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Home My WebLink About2017-06-07 Packet - Budget Hearing CITY OF UKIAH CITY COUNCIL AGENDA Special Meeting CIVIC CENTER COUNCIL CHAMBERS 300 Seminary Avenue Ukiah, CA 95482 June 7, 2017 4:00 p.m. BUDGET HEARING 1. ROLL CALL AND PLEDGE OF ALLEGIANCE 2. PUBLIC COMMENT 3. NEW BUSINESS a. Review and Consideration of the FY 2017-18 Draft City of Ukiah Budget. (Note: The FY 2017-18 DRAFT Budget Document will be posted at this location: https://cityofukiah.box.com/v/June62017BudgetHearing) 4. ADJOURNMENT Please be advised that the City needs to be notified 72 hours in advance of a meeting if any specific accommodations or interpreter services are needed in order for you to attend. The City complies with ADA requirements and will attempt to reasonably accommodate individuals with disabilities upon request. Materials related to an item on this Agenda submitted to the City Council after distribution of the agenda packet are available for public inspection at the front counter at the Ukiah Civic Center, 300 Seminary Avenue, Ukiah, CA 95482, during normal business hours, Monday through Friday, 8:00 am to 5:00 pm. I hereby certify under penalty of perjury under the laws of the State of California that the foregoing agenda was posted on the bulletin board at the main entrance of the City of Ukiah City Hall, located at 300 Seminary Avenue, Ukiah, California, not less than 24 hours prior to the meeting set forth on this agenda. Dated this 6th day of June, 2017. Kristine Lawler, City Clerk City of Ukiah City of Ukiah Annual Budget (RECOMMENDED) Fiscal Year 2017-18 • • 1 A. , , - ';.;.,:iir'. 7t- M y_ .' �; • i.. 1`' ,'-'‘'I -1z,--1='-‘' - • . �v -•3 Y rs' "�f i' ; :;. -. fir • ., ' ..'.' Providin' value to our quality of life THIS PAGE INTENTIONALLY LEFT BLANK Annual Budget (Recommended) Fiscal Year 2017-18 City of Ukiah, California Annual Budget Fiscal Year 2017-18 City of Ukiah, California Compiled by Finance Department Budget Team: Sage Sangiacomo, City Manager Daniel Buffalo, Finance Director Daphine Harris, Management Analyst Sheri Mannion, Human Resources/Risk Management Director Shannon Riley, Deputy City Manager Kristine Lawler, City Clerk Maya Simerson, Project and Grant Administrator CITY OF UKIAH, CALIFORNIA City of Ukiah ANNUAL BUDGET FISCAL YEAR 2017-18 ADVISORY COMMITTEES/COMMISSIONS GOVERNING BODY Airport Commission City Council Planning Commission Redevelopment Successor Agency Board of Design Review Board Directors Traffic Engineering Committee Paths, Open Space, and Creeks Commission Demolition Permit Review Committee Parks, Recreations, and Golf Commission Jim O. Brown Investment Oversight Committee , Ilk Mayor EXECUTIVE MANAGEMENT TEAM Sage Sangiacomo t ' City Manager •� Kevin Doble Shannon Riley Vice Mayor Deputy City Manager David Rapport City Attorney Kristine Lawler City Clerk Maureen Mulheren Chris Dewey •CW Council Member Chief of Police 2 Kirk Thomsen Fire Chief(Interim) Craig Schlatter Community Development Director Douglas Crane I 40 Council Member Tim Eriksen Public Works Director/City Engineer Sean White Water&Sewer Director Greg Owen ' Stephen G. Scalmanini Airport Manager • Council Member N Tami Bartolomei Community Services Administrator Daniel Buffalo Finance Director Sheri Mannion Human Resources/Risk Management Director Mel Grandi Electric Utility Director THIS PAGE INTENTIONALLY LEFT BLANK Table of Contents CONTENTS City Manager's Budget Message 1 Community Overview 1 2016-17 Fiscal Year in Review 2 The Budget Year, 2017-18 3 Operational Highlights 4 Capital Highlights 6 Economic Development Highlights 7 Housing Highlights 7 Financial Highlights 8 Further Revenue Analysis 14 Expenditures: 14 Other sources and uses: 15 The Primary Funds: General Fund 16 Business-type Activities: 18 The Primary Funds: Water and Sewer Operations 19 WATER ENTERPRISE OPERATIONS 19 ELECTRIC ENTERPRISE OPERATIONS 21 Financial Position 23 Looking Ahead 23 Community Profile 27 Budget in Brief 31 City-Wide Compared 31 General Fund Compared 35 Historical Revenue Summary 39 Historical Expenditure Summary 41 Expenditures by Department 43 Department Expenditure Detail 44 Sources and Uses for Fiscal Year 2017-18 45 Sources 46 Uses 48 Page I iii Use by Department/Division 50 Sales Tax Distribution 51 Measure P 52 Measure Y 55 Capital Expenditures 56 Cost of Service 60 Funds Summary 62 THE FUNDS 65 Primary Funds 66 The General Fund 68 Electric Utility Operating Fund 74 Water Operating Fund 78 Wastewater Operating Fund 82 Other Governmental Funds 86 249 City Housing Bond Proceeds 90 250 Special Revenue Fund 92 300 Park Development Fees Fund 94 301 Anton Stadium Fund 96 302 Observatory Park Fund 98 303 Playground & Park Amenities Fund 100 304 Swimming Pool Fund 102 305 Riverside Park Fund 104 306 Skate Park Fund 106 307 Softball Complex Fund 108 310 Museum Grant Fund 110 311 ARRC General Operating Fund 112 312 Downtown Business Improvement 114 313 LMIHF Housing Asset Fund 116 314 Winter Special Events 118 500 Gas Tax (HUTA) Fund 120 505 Signalization Fund 122 508 SB 325 Reimbursement Fund 124 509 S.T.P. 126 510 Trans-Traffic Congest Relief 128 Page I iv 600 Comm. Development. Block Grant Fund 130 602 Community Dev. Comm. Fund 132 603 08-HOME-4688 Fund 134 605 11-HOME-7654 Fund 136 606 CDBG Grant 10-EDEF-7261 Fund 138 607 Prop. 84 Grant Fund 140 609 13-CDBG-8940 142 611 16-CDBG-11147 144 630 Asset Seizure Fund 146 631 Asset Seizure(Drug/Alcohol) Fund 148 633 LEAA- H&S Education 11489(B)(2)(A1) 150 634 Federal Asset Seizure Grants Fund 152 635 Sup. Law Enforce. Svc. Fund (SLESF) 154 638 Asset Forfeiture 11470.2 H&S Fund 156 639 AB 109 Special Revenue Police 158 640 Parking District #1 160 691 Museum Fund 162 695 Transfer Station Fund 164 220 Equipment Reserve Fund 166 251 Special Projects Reserve 168 252 General Capital Projects 170 Other Proprietary 172 ENTERPRISE FUNDS 172 700 Sanitary Disposal Site Fund 174 701 Landfill Corrective Action Fund 176 702 Disposal Closure Reserve Fund 178 703 Refuse/Debris Control Enter. Fund 180 704 Post Closure Fund-Solid Waste 182 705 Landfill Self-Insur.Trust Fund 184 720 Golf Fund 186 730 Conference Center Fund 188 750 Visit Ukiah Fund 190 777 Airport Fund 192 778 Airport Capital Improvement Fund 194 Page I v 779 Special Aviation Fund 196 801 Electric Capital Reserve Fund 198 802 Electric Rate Stabilization Fund 200 803 Lake Mendocino Bond Fund 202 805 Street Lighting Fund 204 806 Public Benefits Charges Fund 206 821 Water Capital Reserve Fund 210 822 Water Connection Fee Fund 212 823 Water Debt Service Reserve 214 830 Recycled Water Fund 216 841 Sewer Bond Debt Service Fund 218 842 Rate Stabilization-City Fund 220 843 Connection Fee Sewer Fund 222 844 City Sewer Capital Projects Fund 224 INTERNAL SERVICE FUNDS 226 202 Liability Fund 227 203 Garage Fund 229 204 Purchasing Fund 231 205 Billing and Collection Fund 233 206 Public Safety Dispatch Fund 235 208 Building & Maintenance Fund 237 209 IT Fund 239 Fiduciary 241 915 Ukiah Valley Fire District Fund 242 969 Ukiah Redevelopment Successor Agency 244 THE BUDGET UNITS 246 Departments and Divisions 247 00. Non-Departmental 249 10. Legislative 250 12. City Manager's Office 254 City Manager 257 City-wide Administrative Services 261 Community Outreach/Public Information 263 City Clerk 265 Page I vi Economic Development 271 Visit Ukiah 275 13. Finance 279 Budget Management 282 Billing and Customer Service 285 Accounting 289 Purchasing 293 Information Technology (IT) 297 14. City Attorney 304 15. City Treasurer 306 16. Human Resources/Risk Management 308 Human Resources 311 Risk Management 315 20. Police 318 21. Fire 322 City Fire 325 District Fire 329 22. Community Services 331 Parks 334 Park Development 338 Aquatics 341 Golf 344 Building and Grounds Maintenance 349 Conference Center 353 Museum 357 Recreation 362 23. Community Development 367 Building Services 370 Housing 375 Planning 377 24. Public Works 383 Fleet and Plant Maintenance 386 Engineering/Streets 390 Corporation yard 394 Page I vii Landfill 398 25. Airport 401 26. Electric 405 Distribution 408 Technical Services 414 Administration 418 27. Water and Sewer 423 Water 426 Sewer 430 Recycled Water 435 Attachments Appendix Page I viii City Organizational Chart G1o•F .A.,: N, 4r.-' 6°.' ,tr.v I,. ,/,. , . •I ?Iii.01, ,, . ..,_ . .,... ,.., ,, ), 0 , .. . 111- _ , r t . , L 47' ,.... .1 1. Citizens of Ukiah City Council Mayor Jim Brown Vice Mayor Kevin Doble Counalmemberpoug Crane Council rrember Steve Scalmanini Coundlmember Maureen Mulheren City Manager Airport Commission City Attorney Sage Sangiacamo 1 Demditicn Permit Review Comnittee David Rapport I Design Review Board I Investment Oversight Committee I Parks,Recreation,&Golf Canmission City Engineer Deputy City Paths,Open Space,&Creeks Commissim r — Tim Eriksen Manager Planning Commission Shannon Riley Traffic Engineering Committee ci y Clerk Board of Appeals • citya,ide Adnlnistrxue Civil Service Board sem Airport Manager • cemmr.ntty Outreach" Pubic mnmauon Greg Owen • Eoorome Derelepmert • Vise Ukiah I I I I I I I Community Water&Sewer Public Works Firarrce Directs HR Director/Risk Planning/Comm. Police Chief Fie Chief Electric Utility Services Utilities Director Director Manager Dev.Director iGrkThansen Director Administrator Sean White Tin Eli ksen Daniel BuffaloManager Mannion Craig Dewey (Maxim) Mel Grandi CraigSdnlatter Tari 8artdornei • Water • Engineering/Streets • Budget Management • Hunan Removes Planting • Polbe Services City Fre • Distribution Parks • Sewer • Creporalm Yani • Betty Bang • Risk Management Building Inspection • Dispa h Ukiah Valley Fie Technical Services Recreation • Recycled Wer • Fleet A Plant • Accounting Housing District • Atlminstratirn Aquatics Maintenance • wmhasing Goy • Landfill • Intimation Cmkrence Center Tehnobgy Museun Buildings S Ground Mantmnnce Page I ix Core Values City of Ukiah _ _ Our Core Values : PROFESSIONALISM SERVICE TEAMWORK INNOVATION SAFETY More information on our core values can be found on the city's website, www.cityofukiah.com/eep. Page I x Core Values Our core values are what drive us to better serve our community by creating a culture of positivity, inclusion, and professional betterment. These values are as follows: PROFESSIONALISM We demonstrate professionalism through proficiency, reliability, and our drive to make opportunities happen. • We strive to promote trust and confidence by being respectful, truthful, open and compassionate in everything we do. • We are dedicated to continuous improvement and professional growth. • We embrace our professional and social responsibility to our community. SERVICE We inspire confidence in our organization and our team members by consistently providing exceptional service. • We meet the needs of a diverse community through dynamic, creative, and thoughtful service. • We achieve tangible results through eagerness to find solutions and provide service. • We are accountable for our actions and take ownership of our deeds. TEAMWORK We believe in creating an environment that fosters teamwork and processes that support equal opportunity, collaboration, and commitment to common goals. • We inspire everyone to make a difference and celebrate success by valuing and recognizing each contribution. • We believe that open, honest communication builds trust,which is the foundation of any relationship—whether it's with our employees or our community. • We maintain a positive and engaging atmosphere where balance and fun are valued. INNOVATION We work to discover practical solutions, challenge prevailing assumptions, and create new ideas that prove useful. • We are actively engaged in seeking strategic solutions and partnerships that will more effectively serve our community and our team members. • We foster a culture of innovation that balances creativity with responsibility and sustainability. • We are open to change and support and encourage suggestions from employees and the community. SAFETY We strive to keep our community and our workplace safe and healthy. • We ensure the vital needs of our community are met through the protection of each other, the environment, and our assets. • We foster a healthy community by ensuring accessibility and high quality programs and services for our citizens. • We ensure the safety of our team-members and are well prepared for emergencies through effective and ongoing training and education. Page I xi City Council ' s Strategic Plan The Ukiah City Council, through a strategic process of discussion, observation, and education, has developed the following set of focused priorities and strategies.The four identified areas are in no way all-encompassing of the City's scope of work nor are they finite; rather, the strategic planning process is evolutionary and often vision-based. All of these areas work to further promote the vibrancy and sustainability of the Ukiah community and the organization. Outcomes The primary outcomes for the Strategic Planning Process are threefold: 1. Create alignment among the Councilmembers about the top strategic priorities for the City of Ukiah. 2. Develop a set of operational principles that will guide the practices and decisions of the council in focusing the strategic priorities. 