7%) Page 3 of 29 4 Property Tax – For fiscal year 2007-08, revenues receipts are almost identical to the amount received this time last year. Anticipated increased property taxes have not materialized due to the housing slump, but it is anticipated that revenues in this category will reach, or come close, to projections. Since Culver City’s property tax share is low, we are not as significantly affected by the downturn in the housing market as some other agencies – including the State. Sales Tax – For fiscal year 2007-08, actual sales tax receipts are down approximately 3.7% from the same period last year. Due to the current economic trends, it is not expected the City will realize the adopted 2007-08 projected sales tax amount. It is being recommended to reduce the adopted 2007-08 sales tax revenue amount from $18,800,000 to $18,300,000. This recommendation is based on many factors, such as: the trend of revenue receipts to date; current economic trends affecting consumer spending, which continues to show as sluggish; effects of the Writer’s Guild strike on the local economy; the closing of a car dealership, which was not factored in when calculating the adopted revenue projection; and a revised “downward” estimate from our City’s Sales Tax auditors, which shows a significant gap between our budgeted amount and estimated receipts based on their analysis. It is important to note that the “triple flip” payments for Sales Tax are received in January and May of each fiscal year. The City is expecting approximately $4.7 million (half paid in January, and half paid in May), and these payments will be reflected in the upcoming monthly budget monitoring reports to the City Council and the fiscal 2007-08 year-end report. Public Safety Sales Tax – Receipts to date for this revenue are less than last year at mid-year. It is anticipated, though, that receipts will hit the adopted revenue amount at the end of the fiscal year. Franchise Tax – Actual receipts to date are dramatically down from last year at this time, specifically because of a receipt of the Time Warner Franchise Fee ($187,000) in October of 2006. Normally, only a minimal amount of monies are collected in the first seven months of the fiscal year, and an “out of the ordinary” payment can throw off a comparison. The majority of Franchise Tax payments occur during February through June of a fiscal year, and it is anticipated that we will meet budgeted projections in this category. Real Property Transfer Tax – Actual receipts are down almost 50% from this same period last year. Part of this is attributable to one-time monies from audit findings that were deposited in the first half of fiscal 2006-07. With the downturn in the housing market, the sale of property has slowed considerably. As of December 31, 2007, the percentage of receipts received per projected budget is 43.5%. Although this is lower than expected, staff believes receipts will hit projections in this category. Utility User’s Tax – To date, receipts are at 44.1% of projections compared to 46.4% at this time last year. Each UUT category (electric, gas, water, telecommunications, and cable) is behind last year’s actual receipts at this same Page 4 of 29 5 time. We will be working closely with our auditors on this issue. Approximately 67% of Gas UUT receipts are received in the second half of the fiscal year. Transient Occupancy Tax – A majority of the increased receipts from last year over this year at mid-year are the result of a bankruptcy settlement received by the City. These funds were received and deposited in December 2006. As of December 31, 2007, TOT receipts are 48.3% of budgeted projections, and are on-line to meet projections. Intergovernmental – Actual receipts are down from last year at this time, but approximately 92% of this category is received in the second half of the fiscal year when the State Motor Vehicle License Fee is received by the City. Payments are received in January and May of each year, and this revenue category will meet budget projections. Use of Money and Property – This category is behind last year at this time, but is expected to meet end of year projections. Interest Income is a portion of this revenue category and is on track with projections. A revenue in this category from last year, Interest Income on Notes Receivable, is no longer relevant this year and is one reason this year lags behind. The remainder of the decrease from last year is in Net Increase/Decrease Fair Value. These accounts are used by Accounting through the year to record various entries required per GASB 31, and will change at the end of the fiscal year. Fiscal 2006-07 shows a mid-year amount of $355,187, while the fiscal 2007-08 mid-year amount is $104,001. It is difficult to analyze what the outcome of this category will be, but as long as the “Fair Value” amount stays positive, this category is on track to meet projections. Expenditure Detail Currently, the City Manager’s Department is exceeding the 96.5% spending assumption, and the Fire Department is right on the line. 1. Through December, the City Manager’s Department has expended 50.5% of the adjusted budget. This increase is partly attributable to inflated regular salaries in the first two months of the fiscal year. During the 2007-08 budget process, three positions were reduced from the City Manager’s Division. One of these positions was filled, and the employee was being paid from the Division for the first two months of the fiscal year during the transition, although no budget amount was appropriated. (The employee ultimately decided to leave City employ.) The other was a contract employee, Interim Financial Officer, who also was paid from regular salaries for the first two months, with no corresponding budget amount. If these salary payments were not included, expenditures at mid-year for the City Manager’s Office would be 49.0%, which would put them well below the expenditure target. 2. Through December, the Fire Department has expended 48.2% of the adjusted budget. Much of this is attributable to personnel costs (constant staffing) that were expended during the wildfires, which occurred in So. California in the fall of 2007. Page 5 of 29 6 It is anticipated, though, the Department will come in within the 96.5% spending assumption at the end of the fiscal year. Additionally, eight (8) General Fund divisions are currently exceeding the 48% target (excluding recreation programs, which are seasonal). Although these divisions are slightly above their expenditure targets, each respective department is within, or close to (Fire), the 48% budget target. • Micrographics has expended 51.3% of their adjusted budget. The Records Management Coordinator position is funded 60% in the City Clerk’s Division and 40% in the Micrographic’s Division. Charges to some of the personnel cost accounts do not reflect this percentage breakdown, and will be corrected. This Division will meet the 96.5% spending assumption target at the end of the year. • Office of the Police Chief has expended 53.2% of the adjusted budget amount at mid-year. This is primarily due to MOU adjustments for the Police Management Group, of which two out of the three employees in the Division belong. The Police Management labor negotiations were the only negotiations still open going into fiscal 2007-08. Because it was unknown what the final negotiation contract would be, an estimated amount of funding based on discussions to date was set aside in the contingency account in Non-Departmental. Funding will be transferred from the contingency account at the end of the fiscal year when other adjustments, such as retirement payoffs, are also performed. • Police Communications has expended 49.5% of its adjusted budget. The major factor is expending of overtime due to vacancies. Also, on average, more overtime is expended in the first half