DATE: June 28, 2016
TO: Mayor and City Council
Redevelopment Successor Agency Board of Directors
Housing Authority Board of Directors
FROM: Interim Director of Finance
SUBJECT
Title
Approval of the FY 2017 Operating Budget and Appropriations for FY 2017; Approval of the FY 2017 Capital Improvement Program Budget and Appropriations for FY 2017; Approval of the Hayward Redevelopment Successor Agency Budget; Approval of the Hayward Housing Authority Budget
End
RECOMMENDATION
Recommendation
That City Council, Successor Redevelopment Agency Board of Directors, and the Housing Authority Board of Directors approve the FY 2017 Operating and Capital Improvement Program Budgets and appropriations for FY 2017 as presented and recommended by the City Manager; and adopt their respective attached resolutions:
1. Approving and Appropriating the FY 2017 Operating Budget;
2. Approving and Appropriating the FY 2017 Community Agency Budget;
3. Approving and Appropriating the FY 2017 Redevelopment Successor Agency Budget;
4. Approving and Appropriating the FY 2017 Housing Authority Budget; and
5. Approving and Appropriating the FY 2017 Capital Improvement Program (CIP) Budget.
Body
BACKGROUND
The Council has been actively engaged in the FY 2017 budget process over the previous months. On April 5, 2016, the Council held a work session on Community Agency funding and Community Development Block Grant (CDBG), Social Services and Arts/Music funding; and subsequently on April 19, 2016, adopted the CDBG funding allocations, as required by the U.S. Department of Housing and Urban Development (HUD).
On May 3, 2016, the City Manager presented the Proposed FY 2017 Operating Budget to City Council. Since then, Council has held three budget work sessions (May 21, May 24, and June 14) to further discuss the proposed budget. These work sessions included departmental presentations, Council discussions, and opportunities for public input on:
Ø the overall operating budget,
Ø department/program budgets and operations,
Ø the proposed CIP budget, and
Ø Council priorities and program performance measures.
In addition to the budget-focused work sessions, Council held a public hearing on the budget on June 21 to receive further public comments on the proposed budget, consider any changes to the proposed budget, and seek additional public input.
This report transmits to City Council the operating and CIP budgets for adoption as contained in the Proposed FY 2017 Operating Budget and the Proposed FY 2017 Capital Improvement Program Budget, and as amended herein.
DISCUSSION
Balancing the Budget
The City of Hayward has long prided itself as a lean, efficient, and nimble organization, making the most of the resources entrusted to us. The prolonged recession forced the organization to make hard choices about which services will be provided to the community, the method of delivery, and affordable levels of service.
The FY 2017 Operating Budget presents a budget plan with a recommendation to use $4.37 million of General Fund Reserves to cover anticipated needs for the year. As a structural gap exists, the City will need to review existing programs and expenditures, evaluate and search out new revenue opportunities, and develop prudent financial strategies to help eliminate the need to use said reserves in future budget years. In addition, the City Manager is under clear direction from Council to be aggressive about managing expenditures and revenues in FY 2017 so as to minimize or even eliminate the projected deficit by year-end without service cuts to the community.
Changes to the Proposed FY 2017 Operating Budget
Since the presentation of the Proposed FY 2017 Operating Budget on May 3, staff has recommended several minor changes to the budget. Table 1 summarizes the net impacts from the proposed expenditure changes for the General Fund and All Other Funds - as well as a comparison to the FY 2016 Adopted Budget.
Table 1 - Citywide Expenditure Budget 
The overall change to the citywide expenditure budget is a net decrease of $0.5 million from what was proposed. The changes are summarized below.
1. General Fund Transfers Out - Elimination of $200,000 transfer out to Fleet Management Replacement Fund (CIP). The expense is already incorporated into the Internal Services Fees.
2. General Fund Transfers Out - Eliminate $200,000 transfer out to the Stormwater Fund. The transfer was intended to move revenues received in the General Fund to the Stormwater Fund to cover the addition of a new Sweeper Equipment Operator. The position has been relocated to the General Fund where the offsetting revenues that fund the position reside.
3. General Fund Transfers Out - Addition of $137,741 transfer to the Water Operating Fund for the repayment of an internal loan for Fire Station #7 Debt Service.
4. Maintenance Services Department - Relocate 1.0 FTE Sweeper Equipment Operator from the Stormwater Fund to the General Fund; $106,348.
5. Maintenance Services Department - Updates to Landscape & Lighting and Maintenance Districts Operating budget resulted in subsequent impacts to Payroll Allocations which resulted in a decrease to the General Fund of $2,000.