3. Identify specific mechanisms for tracking these strategic priorities over time that will allow the Council and City Staff to make the necessary adjustments to achieve the strategic priorities. General Principles A set of accepted guidelines formed to capture values and priorities that transcend bstreetly to the strategic plan. • Our strategies and approaches maintain or enhance the unique positive characteristics of our community. • Our decisions reflect fiscal responsibility, reliability, sustainability, and affordability with an understanding and consideration of impacts to the entire organization. • We look to partner with our community members to promote greater ownership and involvement in their services. • We look for strategies that increase efficiencies while enhancing customer service. • Where applicable, we adjust rates and fees to reflect changes in the economy and cost of services. Strategic Planning Areas & Initiatives • Develop a prioritized plan for maintaining and improving public infrastructure. o Continue the development and maintenance of a comprehensive Capital Improvement Plan. o Identify and/or develop funding for essential and vital infrastructure for the long- term. • Planning Valley-Wide takes place based on sound planning principles. o Review and revise land use planning documents to be reflective of the long-term vision for the community o Analyze and consider opportunities for regional partnerships that support or improve the delivery of municipal services • Facilitate the development of a sound local economy that attracts investment, promotes economic diversity, supports businesses, creates employment opportunities, and generates public revenues. o Identify and remove barriers to economic development while leveraging economic opportunities o Develop and preserve the downtown historic place as a regional center of civic and economic activity • Council and staff work together to create a more responsive and effective workplace environment. Page 1 xii o Promote core values that are embedded in the operational culture of the organization o Develop open communication and workflow practices that cultivate invested team members and community awareness/involvement Page 1 xiii 0 5?1 11 \i A---' C:11 ', I VI SPARTACU a CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET CITY MANAGER'S BUDGET MESSAGE Ukiah is on the brink of exciting and transformative changes, changes that I believe will have a positive impact on our quality of life. At its foundation, Ukiah has spectacular natural beauty and a resilient and caring citizenry. I remain thankful to have grown up and live in a community where, more often than not, the first reaction when passing someone on the sidewalk or in the grocery store is to exchange a smile and a greeting. At the City of Ukiah, we don't take that for granted. Our team, combined with the leadership of the City Council, is dedicated to maintaining that friendly, authentic spirit while improving services to make our community a place of pride and enjoyment, where families and business can thrive and visitors will cherish their experiences. Over the past decade, the City has been impacted by continuing economic, legislative and legal threats that have challenged that ability to provide services. Emerging through the economic downturn was difficult and the impacts have been far lasting including continued issues with homelessness, lack of housing, aging infrastructure, a limited workforce and a lack of significant economic growth. Through a refocused effort on engagement and partnerships,we look forward to working with and for our community to overcome these larger regional issues. The Fiscal Year 2017-2018 budget builds upon the effort to refocus service delivery and resources to Council-directed priorities while maintaining a balanced and sustainable fiscal spending plan. Public Safety services and utility operations remain a priority focus and represent the majority of the City's annual budgetary spending. This year's budget also represents a major investment in infrastructure spending on important community projects that have been in development for a number of years, including street and traffic improvements in and around the Redwood Business Park and the recycled water project. Additional investment in street maintenance will be forthcoming as the City works to plan and deploy the recently-approved Measure Y funding. This introductory message is intended to set the stage and provide context for the narrative and financial information found in this document. It is an overview of the detail found throughout this document. This is my recommended budget to the City Council and the citizenry of the City of Ukiah. It is the story of where we've been and where we intend to go. Community Overview Ukiah is where the rolling vineyards, pear orchards and giant redwoods converge—where ranching and timber families live alongside ex-hippies, internationally renowned musicians, artists and winemakers. Visit Ukiah's tagline, "Far Out. Nearby." truly captures the Ukiah vibe. Because Ukiah is still largely undiscovered, it has retained its small-town charm and quirkiness. At just two-hours north of the Golden Gate Bridge on the scenic Highway 101, the community is easy to get to, but truly feels like an escape from the ordinary. For ease of travel, Ukiah is accessible from three major airports (San Francisco, Oakland, and Sacramento) and is home to Ukiah Municipal Airport. It is situated near the intersection of Highways 101 and 20, which provide north/south and east/west connectivity throughout the State. Ukiah is often described as a great place to get away from the world. We're the county seat of a geographically diverse area and the business and commerce center for Mendocino County, as RECOMMENDED Page I CM 1 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET well as parts of Lake, Humboldt, and Sonoma Counties. A bustling historic downtown anchors a city surrounded by conventional business, retail, hospitality, medical and educational services and outlets. Our listed census population of 16,075 can be deceiving given during the work week it swells to over 35,000. The population swing allows one to find all of the conveniences and opportunities of a midsize urban city within the rural charm of a small town. We're also centrally located to over 30 wineries, making it the perfect launching pad for an authentic wine-tasting adventure. Local tasting rooms are comfortable and casual, and more often than not, you'll be meeting the owner or winemaker. The fact that this is the greenest wine region in America is less of a status symbol than it is a way of life. In addition, visitors can diversify their tasting pallets at a number of the local breweries, distilleries, and unique eateries that are mixed in throughout the countryside. Local area attractions include the Grace Hudson Museum, an art and history museum that features the intricate basketry of the local Pomo Indian tribe, and Montgomery Woods, a pristine redwood grove that hosts some of the world's tallest trees. Outdoor recreation enthusiasts will find no shortage of activities here. This is home to the county's only 18-hole golf course, four-disc golf courses, Lake Mendocino for boating, fishing, hiking and camping, thousands of acres of state and federal land for recreation and off-street vehicles, and more. Additionally, Ukiah offers a number of hospitality options including two historic hot-spring resorts cater to those truly looking to escape for a weekend. Additional details are available at www.cityofukiah.com/businesses/ and www.visitukiah.com. 2016-17 Fiscal Year in Review Another productive year is close to wrapping up for our City's dedicated and hardworking team. Many long hours and diligent effort went into the planning of several critical projects, including the recycled water project, the Palace Hotel, the Costco development project and various street resurfacing and rehab efforts,just to name a few. This was in addition to the regular day-to-day work that our team members carried out toward the goal of providing the highest level of service delivery. These are just some of the accomplishments our team realized in 2016-17: • The Police Department continued another successful year of implementing their strategic plan, including concentrating on reducing quality of life crimes in our community. These efforts resulted in an 18%reduction in property crimes and no measurable increase to the number of violent crimes our community experiences. • The Finance Department has been restructured into a more efficient, productive, fully staffed team. The budget document reflects the culmination of new ideas, refreshed enthusiasm and skillful preparation. • Economic Development and the Parking Ad Hoc Committee worked together to begin the development of an improved parking plan for the downtown area by evaluating the recommendations of the existing parking study to determine relevancy with the changed downtown business climate. • The Fire Department merged financial services between the City and the Ukiah Valley Fire District, improved interdepartmental communications and relations between the two Page I CM 2 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET agencies, and is on the cusp of establishing fully unified joint fire service for the entire Ukiah Valley. • Recreation hosted its first Basketball Shoot-A-Thon fundraiser for the City of Ukiah Youth Basketball League with 200 participants that brought in just over$12,000. After obtaining sponsors and buying prizes for participants, a profit of $9,000 was recognized for future programmatic needs. • The Grace Hudson Nature Education Project has nearly completed its learning center, which includes a large recirculating water feature modeling a section of a salmon stream, new perimeter fencing,walls and gates, installation of an outdoor security system, installation of irrigation and outside lighting, and landscaping with native plants. • Planning has completed zoning ordinance amendments designed to make the development process easier, including permit streamlining and a new development fee deferral program. • Electric Utilities accomplished the completion of the Perkins Street Overhead to Underground conversion and the underground phase for the Perkins Street Lighting Project. • Public Works made great strides in the continued implementation of the "Master Pavement Rehabilitation Program (MPRP)" -two-year approach, along with the launch of online customer reporting to `City Source App'. • The Water Division successfully completed installation of Wells 4 and 9 and began site improvements. • The Wastewater Division secured grant funding and low-interest loans for construction of Phases 1 through 3 of the Recycled Water Project. • The Public Works Department has begun the reconstruction of Observatory, Luce, and Washington Avenues in conjunction with sewer and water main replacements. • Visit Ukiah and the Recreation Department, along with support from multiple other departments, hosted the first-ever seasonal ice-skating rink in Downtown Ukiah, attracting thousands of people from around the area. • An important element of civic engagement includes increased communication and promotion of City activities, achievements, and major initiatives.To accomplish this, the City expanded its presence on social media, increased the frequency of press releases, launched an interactive mobile app so that citizens can conveniently report non-emergency items, and added content and tools to the website. Finally,we did all this under diligent fiscal constraint while still maintaining the highest level of service possible. The Budget Year, 2017-18 The City's Management Team recognizes and appreciates the City Council's expectation for a well- developed and clear budget document. The presented budget represents a full-scale revision from past documents. While the presentation has not been perfected in form, it is a significant step in meeting the presentation and development objectives for budgeting. RECOMMENDED Page I CM 3 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Founded in best management practices and coordinated with a Council ad-hoc and management staff from all departments, the document provides a solid foundation for the continued evolution in years to come. For the first time, the City's budget was developed utilizing the Enterprise Resource Planning (ERP) software referred to as "Munis." All departments directly entered their budget requests into the system and all data and many of the reports in this document are generated directly from the system. We began our process with a Budget Kick-Off in late February. During this review and strategic planning/goal-setting session, new goals and objectives for 2017-18 were identified and presented by each department. They reinforced the four strategic planning areas established by the Council: 1. Planning for public infrastructure, 2. Employment of sound planning principles to the City and greater valley, 3. Promotion and strengthening of economic development, and 4. Improving the organizational workplace environment. Departments and divisions have tailored their individual goals with these strategic priorities in mind and structured their budgets accordingly. Additional department-specific priorities were also identified during the budget process, and we worked to finance those activities accordingly. The budget document presents information and data at the fund level, a departmental/division summary level, and a department/division detail expenditure/revenue line level. Operational Highlights In 2017-18, project development and completion will continue to be a focus, as well as working to improve service levels through resource reorganization, partnerships and innovation. The following are the highlights of what's to come: Personnel. A continued goal is to retain and attract the highest quality and most productive team members. Given our limited resources,we rely on team members that can fill multiple functions and who desire a rewarding and challenging work environment. We have successfully recruited for a range of critical positions; over the past year, several key leadership positions were replaced due to retirements and natural attrition. In the upcoming year, we will continue to build a strong and skilled workforce. With attrition comes an influx of new approaches, but also the loss of institutional knowledge and expertise. To ensure the best utilization of our workforce, cross training and knowledge/task base development remains a priority. All departments and divisions during the budget process were asked to examine the training needs of their team and bring forward an appropriation proposal to meet current year objectives. Training and leadership/career development works to unlock the full potential of our team members and pays dividends in greater service outcomes at a reduced cost. Other notable personnel considerations in 2017-18 include: • Public Safety- Police Services. The Police Department's budget includes appropriation for 34 sworn police officers, up from 32. Funding for one of those new officers will come in part from the Ukiah Unified School District for an additional school resource officer. The second position Page I CM 4 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET will be funded from general revenues of the general fund and other sources, specifically from identified savings in other Police operations. • The Public Works Department will add at least one new position in the engineering department to enhance and expand our internal capacity to perform project management and to plan and execute street rehab and maintenance funded by Measure Y. • The Information Technologies Department will add a 32-hour entry level position to the operations. IT related costs continue to rise as all aspects of City services rely on technological and communication based platforms to provide services. In an effort to provide support of the services, the City has tried both consultant and in-house staffing models. The consultant model has proven costly and less effective. In order to curb costs and reliance on third-party, out-o- market vendors, the Department is proposing this entry level position to provide added support services to end users. • The Purchasing Division includes the addition of a Buyer position to provide relief for