of the fiscal year than the second half. Overall, the Police Department is at 46.2% of adjusted budget at mid-year, and is expected to finish the year below the 96.5% spending assumption. • Office of the Fire Chief has expended 49.7% of its adjusted budget. There were expenses in other contractual services in the Maintenance and Operations category that were fully expended in the first six months of the fiscal year, which inflated the percentage. If these expenses were prorated over the entire fiscal year, the percent of adjusted budget expended would be 47.9%. • Fire Suppression has expended 56.7% of their adjusted budget. This is due to some crossover in personnel expenses between the Fire Suppression division and the EMS division. The EMS division is well under the target (35.3%). A major factor has been the increase in constant staffing, especially during the period of wildfires occurring this fall in So. California. • Fire Prevention has expended 48.9% of their adjusted budget. This is slightly over the target, and the division is still on target to meet the 96.5% spending assumption. Overall, the Fire Department is expected to meet the 96.5% spending assumption. • Public Works Administration has expended 50.8% of their adjusted budget. Some expenses that occurred in the first six months have slightly inflated the percentage. Overtime has also been expended with no amount budgeted for it. Budget savings in other divisions in the Public Works Department will be able to cover the overtime expenditure cost in this division. • Maintenance Operations has expended 51.1% of their adjusted budget. Over time is being expended, and no budget was adopted for this expenditure. Budget Page 6 of 29 7 savings in other divisions in the Public Works Department will be able to cover the overtime expenditure cost in this division. Budget staff will work with Public Works staff to identify overtime needs and, if necessary, budget accordingly. The Public Works Department will be the 96.5% spending assumption. All other General Fund expenditures appear to be on-track. Conclusion/Summary: General Fund recurring revenue is going to be very tight this budget year, especially Sales Tax receipts. There will be additional one-time monies from new development activity that were not anticipated this fiscal year, which will help make up the variance. Overall, General Fund expenditures are expected to come in below the 96.5% assumption spending limit, mainly due to vacancies during the fiscal year. This will help ease the burden on the General Fund due to less than stellar activity in some major revenue categories. Budget & Finance staff will continue to monitor the revenue and expenditure trends monthly and inform departments and the City Council of any significant changes. Internal Service Funds Summary There are no significant budgetary issues in the Equipment Replacement, Equipment Maintenance & Fleet Services, and Central Stores funds at this time. The Equipment Replacement Fund has issued a PO for the purchase of six (6) automated Refuse vehicles, which were approved for purchase this fiscal year. Annual “amortized” contributions from the Refuse Fund for prior refuse vehicles enabled the fund to have sufficient monies to purchase the vehicles outright. Staff from the Equipment Maintenance & Fleet Services Division will keep the City Council apprised of the progress of this purchase. The Self Insurance Fund had a beginning cash balance for 2007-08 of approximately $5 million; however, the Self Insurance Reserve Fund will be significantly reduced by almost $4 million due to costs related to the Culver Crest hillside litigation. Additionally, pending General Liability costs may further impact the fund balance. • Staff will develop a strategy to re-establish the fund reserve, and will assess if an increase in liability reserve charges to operating departments is needed over the next few years. • Workers’ compensation and insurance costs are expected to meet the current budget. Enterprise Funds Summary There are no significant budgetary issues in the Transit and Sewer Funds at this time. • The Transit Fund revenue receipts are on track (34% collected this year vs. 36% collected last year) and expenditures are 47% of the adjusted budget. Some large capital projects the department has been working on for the past couple of fiscal years (AVL project, CNG fueling stations) are seeing some significant headway, and the expending of carried-over operating funds is being realized this fiscal year. Page 7 of 29 8 • The Sewer Fund revenue receipts are on track (44% collected this year vs. 43% collected last year) and expenditures are 41% of the adjusted budget (excluding capital projects). The Refuse Fund revenue receipts are on track (45.6% collected this year vs. 48.2% collected last year) and expenditures are 40% of the adjusted budget. • The outstanding Refuse Fund Loan amount will be approximately $1.15 million at the end of fiscal 2007-08. Of this amount, $686,500 is owed the General Fund, $401,400 to the Equipment Replacement Fund, and $61,400 to the Innovation Fund. Other Fund Highlights: At mid-year, all other funds are on track with anticipated mid-year projections. Budget staff will continue to monitor these funds on a regular basis and inform City Council of any significant changes. Economic Update: Select economic data from December 2007: • Overall: The final fourth quarter real gross domestic product (GDP) numbers showed that the U.S. economy grew by 0.6%, as compared to 4.9% in the third quarter and 3.8% in the second quarter. Overall, the GDP grew 2.2% in 2007, the slowest rate in five years. o The job market in LA County and is showing signs of economic strain as the seasonally adjusted unemployment rate for the County was 5.2% in December 2007, which is up from 4.7% a year ago. The State unemployment rate is also struggling with effects of from the uncertainty of the economy, and the December 2007 rate was 6.1% as compared to 4.8% a year ago. The U.S. unemployment rate for December 2007 was 5.0%. • Real Estate/Housing Market: The national housing market has taken a dramatic turn from a few years ago when housing was growing at an enormous rate. Following years of steep increases, 2007 saw the market retreat and foreclosures take the lead over new home sales. Economic projections for the housing market do not forecast much good news for 2008. Sales are predicted to stay relatively flat, and prices are expected to remain stable or experience modest decreases. The Los Angeles Westside is a highly desirable location, and it is likely home prices will remain stable for the most part. The economy will continue to feel the effects from the sub-prime mortgage fallout throughout 2008, and reduced consumer spending is also expected as a result of the slowing economy. • Inflationary Trends: During December 2007, the Federal Reserve Bank reduced rates by half a point. In January 2008, they reduced the rate twice, half a point each time, in an aggressive effort to head of a potential recession. It is too early to tell if these efforts will have the effect on the economy that is intended. Page 8 of 29REVENUE AND EXPENDITURE CHARTS CHART 1 -$10,000,000 $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 July August September October November December January February March April May June General Fund Revenues Collected Year to Date 2006-07 2007-08 CHART 2 $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 July August September October November December January February March April May June General Fund Expenditures Year to Date 2006-07 2007-08 9 Page 9 of 29CHART 3 -$2,000,000 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 July August September October November December January February March April May June General Fund Revenues Collected by Month 2006-07 2007-08 CHART 4 