HomeMy WebLinkAbout02-05-2016 Council Retreat Agenda PacketSaratoga City Council Meeting Agenda – Page 1 of 2
SARATOGA CITY COUNCIL
SPECIAL MEETING
FEBRUARY 5, 2016
9:00 AM CITY COUNCIL RETREAT
West Valley College | Baltic Room | 14000 Fruitvale Avenue, Saratoga CA 95070
ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS
Any member of the public will be allowed to address the City Council for up to three (3) minutes on
matters not on this Agenda. The law generally prohibits the Council from discussing or taking action on
such items. However, the Council may instruct Staff accordingly.
AGENDA ITEMS
9:00 AM Finance Review: Fiscal Policies, Mid-Year Budget Status, and Five Year Forecast
Staff Report
Proposed Fiscal Policy Statements
Mid-Year Budget Schedule
9:30 AM City Council Priorities for FY 2016/17
Staff Report
10:00 AM FY 2016/17 Capital Improvement Plan (CIP) Budget
Staff Report
12:00 PM LUNCH BREAK
1:00 PM Communications Progress Report
Staff Report
Progress Report
1:30 PM Legislative and Other Statewide Policies Update
Staff Report
2:15 PM BREAK
2:30 PM Smoking Regulations
Staff Report
Attachment A – Tentative Plan for Strengthening Smoking Controls
3:00 PM Retreat Wrap Up
ADJOURNMENT
Saratoga City Council Meeting Agenda – Page 2 of 2
CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA
PACKET, COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
I, Crystal Bothelio, City Clerk for the City of Saratoga, declare that the foregoing agenda for the meeting
of the City Council was posted and available for review on January 28, 2016 at the City of Saratoga,
13777 Fruitvale Avenue, Saratoga, CA 95070 and on the City's website at www.saratoga.ca.us.
Signed this 28th day of January 2016 at Saratoga, California.
Crystal Bothelio, City Clerk
In accordance with the Ralph M. Brown Act, copies of the staff reports and other materials provided to
the City Council by City staff in connection with this agenda are available at the office of the City Clerk
at 13777 Fruitvale Avenue, Saratoga, CA 95070. Note that copies of materials distributed to the City
Council concurrently with the posting of the agenda are also available on the City Website at
www.saratoga.ca.us. Any materials distributed by staff after the posting of the agenda are made available
for public review at the office of the City Clerk at the time they are distributed to the City Council. These
materials are also posted on the City website.
In Compliance with the Americans with Disabilities Act, if you need assistance to participate in this
meeting, please contact the City Clerk at 408/868-1269. Notification 24 hours prior to the meeting will
enable the City to make reasonable arrangements to ensure accessibility to this meeting. [28 CFR
35.102-35.104 ADA title II]
SARATOGA CITY COUNCIL
MEETING DATE:February 5, 2016
DEPARTMENT:Finance & Administrative Services
PREPARED BY: Mary Furey, Administrative Services Director
SUBJECT: Finance Review: Fiscal Policies, Mid-Year Budget Status, and Five Year Forecast
RECOMMENDED ACTION:
Receive proposed fiscal policy statement revisions, FY 2015/16 Mid-Year Budget status review, and Five
Year Forecast presentation, and provide direction on fiscal policies and budget development for the
2016/17 fiscal year.
REPORT SUMMARY:
1.Council’s fiscal decisions are guided by established Budget and Financial Policies. A redline version
of proposed policy statement revisions, as recommended by the Finance Committee, is attached for
Council’s review and discussion at the Council Retreat.
a.Councilmembers may provide additional comments or suggestions to the Administrative
Services Director through March 1, 2016.
b.The comments and suggestions will be compiled and brought to the Finance Committee for
review.
c.The Finance Committee will provide direction to staff regarding additional revisions.
d.Revisions will be incorporated into the proposed fiscal policies (in a different font color) and
brought back to Council at the Budget Study Session on April 18, 2016 for final review.
Fiscal Policies are included in the budget document and adopted as part of the annual budget process.
2.A preliminary Mid-Year Budget Status review will be presented to Council at the retreat to discuss
current fiscal year revenue and expenditure projections and any needed budget adjustments. A final
Mid-Year Budget Status report will be brought to Council at the February 21st City Council meeting.
3.The Five-Year Forecast presentation will present historical financial activity, current year activity and
estimated outcomes, and forecasted projections for the next five years. Forecast handouts and revenue
and expenditure projection assumptions will be provided to Council in the Council Retreat Binder.
Specific budget impacts will be discussed at the retreat.
ATTACHMENTS PROVIDED:
1.Proposed Fiscal Policy Statements
2.Mid-Year Budget Schedule
ATTACHMENTS TO BE PROVIDED IN COUNCIL RETREAT BINDER
1.Forecast Assumptions
2.Five-Year Forecast
3
CITY OF SARATOGA
INTRODUCTION SECTION
BUDGET & FINANCIAL POLICY
INFORMATION
1
4
CITY OF SARATOGA
INTRODUCTION SECTION
BUDGET PROCESS OVERVIEW
he City of Saratoga adopts an annual
Operating and Capital Budget and an
annual budget update of the five-year
Capital Improvement Plan. The budgets
contain summary level information for revenue and
expenditure appropriations for the fiscal year
beginning July 1st and ending June 30th. The budget
documents are prepared on the same basis as the
City’s financial statements, and in accordance with
generally accepted accounting principles (GAAP).
T
BUDGET PURPOSE
The Operating and Capital Summary Budget and the
Capital Improvement Plan serve as the City’s
financial plan, as well as a policy document, a
communications tool, and an operations guide.
Developed with an emphasis on long range planning,
service delivery, and program management, a
fundamental purpose of these documents is to
provide a linkage between the services and projects
the City intends to accomplish, and the resources
committed to get the work done.
The format of the budget facilitates this linkage by
clearly identifying program purpose, key projects,
and workplan goals, in relation to revenue and
expenditures appropriations.
BASIS OF BUDGETING AND ACCOUNTING
Developed on a program basis with fund level
authority, the operating and capital budgets represent
services and functions provided by the City in
alignment with the resources allocated during the
fiscal year.
Basis of Accounting and Budget refers to the timing
factor concept in recognizing transactions. This basis
is a key component of the overall financial system
because the budget determines the accounting
system. For example, if the budget anticipates
revenues on a cash basis, the accounting system must
record only cash revenues as receipts. If the budget
uses an accrual basis, accounting must do likewise.
The City’s budgeting and accounting systems both
use a combination of modified accrual and full
accrual basis in the accounting and budget systems.
The City’s Governmental Funds consist of the
General Fund, Special Revenue Funds, Debt Service
Funds, and Capital Project Funds. Governmental
Fund budgets are developed using the modified
accrual basis of accounting. Under this basis,
revenues are estimated for the period if they are
susceptible to accrual, e.g. amounts can be
determined and will be collected within the current
period. Principal and interest on general long-term
debt are budgeted as expenditures when due, whereas
other expenditures are budgeted for liabilities
expected to be incurred during the current period.
Proprietary fund budgets are adopted using the full
accrual basis of accounting whereby revenue budget
projections are developed recognizing revenues
expected to be earned during the period, and
expenditures are developed for expenses anticipated
to be incurred in the fiscal year. The City maintains
one type of proprietary fund: Internal Service Funds.
Fiduciary funds are also budgeted under the modified
accrual basis. Trust funds are subject to trust
agreement guidelines, and Agency Funds are held in
a custodial capacity involving only the receipt,
temporary investment, and remittance of resources.
Saratoga administers two agency funds.
SUMMARY OF BUDGET DEVELOPMENT
The City develops it budgets with a team-based
budgeting approach. City Management and the
Finance Department guide the process through
budget development; however program budgets and
workplans are developed with each department’s
director or program manager’s oversight and
expertise. This approach allows for hands-on
planning and creates a clear understanding for both
management and staff of a program’s goals and
functions to be accomplished in the next budget year.
THE DEVELOPMENT PROCESS
Typically both the Operating and Capital Budget and
Capital Improvement Plan (CIP) annual development
processes begin in early January with the City
Council and City Manager’s development and
refinement of initiatives and directives for the
upcoming budget year. The Five-Year financial
forecast is developed and brought to the annual
Council Retreat to review. This forecast provides an
overview of service level operations as it ties to fiscal
resources, and guides the discussion for the
2
5
CITY OF SARATOGA
INTRODUCTION SECTION
upcoming budget direction. The CIP is also reviewed
during this time to determine funding capabilities,
project priorities, and to refine project workplans.
Although the CIP Budget is a stand-alone body of
work, CIP projects impact the City’s ongoing
operations and are therefore incorporated into the
Operating and Capital Summary Budget document
through the resulting financial appropriations and
service level requirements.
In February, the budget preparation process begins in
earnest. Budget assumptions, directives and
initiatives are provided to set the City’s overall
objectives and goals. Over several months, staff
identifies and analyzes program revenue and
expenditure projections in coordination with
Finance/Budget staff and City management. Capital
improvement projects are assessed and refined, and
CIP funding and appropriation requirements are
finalized.
Through rounds of budget briefings and revisions,
operational and capital workplans are reviewed and
compiled, and staff finalizes the proposed program
and capital budgets. Financial summary information
is prepared, and the proposed budget document is
prepared for City Council review. A summary level
Public Hearing presentation is created to highlight the
notable budget impacts in the forthcoming year.
BUDGET ADOPTION
During the month of May, the City Council reviews
the proposed Operating and Capital Summary
Budget, and the Capital Improvement Plan for the
five year period in a public hearing. Notice of the
hearing is published in a local newspaper at least ten
days prior to the Council’s public hearing date. The
public is invited to participate and copies of the
proposed budgets are available for review on the
City’s website, in the City Manager’s office and at
the budget hearing.
Under requirements established in Section 65401 of
the State Government Code, the City’s Planning
Commission also reviews the proposed Capital
Improvement Plan and reports back to the City
Council as to the conformity of the plan with the
City’s Adopted General Plan.
Final council-directed revisions to the proposed
budget are made and the budget documents are
resubmitted to the Council for adoption, again in a
publicized public hearing prior to the beginning of
the fiscal year.
Section 2-20.050(i) of Saratoga’s City Code requires
the City Manager to prepare and submit an annual
budget to the City Council. This is accomplished in
June, when the final proposed budget is formally
submitted to the Council in the subsequent public
hearing.
The approved resolutions to adopt the CIP and
operating budgets and the appropriation limitation
(Gann Limit) follow later in this section.
BUDGET AMENDMENTS
During the course of the fiscal year, economic and
workplan changes or unanticipated needs may
necessitate adjustments to the adopted budgets. The
City Manager is authorized to transfer appropriations
between categories, departments, projects, and
programs within a fund in the adopted budget,
whereas the City Council holds the authority for
budget appropriation increases and decreases, and
transfers between funds.
3
6
CITY OF SARATOGA
INTRODUCTION SECTION
BUDGET CALENDAR
December
January
February
March
Budget Office to begin development of financial forecast and budgets for
following fiscal year, including:
•Draft operating budget revenue and expenditure projections
•Prior fiscal year-end fund balance available for CIP
Budget Office to prepare Mid-Year Budget Report and Five-Year Financial
Forecast for Council review at annual retreat
For Operating Budget:
•Budget Office to provide budget information to staff on budget
assumptions, directives, initiatives, and goals
•Budget Office and Program Managers to prepare Internal Service and
Equipment Replacement Fund analyses and schedules, finalize internal
service rates
•Budget Office to prepare operating budget worksheets for updates,
including departmental/program narratives, staffing and financial
worksheets, asset and staffing requests.
For Capital Budget:
•Budget Office to prepare updated five-year CIP project worksheets
Budget Office and departments to review current User Fee Schedule for
appropriate changes in preparation of annual updates process
For Operating Budget:
•Budget Office to finalize Internal Service Fund program workplans
•Budget Office to prepare budget worksheets for departments, including
staffing and internal service program costs
•Departments to prepare draft revenue expenditure workplans
For Capital Budget:
•Project Managers to prepare funding, scope of work, and cost estimates
for new proposed projects
For Operating Budget:
•Departments to finalize budget work plans
•Review proposed budgets with City Manager
•Departments and Budget Office to finalize budget changes
For Capital Budget:
•Project Managers to determine year end CIP project estimates
•City Manager to finalize new proposed CIP projects
4
7
CITY OF SARATOGA
INTRODUCTION SECTION
April
May
June
July/
August/
September
For Operating Budget:
•Departments to finalize program narratives and performance measures
•Budget Office to compile final program narratives, financial and
supplemental schedules, and financial budget summaries and charts for
City Council Budget Study Session
For Capital Budget:
•Project Managers to finalize new project information for CIP submittal
•Public Works Manager to bring new projects to Planning Commission
meeting for General Plan conformance review
City Council to hold Public Hearing for Annual User Fee Update
City Council to hold Budget Study Session
For Operating & Capital Budgets:
•Final budget briefing with City Manager
•Budget Office to incorporate Council directed changes into proposed
budgets and prepare final documents for Public Hearing presentation
City Council to hold Proposed Budget Hearing
For Operating & Capital Budgets:
•City Council revisions incorporated into budget documents
•City Council adoption of Operating and Capital Budget
•City Council adoption of Gann Appropriation Limit
Final document preparation of financial and supplemental schedules, charts,
reference materials, etc.
Adopted Operating and CIP Budget documents finalized, posted on website,
and distributed
5
8
9
FISCAL MANAGEMENT POLICY STATEMENTS
With both a general management philosophy and Council goal to practice fiscal responsibility, the City of Saratoga’s
conservative and cautious financial management is achieved through responsible, sustainable, and enforceable fiscal
policies and internal controls to ensure prudent and efficient use of resources. These policies and controls represent
long-standing accounting, budgeting, debt, investment, and reserve principles and practices, and are the foundation
upon which the City maintains its fiscal stability.
These general fiscal management policy statements provide a summary overview of financial, operational, and
budgetary management, in one comprehensive centralized format toand act as guidelines and assist elected officials
and staff with understanding the City’s financial practices for fiscal operations. Detail level Ffiscal policies are
administrative in nature, therefore detail level policy direction is are not included in the budget document. However,
fiscal policies that rise to Council review and approval standards at a more specific level are incorporated into the
budget document for annual adoption by Council. Currently this includes the Fund Balance Reserve Policy and the
Capital Project Process Policy which follows this section. Other Council defined policies will be added as
directed/approved.