the high demand for services that is backlogging the purchasing process and delaying the timely bidding and acquisition of services and supplies. The current Buyer will be reclassified to a Buyer II level and will have increased responsibilities in the areas of Public Works contracts, surplus material handling, and procurement support. Both positions will provide critical support needed to comply with new regulations that have recently come into effect. • One of our greatest cost challenges in the 2017-18 and future budgets is in the realm of pensions obligations and rising benefit costs. We took prudent steps to ensure the City is positioned to hedge these liabilities by building in operational surpluses throughout funds. Operations. The Finance Department has committed greater resources to budget monitoring and internal auditing for the 2017-18 year. They will achieve this by engaging with departments in a collaborative and honest dialogue and searching for best practices and innovative ways of harnessing both current and potential,yet unrealized, resources. The purpose of such an initiative is to help all City functions, departments, and divisions find ways of providing the highest level of services at the lowest possible cost. Other notable operational considerations in 2017-18 include: • Public Safety- Fire Services. The City will continue to work with the Ukiah Valley Fire Protection District to provide unified operational services to the greater Ukiah Valley. • Evaluate and reorganize the functions and staffing of the Community Development and Planning Department to be in line with City Council's strategic goal to facilitate the development of a sound local economy that attracts investment, promotes economic diversity, supports businesses, creates employment opportunities, and generates public revenues. • Restructuring long-term obligations. In the current interest rate environment, the City must capitalize on opportunities to reduce the cost of borrowing for current debt issues and those yet to come. Pending litigation remains a significant obstacle in this endeavor, but as we work toward finding new ways to mend broken relationships, the Finance Department stands ready to engage in debt refunding and refinancing strategies to save our citizens in costly interest expense. • The City utilizes a cost allocation plan as a means of capturing the total costs of providing services and a method for distributing administration and internal service costs across the various operations that utilize the corresponding services. The cost allocation plan establishes separate basis of allocation for each indirect activity and is founded on an approach that is RECOMMENDED Page I CM 5 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET reasonable,fair, and equitable. Because services and utilization of services can change over time, the City Council wishes to establish an ad-hoc to work with staff on the development of an ongoing audit plan to review the bases of allocation and consider modifications when warranted. Citizen engagement. We must work to improve citizen engagement, customer service and relationships with our local businesses. Communication and partnerships are critical to understanding, developing and delivering services. The City has created a multidiscipline taskforce that is working to improve and align services with the organization's core values. However, a consistent and unified approach for communication and engagement must be developed over the next year. Service delivery. The City focuses on efficient, effective and economical service delivery that has meaningful and positive impacts on health, comfort, and happiness. This focus supports the City's efforts in making difficult decisions among competing priorities while delivering and demonstrating value in the services provided. The City continues to ensure Ukiah residents get the services they need and want, as well as getting value for the tax dollars spent delivering those services. Innovation is a key element in improving service delivery. The City Manager's Office has commissioned two Innovation Teams, comprised of volunteer City team members and led by two department heads. The mission of these teams is to elevate the process of finding ways to reduce costs and enhance service delivery. One team is working on approaches to homelessness issues while the other is working on internal efficiencies. Capital Highlights The City will engage in the preparation of a comprehensive capital improvement program (CIP) budget in the coming year. The CIP will outline in specificity the programs and projects of the highest need in Ukiah, as identified by management and desired by Council and the community,with at least a five-year outlook. Our goal has been, and continues to be, to focus on those projects that will yield the greatest return on investment or that are in the most urgent need of attention. Through this process, the staff will plan for the long-term needs of the City's infrastructure and coordinate activities across departments. Notwithstanding the development of a comprehensive CIP, the City has budgeted specific projects and capital outlays for 2017-18 that represent the most critical of the City's needs and the best use of resources for capital purposes. A full list of this year's capital expenditures can be found in the Budget in Brief Section later in this presentation. The following are among the most notable: • Recycled Water Project Phase 1-3 construction from the Wastewater Treatment Plant north to the Ukiah Sports Complex • Redwood Business Park infrastructure improvements and Airport Park Blvd. reconstruction • Caltrans right of way traffic improvements at Highway 101/Talmage Street • Landfill closure and capping • Airport acquisition of an Avgas self-serve tank with the ability to store 25,000 gallons of jet A fuel • Replacement of the failing Pressure Zone 2 South Water Tank in the western hills to retain the needed ability to store and distribute water; this tank is one of the primary storage tanks in its zone • Two Type-1 replacement engines • Replacement of the Street Sweeper, existing equipment has exceeded the span of its useful life and is costly to repair Page I CM 6 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Of particular importance to the citizens of Ukiah is the new revenues from Measure Y and how they will be deployed to improve our streets. The recommended budget demonstrates a complete budgetary accounting of the utilization and reservation of funds generated by Measure Y to repair and maintain City streets, streets, and public rights-of-way. This includes using Measure Y resources to augment and enhance currently scheduled projects to ensure they are done well to maximize their benefit and longevity. Remaining funds will be held in reserved until the Council considers and approves a spending plan that was delayed due a lawsuit that threaten the collection of funds. With the recent resolution of the lawsuit, Public Works is working to coordinate a summer workshop with the City Council and will be prepared to deliver an aggressive but prudent spending plan for the full utilization of Measure Y resources where they will have the greatest positive impact for Ukiah streets. Economic Development Highlights The City has emerged as a leader for economic development activities in Mendocino County. Partnerships with both private and public entities is the cornerstone of our approach. The City's economic development efforts are focused primarily on business retention and recruitment and the partnership with the Community Development and Housing Department to facilitate the development of housing, both market rate and affordable. The strength of our business community relies on the availability of housing for its workforce,so these two efforts go hand in hand. Staff has been very active in pursuing a regional economic development approach. As the County seat and the business, medical, and education hub for parts of three counties, we recognize that we serve a much larger population base than just our residents. While this often means increased costs and workload for some departments, there is also a benefit for our business community and an expanded tax base for the City's General Fund. Therefore, it behooves us to look beyond our city limits for collaborations. For example, the Visit Ukiah program promotes all areas and events within about a half-hour radius of Ukiah, knowing that visitors to the outlying areas are likely to stay in Ukiah's hotels and shop and dine in our community. In the absence of redevelopment,Staff has utilized CDBG funds to provide low-interest loans and technical assistance for small businesses. Also, we invest in partnerships with organizations including the Greater Ukiah Chamber of Commerce, the Ukiah Main Street Program, the West Company, and the Economic Development and Financing Corporation,who provide other specialized services to the business community. With the addition of Costco, new lodging, and much more, Ukiah is well poised for strong economic growth in the coming years. Our Economic Development team is committed to facilitating that growth in a way that preserves Ukiah's unique character and its balance between large industry and small, independent businesses. Housing Highlights Housing, or the lack thereof, has been an important topic over the last couple of years. Housing starts in the Valley have been few and far between in the last decade, and the impacts of that are now showing. City leaders have heard from businesses large and small about the need for workforce housing for not just entry-level employees, but executives as well. RECOMMENDED Page I CM 7 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET The loss of redevelopment has made the development of affordable housing significantly more challenging. In spite of that, the City's partnership with Petaluma Ecumenical Properties will result in 42 new units of affordable senior housing in the summer of 2017. Additional projects are also in the works in the city and just outside our boundaries, supplementing the housing market with up to 175 new affordable units within the next two years. Recognizing that there is also a need for market-rate housing, the City is facilitating the development of a multi-family complex on property owned by the City's Housing Entity and actively seeking additional opportunities. In FY 17-18, the City will continue to focus on the effective infill of vacant and underutilized parcels while making additional efforts to streamline the development process for builders. Financial Highlights I am pleased to present a balanced operating budget for fiscal year 2017-18. Through the use of regular revenues to fund ongoing costs, as well as one-time resources to fund irregular or one-time expenditures, the general fund remains well capitalized with an appropriate reserve, while water and electric funds strengthen further, even engaging in capital projects nearly impossible to fund with existing revenues just a few years ago. The sewer enterprise, however, continues to face challenges moving forward, but we continue to execute the strategy approved by Council to meet them. A few of the most significant highlights are as follows: Measure P, passed by a simple majority (50 percent plus 1) of Ukiah voters in November of 2014, is a general (unrestricted) transaction and use tax. A general, unrestricted tax is one that can be used to fund any program, function, service, or project at the discretion of the City Council. It is not a special, restricted tax,which would require approval of two-thirds of the voting public. It continued a sun setting transaction and use tax, known as Measure S (2005), accompanied by an advisory Measure T (2005). Measure P, however, was passed with no advisory measure. An independent oversight board has recently been appointed to oversee the spending of these funds. Public Safety Appropriations. The general fund will continue to be committed to funding public safety with the use of Measure P proceeds in 17-18. The majority of this increase is due to additional staffing, retirement plan costs, and the replacement of aging fire safety equipment. Additionally, the amount needed to provide valley-wide fire services has increased, as we work to match service levels of the City with that of the Ukiah Valley Fire District. Quite simply, property tax revenues collected by the UVFD for the unincorporated area are insufficient for fire protection and medical support services. The City has committed its own general fund resources to ensure the District, as a partner, can meet the needs of its citizenry. Part of potential budgetary savings in 2016-17 will be used to help finance increased costs specific to equipment replacements, but such a strategy is meant to be one- time in nature. In order to support sustainability in the years to come, long-term strategies to meet the public safety service needs of our community must be developed in collaboration with partnering services providers and the County of Mendocino. The Purpose of Measure P is to augment public safety expenditures to provide a higher level of police and fire service to the community. Amounts collected from the tax are to be used Page I CM 8 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET in addition to the commitment of the general fund and not in replacement of. See the Budget in Brief section for additional information on this vital revenue source. MEASURE Y AND STREETS Measure Y, passed by a simple majority (50 percent plus 1) of Ukiah voters in November of 2016, is a general (unrestricted) transaction and use tax. Similar to Measure P, this general, unrestricted tax is one that can be used to fund any program, function, service, or project at the discretion of the City Council. It is not a special, restricted tax but was accompanied by an advisory Measure Z (2016). The Purpose of Measure Y is to augment general expenditures on streets, streets, and public rights-of-way. Amounts collected from the tax are to be used in addition to the commitment of the general fund and not in replacement of. I am recommending a prudent use of amounts collected from Measure Y and the establishment of a project reserve for additional projects,yet to be selected by the City Council. See the Budget in Brief section on Measure Y for additional details. In addition to the amounts collected from Measure Y,we anticipate the receipt of additional gas tax and special appropriations for infrastructure from the state in the coming year. The increase in revenue will not be breathtaking, but those additional resources will be used to enhance projects currently scheduled, as well as future project supported by Measure Y. LIABILITY AND WORKERS COMP INSURANCE. Costs are expected to increase