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 July August September October November December January February March April May June General Fund Expenditures by Month 2006-07 2007-08 10 Page 10 of 29CITY OF CULVER CITY SUMMARY OF REVENUES COMPARISON OF MID-YEAR FISCAL 2006-07 AND 2007-08 ATTACHMENT 2 MID-YEAR MID-YEAR PROPOSED PROPOSED ADOPTED ADJUSTED MID-YEAR PERCENT ACTUAL ADOPTED ADJUSTED MID-YEAR PERCENT BUDGET ADJUSTED BUDGET BUDGET RECEIPTS RECEIVED RECEIPTS BUDGET BUDGET RECEIPTS RECEIVED REVISION BUDGET 2006-07 2006-07 2006-07 2006-07 2006-07 2007-08 2007-08 2007-08 2007-08 2007-08 2007-08 GENERAL FUND PROPERTY TAX 3,048,000 3,048,000 1,152,771 37.8% 3,205,574 3,266,000 3,266,000 1,144,730 35.0% 0 3,266,000 SALES TAX 17,650,000 17,650,000 4,683,456 26.5% 18,198,893 18,800,000 18,800,000 4,515,700 24.0% (500,000) 18,300,000 PUBLIC SAFETY SALES TAX 361,000 361,000 122,719 34.0% 369,193 377,245 377,245 122,104 32.4% 0 377,245 BUSINESS TAX 8,804,100 8,804,100 502,952 5.7% 9,183,833 9,144,000 9,144,000 521,653 5.7% 0 9,144,000 FRANCHISE TAX 1,200,000 1,200,000 252,011 21.0% 1,253,283 1,224,000 1,224,000 98,109 8.0% 0 1,224,000 REAL PROP.TRANS TAX 2,517,000 2,648,942 1,311,167 49.5% 2,965,289 2,050,000 2,050,000 891,215 43.5% 0 2,050,000 UTILITY TAXES 13,380,000 13,380,000 6,214,674 46.4% 13,891,149 13,656,000 13,656,000 6,026,806 44.1% 0 13,656,000 TRANS OCC TAX 2,100,000 2,100,000 1,804,523 85.9% 3,224,328 2,500,000 2,500,000 1,208,294 48.3% 0 2,500,000 COM/IND DEV TAX 372,640 372,640 193,002 51.8% 558,648 1,000,000 1,000,000 229,345 22.9% 0 1,000,000 LICENSES AND PERMITS 1,479,551 1,482,051 807,809 54.5% 1,679,605 2,396,000 2,398,500 977,676 40.8% 0 2,398,500 INTERGOVERNMENTAL 2,942,670 2,952,670 183,199 6.2% 3,061,890 2,980,600 2,980,600 109,996 3.7% 0 2,980,600 CHARGES FOR SERVICES 8,450,919 8,450,919 4,209,776 49.8% 9,115,583 9,444,477 9,598,195 4,820,278 50.2% |1010|9,598,195 FINES AND FORFEITS 4,370,000 4,370,000 2,247,297 51.4% 4,542,779 4,415,000 4,415,000 2,291,549 51.9% 0 4,415,000 USE OF MONEY & PROPERTY 954,000 954,000 1,020,762 107.0% 1,817,041 1,103,000 1,103,000 612,235 55.5% 0 1,103,000 INTER FUND/DEPARTMENTAL 5,574,047 5,574,047 2,581,122 46.3% 5,410,063 5,872,231 5,872,231 2,823,944 48.1% 0 5,872,231 OTHER REVENUES 107,690 112,190 54,919 49.0% 170,814 2,738,304 2,738,304 358,491 13.1% 0 2,738,304 TRANSFERS 1,438,866 1,440,804 719,467 49.9% 1,490,209 1,456,800 1,461,300 728,400 49.8% 0 1,461,300 TOTAL GENERAL FUND 74,750,483 74,901,363 28,061,626 37.5% 80,138,174 82,423,657 82,584,375 27,480,525 33.3% (500,000) 82,084,375 BUILDING SURCHARGE FUND 50,000 50,000 48,863 97.7% 100,388 92,500 92,500 55,618 60.1% 0 92,500 GRANTS OPERATING FUND 1,154,296 2,605,573 677,470 26.0% 2,522,488 1,140,060 1,379,767 633,760 45.9% 0 1,379,767 CDBG - OPERATING GRANT FUND 78,712 78,712 21,320 27.1% 66,622 72,780 72,780 5,891 8.1% 0 72,780 CDBG - CAPITAL GRANT FUND 58,292 84,397 171,654 0.0% 288,492 236,585 236,585 177,113 74.9% 0 236,585 PROP A LOCAL RETURN FUND 632,343 632,343 296,295 46.9% 698,240 669,442 669,442 284,998 42.6% 0 669,442 PROP C LOCAL RETURN FUND 974,017 974,017 262,978 27.0% 615,476 542,911 542,911 191,942 35.4% 0 542,911 ASSET SEIZURES FUND 0 0 34,690 0.0% 98,340 60,000 60,000 118,846 198.1% 0 60,000 SECTION 8 HOUSING 2,554,548 2,554,548 1,365,001 53.4% 2,509,632 2,533,896 2,533,896 917,023 36.2% 0 2,533,896 FISCAL 2006-07 FISCAL 2007-08 Page 11 of 29CITY OF CULVER CITY SUMMARY OF REVENUES COMPARISON OF MID-YEAR FISCAL 2006-07 AND 2007-08 ATTACHMENT 2 MID-YEAR MID-YEAR PROPOSED PROPOSED ADOPTED ADJUSTED MID-YEAR PERCENT ACTUAL ADOPTED ADJUSTED MID-YEAR PERCENT BUDGET ADJUSTED BUDGET BUDGET RECEIPTS RECEIVED RECEIPTS BUDGET BUDGET RECEIPTS RECEIVED REVISION BUDGET 2006-07 2006-07 2006-07 2006-07 2006-07 2007-08 2007-08 2007-08 2007-08 2007-08 2007-08 FISCAL 2006-07 FISCAL 2007-08 ENTERPRISE FUNDS REFUSE FUNDS 10,410,618 10,410,618 5,022,074 48.2% 10,532,475 11,483,841 11,483,841 5,233,621 45.6% 0 11,483,841 MUNICIPAL BUS 16,025,724 16,025,724 5,808,446 36.2% 18,510,625 17,004,756 17,004,756 5,801,871 34.1% 0 17,004,756 SEWER FUND 8,598,900 8,598,900 3,656,867 42.5% 8,892,265 9,121,750 9,121,750 4,009,235 44.0% 0 9,121,750 LANDSCAPE MAINT. DIST 47,000 47,000 22,860 48.6% 56,267 47,000 47,000 21,556 45.9% 0 47,000 TOTAL ENTERPRISE FUNDS 35,082,242 35,082,242 14,510,247 41.4% 37,991,632 37,657,347 37,657,347 15,066,283 40.0% 0 37,657,347 CAPITAL IMPROVEMENT FUNDS ARTS IN PUBLIC PLACES 129,000 129,000 163,706 126.9% 346,492 317,000 317,000 44,682 14.1% 0 317,000 NEW DEV. IMPACT FEE FUND 3,000 3,000 5,026 167.5% 7,671 0 0 4,957 0.0% 0 0 SPECIAL GAS TAX FUND 750,000 750,000 273,270 36.4% 784,259 756,000 756,000 258,599 34.2% 0 756,000 PARK FACILITIES FUND 5,000 5,000 26,887 537.7% 73,869 40,000 40,000 76,953 192.4% 0 40,000 CAPITAL IMPV/ACQ FUND 1,429,000 2,065,372 1,204,760 58.3% 2,102,402 3,792,000 8,489,109 3,509,962 41.3% 0 8,489,109 PARKING IMPROVEMENT FUND 822,200 822,200 479,407 58.3% 1,086,203 944,000 944,000 533,143 56.5% 0 944,000 GRANTS CAPITAL FUND 0 1,042,298 512,627 49.2% 2,349,067 1,929,800 1,929,800 24,255 1.3% 0 1,929,800 TOTAL CAPITAL IMPROVEMENT FUNDS 3,138,200 4,816,870 2,665,683 55.3% 6,749,963 7,778,800 12,475,909 4,452,551 35.7% 0 12,475,909 INTERNAL SERVICE FUNDS EQUIPMENT REPLACEMENT 1,896,851 1,896,851 1,129,050 59.5% 2,196,112 2,042,736 2,042,736 1,055,127 51.7% 0 2,042,736 EQUIPMENT MAINTENANCE 6,212,059 6,212,059 3,035,156 48.9% 6,409,769 6,966,954 6,966,954 3,528,932 50.7% 0 6,966,954 SELF INSURANCE 7,515,002 7,515,002 3,979,359 53.0% 7,876,594 7,270,014 7,274,613 3,728,283 51.3% 0 7,274,613 STORES 1,422,250 1,422,250 792,190 55.7% 1,523,077 1,674,450 1,674,450 741,701 44.3% 0 1,674,450 INNOVATION FUND 11,412 11,412 13,621 119.4% 28,609 4,588 4,588 9,154 199.5% 0 4,588 TOTAL INTERNAL SERVICE FUNDS 17,057,574 17,057,574 8,949,376 52.5% 18,034,161 17,958,742 17,963,341 9,063,197 50.5% 0 17,963,341 TOTAL OPERATING AND CIP FUNDS 135,530,707 138,837,639 57,065,203 41.1% 149,813,608 151,166,720 156,268,853 58,447,747 37.4% (500,000) 155,768,853 LESS: INTERNAL SERVICE FUNDS 17,057,574 17,057,574 8,949,376 52.5% 18,034,161 17,958,742 17,963,341 9,063,197 50.5% 0 17,963,341 TOTAL BUDGET 118,473,133 121,780,065 48,115,827 39.5% 131,779,447 133,207,978 138,305,512 49,384,550 35.7% (500,000) 137,805,512 Page 12 of 29CITY OF CULVER CITY SUMMARY OF EXPENDITURES COMPARISON OF MID-YEAR 2006-07 AND 2007-08 ATTACHMENT 3 MID-YEAR YEAR END MID-YEAR PROPOSED PROPOSED ADOPTED ADJUSTED MID-YEAR PERCENT ACTUAL ADOPTED ADJUSTED MID-YEAR PERCENT BUDGET ADJUSTED BUDGET BUDGET EXPENDITURE EXPENDED* EXPEND BUDGET BUDGET EXPENDITURE EXPENDED* REVISION BUDGET 2006-07 2006-07 2006-07 2006-07 2006-07 2007-08 2007-08 2007-08 2007-08 2007-08 2007-08 GENERAL GOVERNMENT CITY COUNCIL 210,897 265,161 89,033 33.6% 189,132 278,329 336,948 92,176 27.4% 0 336,948 CITY MANAGER 1,000,490 1,051,213 476,957 45.4% 1,042,487 1,009,485 1,066,459 538,613 50.5% 0 1,066,459 CITY CLERK 382,660 428,616 218,096 50.9% 416,673 509,033 509,033 183,910 36.1% 0 509,033 CITY TREASURY 2,806,112 3,115,891 1,515,532 48.6% 2,962,342 3,123,867 3,307,753 1,274,043 38.5% 0 3,307,753 CITY ATTORNEY 1,896,541 1,999,108 857,876 42.9% 1,925,194 1,723,067 1,746,247 779,643 44.6% 0 1,746,247 ADMIN/BUDGET & FINANCE 1,119,484 1,186,051 521,306 44.0% 1,163,842 1,346,237 1,392,163 514,910 37.0% 0 1,392,163 PERSONNEL 957,208 1,058,410 482,738 45.6% 1,111,762 1,112,075 1,141,974 536,668 47.0% 0 1,141,974 INFORMATION TECH. 2,654,587 2,831,034 1,289,091 45.5% 2,577,749 3,034,211 3,153,623 1,365,937 43.3% 0 3,153,623 TOTAL GENERAL GOVERNMENT 11,027,979 11,935,484 5,450,629 45.7% 11,389,181 12,136,304 12,654,200 5,285,900 41.8% 0 12,654,200 PARKS, REC. & COMMUNITY SVCS 6,174,663 6,394,103 2,897,508 45.3% 6,271,371 6,864,988 7,038,358 3,068,214 43.6% 25,300 7,063,658 POLICE DEPARTMENT 27,429,735 