6. Mayor and Council have asked for some changes in their budget as well. These will be reviewed in September when Council does their next year planning as a newly configured Council. In the meantime, money has been allocated to accommodate some changes such as Tuesday meals. Other items, if desired and if warranting budget adjustments, can be implemented in September and then accommodated in the Mid-year.
1. Landscape & Lighting District and Maintenance District Funds - Update to the LLD & MD Operating budget based on FY 2017 projections resulted in a decrease of $287,190 in expenditures for the LLD & MD Funds and increases of $4,622 to Facilities Management Fund, $3,079 to Fleet Management Fund, and $27,348 to the Water Fund due to Payroll Allocation changes.
2. Stormwater Fund - Decrease of $106,348 due to the relocation of 1.0 FTE Sweeper Equipment Operator to the General Fund.
Table 2 - Citywide Staffing
As discussed in the staff report from the June 21, 2016 Public Hearing, the new 1.0 FTE Sweeper Equipment Operator was relocated from the Stormwater Fund to the General Fund. The additional .30 FTE change is due to the reallocation of employee time charged to the Landscape & Lighting Districts and Maintenance Districts funds after receipt of the updated budget for those funds.
Capital Improvement Program (CIP) FY 2017 - FY 2026
The City’s capital improvement program budget has followed a similar review and public process as the operating budget. On May 4, the Council Budget & Finance Committee reviewed and discussed the proposed FY 2017 CIP budget. On May 24 during the Council Budget Work Session, Council reviewed and discussed the FY 2017 CIP budget; and on May 26, the Planning Commission held a public hearing and found the document in conformance with the General Plan.
The CIP for FY 2017 totals approximately $195 million with a total of about $518 million budgeted through FY 2026.
A vast majority of the expenditures for FY 2017 are focused on four categories of projects: Building/Misc. projects which includes Measure C sales tax ($60.3 million), sewer system projects ($58.0 million), road and street projects ($45.5 million), and water system projects ($15.9 million). Another $4.2 million is allocated towards projects associated with livable neighborhoods, which helps support Council’s priorities pertaining to improving the attractiveness and safety of neighborhoods and the City overall. Additionally there are another $10.9 million in other projects not categorized above. The CIP also continues to be focused on the maintenance, security, and upkeep at many of the City’s government buildings, especially City Hall.
FISCAL IMPACT
Table 4 - Summary of Citywide Operating & CIP Budgets
PUBLIC CONTACT
The Proposed FY 2017 Operating Budget has been discussed many times by City Council over the last several months. On April 5, 2016, Council held a work session on community agency funding, for Community Development Block Grant (CDBG), Social Services and Arts/Music funding; and subsequently adopted the CDBG funding allocations, as required by the U.S. Department of Housing and Urban Development (HUD), on April 19, 2016. Social Services and Arts and Music are funded from the General Fund and are, therefore, adopted as part of the approval of the FY2017 General Fund budget.
On May 3, 2016, the City Manager presented the Proposed FY 2017 Operating Budget to City Council. Since May 26, Council has held three budget work sessions (May 21, May 24, and June 14) to further discuss the proposed budget. In addition, City Council held a public hearing on the FY 2017 proposed operating and CIP budgets on June 21, 2016, for which a public notice was published in The Daily Review on June 11 and June 18, 2016 announcing the date, time, location, and subject matter of this public hearing.
A notice advising residents about the Planning Commission’s public hearing (May 26) on the CIP was published in the Daily Review newspaper more than the requisite ten days in advance.
The FY 2017 Proposed Operating Budget is currently available for public review in the City Clerk’s Office at City Hall, at the Main Library and the Weekes Branch, and on the City’s website at: <http://www.hayward-ca.gov/sites/default/files/Proposed%20FY%202017.pdf>
A schedule of the FY 2017 Proposed Operating Budget work sessions is available for public information on the City’s website at: <http://www.hayward-ca.gov/services/city-services/review-city-budget-and-finance-reports>
The FY 2017 Capital Improvement Program Budget is currently available for public review in the City Clerk’s Office at City Hall and on the City’s website at: <http://www.hayward-ca.gov/sites/default/files/Recommended%20%20FY17-%20FY26%20CIP%202%20.pdf>
Prepared and Recommended by: Dustin Claussen, Interim Director of Finance
Approved by:
_________________________________
Fran David, City Manager
Attachments:
I. FY 2017 Operating Budget Resolution
II. FY 2017 General Fund Community Agency Funding Resolution
III. FY 2017 Successor Redevelopment Agency Budget Resolution
IV. FY 2017 Housing Authority Budget Resolution
V. FY 2017 Capital Improvement Program Budget Resolution