compared to FY 2016-17. This is of particular concern to the executive management team, and the HR and Risk Management Department has been tasked with developing a strategy to curb the expense related to worker's comp--in particular, getting our team members back to work following an injury as quickly as possible. Fortunately, other health insurance costs are anticipated to rise by only a nominal amount, in part due to the City's decision to be self-funded with its insurance carrier, the Redwood Empire Municipal Insurance Fund (REMIF). THE UTILITIES Water and sewer enterprise activities will continue to experience increased costs; however, the restructured water rate schedule will sustain its operations and capital plans, with a focus on enhanced maintenance. Sewer activities will focus on maintenance as well -including inflow and infiltration (I&I) identification/mitigation, infrastructure rehabilitation, and addressing disposal costs. A thorough evaluation of rates for sewer services must be completed for the enterprise to find sure footing moving forward. Additionally, both water and sewer will participate in the effort to implement recycled water in the City of Ukiah. It's a matter of disposal for the sewer system and one of increased capacity for the water enterprise. For both, it is an effort to exercise best practices in municipal water and sewer services and in environmental stewardship. Revenues: The City receives revenue from a variety of sources. Many of those revenues are to be used to support specific purposes. They come in the form of grants, subventions, charges for services and other fees. We typically track those sources in funds called special revenue funds either because of legal requirements or because the City wants to track them and the activities financed by them separately from other revenue sources. RECOMMENDED Page I CM 9 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Additionally, there are general revenues,which are accounted for almost entirely in the general fund. They can predominantly be used for any services or activities deemed necessarily and/or desirable by the City Council and the community. General revenues collected in the general fund are comprised primarily of taxes of sales and property taxes. The former by far is the most significant in terms of volume and volatility because it is directly related to the economic health of our City and, by proxy, is an indicator of the economic conditions of the greater regional economy, the state, and even the nation. Property taxes are much more stable and consistent. The information presented in this budget document is perhaps best understood when it is considered from the perspective of the specific environment within which the City operates. Understanding that property and sales taxes generate the City's largest two sources of general revenue, it is important to look at the economy in the context of people's wherewithal for producing general fund tax revenues. Here we discuss our major revenue sources, principally taxes and user fees (such as water,sewer, and electric rates). Further,we examine the major sources of revenue to the general fund, as they are truly the only source of discretionary resources for the City. GENERAL REVENUES-TOP TEN: The City's top ten revenue sources account for nearly 85 percent of total general fund income. Focusing on these sources can provide an excellent understanding of the City's revenue position. Top Ten Revenues, FY 2017-18 General Fund 12.7% 87.3% Total top 10 Other Revenue Page I CM 10 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Overall, these key revenues are expected to perform even stronger in 2017-18 than in the year prior. This is not unexpected, as resources from Measure Y and the Costco project will enhance the economic base of the City and the greater valley. Further, as Ukiah continues to grow as a regional center of commerce,we will see that economic base expand and deepen. Estimated Percent of Budget Year-end Percent Total 2017-18 TOP 10-GENERAL REVENUES 2017-18 2016-17 Change Revenues Top 10: Bradley Burns Sales Tax $ 5,696,920 $ 5,339,644 6.69% 29.04% 1/2%Measure P Sales Tax2,921,958 2,731,307 6.98% 14.90% 1/2%Measure Y Sales Tax 2,921,958 682,826 327.92% 14.90% Prop Tax In Lieu Of Vlf 1,354,955 1,348,163 0.50% 6.91% Room Occupancy Tax 8% 1,034,921 955,292 8.34% 5.28% City Utility Franchise Fee 937,723 900,000 4.19% 4.78% URDA Pass Thru-Prop Tax Adj 702,315 704,585 -0.32% 3.58% Secured Property Tax 677,418 650,000 4.22% 3.45% Refuse Disposal Franchise Fee 500,581 483,181 3.60% 2.55% Business License Tax 367,000 365,000 0.55% 1.87% Total top 10 17,115,749 14,159,998 20.87% 87.26% Other Revenue 2,499,486 4,612,671 -45.81% 12.74% Total operating revenue $ 19,615,235 $ 18,772,669 4.49% 100.00% Top Ten Revenues Compared FY's 2018 and 2017 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 II ii ii „ II ■■ -- 61 Fee SSa\eS�ax Q Sa\eS�a� �SaYeS�a \32\5. v,-1-cy(a�a�I° ta�c�`�Se Q�oP�2* e�y�21- F�arc,�seerSe-ca- 0C a\��°�� 2��eaSoe 1 Io�eaSote Q�oP�a�M °�Occ°Pay Gtiy�ti`\�yFPPaSs�r�J'S�°teaQoQ JS ��sQ°Sa\ �us�reS5 a 1I o 0 1I �o \�Q • Budget 2017-18 ■ Estimated Year-end 2016-17 Sales Tax. The City collects sales tax from three sources: normal Bradley-Burns sales taxes (1 percent of taxable transactions), a '/2 cent transaction and use (district) tax, commonly referred to as Measure P and devoted entirely to the City, and a '/2 cent transaction and use RECOMMENDED Page 1 CM 1 1 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET tax, known as Measure Y. These three tax sources are distinct and considered separate sources. The district taxes behave slightly differently given their tax base. Bradley-Burns sales taxes are referred to as "sales and use" taxes, levied on transactions based geographically in the City. Measures P and Y are referred to as "transaction and use" taxes and are applied to any taxable sale in the City as well as any sale where the use of the item is in the City. For instance, a car purchased outside the City but registered to, and therefore presumed to be used at, an address within would be levied the 1/2 cent on the purchase price. All are general taxes and can be used for any regular, general governmental purpose. However, the City Council has made it very clear their intention to use those resources to enhance public safety and street and infrastructure maintenance. Overall, sales taxes receipts (Bradley-Burns and Measure P) were up moderately from a year ago due in part to stronger sales in the City's retail sector. It was offset somewhat be the declining price of gas. Measure Y also came online in April of 2017. The City will begin receiving proceeds from it in June, 2017. Property Tax in Lieu of VLF (Vehicle License Fee). These are property tax shares allocated to cities and counties beginning in FY 04-05 as compensation for the state's take of Vehicle License Fees (VLF). This revenue source typically follows regular property tax collections, discussed under "Secured Property Tax" below and is expected to be up 0.50 percent compared to fiscal year 2016-17. Transient Occupancy Tax(TOT). Commonly referred to as a "bed," "hotel," or "room" tax this revenue source has performed strongly over the last two years, up nearly 15 percent from 2014-15. Driven by increased tourism in the greater Ukiah Valley area and a larger volume of travelers heading north, this revenue source is poised to continue its positive growth trend for several more years. The TOT rate in Ukiah is currently 10 percent; however, 8 percent is considered general revenue to the general fund,which is what is reported here. The remaining 2 percent funds economic development and tourism enterprise and is deposited to a special revenue fund. City Utility Franchise Fees. This revenue source is a charge to the City's electric utility and Comcast. Franchise fees are not taxes; rather, they are rents paid by utility providers to operate on or in City rights-of-way and City property, such as streets,sidewalks, parklands, etc. The rents are established by the City Council and typically are correlated to gross revenues generated by the utility provider. Revenue from this source is expected to be higher in the coming year, as the Electric Utility implemented rate adjustments beginning in January. Redevelopment Tax Increment Pass-Through (URDA Pass-Thu). After the dissolution of Redevelopment in California by the Legislature, the Ukiah Redevelopment Agency was sent into receivership of a successor agency. Property tax increment revenue once received by the former agency was instead held in trust by the County Auditor-Controller in a specific fund, known as the Redevelopment Property Tax Trust Fund (RPTTF). Property tax increment collected in this fund would first pay the County Auditor-Controller's admin costs, then pass to the successor agency of the former RDA (City of Ukiah) to satisfy the obligations of the former agency, then to the taxing entities in the project area of the former RDA, including the Ukiah Unified School District and the County of Mendocino general fund. The City also receives a share of these residuals and deposits them in a specific account in the general fund,which is reported here. Page 1 CM 12 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET This revenue source tracks relatively similar to regular (secured) property tax, although it is calculated from a slightly different derivative property tax base (tax increment). It is estimated to come in slightly lower in 2017-18. Secured Property Tax. Traditionally, revenue from property tax was viewed as a very stable source. The housing collapse of 2008 tested that assumption. However, as the housing market continued to recover modestly in Ukiah, receipts came in higher than the year prior. This was due to a combination of factors, including retroactive Prop 8 (1978) assessment adjustments and increased assessed values from housing sales. Slightly less than 11 percent of property taxes paid by property owners within the City are allocated to the City. The majority is distributed to local schools and the County of Mendocino. As mentioned earlier, revenue from this source will continue to trend positively over the next few years as the county continues to process Prop 8 property value adjustments and as housing prices and home sales increase. Property Tax Revenue Trend Since High of 2007 3,500,000 40.00% 35.00% 3,000,000 30.00% :::: , , — 25.00% . . . 20.00% . . . 15.00% 1,500,000 _ 10.00% III ■ . ■ 5.00% 1,000,000 - 0.00% -5.00% 500,000 -10.00% -15.00% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (Projected) (Projected) (Projected) (Projected) Property tax revenue —Rate of change Refuse Disposal Franchise Fees. This revenue source is generated through a charge to the City's franchise solid waste hauler. As discussed earlier, franchise fees are not taxes; rather, they are rents paid by utility providers to operate on or in City rights-of-way and City property, such as streets,sidewalks, parklands, etc. The vehicles used to provide this service (garbage trucks) are heavy machines that wear streets more quickly and significantly than other commercial and non-commercial vehicles. Revenues from this source are expected to be higher in FY 2017-18 than in the preceding year due increased sales by the hauler, Ukiah Waste Solutions. Business License Tax. Businesses that operate within City limits are required to obtain a business license. The proceeds from the tax collected are available for unrestricted use in the general fund. Receipts are expected to be up nominally due to greater economic activity in the City. RECOMMENDED Page CM 13 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Further Revenue Analysis The City will continue to serve as the Successor Agency to the former RDA and will be entitled to an administrative allowance to offset operating costs associated with the dissolution of the agency and the retirement of its obligations. This is an important financial resource to the City in ensuring a smooth transition away from redevelopment, but it is at risk of further state intervention and changes to redevelopment law. Water and sewer enterprise activities will continue to experience increased costs; however, the restructured water and sewer rate schedules will continue to sustain these enterprise activities,with a focus on infrastructure rehabilitation and reserve building. Funding from other agencies is expected to increase with new transportation funding from the state and continued highway user tax (HUTA) allocations. We will continue to evaluate and recommend changes to the City's fee structure to ensure fiscal sustainability in those activities that have specific benefit to users. Also, we expect to reach finality on the issue of tax sharing with the County, which will open the door for responsible and effective community growth through annexation. Finally,we will continue to explore new sources of revenue aggressively to ensure the City can maintain vital services to the community, including public safety, infrastructure improvements, and parks and recreation. Expenditures: Expenditure control is an important element of budget execution and financial resource management. The City Council and the City's management team exercise expenditure control oversight during budget development and implementation to ensure finances remain structurally balanced and there are available resources to address the priorities of the community. Truly it is a team effort. The management team has been relentless in making sure that the City's budget remains structurally balanced. This was accomplished through a thorough analysis of past outcomes and accomplishments and future goals and objectives. It was a team effort, and I relied heavily on the input of my leadership staff and their budget team members to provide the detail and context of what was done in the past to craft the structure moving forward. The following are changes of note in fiscal year 2017-18. They are presented by major expenditure groups. PERSONNEL: • Salaries and benefits are anticipated to increase from filling vacant, positions, enhance services in public safety and streets, and to cover increased health and pension costs. Please see the personnel schedule later in this document for additional detail on recommended staffing changes. Page 1 CM 14 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET MATERIALS, SUPPLIES, AND SERVICES: • Operating expenditures will increase in the 2017-18 year as we invest in expanding capacity to meet our capital plans, train and develop our team members, and work toward meeting the primary goals of the City Council. GRANTS AND LOANS: • Loans and grants will increase markedly as we look to deploy housing resources into the community, through a