28,030,931 13,200,653 47.1% 27,612,692 28,385,399 28,464,960 13,159,592 46.2% 0 28,464,960 FIRE DEPARTMENT 13,771,360 14,386,792 6,750,499 46.9% 14,019,593 14,540,504 14,566,867 7,047,576 48.4% 32,850 14,599,717 COMMUNITY DEVELOPMENT 5,850,224 6,205,870 2,722,359 43.9% 5,656,226 7,131,365 7,479,735 2,980,716 39.9% 0 7,479,735 PUBLIC WORKS 8,193,357 8,569,275 3,734,734 43.6% 8,242,887 9,317,108 9,427,907 3,942,780 41.8% 0 9,427,907 NON-DEPARTMENTAL 4,983,050 3,298,737 950,562 28.8% 2,519,698 3,987,650 3,887,450 1,120,577 28.8% 0 3,887,450 Transfers 1,238,071 1,249,143 614,922 49.2% 1,223,884 1,338,504 4,495,532 2,239,072 49.8% 0 4,495,532 Projected excess appropriations (2,650,000) (2,650,000) 0.0% 0 (2,805,835) (2,805,835) 0 0% 0 (2,805,835) TOTAL GENERAL FUND 76,018,439 77,420,335 36,321,866 46.9% 76,935,532 80,895,987 85,209,174 38,844,427 45.6% 58,150 85,267,324 TOTAL OPERATING GRANTS FUND 1,154,296 2,103,043 1,076,376 51.2% 1,987,499 1,127,061 1,371,119 604,137 44.1% 0 1,371,119 CDBG OPERATING FUND 78,712 78,712 41,449 52.7% 66,623 72,780 72,780 20,997 28.8% 0 72,780 TOTAL SEC. 8 FUND 2,503,325 2,527,580 864,744 34.2% 1,712,655 2,574,648 2,584,943 855,289 33.1% 0 2,584,943 TOTAL PROP A FUND 632,343 632,343 316,170 50.0% 632,340 669,442 669,442 327,221 48.9% 0 669,442 TOTAL PROP C FUND 974,017 974,017 272,094 27.9% 767,187 542,911 592,911 279,277 47.1% 0 592,911 TOTAL ASSET SEIZURE FUND 0 953,154 3,232 0.3% 41,075 60,000 948,255 152,849 16.1% 0 948,255 TOTAL OPERATING 81,361,132 84,689,184 38,895,931 45.9% 82,142,911 85,942,829 91,448,624 41,084,197 44.9% 58,150 91,506,774 FISCAL 2006-07 FISCAL 2007-08 2/18/2008 8:36 AM Page 13 of 29CITY OF CULVER CITY SUMMARY OF EXPENDITURES COMPARISON OF MID-YEAR 2006-07 AND 2007-08 ATTACHMENT 3 MID-YEAR YEAR END MID-YEAR PROPOSED PROPOSED ADOPTED ADJUSTED MID-YEAR PERCENT ACTUAL ADOPTED ADJUSTED MID-YEAR PERCENT BUDGET ADJUSTED BUDGET BUDGET EXPENDITURE EXPENDED* EXPEND BUDGET BUDGET EXPENDITURE EXPENDED* REVISION BUDGET 2006-07 2006-07 2006-07 2006-07 2006-07 2007-08 2007-08 2007-08 2007-08 2007-08 2007-08 FISCAL 2006-07 FISCAL 2007-08 ENTERPRISE AND USER FEE FUNDS *** TOTAL REFUSE 10,810,594 11,403,923 4,640,973 40.7% 10,047,895 11,712,676 12,098,967 4,897,345 40.5% 16,420 12,115,387 TOTAL TRANSIT 17,505,550 24,155,438 9,045,338 37.4% 17,473,091 18,350,584 24,779,202 11,593,128 46.8% 291,420 25,070,622 TOTAL SEWER 10,263,767 14,669,770 3,857,974 26.3% 8,088,536 9,976,940 14,915,025 4,802,484 32.2% 16,420 14,931,445 TOTAL LANDSCAPE 47,000 47,000 23,500 50.0% 47,000 47,000 47,000 23,500 50.0% 0 47,000 TOTAL ENTERPRISE 38,626,911 50,276,131 17,567,785 34.9% 35,656,522 40,087,200 51,840,194 21,316,457 41.1% 324,260 52,164,454 CAPITAL IMPROVEMENT FUNDS BUILDING SURCHARGE 50,000 51,016 1,016 2.0% 35,587 7,800 14,064 7,814 55.6% 0 14,064 ART IN PUBLIC PLACES 138,000 493,592 55,315 11.2% 140,110 565,773 837,130 40,460 4.8% 0 837,130 COMMUNITY DEVELOPMENT 0 59,679 0 0.0% 57,312 0 57,149 1,177 2.1% 0 57,149 GAS TAX 722,708 1,979,943 573,784 29.0% 919,950 877,160 1,696,679 235,497 13.9% 0 1,696,679 PARK FACILITIES 0 170,056 0 0.0% 16,727 86,500 145,030 31,645 21.8% 0 145,030 IMPROVEMENT & ACQUISITION 1,321,839 5,611,041 463,910 8.3% 1,428,409 3,762,000 13,189,700 658,219 5.0% 0 13,189,700 PARKING IMPROVEMENT 780,000 796,639 390,000 49.0% 780,000 798,000 814,639 390,000 47.9% 0 814,639 CAPITAL GRANTS 0 2,670,215 78,638 2.9% 550,755 1,929,800 4,464,355 479,770 10.7% 0 4,464,355 CDBG CAPITAL 58,292 84,397 171,654 203.4% 297,832 236,585 294,877 167,773 56.9% 0 294,877 TOTAL CAPITAL IMPROVE FUND 3,070,839 11,916,578 1,734,317 14.6% 4,226,682 8,263,618 21,513,623 2,012,355 9.4% 0 21,499,559 INTERNAL SERVICE FUNDS EQUIPMENT REPLACEMENT 1,220,828 3,797,038 1,038,513 27.4% 3,638,497 3,144,492 4,452,903 784,941 17.6% 0 4,452,903 EQUIPMENT MAINTENANCE 6,208,557 6,389,953 2,964,806 46.4% 6,489,993 6,867,854 6,870,800 3,091,783 45.0% 0 6,870,800 SELF INSURANCE 7,403,121 7,442,927 3,551,628 47.7% 5,675,674 9,571,353 11,072,650 4,671,015 42.2% 0 11,072,650 CENTRAL STORES 1,422,250 1,437,844 671,587 46.7% 1,460,098 1,674,450 1,674,627 651,760 38.9% 0 1,674,627 INNOVATION 0 159,989 0 0.0% 0 0 0 0 0.0% 0 0 TOTAL INTERNAL SERVICE FUND 16,254,756 19,227,751 8,226,534 42.8% 17,264,262 21,258,149 24,070,980 9,199,499 38.2% 0 24,070,980 TOTAL BUDGET BEFORE ADJ. 139,313,638 166,109,644 66,424,567 40.0% 139,290,377 155,551,796 188,873,421 73,612,508 39.0% 382,410 189,241,767 LESS INTERNAL SERVICE FUND 16,254,756 19,227,751 8,226,534 42.8% 17,264,262 21,258,149 24,070,980 9,199,499 38.2% 0 24,070,980 TOTAL BUDGET 123,058,882 146,881,893 58,198,033 39.6% 122,026,115 134,293,647 164,802,441 64,413,009 39.1% 382,410 165,170,787 * Percent expended represents the percent of the adusted budget expended as of the end of the period covered in this report. ** Includes actual expenditures only. Does not include future liability adjustment (30921310) *** Includes appropriations for capital improvement projects funded by Enterprise funds only. 2/18/2008 8:36 AM Page 14 of 29 FINANCE DEPARTMENT CITY OF CULVER CITY 9770 CULVER BOULEVARD, CULVER CITY, CALIFORNIA 90232-0507 (310) 253-6000 • FAX (310) 253-6010 JEFF MUIR Chief Financial Officer ____________________________ Culver City Employees take pride in effectively providing the highest levels of service to enrich the quality of life for the community by building on our tradition of more than seventy-five years of public service, by our present commitment, and by our dedication to meet the challenges of the future. PRINTED ON RECYCLED PAPER Date: February 25, 2008 To: Honorable Mayor and Members of the City Council From: Finance Department CC: City Manager Re: RDA Mid-Year Budget Monitoring Report Introduction: This report includes a brief recap of fiscal year 2006-07 and the mid-year analysis of revenues and expenditures for the Redevelopment Agency through December 31, 2007. The purpose of this report is to provide the Council with a snapshot of the financial position of the Redevelopment Agency (unrestricted and bond proceed funds) as it relates to the budget, provide some information on the progress on RDA programs and projects as measured by expenditures to date, and propose mid-year adjustments to the budget as necessary. Fiscal Year 2006-07 Recap: Unrestricted Tax Increment Fund The beginning balance for unrestricted funds in Fiscal Year 2006-07 was approximately $23 million. The ending balance for FY 2006-07 is approximately $12.5 million. On-going revenues were strong and came in approximately $6 million over budget. This was driven mainly by stronger than budgeted tax increment receipts (approximately $4 million over budget), interest income (approximately $425,000 over budget), parking revenues (approximately $350,000 over budget), and Pacific Theater income (approximately $900,000 over budget). One-time revenues were significantly over budget (approximately $12 million). This is a result of a number of land sale revenues that were not originally budgeted at the beginning of the year, including properties on Irving Place, Culver Boulevard, and Lindblade (Lindblade was a pass-through for relocation assistance; a corresponding expenditure was recorded on the expenditure side). Expenditures also exceeded the adopted budget. Some expenditures, such as the county administration fee, statutory pass through payments, and housing set- aside are a set percentage of tax increment receipts per State redevelopment law. Therefore, as tax increment receipts increase, there is a corresponding increase in those expenditures, which equated to approximately $1.5 million over budget. Page 15 of 29Page 2 PRINTED ON RECYCLED PAPER Additionally, the Agency purchased a large amount of land in 2006-07 amounting to almost $23 million. The majority of this amount was related to parcels near the Washington/National project area in anticipation