The Summary Fiscal Management Policy Statements in this document are organized into the following categories:
General Financial Principles
Appropriations and Budgetary Control
Auditing and Financial Reporting
Capital Improvement Plan
Development Related Financial Policies
Expenditures and Purchasing
Fixed Assets and Infrastructure
Internal Service Funds
Long-Term Debt
Revenues
Risk Management Policies
Treasury Management
General Financial Principles
•The City’s fiscal policies are structured to ensure fiscal responsibility, accountability, transparency, and
efficient use of resources. Fiscal policies are to be reviewed, updated, and refined as necessary, with general
policy level decisions brought to City Council for review and approval, and administrative and operational
level functions approved by the City Manager.
•Proposed revisions to the Fiscal Management Polic y Statements and Council Polic ies are provided to Council
at the annual Council Retreat. Council members are to provide comments and concerns regarding revisions
back to the Mayor or City Manager at least two weeks prior to the budget study session to clarify or include in
agenda.
•The City’s primary long-term financial goals are to main tain the City’s fiscal health, preserve essential
services, and support short and long-term administrative, financial, and operational goals in a financially
judicious manner. Long-term financial and infrastructure planning and the annual adoption of a structurally
balanced budget provides the foundation to these long-term financial goals. The City shall promote and
implement strong internal financial controls to manage risks and monitor the reliability and integrity of
financial transactions and operational activities.
•Financial information shall be provided in a relevant, thorough, and timely manner, to effectively communicate
the City’s financial status to the Council, citizens, employees, and all other interested parties.
10
•F inancial stability goals and judicious responsiveness shall be the foundation upon which proactive and
advantageous financial decisions are made, and which guide the City’s response to local, regional, and broader
economic changes through the years.
•The City shall undertake , adopt, and integrate new initiatives or programs in a cau tious, well planned manner
to support the City’s long-term ability to maintain its essential services at the same level and quality required
by its citizens.
•The City Council’s financial and community based goals, objectives, and policies are incorporated into and
implemented with the development and adoption of the City’s Operating and Capital Budgets.
•Efforts will be coordinated with other governmental agencies and joint power associations to achieve common
policy objectives, create beneficial opportunities and services for the community, share the cost of providing
governmental services, and support legislation favorable to cities at the state and federal level.
•The City will seek out, apply for, and effectively administer federal, state, local, and foundation, business, and
private grants which address the City’s current priorities and policy objectives.
Appropriations and Budgetary Control
•The City Council shall adopts an annual balanced operating budget and the first year of an integrated five-year
capital improvement plan budget by June 30th of each year on an annual basis, to be effective for the following
fiscal year running from July 1st through June 30th. Balanced budgets present budgeted sources in excess of
budgeted uses. Budgeted “Sources” include Revenues, Transfers In, and Appropriated Uses of Fund Balance.
Budgeted “Uses” include Expenditures and Transfers Out. Operating and cCapital bBudgets are to align with
the City’s long-term financial goals.
•The City utilizes long-range planning as a decision-making tool, and annually adopts a structurally balanced
financial plan that retains the City’s fiscal health, preserves essential services, and support s short and long-term
goals in a financially judicious manner. moved to general fin policies
•Each year the Finance & Administrative Services Department provides a short recap of the prior-year budget, a
mid-year budget status report, and an updated five year financial forecast to the City Council at the Annual
Council Retreat (scheduled in late January or early February ) to assist Council with formulating direction for
long-range fiscal planning, operating budget development, and capital funding appropriations.
• Budgets are prepared on the same basis of accounting used for financial reporting: governmental fund types
(General, Special Revenue, and Debt Service) are budgeted according to the modified accrual basis of
accounting; proprietary funds (Internal Service Funds) and fiduciary funds are budgeted under the accrual basis
of accounting.
•The Operating Budget is primarily funded with current year revenues. Dedicated fund balance reserves, such
as the Carryforward or Fiscal Stabilization Reserves represent prior year savings designated for specific uses, which
may be used to fund current year operational expenses , in accordance with their purpose , upon Council approval.
Council may also approve the use of long-term debt for operational liabilities if they deem it fiscally prudent.
•City policy is to fund tThe Capital Budget is funded with both prior year surplus funding and dedicated capital
funding resources. Dedicated funding sources include Gas Tax (HUTA) revenues, road impact assessment revenues;
grantsproject revenues and reimbursements; community benefit assessments; and federal, state, local, and private
grants.
•In practice, budgeted revenues are conservatively stated and budgeted expenditures are comprehensive,
allowing for the annual operational and capital improvement goals to be completed. With effectively managed
revenue streams and efficient use of resources, fiscal year-end operational budget surpluses are available to fund
future capital improvement projects and contribute to the City’s fiscally responsible reserve accounts.
•The City Council maintains budgetary control at the fund level; any changes in total fund appropriations during
the fiscal year must be submitted to the City Council for review and Council majority approval. Operating
Budget appropriations lapse at the end of each fiscal year unless specifically carried forward by appropriation 11
re-appropriated by the City Council in the following fiscal year’s budget. Capital Budget appropriations are
structured as a multi-year workplan; therefore project expenditure balances are automatically carried forward
to the following fiscal year as part of the annual budget adoption until funding is exhausted , modified, or the
project is completed.
•The City budget shall comply with the annual determination of the City’s appropriation limit calculated in
accordance with Article XIIIB of the Constitution of the State of California and adopt an annual resolution to
this effect.
•The City Manager is authorized to implement the City’s workplan as approved in the adopted budget. Within a
specific fund, the City Manager may transferhas the discretion to adjust appropriations between categories,
departments, programs, and projects as needed to implement the adopted budget, provided no change is made
to the total appropriation amount provided for any one fund. An example would be to backfill a vacant
salaried position with a contract service, therefore shifting funds from wage and benefit appropriations to an
operating expense expenditure within the General Fund appropriation. The City Manager also has the
authority to withhold filling the position for a time if conditions warrant a delay.
•Generally, recurring expenditures are funded with recurring revenues or revenues specifically designated for
operational use. One time expenditures may be funded with one-time revenues or fund balances reserves.
Fund balance reserves are to be used for non-recurring one-time expenditures and capital projects.
•In compliance with Council’s Fiscal Stewardship goal, fiscal stability and sustainability principles are
incorporated into budget planning. Appropriating adequate funds on an annual basis for the replacement and
maintenance of assets through Internal Service Funds, prioritizing infrastructure maintenance and repair in the
capital budget, and institutionalizing prudent payment strategies for long-term liabilities are foundational
strategies of fiscal stability and sustainability.
•I n FY 2014/15 CalPERS notified the City that as of 6/30/2015, the City ’ s U nfunded Accrued Liability
obligation of $7.7 million was to repaid over a thirty (30) year payment plan. The City Council established an
alternative repayment plan to lower the overall cost of the liability while maintaining fiscal stability.
Approximately 43% of the outstanding liability was immediately paid through the use of current year net
operations and expendable reserve funding. The remaining liability is to be paid off with an accelerated
payment plan of $500,000 per year. This payment strategy reduces interest costs by approximately 65% and
reduces the payment period to 15 years.
•The City Council appropriates has established a $50,000 annually to a ‘Council ContingencyDiscretionary
account’ appropriation for so that Council has funding available forapproved unplanned expenditures. Council
direction and consensus approval is required to utilize these funds. Unexpended appropriations are carried
forward into the following fiscal year.
•Parks and Recreation Services are an essential element in m eet ing the City’s goal to enhance and pro mote
quality of life in the community. The Recreation Department provides activities, programs, classes, and rental
facilities to the entire Saratoga community, from infants to seniors, through various services. While these
services innately benefit individuals, and would typically be 100% funded through user fees, Council recognizes
the general community benefit and determined the Recreation Department would function under a minimum
cost recovery goal of 65%. This calculation is comprised of t was established to align with the California Parks
& Recreation Society’s (CPRS) average cost recovery rate for all California recreation departments at the time
the policy was set. otal program revenues and expenditures for the General Fund’s Recreation Services, Teen
Services, and Facility Rentals programs, as all share the use of the building, equipment, staff, and purpose, and
are therefore intrinsically connected in the analysis.
•The Community Development Department strives to attain full cost recovery in recognition that
development and building services are provided primarily for individual and monetary benefitenrichment
rather than for the general community’s benefit. Total department revenues in excess of total department
expenses (net gain) are added to the reserve at year end, and up to one-third of the reserve fund balance
may be used to offset a net loss at year end.
Auditing and Financial Reporting 12
•California State statutes require an annual financial audit of the City’s financial records and transactions by
independent Certified Public Accountants. The City shall comply with Generally Accepted Accounting
Principles (GAAP) and produce annual financial reports pursuant to Governmental Accounting, Auditing, and
Financial Reporting (GAAFR) guidelines. The independent auditor will issue an audit opinion to be included
in the City’s Comprehensive Annual Financial Report (CAFR) testifying to the financial reports conformance
with accounting principles.
•Additional financial reports issued by the Auditor’s may include: Singe Audit Report (annual report of federal
grant expenditures if in excess of the federal single audit limit is expended in a fiscal year), a Transportation
Development Act (TDA) report (annual report of TDA fund expenditures), an Appropriations Limit review
report (to establish tax revenue appropriation limit), and a Management report on the City’s Internal Controls.
•The City shall submit the CAFR to the Governmental Finance Officer s Association (GFOA) Financial
Reporting Program each year for review, and if in compliance with the program ’s requirements, to receive an
award for meeting GFOA’s financial reporting standards.
•Regularly scheduled external F inancial R eports include the following:
A State required Annual Cities Report , and Annual Streets Report are also completed in
conjunction with the year-end close.
Quarterly SMIP (Seismic Motion) fee reconcil i ation reports ; CASp (ADA Acces si bility)
reconciliation reports: and California Building Standard Commission (green building standards)
reconciliation reports
Quarterly Use Tax Reports to remit uncollected sales tax to the State Board of Equalization
SB90 Mandated Cost reports for claims to comply with State regulated legislation .
Annual UST Certification report to show fiscal responsibility for the City’s underground storage
tanks,
Annual Possessory Interest Report submitted to the County ’s Assessor’s Office to report City
owned leased property
•Regularly scheduled internal F inancial R eports include the following :
Weekly check registers and monthly Cash and Investment Treasurer Reports arewill be s
submitted for review and approval at City Council meetings.
Quarterly financial reports will provides a status update on General Fund revenues and
expenditures for the first, second, and third quarters.
At mid-year , a budget status report is presented toat the City Council in February each
yearretreat with to provide a more comprehensive financial overview of the current year’s budget
and includes to proposed recommended budget adjustments as appropriate.
A year-end financial recap is provided after the City’s annual financial audit is completed.
Capital Improvement Plan
•A five year C apital I mprovement P lan (CIP) is updated annually in conjunction with the operating budget. The
CIP reflects the current and changing needs of the community as well as enhancements to improve the quality
of the community. The first year of the CIP is adopted to authorize appropriations.
•The CIP is categorized into programs by project type . The four programs are : Street Improvements, Park &
Trail Improvements, Facility Improvements, and Administrative & Technology Improvements.
•All projects within the CIP programs are appropriated, managed, and tracked separately , and each project’s
financial status is reported on a monthly basis in the Treasurers Report.13
•Project updates are recorded in the annual Capital Budget, with narrative, timeline, and financial summary
information updated with each published budget document.
•Capital improvements that specifically benefit a select group of users and/or are fee-for-service based are t o be
financed through user fees, service charges, special assessments and taxes, or development impact fees.
•The City shall identify and dedicate capital improvement related funding directly to the CIP and to maximize
the use of grant funding for capital improvement projects.
•Grant s, insurance , or other r eimbursement funding is to be returned to the expenditure’s funding source, unless
otherwise directed by Council. For instance, Hillside Reserve funded projects that receive insurance
reimbursement payments are to be returned to the Hillside Reserve, and grant reimbursements for projects
funded through the CIP Reserve are to be returned to the CIP Reserve when payment is received.
•After completion of the prior year’s audit and the General Fund’s priority funding requirements are met, the
remaining net operations are moved into the Capital Project Reserve at year end. Use of the Capital Project
Reserve for the subsequent fiscal year is reviewed and preliminary direction given by consensus of the City
Council at the Annual Council Retreat. Final CIP funding direction is provide through the budget adoption.
•Council has designated the following capital projects as fundamental to maintaining City infrastructure on an
ongoing basis, and shall therefore have priority status for available Capital Improvement Reserve funding:
The below funding guidelines shall be reviewed by Council for final CIP Budget direction each fiscal year:
$200,000 – A nnual Infrastructure Maintenance & Repairs ( for Sidewalk , Storm Drains, Curb &
Gutter, and Bridge Maintenance)
$50,000 – Roadway Safety and Traffic Calming
$50,000 – Risk Management and Mitigation Projects
•The Annual Roadway Maintenance and Repair (ARM&R) CIP project is the primary CIP project funded in
support of Council’s goal to maintain Saratoga city streets at an average 70 PCI rating. On occasion, separate
street specific resurfacing projects are established due to funding requirements; they also contribute toward this
goal. The ARM&R project was originally established with a $1,000,000 minimum annual funding goal from
dedicated Gas Tax Revenue and Solid Waste Services contract assessed Vehicle Impact Fees. However , after
decreases in the PCI, Council has established a new goal of $2,000,000 annually with the FY 2016/17 budget.
Council is to consider this goal in conjunction with funding requests during the CIP budget discussion each
year. This project shall encompass roadway repairs, resurfacing, and rehabilitation projects, traffic light, curb
and gutter, and other miscellaneous repairs, striping and signage, and assorted street materials and supplies.
Development Related Financial Policies
•The Development Reserve was established to provide stability for multi-year development related services. The
reserve is funded by Community Development Department revenues in excess of expenses at fiscal year-end.
The reserve is available for use in those years where a shortfall occurs; when development revenues fall below
development expenses. Use of the reserve for operational support is limited to a maximum of 1/3 of the reserve
balance in any given fiscal year; with any budgeted use of the reserve automatically rescinded up to the amount
development revenues are sufficient to cover General Fund net operations. The reserve may also be utilized for
other development related uses, such as funding development software upgrades or special projects, per Council
direction. Additional information on this Development Reserve is located in the Fund Balance Reserve Policies
section.
•The Williamson Act, also known as the California Land Conservation Act, was passed by the California
Legislature in 1965 to encourage rural & agricultural land owners to keep their land undeveloped. When land
owners enter into a contract under the act, they benefit from lower property taxes, which are based on the
property’s current use, rather than paying market value based tax rates. In exchange, the property is to remain
undeveloped and continue to function in the same manner for the duration of the contract. Contracts run for 10
years and are automatically renewed unless the farmer or rancher cancels it. The City does not limit the number
of Williamson Act contracts entered into each year. 14
•The Mills Act is State-sponsored legislation granting local governments the authority to enter into an agreement
with property owners to allow reduced property tax payments in return for the restoration and continued
maintenance of their historic property. Since the agreement reduces property tax assessment, the City receives a
smaller share of property tax revenue in comparison to a property that is assessed at market value. The City will
allow approval of up to three Mills Act Contracts per year.