combination of grants and unspent redevelopment housing bond proceeds. DEBT SERVICE: • Debt service will increase by a significant amount due to new debt issues, including: o I-Bank financing for infrastructure rehabilitation around Redwood Business Park o SRF loan through the state for the recycled water project o A capital lease financing for the purchase of two fire engines, replacing those past due for retirement. CAPITAL OUTLAY (CIP): This year is expected to be one in which the City will engage in significant capital projects. As was explored earlier in brief, and further detailed throughout this document,we will engage in a variety of infrastructure projects, in addition to fixed asset replacement, primarily focused on recycled water and street and right-of-way rehabilitation. Other sources and uses: As part of its path toward maintaining fiscal sustainability, the City may rely on one-time uses of its fund balance/working capital to ensure the best possible level of service to its citizen. I am recommending the use of reserves and available fund balance/working capital sparingly from resources accumulated from past budgetary surpluses. Most of this use will be toward capital projects in electric,water, sewer, and capital replacement reserve funds. Other sources and uses are inflows and outflows that increase or decrease fund balance but are not considered revenues or expenditures. The predominant example would be transfers. For instance, a "transfer out"would be recognized if the general fund provided resources to a special revenue fund without receiving something proportionate. An example of this would be the general fund's support of the Grace Hudson Museum,which is accounted for in special revenue fund with the intent that it might support itself with dedicated revenues, e.g. entry fees, facility rentals, etc. Transfers into the general fund would be similar in characteristic. Another governmental, enterprise, or fiduciary fund may provide resources to it without receiving something in return. An example RECOMMENDED Page 1 CM 15 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET would be a gas tax fund transferring resources into the general fund so that the general fund could perform general street maintenance. It should be noted and stressed: transfers are not the same as interfund borrowing. Such activity is a balance sheet activity and does not impact fund balance in total. Fund balance is the remaining resources of a fund that can be used in the subsequent period, or budget year. Per generally accepted accounting principles (GAAP) the City characterizes its fund balance accounts as one of 5 main categories: • Nonspendable. These are amounts that are not necessarily readily available but are nonetheless current enough to be liquidated and used. Examples include receivable amounts from long-term interfund borrowing and notes receivable. • Restricted. These are amounts which can only be spent on specific activities prescribed be a third party, i.e. an entity other than the voters, City Council, or City management. An example would be amounts held by the fund derived from a grant by which the grantor has set the requirements as to how those proceeds are to be used. • Committed. These are amounts designated by the highest level of the government's authority (typically the voters or City Council) for discrete purposes. Further, the mechanism used to prescribe these amounts is one that is not readily created, altered, or otherwise reversed, e.g. and ordinance or voter initiative. • Assigned. These amounts are similar to those characterized as committed but are more readily established, altered, or cancelled. The City Council or City Management can assign fund balance through resolution or budgetary policy, for instance. An example of this would be amounts designated as reserve by the City Council for exclusive use related to public safety or to act as a general rainy day reserve. • Unassigned. These amounts are any that do not fall under the characterization of the four fund balance classifications described above. The Primary Funds: General Fund The use of general fund resources by function are recommended as the follows: Fiscal Year 2017-18 2017-18 Percent of General Fund Recommended Total Activities: Public safety $ 10,870,402 43.41% Roads and infrastructure 9,463,814 37.80% General government and administration 1,057,132 4.22% Parks and recreation 2,585,318 10.32% Community development 898,883 3.59% $ 25,039,484 100.00% The general fund will remain well capitalized with an adequate reserve in 2017-18. We look to build those reserves further for specific purposes in the coming year, particularly to assist the City in ensuring it is able to retain and recruit personnel. An annual operating surplus is necessary to prepare Page 1 CM 16 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET for future cost of living increases for the workforce. Labor negotiations will begin next calendar year as contracts with the City's employee bargaining units are set to expire in the fall of 2018. The City's general fund is its primary source of discretionary resources for the provision of service deemed necessary and desirable by the citizens of Ukiah and the City Council. The schedule and chart below illustrate how the general fund has performed over the last five years, ending June 30, 2016, how it is expected to perform by the end of 2016-17, and how it is anticipated to perform by the end of 2017-18. Fiscal Year Ended June 30, GENERAL FUND 2017 2018 Five-Year Trend 2012 2013 2014 2015 2016 (Estimated) Budget Revenue 13,211,341 13,453,616 13,235,450 14,493,862 15,324,679 18,772,669 19,571,440 Expenditures 13,650,142 15,349,387 15,167,827 15,099,745 15,313,659 17,246,829 25,039,484 Excess(deficiency) (438,801) (1,895,771) (1,932,377) (605,883) 11,020 1,525,840 (5,468,044) Other sources(uses) 1,065,910 304,768 1,714,573 250,351 (157,913) (110,422) 7,173,852 Change in fund balance $ 627,109 $ (1,591,003) $ (217,804) $ (355,532) $ (146,893) $ 1,415,418 $ 1,705,808 Beginning fund balance 6,237,800 6,864,909 5,273,906 5,715,426 5,359,894 5,213,001 6,628,419 Ending fund balance: Nonspendable 559,134 619,044 619,044 645,728 911,343 850,000 800,000 Restricted - - - - - - - Committed - 183,956 203,105 - - - - Assigned 4,851,110 89,859 - - 4,301,658 5,778,419 7,534,227 Unassigned 1,454,665 4,381,047 4,233,953 4,714,166 - - - Total ending fund balance $ 6,864,909 $ 5,273,906 $ 5,056,102 $ 5,359,894 $ 5,213,001 $ 6,628,419 $ 8,334,227 The general fund is estimated to end the 2017-18 year with a total fund balance of$8.3 million, of which $7.5 million is estimated to be available for spending. As only$1.4 million of the estimated $2.9 million of Measure Y proceeds are recommended to be spent during the year, $1.5 million is to be held in reserve for future street and infrastructure projects. Total available fund balance under this RECOMMENDED Page 1 CM 17 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET analysis represents 42.6 percent of general fund revenue for the year, exceeding the desired minimum reserve amount of 25 percent. General Fund Historical Performance $30,000,000 $25,000,000 $20,000,000 _ $15,000,000 $10,000,000 $5,000,000 2012 2013 2014 2015 2016 2017 2018 Budget $15,000,0001 Total ending fund balance Revenue Expenditures Other sources(uses) Revenues flow into the fund from a wide variety of sources, including the top ten discussed earlier. Conversely, the general fund provides for a variety of services to the community,which are generally grouped as follows: • General government (including, but not limited to, City Council, City Management, City Clerk, City Attorney, Finance, and Treasury Management) • Public Safety (Police and Fire) • Public Works (Engineering and streets primarily) • Housing and Community Development (housing program administration, Planning, and Building) • Parks and Recreation • Capital outlay Business-type Activities: The City provides various enterprise services, including water, sewer, and electric. Water and sewer are housed administratively within the Water and Sewer Department but are accounted for, like electric, in proprietary enterprise funds. Through the collection of fees and charges, these funds should collect revenues sufficient enough to finance costs associated with administration, operations, capital improvements (CIP), and debt service. Enterprise activities are accounted for like a business in the private sector using the full accrual basis. This is starkly different than governmental fund accounting,which uses the modified accrual basis and is concerned only with current spendable resources,what we call fund balance. Drawing comparisons of information between the two methods can be challenging. Although the City accounts and reports on these funds using full accrual accounting basis, here we present the activities of the water, sewer, and electric enterprise funds in terms of working capital. Page CM 18 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Working capital is defined as the difference between current assets and current liabilities,which is closely approximate to the definition of fund balance in governmental funds. In other words, it's the resources available to meet ongoing operating, debt service, and capital activities in the near term. Non-cash expenses, such as depreciation and typically part of full accrual accounting, are excluded from this presentation. The Primary Funds: Water and Sewer Operations Water funds are anticipated to strengthen further during the upcoming year with the implementation of the five-year rate plan and easing of drought related restrictions; however, sewer revenues will likely be deficient given the continued litigation efforts of the Ukiah Valley Sanitation District which has inhibited the City's ability to refinance existing debt and plan for future operational and capital needs. The Water and Sewer Services Department is committed to exploring ways to enhance revenues to meet service needs of the community. The engagement in an ambitious recycled water project is a large step forward in the endeavor, brining tremendous benefit to reducing overall cost of water and sewer services, as well as mitigating our impact on the environment. WATER ENTERPRISE OPERATIONS Revenues from rates and grants are expected to exceed expenditures by$2.6 million, bringing its total working capital to $13.5 million, or 217 percent of current revenue for the year. Of that, approximately$4 million is expected to be needed for capital projects, including work on recycled water. The remainder is available to support operations, a comfortable cushion to protect operations for adverse conditions. Fiscal Year Ended June 30, WATER ENTERPRISE 2017 2018 Five-Year Trend 2012 2013 2014 2015 2016 (Estimated) Budget Revenue 4,943,509 5,847,196 6,063,225 5,640,655 5,593,810 5,856,484 6,225,968 Expenditures: Operating 2,174,248 2,446,509 2487,945 2,621,130 3,415,743 2,870,875 2,547,738 Debt service 1,088,369 1,075,780 1,066,651 1,013,800 600,302 965,000 964,918 Capital outlay 83,969 279,693 137,327 520,893 887,301 40,000 88,250 Total expenditures 3,346,586 3,801,982 3,691,923 4,155,823 4,903,346 3,875,875 3,600,906 Excess(deficiency) 1,596,923 2,045,214 2,371,302 1,484,832 690,464 1,980,609 2,625,062 Other sources(uses) (119,176) (15,000) (250,000) - 553,833 - - Changeinworkingcapital $ 1,477,747 $ 2,030,214 $ 2,121,302 $ 1,484,832 $ 1,244,297 $ 1,980,609 $ 2,625,062 Beginning working capital 299,641 1,953,924 3,970,493 6,177,985 7,662,817 8,907,114 10,887,723 Ending working capital,reserved for: Rate stabalization - - - - - - - Restricted - - - - - -Debt service - - - - - - - Capital - - - - - - - Operations 1,953,924 3,970,493 6,177,985 - 8,907,114 10,887,723 13,512,785 Total ending working capital $ 1,777,388 $ 3,984,138 $ 6,091,795 $ 7,662,817 $ 8,907,114 $ 10,887,723 $ 13,512,785 Due in large part to recent rate adjustments, the water enterprise is positioned strongly to ensure operations are maintained and capital projects can be engaged with adequate resources behind it. RECOMMENDED Page 1 CM 19 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Water Enterprise Historical Performance $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 c . -_.. 2012 2013 2014 2015 2016 $)2,000,000) Total ending working capital —Revenue —Expenditures: —Other sources(uses) SEWER ENTERPRISE OPERATIONS Unlike the electric and water utilities, the sewer enterprise is facing challenges financially. Expenditures are expected to exceed available revenue from rates by$1.23 million. After debt service contributions from the Ukiah Valley Sanitation District are included, working capital for the utility is expected to decrease. Its working capital remains strong, however, at 116 percent of available operating revenues, giving it a bit of a cushion. But as expenditures continue to rise from the cost of operations, the revenue side must be considered critically. Fiscal Year Ended June 30, SEWER ENTERPRISE 2017 2018 Five-Year Trend 2012 2013 2014 2015 2016 (Estimated) Budget Revenue 9,347,024 9,085,498 8,956,123 9,394,906 9,838,802 9,953,532 9,851,368 Expenditures: Operating 6,329,228 6,342,258 3,190,205 3,351,625 5,759,715 3,991,975 5,922,137 Debt service 5,307,129 5,288,494 5,281,493 5,278,494 4,842,900 4,861,300 4,860,900 Capital outlay 953,783 158,112 52,295 578,890 1,903,028 605,315 294,250 Total expenditures 12,590,140 11,788,864 8,523,993 9,209,009 12,505,643 9,458,590 11,077,287 Excess(deficiency) (3,243,116) (2,703,366) 432,130 185,897 (2,666,841) 494,943 (1,225,919) Other sources(uses) 4,411,388 3,418,875 (2,523,813) 55,816 2,047,753 (74,334) - Change in working capital $ 1,168,272 $ 715,509 $ (2,091,683) $ 241,713 $ (619,088) $ 420,609 $ (1,225,919) Beginning working capital 12,862,163 14,030,435 14,745,944 12,654,261 12,895,974 12,276,886 12,697,495 Ending working capital,reserved for: Rate stabalization - - - - - - - Restricted - - - - - -Debt service - - - - - - - Capital - - - - - - - Operations 14,030,435 14,745,944 12,654,261 12,895,974 12,276,886 12,697,495 11,471,576 Total ending working capital $ 14,030,435 $ 14,745,944 $ 12,654,261 $ 12,895,974 $ 12,276,886 $ 12,697,495 $ 11,471,576 The fund has performed nominally over the last five years,with expenditures and revenues tracking closely. This is problematic for the fund, however, as it makes continued investments in significant capital outlay increasingly challenging. As has been mentioned before, this is something we will be watching closely and making appropriate recommended adjustments to operational spending where necessary. Further, management expects to spend at least $1.75 million on legal fees in the City's defense of the lawsuit brought by the Ukiah Valley Sanitation District. Page I CM 20 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Sewer