of development related to the impending Expo Light Rail regional transportation project. All together, the Agency ran a deficit of approximately $11 million in 2006-07. Tax-Exempt Bond Funds The beginning balance for tax exempt funds in Fiscal Year 2006-07 was approximately $12 million. The ending balance for FY 2006-07 (and beginning balance for 2007-08) was approximately $23.5 million. The increased fund balance is mainly the result of a re-allocation of funds. As of July 1, 2006, there was approximately $12 million available in tax exempt bond funds. In order to give the Agency flexibility with respects to the Baldwin Motel Site project, the Agency approved transferring $1.7 million in unrestricted tax increment funds to tax exempt bond funds. An additional $1.8 million was earned in interest, which increased the available tax exempt bond funds to $15.5 million. In May 2007, the Agency approved a $9 million loan from the City’s General Fund to the Redevelopment Agency, which was used to substitute unrestricted funds for tax exempt bond funds for the Washington/Centinela project area. This further increased the available tax exempt bond funds to approximately $24.5 million. Of this amount, approximately $10 million was appropriated for projects. Therefore, approximately $14.5 million in tax exempt bond funds were available to be appropriated for qualified projects at the end of fiscal year 2006-07. Low/Moderate Income Housing Fund The beginning balance for Low/Moderate Income Housing Fund in Fiscal Year 2006-07 was approximately $12.9 million. The ending balance for FY 2006-07 (and beginning balance for 2007-08) was approximately $15.1 million. Towards the end of FY 2006-07, Housing and Community Development staff began work developing strategies to program the Low/Moderate Income Housing funds and develop a long term work program, which will be presented to the Redevelopment Agency at a later date. Page 16 of 29Page 3 PRINTED ON RECYCLED PAPER Mid-Year 2007-08 Analysis Unrestricted Funds Fund Balance: The beginning unrestricted fund balance for 2007-08 is approximately $13 million. The projected ending fund balance, assuming that the proposed budget revisions are adopted and the $9 million loan to the City is fully repaid, is approximately $3.4 million. Revenues: Tax Increment Tax Increment is the Redevelopment Agency’s primary source of on-going revenue. The Agency receives tax increment based on the amount of property tax that is generated in a Redevelopment project area above a certain base year (i.e. the year the project area was established). 2006-07 2007-08 Revised Revenue Description Actual Revenue Mid-year Receipts Adopted Revenue Mid-year Receipts 2007-08 Estimate Project Area 1 7,824,285 3,000,752 7,101,000 3,816,610 8,144,000 Project Area 2 5,860,450 2,024,385 5,651,000 2,325,661 6,144,000 Project Area 3 12,387,106 4,872,195 11,667,000 5,237,616 12,479,000 Project Area 4 2,389,236 811,796 2,230,000 1,285,470 2,826,000 Total Tax Increment $28,461,077 $10,709,128 $26,649,000 $12,665,357 $29,593,000 Note: The tax increment revenues in the above table are gross receipts. Twenty percent (20%) of the gross amount must be passed through to low/moderate income housing fund and up to an additional twenty percent (20%) is passed through to other taxing agencies (e.g. CCUSD, LA County, City of Culver City). Subsequent to the adoption of the 2007-08 Redevelopment Agency budget, Keyser Marston Associates provided staff with an updated tax increment projection based on the 2008-09 Assessed Value Report issued by the County Assessor’s Office. The revised 2007-08 estimate of $29.6 million represents a 4% increase over the $28.5 million received in 2006-07. Based on the mid-year receipts to date, staff recommends that the budgeted tax increment revenues are revised to reflect the increased values. On-going Revenues In addition to tax increment, the Redevelopment Agency receives some on-going revenue from a number of sources, including rental income, parking fees, participation agreements, repayment for loan’s issued, etc. Page 17 of 29Page 4 PRINTED ON RECYCLED PAPER Parking Revenues: 2006-07 2007-08 Revised Revenue Description Actual Revenue Mid-year Receipts Adopted Revenue Mid-year Receipts 2007-08 Estimate Ince Parking Structure 410,424 216,499 380,000 260,337 420,000 Cardiff Parking Structure 103,539 52,480 105,000 47,852 no change Watseka Parking Structure 211,129 102,905 205,000 111,356 no change Film Parking Revenue 172,317 97,294 75,000 50,768 no change Other Parking Revenues 287,824 139,558 138,120 105,893 no change Total Parking Revenues $1,185,233 $608,736 $903,120 $576,206 $943,120 Rent/Participation Agreements: 2006-07 2007-08 Revised Revenue Description Actual Revenue Mid-year Receipts Adopted Revenue Mid-year Receipts 2007-08 Estimate Farmers’ Market 114,409 55,640 105,000 62,177 no change Pacific Theatre Revenues 1,686,956 627,282 1,200,000 377,381 no change Rent, Lease, & Loan Pymnts 165,178 126,660 156,000 75,600 no change Based on the mid-year receipts, staff recommends that the revenue estimate for the Ince Parking Structure is increased. A significant amount of the use of the Ince Parking structure comes from business related to filming and operations at Culver Studios. Despite the Writers’ Guild strike, film parking at Ince has remained relatively strong as many of the game shows and reality type shows filmed at Culver Studios have not been significantly impacted by the strike. Other Parking Revenues includes smaller parking lots, such as those on Virginia, Canfield, Robertson, and Parcel B. Parking revenues from Parcel B were collected through December. However, Parcel B will no longer be used as a parking lot and will not generate parking revenues for the remainder of the fiscal year. Therefore no budget amendment is recommended. Additionally, mid-year receipts for the Pacific Theatre are lagging behind last year’s receipts. The lagging revenues have been seen industry-wide and are a combination of a number of factors, including a weakening economy, lack of quality blockbuster movies, and the Writers’ Guild strike. Staff believes that the adopted revenue of $1.2 million is still achievable as the spring movie season is historically stronger than the fall/winter. RDA staff will be presenting a more detailed report to the Agency in March on Pacific Theatre’s performance through the first two quarters of the year. Land Sale Proceeds Over the last few years, the Redevelopment Agency has acquired a number of blighted properties throughout the Redevelopment project areas. The RDA is now moving forward with selling many of these properties for various redevelopment projects, including Parcel B, Baldwin Hotel property, and Washington/Centinela. Staff expects to receive revenue from one property in fiscal year 2007-08. Page 18 of 29Page 5 PRINTED ON RECYCLED PAPER Expenditures: To identify the nature of the Agency’s expenditures, they have been divided into five categories: 1. Debt Service and Statutory Indebtedness 2. Administrative Costs 3. Ongoing Projects/Programs 4. Under Development Projects/Programs 5. Potential Projects/Programs Debt Service and Statutory Indebtedness Debt Service Payments include all principal and interest payments on all outstanding bond issues, which are based on interest rates at the time of bond issuance. Debt Service payments are fixed when the bond is issued; therefore the payment amounts are known and paid according to a debt schedule. The Redevelopment Agency’s Debt Service obligation for 2007-08 is $13,972,793. Statutory indebtedness are payments that the Redevelopment Agency is statutorily obligated to pay, such as the 20% housing set-aside requirement, statutory pass through agreements with other taxing agencies, administration fee to the County, and Education Revenue Augmentation Fund (ERAF) payments. Housing