Expenditures and Purchasing
•All expenditures shall be in accordance with the City’s purchasing policy, travel policy, credit card policy,
agreement, contract policy and public contract code, state or federal law, or any other applicable guidelines or
regulations.
•Expenditures are managed at the program level. Program managers are to ensure expenditures do not exceed
the budgeted workplan and must take immediate action if at any time during the fiscal year an operating deficit
is projected at year-end. Corrective actions may include expenditure reductions, or with Council approval,
budget adjustments, or service reductions.
•The City’s current purchasing policy, (effective date of 4/23/2007) establishes purchasing authority levels,
purchasing procedures, and procedural requirements, for the procurement of supplies, equipment, and services,
in conformance with Federal and State codes and regulations, and City Ordinance No. 2-45.
•Public Work projects governed by the State’s Public Contract Code are excluded from provisions of the City’s
purchasing policy.
•Guidelines established by the City’s Purchasing Policy directs the City’s departments to purchase the best value
obtainable, securing the maximum benefit for funds expended, while providing all qualified vendors an equal
opportunity to do business with the City.
•Services and supplies purchases that exceed $5,000 require written quotes, and must be approved by the
Purchasing Officer or designee, typically through the Purchase Order process. Documentation is to be retained
by the department in accordance with the records retention policy and schedule.
•Services, supplies, and fixed asset purchases exceeding $25,000 must be authorized by the City Council, unless
purchase is specifically called out in the adopted budget (such as vehicle and equipment replacements) or
excluded under the Purchasing Policy.
•The City departments shall conduct quarterly program and capital project review s to determine if projected
operating revenues and expenditures meet budgeted expectations. If an operating deficit is projected at year-
end, the departments shall evaluate and implement corrective actions as needed, and notify Council if services
will be impacted.
Fixed Assets and Infrastructure
•Tangible assets with a cost equal to or greater than $10,000 and a useful life of more than one year are
considered fixed assets and added to the capitalization schedules. Repairs and maintenance of infrastructure
assets will generally not be subject to capitalization unless the repair extends the useful life of the asset.
•The City will sustain a long-range fiscal perspective through the use of a five-year Capital Improvement Plan
designed to maintain the quality of City infrastructure, including streets, sidewalks, curbs and storm drains,
lighting, building, parks, and trees, and through Internal Service Fund programs to both maintain and replace
City building infrastructure, fixtures, and equipment, vehicles, and public works and technology equipment on
an ongoing basis
•A Capital Asset system will be maintained to identify all City assets, their condition, historical and estimated
replacement costs, and useful life. Asset information is retained to provide information for preparation of
financial statements in accordance with GAAP, with emphasis placed on completion of GASB 34
requirements.15
•Infrastructure management systems are to be developed and maintained to provide long range financial and
operational planning. These shall include Roadway System management programs, Storm Drain System
management plans, Bridge replacements, Street Signal System replacements, and all other infrastructure
categories that require significant financial resources to fund the eventual replacement needs.
Internal Service Funds
•Internal Services Funds are established to both equitably allocate operating costs to departments for support
and maintenance services, and to stabilize and spread the City’s replacement and operational costs over fiscal
years for the purpose of providing an accurate and balanced long-range fiscal perspective of the use of services
and assets.
•Vehicles, Equipment, and Building asset replacement and maintenance types of Internal Service Funds are
structured to provide a consistent level of funding for asset and equipment replacement, and to ensure
sufficient funding is available for the regular maintenance, repair, and replacement of the City’s vehicles,
equipment, and building fixtures in an ongoing manner.
•Technology and Office Equipment replacement and maintenance Internal Service Funds are structured to
provide a consistent level of funding for the replacement of assets and projects, and to appropriately distribute
support and maintenance costs to departments.
•The Liability and Workers Compensation Insurance Internal Service Funds shall maintain adequate reserves to
pay all valid self-insured claims and insurance deductibles, including those incurred but not reported, in order
to keep the insurance funds actuarially sound.
•Each Internal Service Fund will set recovery charges at rates sufficient to meet all operating expenses,
depreciation, and fund balance reserve policy objectives.
Long-Term Debt
•The City shall seek to maintain a high credit rating through sound financial practices as a foundational
financial practice, and to maximize borrowing costs.
•The City does not incur debt for operations or capital improvements except under extraordinary circumstances
and with citizen support. Under these circumstances the City will seek voter approval for General Obligation (GO)
Bond Debt for major infrastructure rehabilitation.
•Long-term Financing Debt is typically incurred for capital improvements or special projects that cannot be
financed from current or dedicated revenues, or for large liabilities resulting in significant financial impacts. In
principal, long-term debt is to be used only if the debt service requirements do not negatively impact the City’s
ability to meet future operating, capital, and cash reserve policy requirements.
•Through City Council approval, t he City may function as a bonding conduit for special assessment districts .
This may occur when a neighborhood or area is seeking to improve private or cooperatively owned
infrastructure, such as private roads or water system cooperatives. The City shall require full liability
protection and cost recovery as necessary to protect the City and mitigate the cost associated with such actions.
•The term for repayment of long-term financing shall: not exceed the expected useful life of the project ; include
financing payment terms at a manageable level ; and does notor extend beyond functionally appropriate
payment terms.
•The City will monitor all forms of debt annually in conjunction with budget development and will report
concerns and remedies if necessary to the City Council.
•The City will ensure compliance with bond covenants, providing financial information to reporting parties as
necessary.
16
•The City will comply with Government Code Section 43605 limitations on debt, which limit s general
obligation indebtedness to an aggregate 15% of the assessed value of all real and personal property of the City.
Revenues
•The City will encourage a stable revenue system to offset short-run fluctuations in any one revenue source, in
part through balancing revenue fluctuations to related operational fluctuations . –such as This concept is
applied in Community Development as’s multi-year service revenues net operational funding is held in
reserve and utilized to fund operational expenses as needed. and contract services fluctuate with service
needs.
•Designated and legally restricted tax and revenue funding sources will be accounted for in the appropriate
funds. General taxes and revenues not allocated by law or some other contractual agreement to other funds
are accounted for in the General Fund. Dedicated Capital Project revenues are to be directly accounted for in
the appropriate capital project fund, within a designated project.
•A master schedule of User Fees is reviewed and presented to Council on an annual basis to adjust fees to an
appropriate level. Operating departments shall review services and the existing fees to ensure discretionary
services (not specifically waived or modified) reflect direct and reasonable indirect costs of providing such
services.
•The City typically establishes user charges and fees at levels that recover the direct and indirect activity cost
of providing a service or product. The City also considers market rates and charges levied by other
municipalities of similar size for like services in establishing rates, fees, and charges. As some services have
partial cost recovery objectives (such as Recreation classes and facility rentals), cost recovery ratios will vary
in accordance with policy objectives.
•The City will follow an aggressive policy of collecting local taxes and revenues due to the City through
persistent follow-up procedures, and external resources as necessary.
•Donations may be accepted in accordance with the City of Saratoga Donation Policy most recently approved
by the City Council. Under the current policy, unrestricted donations of $5,000 or less may be accepted or
declined by the City Manager. Restricted donations of $500 or less may be accepted or declined by the City
Manager. Unrestricted donations of more than $5,000 and restricted donations of more than $500 must be
brought to the City Council for consideration. The City Manager may choose to request City Council
consideration of any donation, regardless of value.
Risk Management Policy
•The City is insured for up to $205 million of general liability, auto, and property damage claims through a Joint
Powers Association insurance cooperative up to $5 million, and an excess insurance provider for claims in
excess of this, up to $20 million.the Association of Bay Area Government’s (ABAG) Pooled Liability
Assurance Network (PLAN) Corporation. The City is self-insured for the first $25,000 for general liability and
auto claims; property damage afterup to $5,000 and third party auto claims afterup to $10,000.
•Workers Compensation claims are insured for the first $250,000 of coverage through the City’s participation in
a Workers Compensation risk pool, known as SHARP (Shared Agency Risk Pool). After the $250,000 limit is
met, an excess insurance coverage policy is activated. The excess coverage provides an employer liability
limit of $5 million,000,000 per occurrence, and workers’ comp per occurrence limit of $100 million,000,000.
Workers' Compensation claims are managed by a third party administrator.
•The City’s role in managing both its risk management and workers comp programs is to be preventative in
nature which is accomplished through careful monitoring of losses, working closely with the third party
administrator, proactively addressing infrastructure maintenance and potential risks, and by designing and
implementing safety programs to minimize risk and reduce losses.
17
Treasury Management
•The City’s Investment Policy shall be brought to the Finance Committee and City Council for review,
discussion, direction, and adoption on an annual basis. California Government Code Section 53600 and the;
City of Saratoga Municipal Code Section 2-20.035; and Section 16.0 of the City of Saratoga Investment Policy
require the City Council to annually review and approve the City’s Investment Policy.
•It is the policy of the City of Saratoga to invest public funds in a manner which will provide the maximum
security with the highest investment return, while meeting the daily cash flow demands of the City and
conforming to all state and local statutes governing the investment of funds.
•Finance staff shall exercise due diligence to comply with the Investment Policy. The City currently practices
very conservative and cautious investment practices throughby limiting its investments to the State’s Local
Agency Investment Fund (LAIF). LAIF’s extensive professional investment staff and conservative investment
practices ensure prudent financial management of the City’s fiscal reserves.Certificates of Deposits and high
grade investment vehicles may also be utilized under the Investment Policy, however the Finance Committee
will provide oversight, review and direction on any decisions to move a portion of the City’s available funds into
these other permitted investments.
•Administrative Services Department’s Finance Division shall prepare a monthly report to the City Council that
has sufficient detail to present the financial condition of the City at month end, the cash and investments balance
by fund, and fund balances by fund type.
18
19
FUND BALANCE RESERVE POLICY
Prudent financial management dictates that the City reserve a portion of its funds for future
use to: maintain fiscal stability; ensure the continued orderly operation of government and
provision of services to residents; and to mitigate current and future risks.
As a general budget precept, the City Council decides when and whether to appropriate
available funds to and from a reserve account. Use of reserve funds must be authorized by
either specific direction in the annual budget, or by a separate City Council action – unless
specifically directed by policy. Responsible fiscal stewardship also requires adequate
reserves be maintained for all known liabilities and established City Council and community
directed initiatives.
In the following Fund Balance/Reserve Policy overviews, the descriptions include
identification of the fund type and classification, the purpose of the reserve, minimum and
maximum funding goals if appropriate, guidelines on utilization of the reserve and by what
authority, and the procedure for funding the reserve initially; on an ongoing basis, or after
utilization.
Fund Balance and Net Position
In 2009, Governmental Accounting Standards Board (“GASB”) Statement No. 54 revised fund
balance classifications for “Governmental Funds” into five specific classifications of fund
balance with the intent to identify the extent to which a specific fund balance reserve is
available for appropriation and therefore spendable, or whether the fund balance reserve is
constrained by special restrictions. Government Funds for which these new rules apply
include: the General Fund, Special Revenue Funds, Capital Project Funds, and Debt Service
Funds.
For “Non-Governmental Funds”, equity classifications are classified as “Net Position” with
sub-classifications of Restricted or Unrestricted Net Position. A third component of a Non-
Governmental Fund’s equity is “Net Investment in Capital Assets,” which for the City refers to
the non-monetary portion of equity such as vehicles and equipment, net of depreciation. Non-
Governmental Fund types include Proprietary Funds (Enterprise and Internal Service Funds)
and Fiduciary Funds (Trust Funds). Currently, the City’s non-governmental fund types are
limited to Internal Service Funds.
Governmental Fund Type Reserve Classifications
The Governmental Reserve classifications are defined as follows, which includes the
applicable reserves that fall into the classification:
Non-Spendable Fund Balance
Represents resources that are inherently non-spendable from the vantage point of the
current period. The City does not presently hold Non-Spendable Reserve funds.
Restricted Fund Balance
Represents fund balance that is subject to external enforceable legal restrictions. The
City maintains the following restricted fund balances under this designation:
•General Fund: Environmental Services Fund Balance Reserve 20
•Special Revenue Funds: Landscape & Lighting Assessment Districts Fund
Balance
•Debt Service Fund: Library General Obligation Bond Debt Service Fund
•Capital Project Funds: a) Park In Lieu Fund:
b) Highway User Tax Allocation Fund (Gas Tax):
c) Capital Project Grant Funds
Committed Fund Balance
Represents fund balance constrained by limitations the government imposes upon itself at
its highest level of decision making and remains binding unless removed in the same
manner. The City maintains the following fund balances under this designation:
•General Fund: Hillside Stability Reserve
•General Fund: Facility Replacement Reserve
•Capital Improvement Plan Funds: Capital Improvement Project Fund Balance
Reserve
Assigned Fund Balance
Represents fund balance identified by Council for an intended use; however as no legal
obligations exist, the funds may be re-designated and utilized for another purpose if
Council chooses. The City maintains the following General Fund reserves under this
designation:
•General Fund: Future Capital & Efficiency Project Reserve
•General Fund: Carryforward Reserve
Unassigned Fund Balance
Represents funding which may be held for specific types of uses or operational
funding/stabilization purposes, but is not yet directed to a specific purpose. Only General
Fund reserves can be designated under the “Unassigned” fund balance classification.
Other fund types are by nature structured for specific purposes, hence the fund balances
are therefore considered “assigned” for that purpose.
•General Fund: Working Capital Reserve
•General Fund: Fiscal Stabilization Reserve
•General Fund: Development Services Reserve
•General Fund: Other Unassigned Fund Balance Reserve
Fund Balance Ratios
To ensure the City maintains available working cash flow and emergency funding at all
times, the collective total of the General Fund’s Assigned and Unassigned Reserves shall
be sustained at a minimum of 20% of General Fund expenditure appropriations, net of
transfers out.
General Fund Year-End Allocations
After the City’s financial records are finalized and audited, with legal obligations and liability
reserves funded, revenues in excess of expenditures are closed out to the Other Unassigned
Fund Balance Reserve. A base $500,000 of funding is to remain in the Other Unassigned
Fund Balance Reserve, with the remainder distributed in the following order:
1.Working Capital Reserve interest allocation.