Enterprise Historical Performance $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 2012 2013 2014 2015 2016 $(2,000,000) $(4,000,000) _Total ending working capital —Revenue —Expenditures: —Other sources(uses) Electric Utility. With the recent adjustment to rates, approved by Council and first implemented in January, 2017, the Utility stands well positioned to engage in needed capital improvements and ensure that operations are provided adequate resources for the foreseeable future. And while the rates offered to our customers remain well below those of our nearest competitor, PG&E and Sonoma Clean Power,we will continue to search for ways to provide high quality, green, reliable power services at the lowest possible cost. ELECTRIC ENTERPRISE OPERATIONS Revenues from rates will come in stronger than in prior years due to recently enacted rate adjustments. Although operating costs are expected to be lower in 2017-18, the enterprise is expected to make significant capital investments throughout the year, using its available working capital to finance much of the effort. Working capital is expected to decrease $7.7 million this year as it is employed aggressively in capital projects. RECOMMENDED Page CM 21 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Fiscal Year Ended June 30, ELECTRIC ENTERPRISE 2017 2018 Five-Year Trend 2012 2013 2014 2015 2016 (Estimated) Budget Revenue 16,329,459 15,177,990 15,080,656 15,413,370 14,789,340 14,718,016 15,521,437 Expenditures: Operating 12,279,037 12,679,304 12,829,515 14,496,789 15,367,124 16,554,190 15,779,781 Debt service 2,033,125 2,035,312 2,037,187 2,076,253 2,095,715 2,060,938 2,071,875 Capital outlay 1,637,808 426,194 860,408 1,730,441 1,013,394 531,512 5,382,250 Total expenditures 15,949,970 15,140,810 15,727,110 18,303,483 18,476,233 19,146,640 23,233,906 Excess(deficiency) 379,489 37,180 (646,454) (2,890,113) (3,686,893) (4,428,624) (7,712,469) Other sources(uses) (3,752,341) 2,462,500 (589,489) 10,538,280 1,178,608 (98,409) (48,536) Change in working capital $ (3,372,852) $ 2,499,680 $ (1,235,943) $ 7,648,167 $ (2,508,285) $ (4,527,033) $ (7,761,005) Beginning working capital 14,201,792 10,828,940 13,328,620 12,092,677 19,740,844 17,232,559 12,705,526 Ending working capital,reserved for: Rate stabalization - - - - - - - Restricted - - - - - 100,000 100,000 Debt service - - - - - - - Capital - - - - - 26,499 4,721,639 Operations 10,828,940 13,328,620 12,092,677 19,740,844 17,232,559 12,579,027 122,882 Total ending working capital $ 10,828,940 $ 13,328,620 $ 12,092,677 $ 19,740,844 $ 17,232,559 $ 12,705,526 $ 4,944,521 In spite of this past erosion, the electric enterprise is estimated to maintain an adequate reserve of 31 percent by the end of 2017-18. Additionally, the City maintains a public benefit program to assist low-income customers with the cost of their electric service. Budgetary information on that program is presented in the fund and department sections later in this document. Electric Enterprise Historical Performance $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- 2012 2013 2014 2015 2016 2017 2018 $15,000,000) - $110,000,000) Total ending working capital —Revenue —Expenditures: —Other sources(uses) Page CM 22 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Financial Position The overall financial position continues to reflect a period of positive growth and the incremental allocation of resources to priority services and projects. However, our budgeting approach remains conservative, estimating and committing resources as a means to ensure structural stability with changing economic conditions, legislatively imposed burdens, and legal threats. The Management Team has been dedicated to cost savings whenever possible and watchful of their expenditures so that the need to use reserves is limited, if necessary at all. This has led to a projected year-end surplus and fortification of the City's general fund reserve. We estimate the total reserves to begin the 2017- 18 fiscal year at 33 percent of estimated revenues and increase to over 36 percent by year end. As mentioned earlier, 25 percent of revenues is the benchmark target for reserves in the general fund. This positions the City to meet current and future financial challenges, and allows us to maintain and even enhance services. I am proposing a balanced budget across all funds- including the general fun -for fiscal year 2017- 18. It is a prudent spending plan that places strong emphasis on providing the highest quality services this community can afford and deserves. Further, the budget year will be a milestone one for capital projects as we look to deploy resources for significant infrastructure improvements. To end 2016-17,we anticipate a budget surplus of nearly$1.52 million. Much of it ($683,000 estimated) will be due to the receipt of Measure Y funds, the collection of which began in April; the remainder will be due to cost savings by departments. I am recommending using a portion ($225,000) of that surplus in 2017-18 to finance a street sweeper for the Public Works Department. Further,for the general fund, the end result for the coming fiscal year 2017-18 is expected to be an estimated budgetary surplus of nearly$1.9 million, of which I recommend $1.5 million be reserved for future street and infrastructure projects (this amount is the anticipated remainder of Measure Y proceeds collected but not used) and the remainder to be held to establish additional reserve accounts for specific purposes, including establishing a tool chest to better support efforts in personnel retention and recruitment. Looking Ahead With vision and direction provided by the City Council, the City is operating with a clear understanding of our community's needs while continuing to maintain financial stability. The Fiscal Year 2017-18 budget is a prudent and responsive expenditure plan focusing on project completion, enhancing public safety, rebuilding our streets, investing in infrastructure, and aligning resources with priority services. Where appropriate,some projects are funded by one-time revenue sources -such as grant and loan funding -and available fund balance that has accumulated from past budgetary surpluses. In whole, operations are balanced structurally and sustainable fiscally. Moreover, our team at the City is working to ensure a quality of life that supports the diverse needs of our citizens and businesses. Ukiah is a special place with unique character and charm. Our team members have a strong sense of purpose and dedication because we live and work here among family and friends. We continue to foster this culture at the City by embedding the core values of professionalism, service, teamwork, innovation, and safety into every aspect of our work and every decision. RECOMMENDED Page 1 CM 23 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET However,we will fall short in our efforts without the support of the community we serve. Communicating our plans, achievements, and our shortcomings is critical. Encouraging constructive public input and civic engagement must receive considerable attention. I plan to continue making recommendations and requests that support and strengthen that effort. Budget development has been a difficult process for the City over the past 6 years as we struggled through the implementation of a new financial software system and attrition/retirements. As demonstrated with this document, I'm pleased to report that the Finance Team is back on track with strong leadership and dedicated staffing. Their hard work combined with the efforts of team members from every department have produced a strong foundation for fiscal planning and budgeting. All those involved with the production of this year's budget deserve our praise. Furthermore, our staff appreciate the care with which the Council leads our agency and embraces teamwork. The collaboration between the Council and staff fosters an inclusive environment that energizes, releases creativity and makes working together both productive and satisfying. Respectfully, Sage Sangiacomo City Manager ,r,>•:, 1. k • - *Iiiiii;1.4:1 .'111 ...1 i, ! . :L ' ') r ,Ill'u I 1 ii +14'; 4. _ ,*I: _rp i�1 ; • N` .,., if i, -Ji ; ms s' ''• ,Y�1 rAMI •� _ 1 . . -,., t vim .i - is i , . Page 1 CM 24 fti 1 ' i•,._51- ■ 1 1 • -. j14-1 . r r I' 1 41 i dia. II ifs. _... ,p• NM -44.51111111-11111111.1111114111 1 y r . , „.. : . 1 ,.. , . .,. ,,,, *,,..„.: ,, IL . lb . ., . , e* II - El rr i. Ilpnrell 4 1 4 g i x tri � C - . 6 . e• � : .. i - .. A CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET COMMUNITY PROFILE Incorporated Ukiah, incorporated in 1876, operates a full range of municipal functions including public safety, public works, community development, and community services. Furthermore, the City of Ukiah provides electric,water and wastewater utilities for its residents and operates an airport, golf course, museum, and conference center. Government Ukiah is a general law city i *t. operated under a council- manager form of '' � government in which policy , • - -, 42 is set by a five-member s council, elected at large to t `„ . ' 3 •four-year overlapping terms. Council members must be ,; residents of the City. The , i,z 3 I .- positions of Mayor and Vice- , • r1 "` " Mayor are chosen by the • . Council through its own -- Acte policy and rotates among its members. The Mayor conducts the Council meetings and represents the City in ceremonial occasions. The Council serves as the policy board for the municipality. It provides direction, establishes goals, and sets priorities for city government. In addition to serving as the policy makers for the community, the City Council is also responsible for numerous land use decisions within its borders, including the General Plan. The City Council appoints the City Manager and City Attorney, and all members of advisory boards and commissions. Location Ukiah is located along the busy Highway 101 corridor,just two hours north of the Golden Gate Bridge. It is a perfect hub between the Bay Area and the Oregon border, and is * also situated near the east/west intersection of Highway • 20, providing access to the Central Valley and the Coast. County Mendocino (Ukiah is the county seat) CA Area and Elevation 4.67 square miles at 633 feet above sea level Population Our population of 16,075 can be deceiving. Because Ukiah is the County seat and the business/education/shopping center for much of Mendocino, Lake, and even Sonoma Counties, our weekday population swells to roughly 35,000. The surrounding area—within a 30- minute radius of Ukiah—is home to over 104,000. Page I CP 27 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Education The Ukiah area offers big-city educational opportunities in a small-town environment. Ukiah Unified School District provides traditional public schools, as well as a Spanish-immersion elementary school, a Montessori-based charter school, a Waldorf based charter school, an independent study-focused charter school, and more. Other options include a private Waldorf school, a private Catholic K-8 school, and the Instilling Goodness/ Developing Virtue Buddhist school. Furthermore, the University of California Davis's , 111.111111‘ Hopland Research and Extension Center is one of . nine operated by the UC Division of Agriculture and \IC, , Natural Resources, and Mendocino College,with its i 127-acre campus enrolls over 5,000 students each l , � F r- term. III• ' '' 4s. Lifestyle and recreation Pk Ukiah is the only place where you can sip wine from i � ! if America's greenest wine region or sample a locally �� : brewed ale, hike amongst some of the tallest 1 44 t redwood trees in the world, and relax in a naturally warm and carbonated mineral spring...all in a day. ff;_- Ukiah is where the redwoods meet the vines, a Q place where year-round events draw locals and visitors together, and where the entrepreneurial spirit is alive and well. In the historic downtown, Ukiah's up-and-coming dining scene and the surrounding wineries have garnered attention from Wine Spectator, VIA Magazine, Wine Enthusiast, and more. Sunset Magazine praised Ukiah's "19th-century architecture, charming tree-lined neighborhoods, and its laid-back '" vibe." V* 1 - , With 16 parks,five sporting areas, five tennis courts, municipal 11.10.74‘ r : 4 'Alit i swimming pools, a rail trail, and � recreation classes for all ages, immi �'r aa 1 there is no shortage of things to �1 L` do here. New programs and 414 activities are regularly being added, like the first-ever Ukiah On Ice skating rink, and facilities are always being developed and improved. y Page I CP 28 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Local economy and employment Ukiah serves a population of over 104,000 within a half-hour radius. This allows the city to have services, shopping and dining beyond what most cities our size would be able to accommodate. Leakage studies and sales tax data demonstrate that Ukiah effectively serves more than just our residents—and also shows that we can support even more sales-tax generating business. The largest employment sectors are in sales/administration and service, together comprising 47% of the local area jobs. Additionally, the entrepreneurial spirit is strong here,with more-than- average self-employed. Unemployment has been on a downward trend, and in the spring of 2017, the Bureau of Labor Statistics reported that the rate in Ukiah was 5.4%. UKIAH'S TOP OCCUPATIONS Per 2010 Census Healthcare Computer, practitioners and engineering,and technical science occupations 2% 4% Management,_ Sales and Office business,and 27% financial 9% Education,legal community service, arts,and media 12% Service 20 Production, transportation,and material moving Natural resources, 12% construction,and maintenance 14% Page I CP 29 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Over 50%of the labor force, ages 25 and up, is comprised of individuals who have attained at least some college education, as seen on the chart below. Educational Attainment, Ages 25+ Graduate/Professional Degree 8% Bachelor's Degree 12.0% Associate Degree 8.2% Some College,No Degree 22.5% High School Graduate 32.3% 9th-12th Grade,No Diploma 9.0% Less than 9th Grade 8.4% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Small businesses The City of Ukiah believes that small businesses are the foundation for economic vitality in our community. These businesses provide a rich and diverse experience and create a unique atmosphere that is essential to the fabric and preservation of our "small town". In fact, preservation of the distinct character of our business district can form the City's definition of its uniqueness and a sense of place for our families, friends and tourists alike. As such, we strive to provide services and resources that facilitate the retention and success of our small businesses. ...4.71pith„.