set-aside and statutory pass through payments are calculated as a set percentage of the total tax increment that the Agency receives. Consequently, those payment amounts are dependant on how much tax increment is received in any given year. Based on the revised tax increment projections above, the revised pass through payments for 2007-08 are: Revenue Description Actual 2006-07 Expense Adjusted 2007-08 Budget Revised 2007-08 Estimate 20% Housing Set Aside 5,692,215 5,329,800 5,918,600 Total Housing Set Aside $5,692,215 $5,329,800 $5,918,600 Pass Through Pymnts LA County – General 1,452,081 1,350,104 1,694,514 LA County Fire Dept 9,987 9,265 11,628 LACCD 40,497 37,568 47,152 LA West Vector Control 501 465 583 LA County Flood Contrl 18,153 16,840 21,136 LA County School Serv 5,606 5,201 6,527 CCUSD 1,217,774 1,383,111 1,735,940 City of Culver City 164,414 152,523 191,431 LA County Library 38,725 35,924 45,088 Total Pass Through $2,947,737 $2,991,000 $3,754,000 Note: Due to the timing of tax increment receipts from the County, pass through payments made in the current year are for prior year’s obligation. For example, payments made in 2006-07 are for 2005-06 pass through obligation. Page 19 of 29Page 6 PRINTED ON RECYCLED PAPER The state has not required Redevelopment Agencies to make ERAF payments since fiscal 2005-06. However, due to the state’s recent cash flow problems and projected $14 billion budget deficit for 2008-09, the Governor has declared a fiscal emergency. The declaration of a fiscal emergency opens the door for the state to again shift funds away from Redevelopment Agencies. At this juncture, the Governor has not proposed diverting Redevelopment Agency funds. However, as the budget process progresses, the legislature may re-institute ERAF payments or some other form of revenue diversion. Staff will continue to monitor the state’s budget and its impact on the City and RDA. Administrative Costs The Administrative costs category includes the salaries and benefits for the Redevelopment and Economic Development divisions, general supplies and operations expenses, contract services, and reimbursement costs that the Agency pays to the City for a number of positions that are impacted by redevelopment activities (e.g. planning staff, code enforcement staff, building and safety staff, etc.). With the exception of Supplies and Contract Services, these costs are typically charged monthly with a “true-up” adjustment at the end of the fiscal year. No adjustments to any of these expenditure categories are recommended at this time. Program Description Actual 2006-07 Expense Adjusted 2007-08 Budget Mid-year Expense 2007-08 Admin – RDA Salaries 1,509,821 1,785,781 845,900 Admin – Supplies 414,373 339,183 110,049 Admin – Contract Svcs 869,945 1,224,368 223,589 Rehab Patrol Services 325,000 325,000 135,415 City Cost Allocation 2,274,546 2,525,001 1,228,680 Total Administration Costs $5,393,685 $6,199,333 $2,543,633 Note: Admin – Salaries and City Cost Allocation are reimbursements to the City. The actual reimbursement is typically billed as a lump sum at year-end. Therefore, there is very little monthly activity in these areas Ongoing Projects/Programs This expenditure category consists of the ongoing projects and programs managed by the Agency. This includes the costs for management activities for Agency owned and/or operated properties (e.g. downtown parking structures, and the Pacific Theaters) and many cultural affairs type programs, including Music in the Chambers, “The Art of…” speaker series, and the Culver City Music Festival. Page 20 of 29Page 7 PRINTED ON RECYCLED PAPER Program Description Actual 2006-07 Expense Mid-year Expense 2006-07 Adjusted 2007-08 Budget Mid-year Expense 2007-08 Parking Management Cardiff Parking Structure 350,546 64,650 373,435 64,383 Ince Parking Structure 353,563 140,161 561,532 108,989 Virginia Parking Lot 27,297 13,098 46,828 13,500 Watseka Parking Structure 116,449 41,410 309,849 19,795 Total Parking Management $847,855 $259,319 $1,291,644 $206,667 Economic Development Programs 294,445 227,755 574,368 48,057 Farmers Market 45,155 15,838 85,657 14,714 Property Management - General 428,256 259,328 438,612 131,978 Ivy Substation 9,355 3,764 49,747 1,481 Total Economic Development $777,211 $506,685 $1,148,384 $196,230 Children’s Events 4,115 0 5,000 152 Historic Preservation 00 10,000 0 Public Outreach 11,046 3,035 39,973 100 Music in the Chambers 10,317 16 20,000 500 Speaker Series – The Art of … 25,232 12,967 47,687 0 Special Events 3,809 0 10,000 6,284 Culver City Music Festival 46,786 33,877 103,899 63,224 Total Cultural Affairs $101,305 $49,895 $236,559 $70,260 Due to the vacancy of the Economic Development Administrator, Economic Development Program expenditures are behind last year’s expenditures, primarily due to a decrease in Business Development expenses. The Business Development Program offers various incentives to encourage local business development. The RDA is currently recruiting for the vacant position. Property Management – General costs are also down from last year due to a large interest payment of approximately $130,000 for the purchase of the 9900 Culver Blvd property from the City. After adjusting that one-time payment out, expenditures are comparable to last year. No budget revisions are recommended at this time. Projects/Programs Under Development Projects/programs under development have been presented to and considered by the Agency Board and are in varying stages of implementation (i.e. planning, demolition, construction, or project closeout stage). Once these projects/programs are completed, there will be no associated direct ongoing cost assumed by the Agency. Expenditures in this category are subject to change as projects progress due to a variety of project specific factors. Page 21 of 29Page 8 PRINTED ON RECYCLED PAPER Program Description Actual 2006-07 Expense Mid-year Expense 2006-07 Adjusted 2007-08 Budget Mid-year Expense 2007-08 Proposed Revision Baldwin Motel Block (12803-23 Wash. Blvd) 9,018 1,569 45,600 549 no change Parcel B 3,248 2,289 10,521 750 no change Sepulveda Blvd MTA 00 130,000 0 no change Washington/Centinela Sites 825,390 349,791 469,876 35,379 no change Washington/National Sites 1,187,693 280,320 645,711 270,672 895,711 Total Projects under Development $2,025,349 $633,969 $1,301,708 $307,350 $1,551,708 Due to the uncertainty related to relocation costs for the Washington/National project, sufficient funding for relocation services was not originally included in the adopted 2007-08 budget. Therefore, a budget amendment is needed to increase relocation services in the Washington/National project (55092620.610500) by $250,000. With the exception of Washington/National and Sepulveda Blvd MTA, most of the above projects are substantially under way and the Redevelopment Agency’s involvement is expected to dwindle within the next 12 – 18 months. No other budget revisions to any of these projects are recommended at this time. Potential Projects/Programs Potential projects/programs are in the exploratory stages of development, i.e. staff is researching potential projects that community investors and community members may be interested in implementing. For the most part, costs in this category are to identify projects in certain areas that may ultimately be brought before the Agency Board for consideration. Once a potential program is approved by the Agency Board, it becomes a current project/program. This is the most dynamic and changing expenditure category. Program Description Actual 2006-07 Expense Mid-year Expense 2006-07 Adjusted 2007-08 Budget Mid-year Expense 2007-08 Culver and Sawtelle 00 5,000 0 Mid Washington Opportunity Sites 21,178 0 132,000 7,321 Sepulveda Blvd Redevelopment 23,669 1,000 110,528 0 Total Potential Projects/Programs $44,847 $1,000 $247,528 $7,321 Due to a