2.Repayment of Fund Balance Reserve loans - back to established levels (e.g. 21
borrowing from/usage of the Fiscal Stabilization or Hillside Stability Reserves).
a.For the Hillside Stability Reserve, loan repayment shall be made in annual
contributions of $100,000 until reserve balance reaches the $1,000,000 reserve
goal.
b.Fiscal Stabilization loan repayments shall be made as directed by Council.
3.Annual contribution of $3500,000 to Facilities Replacement Reserve.
4.Remaining funds are allocated to the Future Capital Improvement and Cost Efficiency
Projects Reserve.
22
GENERAL FUND – FUND BALANCE RESERVE POLICIES
Environmental Services Reserve
Under the Restricted Fund Balance classification, the Environmental Services Reserve
represents revenues collected under a prior funding structure for environmental purposes,
and is therefore restricted for use in funding environmental program costs such as clean
water programs, street sweeping, and storm drain cleaning services. Per policy, the
Environmental Service Reserve is being utilized through annual budget appropriations of
$50,000.
The Environmental Services Reserve originated from a one-time funding structural change
and therefore will not be replenished when depleted.
Hillside Stability Reserve
Under the Committed Fund Balance classification, a Hillside Stability Reserve of $1,000,000
is set aside to provide funding for unanticipated or unforeseen emergency or extraordinary
costs related to hillside degradation, inclusive of slide prevention and mitigation, slide repair,
and associated drainage and roadwork. The reserve is to be increased by $100,000 each
fiscal year from General Fund year-end net operations until a $1,000,000 reserve cap is
reached.
Use of the reserve requires an analysis be prepared and presented to Council for approval, or
in the event of a landslide requiring immediate emergency work, the Public Works Director
may direct use of up to 10% of the reserve to make emergency repairs and mitigate further
damage until Council takes action. Reserve funding is to be used for emergency work which
exceeds operational funding provided for in the Operations Budget. Upon use, refunding of
the reserve shall again resume at be provided from year-end net operations in the amount of
$100,000 each fiscal year until the $1,000,000 reserve cap is reached.
Facility Replacement Reserve
The Facility Replacement Reserve is established to accrue funding for the major rehabilitation
or replacement of City Facilities (Bbuildings/structures). Eligible uses of this reserve to
finance the construction of critical City facilities include both direct funding of public facility
improvements, and the servicing of related debt. Small facility building replacements, major
facility renovations, and down payment contributions toward a large facility replacement in
conjunction with bond measure funding are examples of intended Facility Replacement
Reserve uses.
An initial contribution of $300,000 was established in FY 2012/13 with Council’s
recommendation to continue funding at this level, as a priority use of year-end net operations
fundingavailable. Effective FY 2016/17, Council’s direction is to increase the annual year-end
contribution amount to $500,000, as funding is available. Council has set a goal to fund the
Facility Replacement Reserve to a level equal to 1/3 of the City’s insured value over the next
20 years (by FY 2036/37) as a fiscally responsible practice to maintain city infrastructure In
principle, Saratoga does not pursue bond money to fund capital improvements, however,
replacing high cost facility infrastructure requires a long-term funding plan that may or may
not be attainable through annual contributions. Therefore, the Facility Replacement Reserve
demonstrates both the City’s good faith funding effort and financial stewardship for future
bond measures if needed, as well as accumulating funding for a down payment on
replacement infrastructure to minimize bond funding needs.
A facility’s insured value represents the initial cost of the facility decreased each year over the 23
facility’s estimated lifespan. Therefore, insured value represents the remaining life of the
facility’s purchase cost – it does not represent the current cost to replace a facility. The City
recognizes that insured value is not sufficient to fund facility replacements, therefore annual
contributions will continue as an ongoing funding obligation even after the 1/3 reserve goal is
met.
Changes in aAnnual contributions and ,the reserve goal amount, and utilization shall be
determined by Council during the budget process, in line with changes in as the City’s
economic situation changes. Utilization of the reserve shall be brought to Council for
discussion and consideration as needed.
Future Capital & Efficiency Projects Reserve
Under the Assigned Fund Balance classification, the Reserve for Future Capital Improvement
& Efficiency Projects shall reserve funding for as yet undefined capital and efficiency
improvement projects. Reserve funding is derived from General Fund accumulated net
operations (as available) and is therefore considered a “one-time funding source”. Funds are
held in this reserve until Council reviews funding requests and approves a use or transfer to a
capital project fund.
Use of the reserve funding is at the Council’s discretion, but typically occurs in conjunction
with the annual budget adoption after Council conducts a comprehensive review of capital
and efficiency improvement needs. Reserve replenishment is dependent upon net
operational savings in subsequent fiscal years.
Carryforward Reserve
Under the Assigned Fund Balance classification, the Reserve for Carryforwards represents
funding held at the end of each fiscal year for critical unexpended operating budget
appropriations to be purchased in the following fiscal year, and any remaining Council
Contingency funding. The reserve is reconciled at the end of each fiscal year to both release
prior year carryforward funding and reserve current year carryforward funding into the
following budget year.
Staff determines the year-end reserve amount after all fiscal year payments are finalized; the
reserve amount is conceptually appropriated by Council each year in the budget adoption
resolution.
Working Capital Reserves
In accordance with the City’s cautious and conservative fiscal philosophy, the City’s general
prevailing financial policy holds that the City should fund daily operations with current
resources in order to avoid use of short-term Tax Revenue Anticipation Notes (TRANs).
To support this policy a Working Capital Reserve is established to meet cash flow
requirements and prevent short-term borrowing, which in turn ensures the continuance of
services to the public while also maintaining the City’s credit worthiness. To provide adequate
working capital in the case of extreme circumstances , the City shall maintain, in conjunction
with the Fiscal Stabilization Reserve, a minimum operational reserve of 60 days of the
following year’s General Fund budgeted expenditures net of internal service charges and
transfers out, and up to a maximum operational reserve amount equal to 90 days of the
following year's General Fund budgeted expenditures, net of internal service charges and
transfers out. This reserve falls under the Unassigned Fund Balance classification.
Effective July 1, 2016, the A Working Capital Reserve of $2,000,000 shall be reduced to 24
$1,000,000, in was established conjunction with increasing the Fiscal Stabilization Reserve by
$1,000,000. For the City of Saratoga, a Working Capital Reserve of $1,000,000 is more than
sufficient for cash flow needs. With the $1,000,000 flowing into the Fiscal Stabilization
Reserve, the overall 60 day General Fund operational reserve minimum requirements shall
continue to be met. in April 1994. Effective June 30, 2000, interest earnings accrue to the
reserve at the end of each fiscal year based on the annual LAIF rate, for the purpose of
increasing the reserve balance amount in proportion to Operating Budget increases.
In 2014, accumulated interest earnings of $930,184 were utilized to pay off a portion of the
City’s Unfunded Accrued Liability, bringing the Working Capital Reserve back to the initial
$2,000,000 funding level.
As the Working Capital Reserve’s purpose is to ensure sufficient operating cash, there are no
defined fund uses, repayment terms, or authorization requirements. The $1,000,000 Working
Capital Reserve funding level will be assessed on an annual basis to ensure this funding level
is sufficient for cash flow needs.
Fiscal Stabilization Reserve
Under the Unassigned Fund Balance classification, a Fiscal Stabilization Reserve of
$1,500,000 was established to provide temporary financing for budget stabilization caused by
fiscal downturns, unanticipated extraordinary expenditures related to a natural disaster or
calamity, or from an unexpected liability or funding decrease created by a legislative action.
Effective July 1, 2016, the Fiscal Stabilization Reserve funding level shall increase by the $1
million transfer from the Working Capital Reserve, up to $2,500,000. This funding shift
provides a more accurate reserve funding purpose and utilization structure.
Fiscal stabilization needs may occur from revenue declines (over one or more years) of more
than 5% of either property tax, the combined total of other taxes, or General Fund revenues in
total, or from unanticipated extraordinary operational increases of more than 5% such as from
a natural disaster or unexpected Federal, State, County or CalPERS funding changes.
Council may utilize funding at budget adoption, by adoption of a budget adjustment resolution
during the course of the year, or after a Federal, State, or locally declared emergency. In the
event a locally declared emergency takes place, the City Manager has the authority to spend
funds until such time as the City Council takes action. Reserve appropriations are to be
replenished from year-end net operations, as available, on a priority basis. The $2,500,000
Fiscal Stabilization Reserve funding level will be assessed on an annual basis to ensure this
funding level is sufficient in light of operational reserves and utilization needs.
Development Services Reserve
Under the Unassigned Fund Balance classification, the Development Services Reserve
provides fiscal stability for the Community Development Department’s planning and building
programs. Development projects are often multi-year activities in which revenues may be
collected in one year, while project expenditures may extend over several years.
This reserve represents accumulated excess planning and building net operation funds from
years when development revenues exceeded development expenditures. The reserve funds
are subsequently utilized to offset excess planning and building program expenditures
through annual budget appropriations in the years where revenues are not sufficient, thereby
acting as an overall funding stabilizer for multi-year development activities.
Use of reserve funding for operational support is restricted to 1/3 or the reserve balance in
any given fiscal year, with Council approval. Budgeted use of the Development Reserve is to 25
be rescinded if and to the point where development revenues are sufficient to cover General
Fund net operations at year-end. The reserve may also be utilized for other development
related uses, such as for development software upgrades or special projects, per Council
direction.
Compensated Absences Reserve
Under the Unassigned Fund Balance classification, the Compensated Absences Reserve is
established to smooth expenditure fluctuations resulting from the payout of accrued leave to
employees at service separation and distribution payouts. Initial reserve funding is to be
established at $200,000, with a targeted goal of one-third of the compensated absences
liability established at year-end. Reserve funding in excess of one-third of the liability is to be
returned to the General Fund Other Unassigned Reserve.
Use of the reserve occurs when total annual compensated absences payouts exceed
budgeted salary funds. Large payouts decrease the compensated absences liability at year-
end, thereby supporting the practice of utilizing the reserve as needed. The reserve may be
replenished over a three year period. Year-end reconciling allocations to and from the
reserve are approved though Council’s budget resolution adoption each fiscal year, with the
liability and resulting reserve amounts determined as part of the year-end close process.
Council Discretionary Reserve
Under the Unassigned Fund Balance classification, the Council Discretionary Reserve
represents unspent funds from the Council’s annual appropriation. The reserve provides a
mechanism to roll forward remaining Council Discretionary Funds as reserve funds are
immediately re-appropriated into the following fiscal year. This allows Council the flexibility to
take advantage of unforeseen opportunities or needs without the restriction of fiscal year
boundaries. Use of the reserve funding requires Council majority approval. The reserve
exists at year-end only when there are remaining unspent Council Discretionary funds at the
end of the fiscal year.
Other Unassigned Reserve
The ‘Other Unassigned Reserve’ represents accumulated net operations not yet allocated to
other fund balance reserves, and by definition, fall into the Unassigned Fund Balance
classification. In the General Fund, a baseline of $500,000 of accumulated net operations is
to remain in the Other Unassigned Fund Balance Reserve at year end to provide a buffer for
unanticipated operational shortfalls and unforeseen needs.
Other fund’s accumulated net operations are typically accounted for in an undefined reserve
account – typically just called fund balance reserve. As the other types of funds are
structured for specific uses or commitments, their fund balance already has a directed
purpose, whereas the General Fund is used for multiple operational purposes thereby
requiring a distinction of purpose for each reserve.
Council may utilize reserve funding at budget adoption or by adoption of a budget adjustment
resolution during the course of the year. Reserve funding is replenished from year-end net
operations, as availabl
SPECIAL REVENUE FUND – FUND BALANCE RESERVE POLICIES
Landscape & Lighting Assessment District Funds 26
Assessment District Funds are Special Revenue Funds, which is a type of governmental fund.
As a governmental fund, the Landscape and Lighting Assessment District Funds comply with
GASB 54 fund balance classifications, and by nature of the fund’s purpose, fund balance
reserves are classified as restricted reserves.
Special Revenue Funds account for and report the proceeds of specific revenue sources that
are restricted or committed to specified purposes (other than for debt service or capital
projects.) For the City, Landscape & Lighting District Special Revenue Funds were
established to account for each individual assessment district; thereby each fund has its own
separate fund balance reserve.
Each district’s fund balance reserve should be sufficient to provide working capital to cover
operational expenses through the first half of assessment receipts in January, therefore
equitable to approximately one-half of a district’s annual expenditure budget. The second half
of receipts are received in June. Some districts may include capital improvement projects in
addition to ongoing regular maintenance resulting in fund balance increasing over the years to
accumulate sufficient resources for the improvement projects. As each district’s situation is
different, a district’s maximum fund balance shall be determined by the Public Works Director.
Requests for use of the reserve are approved by Council through budget adoption or by a
Council approved budget adjustment resolution throughout the year. The reserve is
replenished from the Fund’s net operations in subsequent years.
DEBT SERVICE FUND – FUND BALANCE RESERVE POLICIES
Library General Obligation (GO) Bond Debt Fund
The Library General Obligation (GO) Bond Debt Fund is a Debt Service Fund established to
account for the financial resources accumulated for principal, interest, and cost of issuance
expenditures associated with the Library Bond Debt. As Debt Service Funds are a
governmental fund type, the fund reserves fall under the GASB 54 fund balance
classifications. Debt Service Fund reserves are classified as Restricted as funding can only
be spent for specific purposes as stipulated by the bond covenants.
The Library GO Bond Debt Fund was established to ensure receipts are tracked separately,
and funding is available for the GO Bond debt service requirements. At a minimum, the year-
end fund balance reserve shall be sufficient to provide working capital to cover the semi-
annual principal and interest debt payment due on August 1 st as GO Bond tax receipts are
received after the 1st debt payment is due. December receipts provide for the February
payment. As bond assessments are collected as a percentage of property values, reserves
should provide sufficient funding to compensate for tax fluctuations. The fund’s reserve
maximum should be no more than one-year of budgeted annual expenditures.
The reserve balance is increased (or reduced) through establishing assessment rates at more
(or less) than the semi-annual payments and bond services require. Therefore,
replenishment (or use) of the reserve is approved by Council through budget adoption and
implemented through an increased (or reduced) assessment rate as a result of the fund’s net
operations.
CAPITAL IMPROVEMENT PROJECT FUNDS – FUND BALANCE RESERVE POLICIES
Overview 27
Capital Improvement Project (CIP) Funds account for the acquisition and maintenance of
major capital assets other than those financed through special assessments or enterprise
funds. Capital Project Funds are a type of governmental fund and therefore comply with
GASB 54 fund balance classifications. As Council directs appropriated funding be spent for
specific improvement projects, the Capital Project Fund Balance Reserves are classified as
Committed Fund Balance.