„,,rs , 4,,; .:( , . • .....; . .., ,,,.., , 1 ° t'J�, •.4,:41 il.e,H , ,10 T. - illi i F) _MCAD ////,�/H441.4, F' = ! Ill r . 1 Page I CP 30 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET BUDGET IN BRIEF This is an introductory section meant to summarize information for the reader in a succinct and more readily comprehensible way. CITY-WIDE COMPARED This is a comprehensive summary of the City as a whole, as recommended for fiscal year 2017-18. All budgeted funds are included in this synopsisl. Fiscal Year 2017-18 City-Wide Comparison Fiscal Year Ended 2016-17 2013-14 2014-15 2015-16 (Estimated) 2017-18 2017-18 Percent of Account Class Actual Actual Actual Year-End Recommended Adopted Total Revenue Taxes $ 10,855,860 $ 11,148,160 $ 11,971,445 $ 14,496,864 $ 18,373,882 $ - 24.35% Franchises 1,601,185 1,643,559 1,514,799 1,503,317 1,580,304 - 2.09% Licenses 412 6,656 6,648 54 6,550 - 0.01% Permits 328,536 233,713 402,339 356,382 421,875 - 0.56% Fines,forfeitures,and penalties 104,603 90,287 97,968 115,500 115,500 - 0.15% Use of money and property 1,269,323 1,362,364 1,582,196 1,544,710 1,744,550 - 2.31% Federal funding 284,402 392,387 553,944 272,387 1,948,500 - 2.58% State funding 2,051244 2,243,106 2,162,621 2,636,579 9,188,896 - 12.18% Other grants,subventions,and contributions 2,552,361 2,579,878 2,658,989 2,610,984 2,701,907 - 3.58% Charges for service 31,272,266 31,870,710 30,987,175 31,181,640 32,571,996 - 43.16% Internal services provided 1,889,820 1,498,406 4,358,617 4,274,136 5,520,173 - 7.31% Other revenue 327,932 386,152 129,037 261,725 1,294,836 - 1.72% Total 52,537,946 53,455,378 56,425,778 59,254,279 75,468,969 - 100.00% Expenditures Personnel 18,961,328 19,168,915 20,849,865 21,485,758 25,326,387 - 23.73% Materials,services,and other operating 19,642,901 25,824,498 19,252,344 22,473,294 23,915,108 - 22.41% Grants,loans,and other assistance 2,244,823 476,342 391,403 364,102 825,000 - 0.77% Debt service 6,153,161 7,991,519 7,646,608 9,387,120 8,514,337 - 7.98% Capital out lay/CIP 1,948,212 3,776,324 5,170,764 6,947,052 42,440,250 - 39.77% Administration and overhead 1,458,682 2,597,497 2,337,809 2,185,139 3,013,770 - 2.82% Allocated administration and overhead (1,922,027) (3,263,691) (2,339,598) (2,188,550) (3,132,019) - -2.94% Internal service use 3,429,741 3,256,388 4,840,735 4,511,364 5,803,539 - 5.44% Total 51,916,821 59,827,792 58,149,930 65,165,280 106,706,373' - 100.00% Other financing sources(uses) Other in(out) 81,374 86,226 109,036 300,633 21,383,158 100.00% Total 81,374 86,226 109,036 300,633 21,383,158 - 100.00% Change in total fund balance/working capital $ 702,499 $ (6,286,188) $ (1,615,116) $ (5,610,367) $ (9,854,246) $ - 1 The information presented here includes large capital projects in FY 2017-18 that are financed,in part, by borrowing not considered revenue. RECOMMENDED Page 1 BB 31 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET The following charts illustrate trends in revenue and its composition.2 City-wide Revenues Over Time 80,000,000 70,000,000 •Other revenue 60,000,000 50,000,000 ■Charges for service ■Othergrants,subventions,and contributions ■State funding 40,000,000 ■Federal funding ■Use of money and property ■Fines,forfeitures,and penalties 30,000,000 ❑Permits 116 20,000,000 ❑Licenses ®Franchises 10,000,000 o Taxes Actual Actual Actual Year-End Recommended 2013-14 2014-15 2015-16 (Estimated) 2017-18 Sources of Revenue City-Wide Other revenue 1.85% Franchises 2.26% Taxes 26.27% Licenses 0.01% Charges for service 46.57% Permits \ 0.60% Fines,forfeitures, \ State fu and penalties 13. 0.17% Use of money and property Other grants, 2.49% subventions,and Federal funding contributions 2.79% 3.86% 2 State funding in FY 2017-18 is anticipated to increase from the prior year due to grants from State Revolving Fund (SRF) for the recycled water project. RECOMMENDED Page I BB 32 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET The following charts illustrate trends in expenditures and its composition.3 City-wide Expenditures Over Time 120,000,000 100,000,000 80,000,000 •Capital outlay/CIP 60,000,000 ❑Debt service ❑Grants,loans,and other assistance 40,000,000 ❑Materials,services,and other operating ❑Personnel 20,000,000 111J - 1.1 Actual Actual Actual Year-End Recommended 2013-14 2014-15 2015-16 (Estimated) 2017-18 Appropriations by Use City-Wide Personnel 25.07% apital outlay/CIP 42.01% \\ve/ Materials, services,and Debt other operating service 23.67% 8.43% Grants,loans,and other assistance 0.82% 3 Capital expenditures in FY 2017-18 are expected to increase significantly from the prior years are due in large part to the recycled water project and infrastructure improvements in the Redwood Business Park. RECOMMENDED Page I BB 33 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET The following charts illustrate trends in expenditures by activity, e.g., public safety, economic development, and airport operations.4 Expenditures by Activity Over Time 120,000,000 111 100,000,000 ■Internal services •Other enterprise operations 80,000,000 ■Airport operations •Water and sewer operations •Electric operations 60,000,000 •Housing and support programs ®Economic development 40,000,000 ■Commdelen sow- Parks and recreation 20,000,000 General governmentopmandt administration E Roads and infrastructure ID Public safety Actual Actual Actual Year-End Recommended 2013-14 2014-15 2015-16 (Estimated) 2017-18 Expenditures by Activity City-Wide Other enterprise_ Internal services operations 4.96% 1.16% Roads and infrastructure 8.97% General Airport operations i Public safety government and 1.10% 13.76% administration Park1.413618 _recreation 3.15% Water and sewer -_-_ Community operations _________development 39.32% 1.32% Electric operations 22.34% _Economic development 0.74% Housing and support programs 1.77% 4 RECOMMENDED Page I BB 34 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET GENERAL FUND COMPARED This is a comprehensive summary of the general fund, as proposed for fiscal year 2017-18.5 Fiscal Year 2017-18 General Fund Fiscal Year Ended 2016-17 2013-14 2014-15 2015-16 (Estimated) 2017-18 2017-18 Percent of Account Class Actual Actual Actual Year-End Recommended Adopted Total Revenue Taxes $ 10,826,738 $ 11,118,836 $ 11,940,571 $ 13,128,961 $ 16,041,539 $ - 81.96% Franchises 1,601,185 1,643,559 1,514,799 1,503,317 1,580,304 - 8.07% Licenses 412 6,656 6,648 54 6,550 - 0.03% Permits 268,779 177,135 332,274 273,662 319,975 - 1.63% Fines,forfeitures,and penalties 60,386 54,187 75,138 60,500 55,500 - 0.28% Use of money and property 152,485 219,696 161,677 209,085 208,800 - 1.07% Federal funding - - - - - - State funding 65,637 129,760 92,126 65,629 85,000 - 0.43% Other grants,subventions,and contributions - - - - - - - Chargesforservice 1,603,977 1,836,095 1,234,899 1,330,106 1,243,400 - 635% Internal services provided - - - 10,000 22,872 - 0.12% Other revenue 173,733 10,651 16,238 2,804 7,500 - 0.04% Total 14,753,332 15,196,575 15,374,370 16,584,119 19,571,440 - 100.00% Expenditures Personnel 10,999,519 11,431,588 11,546,093 11,706,544 12,347,934 - 49.31% Materials,services,and other operating 3,474,554 3,531,848 2,780,449 2,540,645 3,896,584 - 15.56% Grants,loans,and other assistance - - - - - - - Debt service - - - - 458,004 - 1.83% Capital out lay/CIP 293,148 305,178 10,000 26,835 7,909,000 - 31.59% Administration and overhead 248,650 761,137 712,983 660,944 1,020,654 - 4.08% Allocated administration and overhead (1,458,682) (2,600,109) (2,339,598) (2,188,550) (3,132,019) - -12.51% Internal service use 2,090,310 2,369,837 2,596,119 2,311,860 2,539,328 - 10.14% Total 15,647,499 15,799,479 15,306,046 15,058,279 25,039,484' - 98.29% Other financing sources(uses) Other in(out) 285,245 322,320 (157,432) (110,422) 7,173,852 - 100.00% Total 285,245 322,320 (157,432) (110,422) 7,173,852 - 100.00% Change in total fund balance/working capital $ (608,922) $ (280,584) $ (89,108) $ 1,415,418 $ 1,705,808 $ - Revenues and Expenditures Compared 30,000,000 25,000,000 20,000,000 15,000,000 •Revenues 10,000,000 ©Expenditures Iiiiiiiiiii eili _41 • 111 5,000,000 Actual Actual Actual Year-End Recommended 2013-14 2014-15 2015-16 (Estimated) 2017-18 5 The information presented here includes large capital projects in FY 2017-18 that are financed,in part, by borrowing not considered revenue,e.g., Redwood Business Park infrastructure improvements. In order to better demonstrate total cost,the accounting of administration, overhead,and internal service use is scheduled to change in FY 2017-18. Indirect costs related to administrative cost centers are now being shown directly and not netted out, as they were in past years. The three line items affected by this are administration and overhead,allocated administration and overhead, and internal service use. RECOMMENDED Page 1 BB 35 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET General Fund Revenue Composition Over Time 25,000,000 20,000,000 •Other revenue H ■Charges for service •Other grants,subventions,and contributions 15,000,000 11011 ■State funding •Federal funding •Use of money and property 10,000,000 •Fines,forfeitures,and penalties ❑Permits ❑Licenses 5,000,000 ®Franchises GI Taxes Actual Actual Actual Year-End Recommended 2013-14 2014-15 2015-16 (Estimated) 2017-18 Sources of Revenue General Fund Use of money and property State funding Charges for 1.07% 0.43% service _Other revenue Permits 6.36% 0.04% 1.64% Fines,forfeitures, and penalties 0.28% Licenses_i 0.03% Franchises Taxes 0 8.08% 82.06% RECOMMENDED Page I BB 36 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET General Fund Expenditures Composition Over Time 30,000,000 25,000,000 •Internal service use 20,000,000 W Administration and overhead ,.., 15,000,000ii �� •Capital outlay/CIP ID Debt service iii7 10,000,000 ©Materials,services,and other 5,000,000 II, I operating ®Personnel Actual Actual Actual Year-End Recommended 2013-14 2014-15 2015-16 (Estimated) 2017-18 Appropriations by Use General Fund Internal service use 9.01% Administration and overhead `\ 3.62% Capital outlay/CIP Personnel 28.07% 43.83% Debt service_ Materials, 1.63% services,and other operating 13.83% RECOMMENDED Page I BB 37 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Fiscal Year 2017-18 2017-18 Percent of General Fund Recommended Total Activities: Public safety $ 10,888,244 43.58% Roads and infrastructure 9,467,633 37.89% General government and administration 1,005,058 4.02% Parks and recreation 2,578,514 10.32% Community development 893,920 3.58% Economic development 151,681 0.61% $ 24,985,049 100.00% Genaral Fund Expenditures by Activity Over Time 30,000,000 Economic development 25,000,000 a General government and administration 20,000,000 Roads infrastructure 15,000,000 111 Public safety 10,000,000 5,000,000 •Community development Actual Actual Actual Year-End Recommended ❑Parks and recreation 2013-14 2014-15 2015-16 (Estimated) 2017-18 Expenditures by Activity General Fund Parks and Community Economic recreation development, development 10.32% 3.58% 0.61% General government and_ administration 4.02% Public safety 43.58 Roads and infrastructure 37.89% RECOMMENDED Page I BB 38 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET HISTORICAL REVENUE SUMMARY This table illustrates from where and by how much revenues have come into the City over the last four years compared to fiscal year 2017-18. Fiscal Year 2017-18 Revenue Summary by Fund ACTUAL ACTUAL ACTUAL ESTIMATED BUDGET FUND REVENUE REVENUE REVENUE REVENUE REVENUE NO. FUND NAME 2013-14 2014-15 2015-16 2016-17 2017-18 100 General Fund $ 14,753,332 $ 15,196,575 $ 15,374,370 $ 16,584,119 $ 19,571,440 Capital Project Funds: 220 Equipment Reserve Fund 146,758 92,140 28,424 - 6,429 251 Special Projects Reserve 21,677 11,018 32,762 32,762 8,222 252 General Capital Projects - - - - - Total capital project funds 168,435 103,158 61,186 32,762 14,651 Special Revenue Funds: 249 City Housing Bond Proceeds 690 1,099 3,499 3,499 24,000 250 Special Revenue Fund 414,693 714,253 106,952 75,915 - 300 Park Development Fees Fund 9,203 103 146,060 3,649 127 301 Anton Stadium Fund 16,141 102,806 528 350 141 302 Observatory Park Fund (116) 3,864 (1) - - 303 Playground&Park Amenities 263 78 40 40 40 304 Swimming Pool Fund 182 102 935 150 185 305 Riverside Park Fund 574,839 (21) - 20,130 135 306 Skate Park Fund 199 1,151 177 110 115 307 Softball Complex Fund 58 30 102 70 73 310 Museum Grant Fund 50,806 444,943 1,105,255 1,108,615 - 311 ARRC General Operating Fund 66,350 96,910 74,380 78,954 96,000 312 Downtown Business Improvement 18,236 17,619 19,042 19,042 18,000 313 LMIHF Housing Asset Fund 12,710 12,172 12,728 12,728 12,219 314 Winter Special Events - - - 105,997 146,000 500 2106 Gas Tax Fund 64,086 66,074 66,189 66,189 457,974 501 2107 Gas Tax Fund 116,285 112,247 118,037 163,697 - 502 2107.5 Gas Tax Fund 4,000 4,001 4,003 4,030 - 503 2105 Gas Tax Fund 108,691 87,576 91,193 209,329 - 505 Signalization Fund 3,864 2,068 14,077 6,832 1,889 506 Capital Improvement Fund (315) (316) - - - 508 SB 325 Reimbursement Fund 73,482 101,701 64,019 15,000 105,000 510 Trans-Traffic Congest Relief 228,648 153,268 96,540 50,405 - 600 Comm.Developmt.Block Grant 1,086 568 1,893 1,893 522 601 EDBG 94-333 Revolving Loan (1) (1) (1) - - 602 Community Dev.Comm.Fund 383 10,011 8,162 800 258 605 11-Home-7654 Fund 224,005 311,026 1 - - 606 CDBG Grant 10-Edef-7261 Fund 14,317 49,998 (36,993) 60,620 8,100 607 Prop.84 Grant Fund 15,895 - - 1 2,500,000 609 13-CDBG-8940 - 18,744 568,401 114,980 - 611 CDBG 16-CDBG-11147 - - - - 500,000 630 Asset Seizure Fund 125,995 142,169 59,039 197,638 150,500 631 Asset Seizure(Drug/Alcohol) 9 2 - 1 1 633 H&S Education 11489(B)(2)(A1) 30,564 47,216 50,714 61,808 50,205 634 Federal Asset Seizure Grants 2,013 610 22,898 1,856 1,875 635 Sup.Law Enforce.Svc.Fd (SLESF) 99,979 112,693 101,772 128,588 106,007 637 Local Law Enforce.Blk Grant (109) (99) (158) - - 638 Asset Forfeiture 11470.2 H&S 46,856 9,559 11,267 16,542 700 639 Special Revenue Police 126,085 124,601 126,415 126,415 125,039 640 Parking District#1 116,625 103,673 98,623 143,350 151,564 691 Museum Fund 39,342 82,007 74,486 61,776 93,153 695 Transfer Station Fund - - - 50,200 350,000 Total special revenue 2,606,036 2,934,505 3,010,275 2,911,200 4,899,822 (Continued) RECOMMENDED Page 1 BB 39 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Enterprise Funds*: 700 Sanitary Disposal Site Fund 58,117 60,032 159,627 210,000 369,850 701 Landfill Corrective Action 8,957 4,683 6,179 - - 702 Disposal Closure Reserve Fund 51,058 47,713 97,406 97,406 34,673 703 Refuse/Debris Control Enter. - - - - - 704 Post Closure Fund-Solid Waste 83,618 72,656 1,955 45,130 45,130 705 Landfill Self-Insur.Trust 14,605 7,636 10,076 - - 720 Golf Fund 159,089 85,120 67,872 44,299 51,329 730 