number of vacant positions and limited staff resources, Redevelopment staff has been focused on moving the Projects under Development along before expending too much energy on potential projects. Therefore, no budget amendments are being recommended at this time. Page 22 of 29Page 9 PRINTED ON RECYCLED PAPER Tax Exempt Bond Fund Fund Balance: The beginning restricted tax exempt bond fund balance for 2007-08 is approximately $23.5 million. Approximately $770,000 is anticipated in interest income and $9 million is currently appropriated for capital projects (see table below). Therefore, approximately $15 million is currently available to be appropriated for projects that meet the restrictions of tax exempt bond funding. Current Bond Funded Projects: The Redevelopment Agency currently has tax exempt bond proceeds available from the 2002 bond issue. The use of tax exempt bond proceeds are restricted by the IRS taxation code, which generally limits the use to qualified governmental purposes, such as constructing governmental facilities, improving roads and infrastructure, or providing for public safety. There are currently approximately $15 million in unallocated bond funds that are available to be used for qualified projects. Projects for which bond funds are currently allocated are below: Program Description Actual 2006-07 Expense Adjusted 2007-08 Budget Mid-year Expense 2007-08 Downtown Street Improvements Washington Blvd Realignment 331,637 2,500,000 559,244 Town Plaza Expansion 0 3,324,000 0 Washington/National 0 350,000 0 Public Works Street Improvements 677,336 323,736 0 Hayden Tract – MTA Spur 0 50,000 0 Fire Station #3 257,503 2,642,000 681,688 Total Bond Fund $1,266,472 $9,136,000 $1,240,932 Work is underway on the Washington Blvd realignment, Fire Station #3, and Public Works Street Improvements (Adams Boulevard resurfacing, scheduled to begin this spring). Demolition on the Washington/National site will begin once all of the occupants in that area have been relocated and work on the Town Plaza expansion is slated to begin in May 2008. City Loan to Agency Over the past few years, the Redevelopment Agency acquired a number of properties throughout the City in furtherance of the Redevelopment Plan. While a number of the properties were purchased with unrestricted tax increment funds, several properties were purchased with tax exempt bond funds due to the anticipated project/proforma structure. For the properties that utilized bond funds to purchase the properties, there was the expectation that the residual land value Page 23 of 29Page 10 PRINTED ON RECYCLED PAPER from the subsequent sale of the property would not result in a return greater than five percent of the total bond issue (i.e. $1.5 million). Due to changes in the value and scope of two of these projects (i.e. Baldwin Hotel fka West Culver Lofts and Washington/Centinela), the return was projected to exceed five percent. This would violate one of the restrictions placed on tax-exempt bond funds. In order to avoid this situation and give the Agency flexibility in the future use and disposition of those affected projects, it was necessary to replace the bond funds originally used to purchase the properties with unrestricted funds. To achieve this, unrestricted funds needed to be transferred to the tax exempt bond fund account, which effectively decreases the amount of unrestricted funds that are available and increases the amount of restricted tax exempt bond funds that are available. As of July 1, 2006, there was approximately $12 million available in tax exempt bond funds. In order to give the Agency flexibility with respects to the West Baldwin Motel Site project, the Agency approved transferring $1.7 million in unrestricted tax increment funds to tax exempt bond funds. An additional $1.8 million was earned in interest, which increased the available tax exempt bond funds to $15.5 million. In May 2007, the Agency approved a $9 million loan from the City’s General Fund to the Redevelopment Agency, which was used to substitute unrestricted funds for tax exempt bond funds for the Washington/Centinela project area. This further increased the available tax exempt bond funds to approximately $24.5 million. Of this amount, approximately $9 million is currently appropriated for other projects (see Adjusted 2007-08 Budget column above). Therefore, approximately $15 million in tax exempt bond funds are available to be appropriated for qualified projects. Page 24 of 29Page 11 PRINTED ON RECYCLED PAPER Economic Update: The Redevelopment Agency relies primarily on Tax Increment as its funding source. As a result, RDA revenues are very dependant on the health of the real estate market (especially the commercial real estate market). • Real Estate/Housing Market: The housing market, both in California and nationwide, continues to slump. A November report from the California Association of Realtors revealed that unit sales in California fell by 36% from last November, while the median price declined by 11.9% to $488,640. The unsold inventory was 15.3 months compared with 6.4 months a year ago. o Los Angeles County: Unit sales fell by 36.5% from last year, while median price fell by 11.8% to $520,960. • State Budget: As previously mentioned in this report, the state is currently experiencing cash flow problems and has a projected $14+ billion budget shortfall for 2008-09. At this point, the Governor’s proposed budget does not include any shifting of City or Redevelopment Agency funds. However, it is still a distinct possibility. Staff will continue to monitor the state budget. ATTACHMENTS: 1. RDA Unrestricted Fund Cash Flow Summary 2. RDA Unrestricted Fund Cash Flow Detail 3. Tax Exempt Bond Fund Cash Flow Summary 4. Tax Exempt Bond Fund Cash Flow Detail Page 25 of 29REDEVELOPMENT AGENCY Actual Adopted Revised Projected Projected Projected Projected UNRESTRICTED FUNDS 2006-07 2007-08 2007-08 2008-09 2009-10 2010-11 2011-12 Beginning Unrestricted Fund Balance 22,900,000 $ 12,583,000 $ 12,583,000 $ 3,453,000 $ 14,192,000 $ 18,145,000 $ 24,074,000 $ Revenues - Tax Increment 28,461,076 26,649,000 29,593,000 31,565,000 36,119,000 40,523,000 43,099,000 Revenues - Other Ongoing 5,173,282 3,643,464 3,720,344 3,731,110 3,574,640 3,673,020 3,816,580 Revenues - One-time 12,114,107 11,375,000 5,975,000 11,775,000 200,000 200,000 0 Total Revenue Projection 45,748,465 41,667,464 39,288,344 47,071,110 39,893,640 44,396,020 46,915,580 Tax Increment Indebtedness 24,421,826 32,026,594 33,378,393 24,709,444 26,719,399 28,897,053 30,017,278 Administrative Costs 5,068,685 5,874,333 5,874,333 6,292,288 6,561,000 6,840,000 7,131,000 Ongoing Projects/Programs 2,051,371 2,659,520 2,659,520 2,658,666 2,660,473 2,730,367 2,801,438 Current Projects 25,012,005 6,536,500 6,441,500 1,299,700 0 0 0 Potential Projects 36,389 65,000 65,000 1,372,500 0 0 0 Total Expenditure Projection 56,590,276 47,161,947 48,418,746 36,332,598 35,940,872 38,467,420 39,949,716 Annual Operationing Surplus/Deficit (10,841,811) (5,494,483) (9,130,402) 10,738,512 3,952,768 5,928,600 6,965,864 Year-end CAFR Reconciliation Adjustment 525,000 Ending Unrestricted Fund Balance 12,583,000 $ 7,089,000 $ 3,453,000 $ 14,192,000 $ 18,145,000 $ 24,074,000 $ 31,040,000 $ REDEVELOPMENT AGENCY UNRESTRICTED FUNDS: 5 YEAR CASH FLOW SUMMARY|1010|10,000 20,000 30,000 40,000 50,000 60,000 2006-07 2007-08 2007-08 2008-09 2009-10 2010-11 2011-12 Actual Adopted Revised Projected Projected Projected Projected Redevelopment Agency Revenues vs. Expenditures Total Revenue Projection Total Expenditure Projection Page 26 of 29Actual Adopted Proposed Revised Revised Projected Projected Projected ANNUAL CASH FLOW 2006-07 2007-08 Revisions 2007-08 2008-09 2009-10 2010-11 2011-12 Beginning Unrestricted Fund Balance 22,900,000 12,583,000 12,583,000 3,453,000 14,192,000 18,145,000 24,074,000 RDA REVENUES