Budgeted capital improvement project funding is determined by the scope of work approved
by Council, and remains assigned for that use until completed or reassigned by Council.
Fund Balance amounts represent the total remaining funds in the individual projects at year-
end. As Fund Balance amounts are determined by the point of project completion at year-end
they cannot be standardized for minimum or maximum amounts. Fund Balance is re-
appropriated to the capital project in the following fiscal year for the work to be completed.
Street Improvement Projects Funds
Street Improvement Project Funds provide for a safe and functional roadway and pedestrian
street system. Each Street Improvement Fund (CIP Street Fund, CIP Grant Fund, and Gas
Tax Fund) has multiple projects which roll up into the overall fund balances, but remain
designated for use by project.
The CIP Street Fund receives annual funding from fees, reimbursements, contributions, and
transfers from other funds. The CIP Grant Fund receives federal, state, and local grants
which vary in source and amount from year-to-year. On occasion, a private grant may be
received. Typically, CIP Grant Funds have a negative fund balance as project work is
conducted before reimbursement is received. Gas Tax Funds represent annual Highway User
Tax and Transportation Congestion Relief revenue allocations that are to be accounted for
separately and are subject to State audits.
Year end fund balance represents the remaining unexpended project funds (net of any
negative CIP Grant Fund Balance) which are subsequently re-appropriated by Council into
the following budget year through budget adoption.
Park & Trail Improvement Project Funds
Park & Trail Improvement Project Funds provide for capital improvements to the City’s
neighborhood and city parks and plaza, the sport fields, bike and pedestrian trails, and open
space areas throughout the City. Each of the Park & Trail Improvement Funds (CIP Park &
Trail Fund, CIP Tree Fund, and the CIP Park & Trail Grant Fund) have multiple projects which
roll up into the overall fund balances, but remain designated for use by project.
The CIP Park & Trail Fund receives annual funding from subventions, occasional Park-in-Lieu
fees, reimbursements and contributions, and transfers in from other funds. The Tree Fund
receives revenue from tree fines and transfers from other funds upon Council direction. The
CIP Grant Fund receives federal, state, local and occasional private grants which vary in
source and amount from year-to-year. Typically, CIP Grant Funds have a negative fund
balance as project work is conducted beforehand and then reimbursed from expenditure
invoices.
Year end fund balance represents the remaining unexpended project funds (net of any
negative CIP Grant Fund Balance) which are subsequently re-appropriated by Council into
the following budget year through budget adoption.
Facility Improvement Project Funds 28
Facility Improvement Project Funds provide for capital maintenance and improvements of the
City-owned buildings and structures throughout the City. Each of the Facility Improvement
Funds (CIP Facilities Fund and the Facility Grant Fund) have multiple projects which roll up
into the overall fund balances, but remain designated for use by project.
The CIP Facilities Fund receives annual funding from a General Fund transfer, from Theater
Ticket Surcharge Fees, and from reimbursements and contributions. The Facility Grant Fund
receives revenue from grants that vary in amount from year-to-year. Typically, CIP Grant
Funds have a negative fund balance as project work is conducted beforehand and then
reimbursed from expenditure invoices.
Year end fund balance represents the remaining unexpended project funds (net of any
negative CIP Grant Fund Balance) which are subsequently re-appropriated by Council into
the following budget year through budget adoption.
Administrative & Technology Improvement Funds
Administrative & Technology Improvement Project Funds provide for major capital
expenditures to improve or enhance administrative, technology, and operational systems,
processes, or functions. Each of the Administrative & Technology Improvement Funds (CIP
Admin & Tech Improvement Fund and the Admin & Tech Grant Fund) have multiple projects
which roll up into the overall fund balances, but remain designated for use by individual
project.
The CIP Administrative & Technology Improvement Fund typically receives funding from a
General Fund transfer as administrative and technology improvement focused grants are
limited. If grants are received, projects typically have a negative fund balance as project work
is conducted beforehand and then reimbursed from expenditure invoices.
Year end fund balance represents the remaining unexpended project funds (net of any
negative CIP Grant Fund Balance) which are subsequently re-appropriated by Council into
the following budget year through budget adoption.
INTERNAL SERVICE FUNDS – FUND BALANCE RESERVE POLICIES
Overview
Internal Service Funds are established to provide centralized cost centers for shared
expenses and services in order to efficiently track costs and manage resources. Costs are
then allocated back to the operational programs based on usage to more accurately
determine cost of services.
The City’s Internal Service Funds include the two Insurance funds: Risk Management and
Workers Compensation, four Service/Support funds: Office Support, IT Services, Vehicle &
Equipment Maintenance, and Building Maintenance Funds, and three Equipment
Replacement funds: the Vehicle & Equipment Replacement Fund, the Office Technology
Equipment Replacement Fund, and the Building FF&E (Furniture, Fixture, & Equipment)
Replacement Fund.
As each fund is accounted for as a separate entity, operational revenues less expenditures
result in either a positive or negative fund balance at any given point in time – Internal Service
Funds are similar to the separate checking and saving accounts a person may use for 29
different purposes. At year end, each fund’s net balance is represented as the “Fund Balance
Reserve”. The intent of the Internal Service Funds Reserves is to hold appropriate levels of
reserves to support cash flow needs and minimize interfund loans, not to accumulate funds in
excess of expected ongoing operational costs. Reserve levels are determined by the specific
operational needs of the program, but typically will fall within 25 – 50% of annual budgeted
expenditures.
Internal Service Funds are a type of Proprietary Fund; therefore GASB 54 fund balance
classification (for Governmental Fund types) does not apply. Instead, Internal Service Fund’s
financial statement reports are presented similar to private-sector businesses and use
“Restricted” and “Unrestricted Net Position” to define net operational balances (equity/fund
balance reserves).
Unrestricted Net Position allows reserve funding to be used (with Council approval) within the
general scope of the fund’s purpose. Restricted Net Position reserves are limited to a specific
use, narrower than the stated purpose of the fund. For example, grant funding provided for a
defined use, as in remaining funds from a Risk Management Training Grant within the
Liability/Risk Management Fund, must be used for qualified training purposes. Most Internal
Service Funds reserves are held in the Unrestricted Net Position category.
Liability /Risk Management Reserve Fund
The Liability/Risk Management Fund’s Unrestricted Net Position reserve supports cash flow
needs and minimizes interfund loans. Appropriate levels are maintained through service
chargebacks to the programs, based on operational risk factors. Most claims are covered
under the insurance risk pool JPA, the City is self-insured for up to $25,000 per General
Liability and City Vehicle Auto Liability occurrence, and up to $5,000 for Property Damage and
3rd Party Auto Liability. Non-covered claims are paid fully by the City.
The Liability/Risk Management program receives funding from allocations charged to covered
departments, from grant funding, and from claim reimbursements. At year end, unspent
funding flows into Unrestricted Net Position or Restricted Net Position for specific purposes.
Requests for use of reserve balance are approved by Council through budget adoption or by
a Council approved budget adjustment resolution during the year. The reserve is replenished
from the Fund’s net operations in subsequent years.
Workers Compensation Fund
The Workers Compensation Fund’s Unrestricted Net Position reserve supports cash flow
needs and minimizes interfund loans. Appropriate levels are maintained through service
chargebacks to the programs, based on operational risk factors. The purpose of the Workers'
Compensation program is to provide insurance benefit coverage for employee work-related
illness and/or injuries through its membership in a shared risk pool. The risk pool provides
coverage up to $250,000, and excess insurance provides coverage over this amount up to
$10 million.
The Workers Compensation program receives funding from allocations charged to covered
departments, from grant funding, and from claim reimbursements. At year end, unspent
funding flows into Unrestricted Net Position, or Restricted Net Position for grant funding.
Requests for use of the reserve balance are approved by Council through budget adoption or
by a Council approved budget adjustment resolution during the year. The reserve is
replenished from the Fund’s net operations in subsequent years.
Office Support Fund 30
The Office Support program provides a centralized cost center for administrative office
support expenses, including photocopy machine leases, postage machines, shared office
machines, and the associated maintenance and repair services, postage, paper, and copier
supplies. For efficiency, office support costs are managed collectively and charged back to
departmental programs on a use-basis allocation. Accumulated net operations are held in the
Office Support Fund for working capital cash flow.
The reserve is funded from the allocations charged to covered departments. At year end,
unspent funding flows into Unrestricted Net Position. Requests for use of excess reserve
balance are approved by Council through budget adoption or by a Council approved budget
adjustment resolution during the year. The reserve is replenished from the Fund’s net
operations in subsequent years.
Information Technology Services Fund
Information Technology Services provide for the delivery of technology based services
throughout the City’s operations, including maintenance of the City’s information systems and
infrastructure, program implementation, streaming video, internet, landline, and wireless
communications systems, cloud based technology, and support of all existing information
technology as well as new technology initiatives. For efficiency, information technology costs
are managed collectively and charged back to departmental programs on a service-based
allocation to fund the program.
Funding for the program comes from these allocations charged to covered departments. At
year end, unspent funding flows into Unrestricted Net Position. Accumulated net operations
are held in the Information Technology Services Fund for working capital cash flow. Requests
for use of the reserve are approved by Council through budget adoption or by a Council
approved budget adjustment resolution during the year. The reserve is replenished from the
Fund’s net operations in subsequent years.
Vehicle & Equipment Maintenance Fund
The Vehicle & Equipment Maintenance program provides for the fuel, maintenance, and
servicing of the City’s fleet and major equipment to ensure all vehicles and equipment comply
with manufacturer’s recommendations and safety requirements.
To fund the program, vehicle & equipment replacement costs are charged back to the
departmental programs based on assigned usage. Accumulated net operations are held in
the Vehicle & Equipment Maintenance Fund for working capital cash flow. At year end,
unspent funding flows into Unrestricted Net Position. Requests for use of the reserve are
approved by Council through budget adoption or by a Council approved budget adjustment
resolution during the year. The reserve is replenished from the Fund’s net operations in
subsequent years.
Building Maintenance Fund
The Building Maintenance program provides for the custodial, maintenance, and non-major
repairs and building improvement services for all facilities at the Civic Center, Prospect
Center, and Museum Park. Additionally, the program supports the maintenance and repair
needs for the tenants of City leased buildings as defined in the lease agreements. To fund
the program, total costs are allocated back to departmental programs primarily based on
building space usage. General and public use is allocated to the Non-Departmental program.
Accumulated net operations are held in the Building Maintenance Fund for working capital
cash flow. Funding comes from the allocations charged to covered departments. At year 31
end, unspent funding flows into Unrestricted Net Position. Requests for use of the reserve
are approved by Council through budget adoption or by establishing chargeback funding
levels higher or lower than budgeted expenditures. The reserve is replenished from the
Fund’s net operations in subsequent years.
Vehicle & Equipment Replacement Reserve
The Vehicle and Equipment Replacement Fund Balance Reserve accounts for accumulated
funding over an asset’s lifespan, to be used for the replacement of the vehicle or equipment at
the end of its useful life. Initial purchases are paid for through a department’s operational
budget. If the purchased item is for ongoing use, the Vehicle & Equipment Replacement
program appropriates an annual allocation for the replacement of the vehicles and equipment
based on the asset’s cost and years of life. Final determination for replacement of the asset
is determined through an analysis of whether the cost of maintenance equals or exceeds the
cost of replacing the asset.
The reserve is funded from allocations charged to covered departments and represents
accumulated funding, less amounts expended for asset replacement. At year end, unspent
funding is held in Unrestricted Net Position. The reserve is to be maintained at a level
sufficient to provide replacement funding of vehicles and equipment in accordance with
replacement schedules.
Requests for use of the reserve are approved by Council through budget adoption or by a
Council approved budget adjustment resolution throughout the year. The reserve is
replenished from the Fund’s net operations in subsequent years.
Office Technology Equipment Replacement Fund
The Office Technology Equipment Replacement Fund accounts for accumulated funding over
an asset’s lifespan to be used for the replacement of office technology based equipment such
as desktop computers and monitors, laptops and tablets, network infrastructure, and various
other related equipment. Replacement costs are charged back to the departments based on
assigned equipment costs. Initial purchases are paid for through a department’s operational
budget. If the purchased item is for ongoing use, the Office Equipment Replacement program
appropriates an annual allocation for the replacement of the equipment based on the asset’s
cost and years of life.
The reserve represents accumulated funding, less amounts expended for replacements. The
reserve shall be funded to provide replacement funding in accordance with replacement
schedules. Funding for the reserve comes from the allocations charged to covered
departments. Requests for use of the reserve are approved by Council through budget
adoption or by a Council approved budget adjustment resolution during the year. The reserve
is replenished from the Fund’s net operations in subsequent years.
Facility Furniture, Fixtures & Equipment (FFE) Replacement Fund
The Facility FF&E Fund accumulates funding over an asset’s lifespan to be used for the
replacement of furniture – such as tables, chairs, and cubicle partitions; for fixtures - such as
kitchen appliances, sound equipment, lighting, for equipment - such as HVAC units, boilers,
and generators; and for facility infrastructure – such as roof, door, window, and
floor/carpeting replacement.
Initial purchases for new assets may be paid for through the Operating Budget or through the
Capital Budget. Annual replacement charges are charged-back to the supported department
programs with full replacement funding to be accumulated over the asset’s estimated lifetime. 32
Final determination for replacement of the asset is determined through an analysis of whether
the cost of maintenance equals or exceeds the cost of replacing the asset. The reserve is
intended to be maintained at a level sufficient to provide replacement funding in accordance
with replacement schedules.
Requests for use of the accumulated reserve funding are approved by Council through
budget adoption, or if an unplanned situation occurs, by a Council approved budget
adjustment resolution during the fiscal year. The reserve is replenished by replacement
charge allocations in subsequent years.
33
CIP PROJECT PROCESS POLICY
This procedural policy defines how a project moves through the CIP Budget Funding process: from the initial
project idea, through project development, nomination, and project approval process, and if successful, into the
Capital Budget as a funded project.
The CIP project development stage of the policy takes different tracks, depending upon whether the project idea is
staff driven or Council nominated. These two paths are discussed separately below, until the tracks converge for CIP
project assessment preparation.
STAFF PROJECT DEVELOPMENT
1.CIP Project Initiation
As a function of staff’s day-to-day work, infrastructure improvements and large-scale repairs and maintenance
are identified as potential capital improvement projects. These are often highly-visible tangible public assets
such as street repaving, or park and trail improvements. However, many CIP projects are less noticeable,
including facility roof repairs, tree planting, or ADA enhancements. Projects may also be administrative or
technology improvements, and hence invisible to the general public, such as code updates/revisions, process
improvements, software implementations, or economic vitality programs.