Conference Center Fund 297,799 342,456 351,332 454,132 508,659 750 Visit Ukiah Fund - - 325 700 228 777 Airport Fund 1,201,546 1,385,789 1,128,684 998,070 1,181,457 778 Airport Capital Improvement 57,271 13,856 - 156,167 1,947,000 779 Special Aviation Fund 174 - (230) 327,164 311 800 Electric Fund 14,660,098 15,186,036 14,812,623 14,674,917 15,507,773 801 Electric Capital Reserve Fund - - - - - 802 Electric Rate Stabilization 13,763 18,879 24,193 24,193 6,664 803 Lake Mendocino Bond Fund 209 8,598 10,577 18,906 7,000 805 Street Lighting Fund 195,787 187,848 191,340 191,341 199,419 806 Public Benefits Charges Fund 406,584 418,838 418,837 419,771 443,752 820 Water Fund 6,060,329 5,653,238 5,615,344 5,891,484 6,205,968 821 Water Capital Reserve Fund - - - - - 822 Water Connection Fee Fund 2,897 (12,580) (21,533) (35,000) 20,000 823 Water Debt Service Reserve - - - - - 830 Recycled Water Fund - - - - 5,215,004 840 City/Dist.Sewer Operating 6,396,562 6,859,948 7,067,299 7,154,572 7,098,279 841 Sewer Bond Debt Service Fund 2,484,510 2,496,549 2,609,658 2,630,984 2,615,803 842 Rate Stabilization-City Fund 26,453 13,835 46,144 30,000 32,000 843 Connection Fee Sewer Fund 27,451 15,562 94,410 116,687 102,052 844 City Sewer Capital Projects - - - 21,289 3,234 Total enterprise funds 32,206,878 32,866,692 32,692,118 33,472,212 41,595,585 Internal Service Funds*: 201 Worker'S Comp Fund 202 Liability Fund 59,408 - 590,598 611,050 659,847 203 Garage Fund 462,580 441,128 397,924 390,435 512,101 204 Purchasing Fund 274,964 231,412 257,991 293,229 485,715 205 Billing And Collection Fund 828,118 532,809 1,196,919 998,038 1,193,328 206 Public Safety Dispatch Fund 1,178,195 1,149,099 1,274,047 1,097,894 1,253,933 207 Payroll Posting Fund 208 Building&Maintenance Fund - - 658,685 633,239 690,711 209 IT Fund - - 911,665 767,050 1,189,713 Total internal service funds 2,803,264 2,354,448 5,287,829 4,790,934 5,985,348 Total City Funds $ 52,537,946 $ 53,455,378 $ 56,425,778 $ 57,791,228 $ 72,066,846 Fiduciary Funds**: 915 UKIAH Valley Fire District - - - 65,000 2,052,035 969 Redevelopment Obligation - - - 1,387,962 1,344,588 Total fiduciary funds - - - 1,463,051 3,402,123 Total all funds $ 52,537,946 $ 53,455,378 $ 56,425,778 $ 59,254,279 $ 75,468,969 RECOMMENDED Page 1 BB 40 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET HISTORICAL EXPENDITURE SUMMARY This table illustrates to where and by how much resources have been used by the City over the last four years compared to fiscal year 2017-18. Fiscal Year 2017-18 Expenditure Summary by Fund ACTUAL ACTUAL ACTUAL ESTIMATED BUDGET FUND EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES EXPENDITURES NO. FUND NAME 2013-14 2014-15 2015-16 2016-17 2017-18 100 General Fund $ 15,647,499 $ 15,799,479 $ 15,306,046 $ 15,058,279 $ 25,039,484 Capital Project Funds: 220 Equipment Reserve Fund 206,024 31,863 (99,107) 506,904 3,608 251 Special Projects Reserve 45,355 96,310 264,238 264,238 61,162 Total capital project funds 251,378 128,173 165,131 771,143 64,770 Special Revenue Funds: 249 City Housing Bond Proceeds - - - - 500,000 250 Special Revenue Fund 813,768 1,361,846 571,645 201,473 300 Park Development Fees Fund - - 142,421 - - 301 Anton Stadium Fund 52,685 32,376 4,015 671 18,028 302 Observatory Park Fund 1,527 - - - - 304 Swimming Pool Fund 31,431 8,017 - - - 306 Skate Park Fund 386 2,843 - - - 310 Museum Grant Fund 209,513 306,065 1,343,085 1,298,228 - 311 ARRC General Operating Fund 79,228 94,134 101,069 94,042 113,567 312 Downtown Business Improvement 17,521 19,132 15,603 10,602 15,008 313 LMIHF Housing Asset Fund - - - 35,000 5,000 314 Winter Special Events - - - 81,206 142,000 500 2106 Gas Tax Fund 1,318 - - - - 501 2107 Gas Tax Fund - - 186,499 - - 506 Capital Improvement Fund 3,235 4,718 - - - 507 1998 Stip Augmentation Fund - - - - - 508 SB 325 Reimbursement Fund 74,354 101,711 64,019 15,000 105,000 509 S.T.P. (2,394) - - 32,380 - 510 Trans-Traffic Congest Relief - 128,408 203,831 69,003 - 605 11-Home-7654 Fund 223,931 8,280 - - - 606 CDBG Grant 10-Edef-7261 Fund 1,200 4,090 46,910 - - 607 Prop.84 Grant Fund 1,145 - - - - 609 13-CDBG-8940 - 18,733 574,590 172,910 - 611 CDBG 16-CDBG-11147 - - - - 500,000 630 Asset Seizure Fund 205,261 109,947 97,367 117,000 80,000 631 Asset Seizure(Drug/Alcohol) - 930 - - - 633 H&S Education 11489(B)(2)(A1) - 30,715 46,841 102,180 50,000 634 Federal Asset Seizure Grants - 1,900 - - - 635 Sup.Law Enforce.Svc.Fd(SLESF) 183,013 179,897 104,971 96,212 109,397 638 Asset Forfeiture 11470.2 H&S 83,118 154,701 1,273 2,800 - 639 Special Revenue Police 148,098 (1,696) - - - 640 Parking District#1 165,302 132,215 158,200 175,020 171,980 691 Museum Fund 367,271 391,138 425,073 372,704 466,139 695 Transfer Station Fund - - - - - Total special revenue 2,660,910 3,090,100 4,087,412 2,876,431 2,276,119 (Continued) RECOMMENDED Page I BB 41 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET Enterprise Funds*: 700 Sanitary Disposal Site Fund 281,123 227,402 373,093 563,123 730,252 701 Landfill Corrective Action - (265,107) - - 784 702 Disposal Closure Reserve Fund 142,634 5,210,343 (171,424) 12,000 12,363 704 Post Closure Fund-Solid Waste - 779,417 - - 248 705 Landfill Self-Insur.Trust - - - - 1,279 720 Golf Fund 126,544 45,164 47,051 38,728 45,129 730 Conference Center Fund 295,796 317,689 346,454 371,047 473,071 750 Visit Ukiah Fund - 9,819 96,890 102,254 145,506 777 Airport Fund 1,416,546 1,421,876 1,031,533 1,064,552 1,240,751 778 Airport Capital Improvement 61,854 15,396 6,083 73,000 1,848,885 779 Special Aviation Fund - - 72,197 146,964 42,066 800 Electric Fund 13,755,267 15,668,723 14,948,859 16,686,757 16,475,031 801 Electric Capital Reserve Fund - - 146,422 415,888 4,694,325 802 Electric Rate Stabilization - - - - 3,071 803 Lake Mendocino Bond Fund 2,063,260 2,103,703 2,099,248 2,064,471 2,078,972 805 Street Lighting Fund 216,529 257,675 419,380 290,043 250,280 806 Public Benefits Charges Fund 553,344 569,463 428,062 397,722 345,867 820 Water Fund 2,741,364 3,009,202 2,763,566 3,875,875 4,105,684 822 Water Connection Fee Fund 925,712 1,100,087 1,572,160 3,671,060 - 830 Recycled Water Fund - - - 74,333 26,097,624 840 City/Dist.Sewer Operating 3,153,026 3,365,396 4,483,992 4,597,290 5,045,869 841 Sewer Bond Debt Service Fund 4,796,502 4,834,039 4,838,787 4,869,585 4,872,669 842 Rate Stabilization-City Fund 3,977 - - - 10,471 843 Connection Fee Sewer Fund 450 - - - 849 844 City Sewer Capital Projects - - - 1,044,067 1,845,941 Total enterprise funds 30,533,928 38,670,287 33,502,353 40,358,758 70,366,987 Internal Service Funds*: 201 Worker'S Comp Fund - - - - - 202 Liability Fund 137,730 (132,834) 590,598 611,050 659,847 203 Garage Fund 427,765 405,031 391,717 397,977 511,947 204 Purchasing Fund 280,694 230,012 255,952 293,228 485,715 205 Billing And Collection Fund 847,231 523,172 989,259 1,001,370 1,549,328 206 Public Safety Dispatch Fund 1,129,686 1,114,372 1,342,829 1,099,123 1,253,933 207 Payroll Posting Fund - - - - - ie 208 Building&Maintenance Fund - - 617,500 643,717 910,091 209 IT Fund - - 901,133 871,365 1,189,713 Total internal service funds 2,823,106 2,139,753 5,088,988 4,917,830 6,560,574 Total City Funds $ 51,916,821 $ 59,827,792 $ 58,149,930 $ 63,982,440 $ 104,307,934 Fiduciary Funds**: 915 UKIAH Valley Are District - - - 357,290 2,148,439 969 Redevelopment Obligation - - - 247,260 250,000 Total fiduciary funds - - - 1,182,840 2,398,439 Total City funds $ 51,916,821 $ 59,827,792 $ 58,149,930 $ 65,165,280 $ 106,706,373 RECOMMENDED Page 1 BB 42 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET EXPENDITURES BY DEPARTMENT This table illustrates how individual departments have been funded over the last four years as compared to fiscal year 2017-18. Non-Departmental accounts for all activities unrelated to a specific department, which typically include debt service for the water and sewer enterprises as well as the former redevelopment agency. Fiscal Year 2017-18 Departmental Expenditure History Comparison Actual Actual Actual Estimated Budget Expenditures Expenditures Expenditures Expenditures Expenditures Name 2013-14 2014-15 2015-16 2016-17 2017-18 UNDEFINED $ 18,055 $ 13,057 $ 1,216,985 $ 1,034,746 $ 1,470,290 CITY COUNCIL 119,453 131,922 125,243 143,939 168,556 ELECTIONS 300 7,354 - - - CITY MANAGER 354,222 380,481 366,399 411,833 511,981 CITY-WIDE A DMI N SERVICES 41,451 63,531 81,470 50,852 244,003 COMMUNITY OUTREACH/PUBLIC INFO 35,005 33,121 28,981 13,150 27,982 MISCELLANEOUS GENERAL GOVERNMENT ACTVITI ES 345,369 884,420 170,735 133,849 - CITY CLERK 141,041 126,638 182,467 234,196 312,614 ECONOMIC DEVELOPMENT 285,769 228,990 149,659 152,647 637,807 VISIT UKIAH 85,248 88,196 94,680 102,254 145,506 BUDGET DEVELOPMENT AND MANAGEMENT - - - - 213,967 UTI LITY BILLING 944,832 515,184 739,430 710,854 1,544,328 ACCOUNTING&REPORTING 822,752 778,977 899,691 861,182 847,773 PURCHASING 280,694 223,849 247,732 282,076 477,715 IT 849,238 892,827 1,065,600 897,581 1,189,713 CITY ATTORNEY 166,851 181,305 278,354 249,327 194,450 CITY TREASURER 75,041 88,663 83,663 63,093 99,466 HUMAN RESOURCES 428,495 415,026 499,110 528,761 538,813 RISK MANAGEMENT 601,074 530,748 590,598 611,050 659,847 ECONOMIC DEVELOPMENT - - - - - SUCCESSOR AGENCY 97,671 59,332 34,103 16,670 6,252 GRANTS DIVISION 288,129 46,499 627,583 384,874 1,888,000 COMMUNITY OUTREACH/P10 - - - - - POLICE OPERATIONS 7,986,799 8,993,273 9,249,539 9,678,768 9,982,590 CITY FIRE 2,666,353 2,560,125 2,861,209 2,633,547 2,553,123 DISTRICT FIRE - - - 250 2,148,439 PARKS 1,168,555 1,142,990 1,139,189 1,179,315 1,516,595 PARK DEVELOPMENT 86,029 43,236 146,436 671 18,000 AQUATICS 207,204 197,699 174,158 191,576 216,907 GOLF 126,544 45,164 44,896 38,728 45,129 BUI LDINGS&GROUNDS MAI NTENANCE 512,185 502,297 542,540 559,437 842,112 CONFERENCE CENTER 295,796 317,689 337,309 361,902 473,071 MUSEUM 578,508 697,203 1,779,175 1,667,841 466,139 RECREATION 712,189 796,121 856,920 955,398 1,145,704 INFORMATION TECHNOLOGY - - - - - COMMUNITY PLANNING 579,702 479,430 482,038 422,016 562,182 BUILDING I NSPECTI ON 290,170 243,159 289,042 232,650 336,701 HOUSING - - - 30,000 505,000 FLEET AND PLANT MAINTENANCE 427,765 405,031 388,408 625,886 511,947 ENGINEERING/STREETS 1,772,123 2,903,465 2,220,474 1,601,502 9,568,814 CORPORATION YARD 344,614 172,395 126,896 85,781 67,980 LANDFILL 423,758 5,951,661 192,809 553,123 720,252 AIRPORT OPERATIONS 1,416,546 1,407,393 1,018,558 1,063,165 1,175,751 ELECTRIC DISTRIBUTION 1,331,214 1,384,140 1,711,209 2,449,694 8,376,127 TECHNICAL SERVICES - - - 208,114 444,350 ELECTRIC ADMINISTRATION 3,751,103 4,250,078 3,953,177 16,970,675 15,022,601 WATER SERVICES 14,161,897 15,510,405 14,654,999 7,648,446 4,105,684 SEWER SERVICES 7,958,164 8,057,105 9,136,771 10,589,729 11,766,787 RECYCLED WATER SERVICES 1,030,133 1,317,622 1,657,388 74,333 26,087,347 ALLOCATED ADMINISTRATION AND OVERHEAD (1,922,027) (3,263,691) (2,339,598) (2,188,550) (3,132,019) $ 51,916,821 $ 59,827,792 $ 58,149,930 $ 65,165,280 $ 106,706,373 RECOMMENDED Page 1 BB 43 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET DEPARTMENT EXPENDITURE DETAIL This table illustrates how departments have used resources in the performance of their appropriated functions over time, compared the proposed appropriations for fiscal year 2017-18. Fiscal Year 2017-18 Expenditure Detail by Department Salaries and Debt Capital Name Benefits Operations Service Outlay Total UNDEFINED $ - $ 2,309,830 $ 65,000 $ 6,575,000 $ 8,949,830 CITY COUNCIL 81,837 77,980 - - 159,817 CITY MANAGER 432,882 75,064 - - 507,946 CITY-WIDEADMINSERVICES 36,515 202,585 - - 239,100 COMMUNITY OUTREACH/PUBLIC INFO - 27,931 - - 27,931 MISCELLANEOUS GENERAL GOVERNMENT ACTVITI ES - 1,032,096 - - 1,032,096 CITY CLERK 203,078 105,709 - - 308,787 ECONOMIC DEVELOPMENT 146,748 144,831 - - 291,579 VISIT UKIAH - - - - - BUDGET DEVELOPMENT AND MANAGEMENT 166,521 44,324 - - 210,845 UTILITY BILLING 837,640 602,902 - 100,000 1,540,542 ACCOUNTING&REPORTING 530,914 311,526 - - 842,440 PURCHASING 345,417 130,863 - - 476,280 IT 479,212 511,528 - 196,000 1,186,740 CITY ATTORNEY - 117,764 - - 117,764 CITY TREASURER 5,598 93,588 - - 99,186 HUMAN RESOURCES 375,856 160,065 - - 535,921 RISK MANAGEMENT - 657,839 - - 657,839 ECONOMIC DEVELOPMENT 3,241 15,515 - - 18,756 SUCCESSOR AGENCY - 6,122 - - 6,122 GRANTS DIVISION - 481,717 - - 481,717 POLICE OPERATIONS 7,008,736 2,696,319 - 230,000 9,935,055 CITY FIRE 1,595,102 833,910 32,297 96,000 2,557,308 PARKS 801,377 588,676 - 125,000 1,515,053 PARK DEVELOPMENT - 28 - 18,000 18,028 AQUATICS 113,845 102,506 - - 216,351 GOLF 29,721 14,735 - - 44,456 BUILDINGS&GROUNDS MAINTENANCE 332,705 286,239 - 219,500 838,444 CONFERENCE CENTER 195,187 152,291 - 125,000 472,478 MUSEUM 324,114 117,328 - 20,000 461,442 RECREATION 545,558 468,880 - - 1,014,438 COMMUNITY PLANNING 441,826 117,041 - - 558,867 BUILDINGINSPECTION 253,423 81,630 - - 335,053 HOUSING - 5,000 500,000 - 505,000 FLEET AND PLANT MAINTENANCE 310,777 129,561 - 70,000 510,338 ENGI NEERI NG/STREETS 795,212 738,714 425,707 7,588,000 9,547,633 CORPORATION YARD 38,080 29,900 - - 67,980 LANDFILL 300,865 332,050 - - 632,915 AIRPORT OPERATIONS 367,293 777,052 - - 1,144,345 ELECTRIC DISTRIBUTION 2,469,535 554,756 - 648,250 3,672,541 ELECTRIC METERING 325,150 89,200 - 25,000 439,350 ELECTRIC GENERATION 93,344 57,600 2,071,875 22,000 2,244,819 ELECTRIC ADMINISTRATION 517,821 10,773,671 - - 11,291,492 PUBLIC BENEFIT - 5,004 - - 5,004 ELECTRIC SERVICES - 800 - - 800 WATER SERVICES 1,468,926 1,520,558 1,891,587 88,250 4,969,321 SEWER SERVICES 1,844,576 4,774,266 4,860,900 294,250 11,773,992 RECYCLED WATER SERVICES 125,753 86,169 - 25,875,000 26,086,922 $ 23,944,382 $ 32,443,663 $ 9,847,366 $ 42,315,250 $ 105,536,256 RECOMMENDED Page I BB 44 CITY OF UKIAH FISCAL YEAR 2017-18 ANNUAL BUDGET SOURCES AND USES FOR FISCAL YEAR 201 7-18 The following two tables illustrate where revenues are estimated to be derived for each budgeted City fund and where those financial resources are recommended to be applied, allocated by broad categories, such as salaries and benefits, operations, loans and grants, debt service, and capital improvements. Such categories are characterized further as follows: • Salaries and benefits include salaries and wages of full and part-time employees, healthcare premiums, City retirement contributions, overtime and standby costs, etc. • Materials,supplies, and other operating include costs associated with day-to-day activities, professional services, insurance costs, and travel and training. • Debt service pertains to any regular payments on bonds, loans, leases, or other long-term obligations. Generally, all debt service is managed in non-departmental. • Grants, loans, and other assistance are expenditures made by the City as part of economic development and housing activities. 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