Tax Increment Revenue 28,461,076 26,649,000 2,944,000 29,593,000 31,565,000 36,119,000 40,523,000 43,099,000 Other Ongoing Revenue 5,173,282 3,643,464 76,880 3,720,344 3,731,110 3,574,640 3,673,020 3,816,580 One-time Revenue (Property Sale) 12,114,107 11,375,000 (5,400,000) 5,975,000 11,775,000 200,000 200,000 - TOTAL RDA REVENUES 45,748,465 41,667,464 (2,379,120) 39,288,344 47,071,110 39,893,640 44,396,020 46,915,580 RDA GENERAL EXPENDITURES 2006-07 2007-08 Revisions Revised 2008-09 2009-10 2010-11 2011-12 Tax Increment Indebtedness Debt Service 13,984,459 13,972,793 - 13,972,793 13,970,444 13,972,599 13,976,453 13,969,478 Housing Set Aside 5,692,215 5,329,800 588,800 5,918,600 6,313,000 7,223,800 8,104,600 8,619,800 Statutory Pass Through 389,916 257,786 65,774 323,560 2,097,000 3,084,000 4,269,000 4,803,000 County Admin Fees 1,452,081 1,350,104 344,396 1,694,500 555,000 634,000 710,000 755,000 CCUSD (CA #2) 1,217,774 1,383,111 352,829 1,735,940 1,554,000 1,585,000 1,617,000 1,650,000 Interfund Transfer 1,685,381 - - - - - - - Loan Repayment to City - 9,513,000 - 9,513,000 - - - - ERAF - - - - - - - - ERAF Loan Payment to Housing - 220,000 - 220,000 220,000 220,000 220,000 220,000 SubTotal TI Indebtedness 24,421,826 32,026,594 1,351,799 33,378,393 24,709,444 26,719,399 28,897,053 30,017,278 Administrative Expenses Administration-Salaries* 1,509,821 1,785,781 - 1,785,781 2,078,346 2,172,000 2,270,000 2,372,000 Administration. - Supplies/Operations 414,373 339,183 - 339,183 336,763 349,000 361,000 374,000 Administration - Contract Services 869,945 1,224,368 - 1,224,368 1,224,837 1,268,000 1,312,000 1,358,000 City Cost Allocation 2,274,546 2,525,001 - 2,525,001 2,652,342 2,772,000 2,897,000 3,027,000 SubTotal Admin Expenses 5,068,685 5,874,333 - 5,874,333 6,292,288 6,561,000 6,840,000 7,131,000 Subtotal -- General Expenditures 29,490,511 37,900,927 1,351,799 39,252,726 31,001,732 33,280,399 35,737,053 37,148,278 ONGOING PROGRAM/PROJECT EXPEN 2006-07 2007-08 Revisions Revised 2008-09 2009-10 2010-11 2011-12 Cardiff Parking Structure 350,546 257,000 - 257,000 264,000 272,000 280,000 288,000 Children's Events 4,115 5,000 - 5,000 5,000 5,150 5,305 5,464 Culver City Music Festival 46,786 70,000 - 70,000 70,000 72,000 74,000 76,000 Economic Development 294,445 557,000 - 557,000 516,000 531,000 547,000 563,000 Farmers Market 45,155 74,450 - 74,450 79,750 82,143 84,607 87,145 Historic Preservation - 10,000 - 10,000 10,000 10,300 10,609 10,927 Ince Parking Structure 353,563 482,500 - 482,500 507,000 522,000 538,000 554,000 Ivy Substation 9,355 48,500 - 48,500 26,400 27,000 28,000 29,000 Public Outreach 11,046 29,000 - 20,000 30,000 30,900 31,827 32,782 Music in the Chambers 10,317 20,000 - 66,000 20,000 20,600 21,218 21,855 Pacific Theaters - 66,000 - 411,070 66,000 - - - Property Management - General 428,256 411,070 - 29,000 416,516 429,000 442,000 455,000 Rehab Patrol Services 325,000 325,000 - 325,000 325,000 325,000 325,000 325,000 Speaker Series - The Art Of... 25,232 34,500 - 34,500 36,000 37,080 38,192 39,338 Special Events 3,809 10,000 - 10,000 10,000 10,300 10,609 10,927 Virginia Parking Lot 27,297 35,500 - 35,500 39,500 41,000 42,000 43,000 Watseka Parking Lot 116,449 224,000 - 224,000 237,500 245,000 252,000 260,000 Subtotal -- Ongoing Programs/Projects 2,051,371 2,659,520 - 2,659,520 2,658,666 2,660,473 2,730,367 2,801,438 CURRENT PROJECT EXPENDITURES 2006-07 2007-08 Revisions Revised 2008-09 2009-10 2010-11 2011-12 Acquisition Administration Costs 41,924 53,500 - 53,500 32,500 - - - Downtown Parcel B 3,248 4,000 - 4,000 - - - - Encore Motel Area 508 - - - - - - - Kirk Douglas Theatre - 10,000 - 10,000 - - - - Sepulveda MTA Grant - 130,000 - 130,000 - - - - Sepulveda Projects 23,669 75,000 - 75,000 75,000 - - - Town Plaza Maintenance 18,197 - - - - - - - Washington/Centinela Sites 825,390 345,000 - - - - - - Washington/National Sites 1,187,693 525,000 250,000 775,000 50,000 - - - West Culver Lofts 9,018 44,000 - 44,000 49,200 - - - Property Acquisition 22,902,358 5,350,000 - 5,350,000 1,093,000 - - - Subtotal -- Current Projects 25,012,005 6,536,500 250,000 6,441,500 1,299,700 - - - EXPENDITURES 2006-07 2007-08 Revisions Revised 2008-09 2009-10 2010-11 2011-12 Miscellaneous Contingency Funds - - - - 1,350,000 - - - Culver Sawtelle - 5,000 - 5,000 2,500 - - - Hayden Revitalization - MTA Spur 14,990 - - - - - - - Lindblade Opportunity Sites 221 - - - - - - - Mid Washington/Pleasant View 21,178 60,000 - 60,000 20,000 - - - Subtotal -- Potential Projects 36,389 65,000 65,000 1,372,500 - - - TOTAL EXPENDITURES 56,590,276 47,161,947 1,601,799 48,418,746 36,332,598 35,940,872 38,467,420 39,949,716 Projected Annual Surplus/Deficit (10,841,811) (5,494,483) (9,130,402) 10,738,512 3,952,768 5,928,600 6,965,864 Year-end CAFR Reconciliation Adjustment 525,000 Ending Unrestricted Fund Balance 12,583,000 7,089,000 3,453,000 14,192,000 18,145,000 24,074,000 31,040,000 REDEVELOPMENT AGENCY UNRESTRICTED FUNDS: 5 YEAR CASH FLOW DETAIL Page 27 of 29REDEVELOPMENT AGENCY TAX EXEMPT BOND FUNDS Actual 2006-07 Adopted 2007-08 Approved 2008-09 Projected 2009-10 Projected 2010-11 Projected 2011-12 Beginning Fund Balance 12,030,775 $ 23,461,000 $ 15,090,000 $ 15,638,000 $ 16,268,000 $ 16,925,000 $ Interest 1,826,204 769,000 608,000 630,000 657,000 685,000 Loan from City 9,075,698 00000 Transfers In 1,685,381 00000 Total Revenues 12,587,283 769,000 608,000 630,000 657,000 685,000 Component Area 1 258,000 2,642,000 0000 Component Area 2 000000 Component Area 3 494,000 6,174,000 0000 Component Area 4 780,000 323,736 60,000 0 0 0 Total Expenditures 1,532,000 9,139,736 60,000 0 0 0 Year-end CAFR Reconciliation Adjustment 375,000 Ending Fund Balance 23,461,000 $ 15,090,000 $ 15,638,000 $ 16,268,000 $ 16,925,000 $ 17,610,000 $ REDEVELOPMENT AGENCY TAX EXEMPT BOND FUNDS: 5 YEAR CASH FLOW SUMMARY Actual 2006-07 Adopted 2007-08 Approved 2008-09 Projected 2009-10 Projected 2010-11 Projected 2011-12|1010|5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 Redevelopment Agency Tax Exempt Bonds -- Available Fund Balance Page 28 of 29ACTUAL ADOPTED APPROVED ESTIMATED ESTIMATED ESTIMATED ANNUAL CASH FLOW 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 AVAILABLE FUND BALANCE - 7/1 12,030,775 23,461,000 15,090,000 15,638,000 16,268,000 16,925,000 TRANSFER IN 1,685,381 LOAN FROM CITY 9,075,698 INTEREST 1,826,204 769,000 608,000 630,000 657,000 685,000 TOTAL AVAILABLE RESOURCES 24,618,058 24,230,000 15,698,000 16,268,000 16,925,000 17,610,000 TOTAL BOND EXPENDITURES COMPONENT AREA 1 000 93700 Fire Station 3 257,503 2,642,000 0000 SubTotal Component Area 1 257,503 2,642,000 0000 COMPONENT AREA 2 No Projects SubTotal Component Area 2 000000 COMPONENT AREA 3 00000 93400 Downtown Street Improvements 331,637 5,824,000 0000 93600 Plunge Remodel 92,681 00000 94801 Wash. Streetscape Projects 69,798 00000 92700 Town Plaza Infrastructure 000000 92620 Washington/National Sites 85 350,000 0000 SubTotal Component Area 3 494,201 6,174,000 0000 COMPONENT AREA 4 93500 Public Works Street Improvements 0 270,000 60,000 0 0 0 93501 Culver Blvd Keystone to Jasmine 120,667 00000 93502 Washington Blvd/Reid Ave 41,264 53,736 0000 93503 Washington Blvd/Elenda Ave 515,405 00000 94200 Kirk Douglas Theater 000000 94500 Historic Rehab 000000 94600 East Washington Rehab Grant 39,975 00000 96900 Senior Center 000000 92630 Culver West Lofts 2,960 00000 93200 West Washington Rehab 60,000 00000 96000 Property Acquisition 000000 92900 Sepulveda Rehab Grant 000000 92610 Washington/Centinela Cites 000000 SubTotal Component Area 4 780,271 323,736 60,000 000 TOTAL PROGRAM EXPENSES 1,531,975 9,139,736 60,000 0 0 0 Year-end CAFR Reconciliation Adjustment 375,000 AVAILABLE FUND BALANCE - 6/30 23,461,000 15,090,000 15,638,000 16,268,000 16,925,000 17,610,000 REDEVELOPMENT AGENCY TAX EXEMPT BOND FUNDS: 5 YEAR CASH FLOW DETAIL Page 29 of 29