Staff is to discuss the CIP project idea with the appropriate staff or City Manager for feedback and refinement.
Ultimately, projects need clearly defined boundaries to identify project requirements, specifications, and
resources. While this is not always feasible in the initial stages of project development, the understanding that a
project will eventually require a clear and specific scope will encourage better preparation for discussing the
project idea and moving it through the nomination process. After receiving initial approval, staff moves into the
idea development stage.
2.Idea Development
To move the idea forward, staff will need to analyze and articulate the project’s scope, political impacts, priority
factors, resource requirements, and any other relevant considerations.
a.Project Scope – Scope may include the description, project size and location parameters, project purpose,
and goals or deliverables, such as products, services or results. Project justifications and assumptions
should support the project’s purpose and definition, and may include cost-benefit analysis, risk
assessments, funding availability, or even community desirability factors.
The scope should clearly state if a project is to be funded and/or completed in phases rather than as a
singular body of work. If the project is ongoing infrastructure maintenance or a program project, this too
should also be clearly noted. In some cases, project scope may be defined by exclusions – statements about
what the project will not accomplish or produce. Additionally, constraints or restrictions may identify
project limitations.
Project Scope defines a commitment to produce a body of work or end-product with the resources provided
under the stated assumptions. The written scope helps to manage expectations and provide clarity to the
involved parties, reduce confusion and failure, prevent scope creep, and provide transparency to the
community.
b.Political Considerations - Knowledge of historical information, which attests to the necessity of
Council/staff communication is of vital importance in project development. Determine whether this project
has come up for consideration before, or why was it not completed previously. Are there lessons to be
learned from a past project proposal? 34
Another consideration includes knowing whether a project might be controversial. Is there a segment of
the community strongly opposed to, or strongly supportive of this specific project? Will this project prompt
demand for further funding or resources? Have similar projects been completed in another part of the city?
Determine why this project should be considered a priority over others, and whether the project’s cost or
benefits would be supported by the community.
c.Priority Factors - Project priority is an important consideration in the CIP approval decision factor.
Council’s role is to determine which projects are of higher priority than others since there will never be
enough money or resources to do every project. Decision criteria may include factors such as:
•Health and Safety Issues
•Imminent failure of structure/system
•Short-term cost of repair vs. long-term cost of replacement
•Availability of external or dedicated funding
•Federal or State mandates
•Business or community support
•Impacts if project is not completed
A project’s priority is also affected by the severity of the criteria. For instance, a project that falls under the
“Imminent Failure of Structure/System” criteria may be an extremely dangerous situation in need of
immediate repair, or low danger of minor importance and simply remedied by removal. Another example
would occur with Federal or State mandated projects. There may be little impact as to whether the mandate
is met, or there may be severe fines for lack of timely completion. As a result, project priority is based on
the overall assessment of the circumstances; many factors contribute to priority decisions and Council
cannot rely upon a clear hierarchical order upon which to base their decisions.
d.Project Resources - In the City’s project development discussions, resources typically refer to financial
funding. However, resources may also refer to staff time, equipment and materials, community/stakeholder
participation or support, space requirements, information technology services, or some other type of
support or contribution.
Funding plays a critical role in project development. In many cases, lower priority projects may be
approved ahead of higher priority projects simply because there is designated funding available for the
lower priority projects. The ability to bring designated funding (such as a grant award) with a project
proposal greatly increases the likelihood that the proposed project is approved. Overall, projects that
request undesignated Capital Project Reserve funding are more competitive due to funding limitations and
the number of projects competing for the same pot of funds.
An additional component of project resource considerations are the unstated resources (identified above)
required in project construction or implementation. For instance, staff time is limited and time spent
working on one project prevents staff time being spent on another project. Project timing and staff time
requirements are therefore an important component of the project that Council may wish to review.
e.Other Considerations - There are numerous other factors not mentioned above that are also taken into
consideration when assessing a project idea. For example, can the City afford the ongoing operating budget
increases to maintain or implement the project? Does the project contribute toward economic vitality? Are
there environmental concerns? Does it enhance the community’s art, education, or cultural resources?
Does the project provide operational efficiencies or cost savings? Are there risk management or legal
liability issues? Does this project require development be staged in phases? Is there strong community
interest in this project? Each project will differ, meaning analysis is specific to the circumstances, and
diligent research and thought should be put into developing project scope and justification.
In summary, the overall goal of idea development is to identify, quantify, and assess the project
comprehensively. This effort is intended to ensure that a proposed project is well-thought-out, developed,
and articulated thereby enabling the City Manager and Council to make educated and rational decisions.35
1.City Manager Approval
Staff is to propose the project idea to the City Manager for approval. If approved, the project is moved onto the
CIP Project Candidate List. Staff is to notify the Administrative Services Director of the project’s approval and
provide pertinent project information.
Staff will prepare written narratives with project scope, justification, fiscal impacts, cost estimates, timelines,
etc. as necessary for Council Retreat assessment package.
City Council Project Development
Council Members are often the recipients of residents’ suggestions for capital project work. Depending on the
topic, Council Members can take these opportunities to: 1) educate the residents on why a project may not be
feasible; or 2) provide residents with information on how to contact City staff with their requests to determine
feasibility; or 3) Council may support the project suggestion and decide to act as a proponent for the project by
guiding it through the Capital Project Nomination process:
1.Nomination - To move a project idea onto the CIP Candidate List, a Council Member is to propose the idea to
fellow Council Members at the end of a City Council Meeting during the Council Items session and request that
it be put on the CIP Candidate List for review during the next upcoming CIP budget cycle.
2.Idea Concurrence - A second Council Member must concur with the request to move the project idea onto the
Capital Project Candidate List.
3.Follow-up - A nomination to the Capital Project Candidate List is to be recorded in the City Council minutes,
and acted upon as a follow-up item for staff to complete Candidate List step requirements. Staff will prepare
written narratives with project scope, justification, fiscal impacts, cost estimates, timelines, etc. as necessary for
Council Retreat assessment package.
CIP Project Assessment
1.Assessment Package
In preparation for the annual Capital Project Assessment, Finance will consolidate the CIP Project Candidates,
along with proposed changes to current CIP projects, and the current year’s CIP Unfunded Project List into an
assessment package for Council’s review. The Capital Project Assessment review provides a forum to assess all
projects at one time. These assessment package will include:
A review of available funding
Existing projects in the current year’s CIP
Proposed changes to existing projects
The current CIP Unfunded List
Proposed changes to projects on the CIP Unfunded List
New projects on the CIP Candidate List
Review of requests in conjunction with funding sources
2.Council Retreat
The Capital Project Assessment is to be held annually, prior to the start of the budget development cycle,
typically at the Council Retreat Meeting that occurs in late January or early February. During the assessment
review, Council will review available funding and all project requests.
36
In their review, Council may request revisions to a project’s scope, funding, or other component. However,
changes that redefine a proposed project must be Council’s consensus direction. As projects are assessed, they
are either:
Rejected
Accepted, or
Modified and Accepted
At the conclusion of the assessment review, Council will prioritize accepted projects and designate project
funding. Projects placed on the Funded List will be brought forward to the upcoming Budget Study Session.
The remainder will be placed on the CIP Unfunded Project List.
NOTE: Rejected project ideas may be nominated for another attempt to become an approved project in the
following year(s), but must again go through the project development and assessment process.
3.Budget Study Session
Updated CIP funding availability and project revisions will be reviewed a final time with Council. Council will
conduct a final assessment and provide consensus direction to staff for inclusion in the upcoming Proposed
Budget Hearing to be held in May.
CIP Project Funding
1.Proposed Budget Hearing
The final Proposed Capital Budget with the recommended project funding will be brought to the City Council
Budget Public Hearing in May for final review. New funded projects will be presented, along with summary
level budget information. Council is to provide any final comments or direction for budget adoption.
2.Budget Adoption
The Operating and Capital Budgets are brought to Council in June with all final direction incorporated into the
final summaries. Council is to adopt the budget at this time, with budget funding effective on July 1 st of that
year.
Funding Process Follow-up
•Approved CIP projects that do not receive funding allocations will be assigned to the next budget year’s CIP
Unfunded List. The list will be included in the budget document, and assessed again during the following
year’s Capital Project Nomination and Assessment Process.
•The new CIP Unfunded List has a life span of one budget cycle.
37
38
FY 2015/16 FY 2015/16 Additional
Revenues Budget Estimates Revenue
Property Tax 10,475,350 11,024,509 549,159
Sales Tax 1,060,000 1,280,000 220,000
Other Taxes 3,071,638 3,126,638 55,000
Fees, Licenses & Permits 1,465,900 1,387,993 (77,907)
Charges for Services 1,845,234 1,937,511 92,277
Other Revenues & Transfers In 1,256,504 1,375,855 119,351
Total Revenues 19,174,626 20,132,506 957,880
FY 2015/16 FY 2015/16 Expenditure
Expenditures Budget Estimates Savings
Salary & Benefits 7,514,983 7,392,700 122,283
Operational Expenditures & Transfers Out 13,161,880 13,047,749 114,131
Total Expenditures 20,676,863 20,440,449 236,414
Budget - Transactional Net Operations (1,502,237)
(307,943)
Plus: Budgeted Use of Reserves
Environmental Reserve 50,000 50,000
Carryforward Reserve 176,560 176,560
Capital Improvement & Efficiency Reserve 1,777,896 1,777,896
Development Services Reserve 60,000 60,000
Less: Reserve repayment
Fiscal Stabilization Reserve (250,000) (250,000)
Total Net Operations (Sources & Uses)312,219 1,506,513
GENERAL FUND
FY 2015/16 Budget & Fiscal Estimates
YE Estimated - Transactional Net Operations
39
SARATOGA CITY COUNCIL
MEETING DATE:February 5, 2016
DEPARTMENT:City Manager’s Office
PREPARED BY:James Lindsay, City Manager
SUBJECT:City Council Priorities for FY 2017/2016
RECOMMENDED ACTION:
Direct staff accordingly.
BACKGROUND:
This item has been placed on the City Council Retreat agenda to provide the Council with an
opportunity to brainstorm priorities and work efforts for Fiscal Year 2016/17.
40
SARATOGA CITY COUNCIL
MEETING DATE:February 5, 2016
DEPARTMENT:Finance & Administrative Services
PREPARED BY:Anthony McFarlane, Finance Manager
SUBJECT:Finance Review: Proposed FY 2016/17 Capital Improvement Plan (CIP) Projects
RECOMMENDED ACTION:
Review and provide direction on development of FY 2016/17 Capital Budget Projects.
ATTACHMENTS:
Capital Improvement Plan schedules and capital project worksheets will be provided to Council in the
Council Retreat Binder on January 28, 2016.
41
SARATOGA CITY COUNCIL
MEETING DATE:February 5, 2016
DEPARTMENT:City Manager’s Office
PREPARED BY:Brian Babcock, Administrative Analyst I
SUBJECT:Communications Progress Report
RECOMMENDED ACTION:
Receive report and direct staff accordingly.
BACKGROUND:
In August 2015, the City Council directed staff to present a progress report on the City’s
communication efforts at the 2016 Council Retreat. The progress report (Attachment A) details
the progress City staff has made toward the 14 action steps Tripepi Smith outlined in its Saratoga
Communications Assessment, which was completed in July 2015.
Communications Assessment
The City Council expressed its desire during the January 2015 Council Retreat to broaden
Saratoga’s citizen engagement and communications efforts. Staff followed up by entering into a
contract with Tripepi Smith and Associates in April 2015 to conduct a communications
assessment with the purpose of reviewing the City’s communication efforts and receive feedback
on where the City could improve.
As part of the assessment, Tripepi Smith held interviews with City Council Members,
Commissioners, City Staff, residents, and local organizations. Tripepi Smith also reviewed data
in relation to the City’s website, social media pages, and more traditional forms of
communication, such as the Median Banner Program, Saratoga Recreation Guide, and The
Saratogan.
Tripepi Smith’s Communication Assessment stated that the City shows a “strong foundation for
communications” with room for improvement. As such, the report outlined 14 action steps with
69 recommendations to help strengthen the City’s communication efforts.
Progress to Date
Implementing the 69 recommendations will be an ongoing effort. However, staff has made
progress on many of the action steps outlined in the Communications Assessment, which are
outlined in the attached progress report. Some of the significant achievements are noted below.
42
Assign a Staff Member to Focus on Communications
One of the most significant steps has been to continue assigning the Administrative Analyst in
the City Manager’s Office (Brian Babcock) to be the center of communication efforts, such as
working closely with Directors and project managers at the inception of projects and initiatives
to ensure that a communications strategy is created and implemented to inform and educate the
public. This has worked well for recent projects, including the Community Development
Department’s Village Specific Plan Update and the Public Works Department’s storm
preparedness efforts.
Having an assigned staff member to oversee communications goes along with the changing
landscape of local government communication efforts. Due mostly to technological advances,
residents now expect clear, brief, and immediate responses to their questions and information
requests. Local governments have had to become proactive instead of reactive when it comes to
sharing information with the public. For example, the Santa Clara County Fire Department
recently created a public information officer (PIO) position, which it historically never had, and
the City of Campbell has also created a social media specialist position.
Website Design
On Tuesday, January 19, the City released a Request for Proposals (RFP) for a website redesign.
Twenty companies have expressed interest in working with the City on a redesign that would,
among other things, make the site mobile-friendly and create a simpler and cleaner design to
allow residents to easily access information and documents. The City expects to award a contract
for the website redesign in April 2016.
Council Videos
City Council Members and City staff have worked closely together throughout the past three
years to create informational videos. These video projects have centered mostly on Public Works
projects, public service announcements, and State of the City addresses. Recently, Council
Members have shown a strong interest in creating more videos in Fiscal Year 2016/17. Due to
limited staff time, staff believes it can complete up to five videos this next fiscal year. Each
Council Member would be given the opportunity to do one in-house.
If the Council chooses to do more than one per member, then staff recommends contracting with
an outside vendor, such as KSAR or University Productions (which created the Quarry Park
video). University Productions has given a cost of $750 per video. However, the cost would drop
if the City contracted with them for multiple videos. Staff has contacted KSAR for a price quote
and will have that information available at the Council Retreat. Currently, there is no funding
allocated in the City budget for video production.
Communications Presentation
Staff will provide the Council with a presentation on the City’s recent communications effort,
which will discuss the information provided in the attached progress report.
