AgdaPkt 2017-12-18 Special Joint SA PFA

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v of funding was higher than can be expected in the future due to various one-time factors and recent and potential changes in school financing, which the County Controller has indicated could significantly reduce this revenue source in FY 2017-18 and future years. The City’s policy is to budget what can reasonably be estimated, which is approximately $2.5 million, or about 51% of the FY 2016-17 actual amount received. The City Council has directed that any additional funds be used to offset the cost of relocation benefits and other costs associated with ending residential uses at Docktown Marina. Successor Agency to the Redevelopment Agency As Successor Agency, the City continues to focus on the disposition of the $10.3 million in funds that had been in the former Redevelopment Agency’s possession and which were encumbered for below-market housing through an agreement with the Legal Aid Society. The control of these funds has been in dispute with the State of California Department of Finance (DOF) since the Redevelopment Agency was dissolved in FY 2011-12. The City filed suit against the State of California challenging the DOF’s position that these funds are unencumbered and must be remitted to the County Controller. Although the State prevailed in the Superior Court trial, the City has filed an appeal. The appeal is fully briefed and the City is awaiting a court date. In the meantime, new State legislation (SB107) was passed in September 2015 requiring that all obligations determined by the DOF be paid in order for successor agencies to receive the benefits of a finding of completion. The City remitted the funds prior to the end of calendar year 2015 for distribution to the taxing entities while it continues to pursue its appeal. The City advised the taxing entities to hold the funds in case the City prevails in this appeal. The City also continues to work with the State of California regarding the disposition of several former Redevelopment Agency land parcels. Relevant Financial Policies In FY 2016-17, the City Council adopted a general fund reserve policy, where the unreserved portion of the general fund’s fund balance shall be 15% of anticipated General Fund revenues. Any excess balance above a 15% reserve threshold was approved to be utilized to set up a Section 115 Trust Account to fund pension expenses. As a result of implementing GASB 54, these unreserved amounts are now reported under the category “Unassigned Fund Balances.” In recent fiscal years, the City has used balances in excess of the reserve policy to pay down unfunded liabilities. In addition, the City Council adopted a Debt Disclosure Policy and updated the Investment Policy. The City reviews these policies regularly and uses them to maintain sound fiscal practices. The City has also established cash management, accounting, budgetary and risk management policies and practices that are essential to the City’s long-term fiscal health. These financial policies and practices also promote public confidence and increase the City’s credibility in the eyes of bond rating agencies and potential investors. Such policies also provide the resources to react to financial needs in a prudent manner. The City also elected to change investment practices by hiring a third party to provide independent, professional investment management services. The purpose is to create a more strategic investment policy, and to diversify the City’s investments. Appropriation Limit Article XIIIB of the California State Constitution, which became effective in FY 1979-80, and which was modified (by Proposition 111) in November 1989, establishes, by formula, an appropriation limit for governmental agencies. Using the appropriations of FY 1978-79 as the base year, the limit is modified by the change in the composite consumer price index, population, and the value of commercial property development within the City 6.1.E. - Page 16