ATTACHMENTS:
Attachment A: Communications Progress Report
2
43
Communications Progress Report – February 5, 2016
Communication Action Step Progress to Date
1.Continue Assigning a Staff Member to
Focus on Communications
The Administrative Analyst in the City
Manager’s Office continues to be the center of
the Saratoga’s communication efforts. The
Analyst has partnered with staff from different
City departments, local organizations, and
residents to inform the community about
important information, news, and events.
2.Create a 12-Month Content Calendar
for the City’s Communication
Target date of completion is May 2016.
3.Change the Distribution for The
Saratogan
In 2015, the City began exploring the
distribution methods proposed in the
Communications Assessment and staff is
continuing to determine which distribution
methods result in the highest readership for the
City’s newsletter. There is a growing segment
of Saratoga’s population that desires electronic
communication. This can be seen in the
growing email correspondences between City
staff and residents, and the steady increase in
followers on the City’s social media sites.
4.Focus on Physical Assets as a Key Tool
for Communication
The City’s Median Banner Program has proven
to be a valuable tool in communicating
information with the public. The City has used
the program to advertise events, and will be
partnering with our Public Safety Agencies to
communicate safety tips.
5.Expand Direct Electronic
Communications with Residents
City staff has expanded its use of electronic
communications with the community. A couple
of successful examples of this includes the use
of Constant Contact to email The Saratogan to
subscribers and the high rate of resident
response to the Peak Democracy survey
pertaining to the Village Specific Plan Update.
Staff will continue to find new ways to use the
growing electronic communication landscape to
survey residents and provide information to the
public.
6.Promote City Communication Platforms City staff has used paid “boosts” on Facebook
to help spread the word about events,
Commission vacancies, and more. Staff has
44
found this to be a relatively inexpensive and
successful way of communicating, marketing,
and promoting important information with the
public.
7.Routinely Collect and Report on Metrics
Related to Communications
It is becoming routine for staff to review metrics
related to Facebook, Constant Contact, short
URLs, and, YouTube, Vimeo, and Google.
8.Revisit Website Design The website Request for Proposals (RFP) has
been released. It is expected that the City will
award a contract in April 2016.
9.Improve Website SEO Functionality Website SEO functionality will be one of the
key deliverables requested in the website
design RFP and improved SEO functionality
will be introduced with the new website.
10.Coordinate with City Stakeholders and
Partner Organizations
City staff has been working closely with the
Sheriff’s Office to regularly issue safety tips to
the public through Nextdoor and The
Saratogan. Staff has also met with the Fire
Department and will begin working on joint
messaging and coordinating communication.
The Analyst will continue to work with
community organizations to promote Saratoga
events.
11.Develop Relationships with Regional
Media
This is an ongoing effort, which is expected to
start at the beginning of the new fiscal year.
12.Develop a Marketing Plan for
Recreation Programming
A marketing calendar is planned to be
completed by April 2016.
13.Improve KSAR’s Deliverables &
Strategic Role
KSAR spent a little more than $100,000 of PEG
funding (for capital projects) to replace all of its
outdated equipment in its booth in the Civic
Theater. Contract talks will begin within the
next couple of months as KSAR’s contract with
the City expires on June 30, 2016.
14.Develop a Crisis Communications Plan A Crisis Communications Plan was completed
this fall by MTEP participant Cheryl Parkman.
The plan is a living document, meaning that it
will be regularly updated to reflect changes to
information or communication strategies.
45
SARATOGA CITY COUNCIL
MEETING DATE:February 5, 2016
DEPARTMENT:City Attorney’s Office
PREPARED BY:Richard Taylor, City Attorney
SUBJECT:Legislative and Other Statewide Policies Update
RECOMMENDED ACTION:
Direct staff accordingly.
BACKGROUND:
Each year the State legislature adopts legislation affecting cities. Similarly, State regulatory
agencies adopt policies that affect City operations and in some cases statewide voter initiatives
and referenda can affect the City. Attached is a list of recent actions at the Statewide level that
are expected to have some bearing on Saratoga. The list is divided into three parts:
1.State level actions that require specific actions on the part of the Council or City staff;
2.State level actions that touch on issues that have been the subject of ordinances or other
significant discussion by the City Council; and
3.State level actions that will affect day-to-day City operations and/or Council member
campaign related filing obligations.
46
Highlights of Legislative Action Affecting Saratoga in 2016
I.Measures Requiring City Action
Legislation City Action Required
AB 57 – Wireless Telecommunications
Facilities
This measure provides that a collocation or
siting application for a wireless
telecommunications facility is deemed
approved if the city or county fails to approve
or disapprove the application within the time
periods specified by Federal Communications
Commission regulations, all required public
notices have been provided regarding the
application, and the applicant has provided a
notice to the city or county that the reasonable
time period has lapsed.
Staff expects to be able to implement this and
FCC regulations imposing greater limits on local
control at the administrative level. If code
amendments are required they will be included in
the annual code update.
Medical Marijuana Regulation: AB 243,
AB 266, SB 643
This package of bills provides for state
regulation of medical marijuana. Of
relevance to Saratoga, the bills allow local
ordinances regulating medical marijuana
dispensaries and cultivation (such as
Saratoga’s rules in section 15-80.140 of the
City Code) to remain in effect. The laws
require a state license and a local license or
permit for medical marijuana cultivation,
manufacturing, testing, dispensaries,
distribution, and transport. Accordingly, if a
city’s zoning code prohibits any of these
activities, the city does not need to issue the
local permit. The state will not issue a
permit without evidence of a local permit.
Cities that wish to ban medical marijuana
delivery services within their jurisdictions
should have a delivery ban in place before
the state begins issuing distribution licenses
(currently expected in 2018).
No immediate action required. If the City wishes
to ban delivery services it must do so before the
State begins issuing licenses. This is not
expected until 2018. The City could amend its
code to conform the wording of the code to
wording in the legislation. This could happen
now or the City could wait until the state licensig
rules have been proposed.
There is a also the possibility that one or more
statewide initiatives legalizing recreational use of
marijuana will qualify for the ballot. (To date
none of the measures proposed has qualified.) If
a measure is adopted the City will need to
ascertain the degree of local control allowed by
the measure and what actions it wishes to take
consistent with those limits.
SB 272 – Enterprise System Disclosure
This bill requires public agencies to develop
a catalog of their “enterprise systems” and
post on the agency website specific
Staff is developing a list of the City’s enterprise
systems and will include on the City’s website
prior to the July 1, 2016 deadline.
2
47
information regarding each system. An
enterprise system is one that a software
application or computer system that collects,
stores, exchanges, and analyzes information
that the agency uses and that is both (i) a
multidepartmental system or a system that
contains information collected about the
public and (ii) a system that serves as an
original source of data within an agency. The
bill exempts some security-related systems
from the disclosure requirements.
SB 379 – Safety Element Updates
This measure requires that upon the next
revision of a local hazard mitigation plan on or
after January 1, 2017 cities and counties are to
review and update the General Plan Safety
Element to include a set of goals, policies, and
objectives based on a vulnerability assessment,
identifying the risks that climate change poses
to the local jurisdiction and the geographic
areas at risk from climate change impacts, and
specified information from federal, state,
regional, and local agencies. Saratoga’s local
hazard mitigation plan was adopted in 2012
and provides for a five year review consistent
with federal law.
Staff will comply with this requirement in
connection with the next update to the local
hazard mitigation plan currently planned for
2017.
AB 1236 – Electric Vehicle Charging
Stations
This measure sets standards for electric vehicle
charging stations and requires local
government approval of the charging stations
unless denying agency makes written findings
that the proposed installation would have a
specific, adverse impact upon the public health
or safety, and there is no feasible method to
satisfactorily mitigate or avoid the impact. The
effective date is September 30, 2017 for cities
and counties with a population of less than
200,000 residents.
Staff will include provisions for compliance with
these new requirements as part of this year’s
annual code update.
AB 2188 (2014) -- Solar Permitting
This bill requires cities and counties to adopt
systems for streamlined permitting and
inspection of small residential rooftop solar
energy systems.
Staff already works with applicants to make
review and inspection of rooftop solar as simple
as possible on the administrative level. Staff will
include code amendments to further streamline
the process as part of the annual code updates.
48
AB 2355 (2014) -- Recycled Paving
Materials
This legislation from 2015 sets a January 1,
2017 deadline for cities to either adopt
CalTrans guidelines for use of recycled
paving materials or hold a public hearing to
consider why the standards are not being
adopted.
Staff believes the standards are in the pubic
interest and will be bringing this matter before the
Council in the summer.
Building Code Update
The California Building Standards
Commission will release the new California
Building Code on July 1, 2016. Cities must
adopt the code and approve any local
exceptions to the Code by December 31,
2016.
Staff will work with local building and fire
officials to ascertain exceptions required for
conditions in the Saratoga area and bring this
matter forward in November.
II.Measures Providing Policy Options for Council Consideration
These measures do not require City action but touch upon policy areas that have been of interest
to the Council in the past. The Council may wish to consider whether it wishes to adopt or
amend local policies in response to these legislative actions.
Legislation Policy Considerations
AB 216 – E-Cigarettes
This measure prohibits the sale of any device
intended to deliver a non-nicotine product in a
vapor state, to be directly inhaled by the user,
to a person under 18 years of age. (Existing
law already prohibits the sale to minors of
devices to deliver nicotine products.) This
measure exempts from its prohibition the sale
of a drug or medical device that has been
approved by the federal Food and Drug
Administration.
This measure is noted because the City Council has
previously adopted ordinances regulating the sale of e-
cigarettes
AB 1164 – Drought Tolerant Landscaping
This measure prohibits cities and counties from
enacting or enforcing any ordinance or
regulation that prohibits the installation of
drought tolerant landscaping, synthetic grass,
or artificial turf on residential property. The
law allows reasonable restrictions on the type
of drought tolerant landscaping, synthetic
grass, or artificial turf that may be installed on
This is noted because the City has previously
considered ordinances regarding landscaping
requirements. Staff will not enforce those ordinances
in a manner that would violate this legislation.
4
49
residential property subject to certain
restrictions.
ACR 93 – Fire Sprinkler Ordinances
This non-binding resolution states that built-in
fire suppression systems can offset the negative
impacts of excessive response times and
encourages all municipalities to reexamine
regulations surrounding mandatory fire
suppression ordinances.
This is noted because the City, on the advice of the
local fire districts, has required built-in fire
suppression systems. This matter will be before the
City Council again this year in connection with the
update to the Building Code.
AB 169 –Open Data
This bill provides that if a public agency
posts information on its website with the
designation “open data” the records posted
must be in an open format that meets
specified requirements, including, among
others, that the format is able to be retrieved,
downloaded, indexed, and searched by a
commonly used Internet search application.
The City strives to make data available to the public
on its website and will be making a number of
historical records available via laserfiche later this
year. This will not be characterized as “open data”
because the precise meaning of that terms and the
actions and technology required to comply with this
legislation’s requirements for information designated
as “open data” has not yet been refined. As more
information and cost-effective compliance tools
become available staff will consult Council on the
extent to which it wishes to invest the resources
necessary for an open data componet to the City
website.
Referendum on SB 270 (2014) - Plastic
Bags
SB 270 would have prohibited grocery stores
and certain other establishments from
providing disposable bags to their customers
and instead allowed use of only reusable or
recycled paper bags sold for a fee. The
measure would have prohibited cities from
adopting legislation addressing this subject
matter. The legislation did not take effect
due to qualification of a voter referendum for
the November 2016 ballot. This means that
local governments may still adopt their own
regulations as they were permitted to do
before adoption of SB 270.
This development is noted because the City Council
has previously considered the possibility of adopting
regulations concerning disposable bags in Saratoga.
III.Measures Affecting City/Council Operations
50
These measures do not directly affect City policy issues but are noted due their effect on City
operations and on elected officials.
AB 952 – Local
Government
Vacancies
This bill establishes provisions related to filling an unexpected vacancy
on the City Council. Cities retain the option to fill vacancies through a
special election but if a vacancy is filled by appointment new rules
apply. If the appointment is made during the first half of the vacant
term of office and at least 130 days before the next general municipal
election, the appointed member will hold the seat until the spot is filled
at the next general municipal election and the person elected at that
election will hold office for the balance of the term. If the appointment
is made during the first half of the term but less than 130 days prior to
the next general municipal election or if the appointment takes place
during the second half of the term, the appointed member will fill the
vacancy until the term expires.
AB 990 – Political
Reform Act
Advertisement
Disclosures
Currently, the Political Reform Act requires that political
advertisements disclose who paid for the advertisement. Groups acting
independently in favor or opposition of a candidate must also disclose
that the advertisement was not authorized by a candidate or a
committee controlled by the candidate. Due to passage of this new law,
disclosure statements must be printed in no less than 14-point bold,
sans serif type font. Previously, the Political Reform Act required that
the disclosure be printed in no less than 10-point type font in a
conspicuous manner.
AB 1100 – Ballot
Initiatives Filing Fees
Authored by Saratoga’s State Assembly Representative Evan Low, this
law increases the filing fee for State ballot initiatives from $200 to
$2,000.
AB 594 – Political
Reform Act
Campaign
Statements
This bill makes a number of changes to existing campaign disclosure
rules. One of the most significant changes is the change in the
committee qualification threshold from $1,000 to $2,000. This means
that candidate committees would be required to file a Form 410 to
establish a committee and create a committee bank account when
receiving $2,000 in contributions, instead of $1,000. The bill also
clarifies reporting requirements for contributions and independent
expenditures that are made on the date of the election.
SB 21 – Political
Reform Act Gifts of
Travel
This law amends the Political Reform Act in several ways, including
changes that may impact the Form 700 filings of City Council
Members, Commissioners, and other Saratoga Form 700 filers. The
new law requires that a Form 700 filer who receives a gift of a travel
payment to disclose the destination of the trip on the Form 700 (under
Schedule E, Travel Reporting).
AB 1544 – Reporting
of Behested
This bill clarifies the law regarding reporting of behested payments in
FPPC filings. Existing law requires an elected officials to report a
6
51
Payments donation or other payment made at the behest of that officer, made
principally for legislative, governmental, or charitable purposes, within
30 days following the date on which the payment or payments equal or
exceed $5,000 in the aggregate from the same source in the same
calendar year. This bill clarifies that payments made by state, local,
and federal governmental agencies that are made principally for
legislative or governmental purposes are NOT subject to the behested
payment reporting requirements.
AB 327 – Volunteers
on Public Works
Projects
This measure extends the sunset date from January 1, 2017 to January 1,
2024 for current law which exempts volunteer work from Chapter 1 of the
labor code as it relates to public works projects, including volunteer work
performed by the California Conservation Corps (CCC) or by CCC
certified Community Conservation Corps.
751302.3
52
SARATOGA CITY COUNCIL
MEETING DATE:February 5, 2016
DEPARTMENT:City Manager’s Office
PREPARED BY:Crystal Bothelio, City Clerk/Assistant to the City Manager
SUBJECT:Smoking Regulations
RECOMMENDED ACTION:
Direct staff accordingly.
BACKGROUND:
During the September 2, 2015 City Council Meeting, Council Member Bernald with the support
of then Council Member Cappello, requested discussion of smoking regulations at the 2016 City
Council Retreat. Consequently, this report provides a summary of past efforts and information
about options to further regulate smoking, as well as improve the American Lung Association
State of Tobacco Control grade for the City of Saratoga.
Below is a timeline of the City of Saratoga’s recent actions related to tobacco and smoking.
Date Summary of City Council Action
October 2009 Adopted an ordinance requiring new tobacco retailers to obtain a
conditional use permit to limit the density of tobacco retailers in a given
area and proximity to schools and City parks.
September 2010 Adopted “Smoke Free Recreational Areas” ordinance to prohibit use of
tobacco products in City parks and recreational areas.
June 2013 Adopted resolution in support of FDA regulation of menthol flavoring in
cigarettes and flavored tobacco products.
March 2015 Adopted an ordinance clarifying that use of an electronic smoking device
is prohibited in City parks and recreational areas.
June 2015 Adopted ordinance establishing a Tobacco Retailer License Program and
strengthening tobacco controls. Retailers had until September 1, 2015 to
obtain a license and all 6 of the City’s retailers have obtained a license.
Additionally, the Santa Clara County Sheriff’s Office periodically conducts tobacco decoy
operations at a random sample of Saratoga tobacco retailers to ensure that tobacco is not being
sold to minors in Saratoga. In the operations conducted in April and December 2015, Saratoga
businesses included in the operations were 100% compliant. 53
Despite these efforts, the American Lung Association has given Saratoga failing grades in the
most recent annual report cards of California cities. However, the City’s recent institution of a
tobacco retailer license program is expected to increase Saratoga’s grade for calendar year 2016
to a C.
In anticipation of the City Council discussion of smoking regulations at the Council Retreat, staff
has prepared a tentative plan (Attachment A) for strengthening smoking controls and improving
the City of Saratoga’s American Lung Association Tobacco Control Grade. Should the City
Council proceed with the tentative plan, it would allow the City of Saratoga to achieve an A
grade in the 2018 American Lung Association State of Tobacco Control – assuming grading
criteria remains consistent.
The plan, as proposed, would focus on smokefree housing in 2016 with ordinances that prohibit
smoking in 100% of common areas of all multifamily housing complexes and new and existing
apartments. The City of San Jose, County of Santa Clara, San Mateo County, City of Berkeley,
and City of Santa Monica have also adopted laws the prohibit smoking in all indoor and outdoor
common areas of multifamily complexes. Additionally, several communities in California have
instituted ordinances that prohibit smoking in some or all multifamily units, including
apartments. Some of these communities include the County of Santa Clara, San Mateo County,
Alameda County, and the City of Burlingame.
In 2017, the plan suggests focusing on smokefree outdoor air with adoption of ordinances that
would:
-Limit smoking in outdoor dining areas to designated locations;
-Prohibit smoking at certain types of public events;
-Prohibit smoking within 15-19 feet of all entryways;
-Prohibit smoking in some service areas (service areas include areas such as bus stops,
ATM lines, and other areas where people wait for services); and
-Prohibit smoking in some or all outdoor worksites.
Additionally, the tentative plan proposes prohibiting sale of tobacco products in pharmacies in
2017. There are a number of communities in California that have adopted similar outdoor
smoking regulations and restrictions on pharmacies, including those that are more restrictive than
proposed. These cities and counties are shown in Attachment A.
The attached plan is intended to provide the City Council with the opportunity to explore how
the City could both strengthen smoking regulations and improve its State of Tobacco Control
grade. The City Council may choose to direct staff to implement as much or as little of the plan
as the Council sees fit or may direct staff to implement options not considered in the tentative
plan provided by staff.
ATTACHMENTS:
Attachment A – Tentative Plan for Strengthening Smoking Controls
2
54
Tentative Plan for Strengthening City of Saratoga Smoking Controls
Achieving an A Grade in the City of Saratoga’s 2018 American Lung Association State of Tobacco Control Grade
Saratoga 2015
Grade F
Implemented 2014
Saratoga 2016
Grade C
Implemented 2015
Saratoga 2017
Grade B
Implement 2016
Saratoga 2018
Grade A
Implement 2017
Smokefree Outdoor Air
Dining 0 0 0 2
Entryways 0 0 0 3
Public Events 0 0 0 2
Recreation Areas 4 4 4 4
Service Areas 0 0 0 2
Sidewalks 0 0 0 0
Worksites 0 0 0 1
Total Points 4 4 4 14
Grade (A 18+, B 13-17, C 8-12, D 3-7, F 0-2) D D D B
Smokefree Housing
Nonsmoking Apartments 0 0 4 4
Nonsmoking Condominiums 0 0 0 0
Nonsmoking Common Areas 0 0 4 4
Nonsmoking Housing Authority (N/A) N/A N/A N/A N/A
Total Points 0 0 8 8
Grade (A 11+, B 8-10, C 5-7, D 2-4, F 0-1) F F B B
Reducing Sales of Tobacco Products
Tobacco Retailer Licensing 0 4 4 4
Total Points 0 4 4 4
Grade (A 4+, B 3, C 2, D 1, F 0) F A A A
Emerging Issues Bonus Points
Emerging Produces Definition - Secondhand Smoke 1 1 1 1
Emerging Products Definition - Licensing 1 1 1 1
Retailer Location Restrictions 0 0 0 0
Sampling of Tobacco Products 1 1 1 1
Sale of Tobacco Products in Pharmacies 0 0 0 1
Flavored Tobacco Products 0 0 0 0
Minimum Pack Size of Cigars 0 0 0 0
Total Points (Every 4 points = 1 point towards overall) 3 3 3 4
Total Overall Points (A 11-12, B 8-10, C 5-7, D 2-4, F 0-1) 1 5 8 11
Overall Grade F C B A
55
SMOKEFREE HOUSING – IMPLEMENT IN 2016, REFLECTED IN 2017 GRADE
Nonsmoking Apartments: Smoking prohibited in 100% of new and existing apartments
Adopted By: Santa Clara County, San Mateo County, Alameda County, Burlingame (8.18.055)
Less Restrictive: Santa Monica (4.44.040 – smoking allowed in designated units)
Nonsmoking Common Areas: Prohibits smoking in indoor and outdoor common areas.
Adopted By: San Jose, County of Santa Clara, San Mateo County (4.97.030), Berkeley, Santa Monica (Chapter 4.44)
SMOKEFREE OUTDOOR AIR & EMERGING ISSUES – IMPLEMENT IN 2017, REFLECTED IN 2018 GRADE
Dining Restrictions: Allows designated smoking areas or includes exceptions
Adopted By: Gilroy (50% of outdoor dining must be smokefree), Morgan Hill (prohibited except for private events on private property,
invitation required, entire facility occupied, and there is a designated smoking area), Sunnyvale (9.28.020 prohibited in 60% of outdoor
eating areas)
More Restrictive Regulations (100% smokefree outdoor dining): Campbell, Cupertino (10.90.020), Los Gatos, Mountain View, Palo Alto
(9.14.025), San Jose, Santa Clara County
Entryways: No smoking within 15-19 feet of all entry ways
Similar Regulations: Campbell (more restrictive), Morgan Hill (less restrictive), Mountain View (more restrictive), Palo Alto (9.14.025 more
restrictive), San Jose (more restrictive) Santa Clara County (within 30 feet of entryway)
Public Events: Smoking prohibited at some types of public events, but not all
Adopted By: Los Gatos (public event seating areas), Mountain View (prohibited in seating areas of outdoor amphitheater), San Jose (seating
and eating areas of outdoor stadiums and sports arena, unless in designated smoking area), Sunnyvale (9.29.020 prohibited in
stadiums and outdoor theaters), County of Santa Clara (prohibited in theaters, auditoriums, halls)
More Restrictive Regulations (smoking in designated areas or entirely prohibited): Campbell, Morgan Hill
Service Areas: Smoking prohibited in some types of services areas, but not all. Service areas include places where people wait or receive
services, such as bus stops or ATMs
More Restrictive (100% smokefree service areas): Campbell, Morgan Hill, Palo Alto (9.14.050), San Jose, County of Santa Clara (“. . . public area
designed or regularly used by one or more person to receive or wait to receive goods or services, enter a public place, or make a
transaction, whether or not such service includes exchange of money. Services areas include, but are not limited to, bars, restaurants,
information kiosks, bus stops, taxi stands, and lines for automated teller machines, public telephones, and ticket purchase.”)
Worksites: Smoking prohibited at some or all outdoor worksites
Adopted By: County of Santa Clara, Palo Alto, County of Alameda
Sale of Tobacco Products in Pharmacies: Prohibits sales at all or some pharmacies
Adopted By: County of Santa Clara, Healdsburg, Hollister (5.38.010), Berkeley (9.80.043), City/County of San Francisco
56
American Lung Association in California | State of Tobacco Control 2015 – California Local Grades 79
State of Tobacco Control 2015 – California Local Grades
Overall Tobacco Control Grade: A (11-12), B (8-10), C (5-7), D (2-4), F (0-1);
determined by grades and points from other three categories – A (4), B (3), C (2), D (1), F (0)
Smokefree Outdoor Air Grade: A (18+), B (13-17), C (8-12), D (3-7), F (0-2)
Smokefree Housing Grade: A (11+), B (8-10), C (5-7), D (2-4), F (0-1)
Reducing Sales of Tobacco Products Grade: A (4+), B (3), C (2), D (1), F (0)
SANTA CLARA COUNTY
Overall Tobacco Control Grade B D C F F D F n/a C D D B F F D A
Total Points 8 2 5 1 0 2 1 7 2 2 8 1 1 2 13
Smokefree Outdoor Air A C D D F C D n/a B C C B F D C A
Dining 4 4 2 0 0 4 0 2 4 2 4 0 0 2 4
Entryways 4 0 2 0 0 0 0 2 4 2 0 0 0 0 4
Public Events 4 0 0 0 0 2 0 3 2 0 2 0 0 2 2
Recreation Areas 4 4 2 4 0 4 4 3 2 4 4 0 4 4 4
Service Areas 4 0 0 0 0 0 0 4 0 4 4 0 0 0 4
Sidewalks 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Worksites 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1
Total Points 20 8 6 4 0 10 4 14 12 12 14 0 4 8 19
Smokefree Housing F F F F F F F F F F F C D F F A
Nonsmoking Apartments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4
Nonsmoking Condominiums 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4
Nonsmoking Common Areas 0 0 0 0 0 0 0 0 0 0 4 2 0 0 4
Nonsmoking Housing Authority n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 1
Total Points 0 0 0 0 0 0 0 0 0 0 0 4 2 0 0 13
Reducing Sales of Tobacco Products A F A F n/a F F n/a A F F B F F F A
Tobacco Retailer Licensing 4 0 4 0 0 0 4 0 0 3 0 0 0 4
Total Points 4 0 4 0 0 0 4 0 0 3 0 0 0 4
Emerging Issues Bonus Points
Emerging Products Definition - Secondhand Smoke 0 1 0 1 0 0 1 1 0 0 0 0 1 1 1
Emerging Products Definition - Licensing 1 0 1 0 0 0 0 1 0 0 0 0 1 0 1
Retailer Location Restrictions 0 0 1 0 0 0 0 0 1 0 0 0 0 0 1
Sampling of Tobacco Products 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0
Sale of Tobacco Products in Pharmacies 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1
Flavored Tobacco Products 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1
Minimum Pack Size of Cigars 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Points 1 1 2 1 0 0 1 2 1 0 0 0 3 1 5
Cam
p
b
e
l
l
Cu
p
e
r
t
i
n
o
Gil
r
o
y
Los
A
l
t
o
s
Los
A
l
t
o
s
H
i
l
l
s
Los
G
a
t
o
s
Mi
l
p
i
t
a
s
Mo
n
t
e
S
e
r
e
n
o
Mo
r
g
a
n
H
i
l
l
Mo
u
n
t
a
i
n
V
i
e
w
Pal
o
A
l
t
o
San
J
o
s
e
San
t
a
C
l
a
r
a
Sar
a
t
o
g
a
Sun
n
y
v
a
l
e
Co
u
n
t
y
Un
i
n
c
o
r
p
o
r
a
t
e
d
57
American Lung Association in California | State of Tobacco Control 2015 – California Local Grades 19
RAISE YOUR GRADE
As is evidenced by the 13 cities and counties that have overall A grades, strong tobacco control policies
can work in any community. So how can your community improve its health and raise its grade? Below is a
worksheet that can be used to determine what types of policies could improve the health of your city or county
and help raise its grade. Just fill in the points for the policies your community already has in the right-hand
column, and see how many more points you will need to increase your grade. These policies will improve the
health of your communities and ensure that tobacco is kept out of the hands of children.
SMOKEFREE OUTDOOR AIR
1 Point 2 Points 3 Points 4 Points Total Points
Dining Allows designated smoking
areas or includes exceptions
100%
smokefree
Entryways
Less than 15 feet of all
entryways or within an
unspecified distance
Within 15-19 feet
of all entryways
20 or more
feet from all
entryways
Public Events Some types of public events
but not all
Allows designated
smoking areas
100%
smokefree
Recreation
Areas
Some parks, beaches and
trails
Allows designated
smoking areas
100%
smokefree
Service Areas Some types of service areas
but not all All service areas
Sidewalks Some or all sidewalks or
other pedestrian walkways
Worksites Some or all outdoor
worksites
TOTAL:
18+ points = A 13-17 points = B 8-12 points = C 3-7 points = D 0-2 points = F
SMOKEFREE HOUSING
1 Point 2 Points 3 Points 4 Points Total Points
Nonsmoking
Units in
Apartments
Prohibits smoking in 75%
or more of new apartment
units
75% of new and
existing apartment
units
100% of units for
both new and
existing apartments
Nonsmoking
Units in
Condominiums
Prohibits smoking in 75%
or more of new condos
units
75% of new and
existing condos units
100% of units for
both new and
existing condos
Nonsmoking
Common Areas
Indoor common
areas
Indoor and outdoor
common areas
Prohibits
smoking within
75% of units
under control of
Housing
Authority
Prohibits smoking within
75% of units for multi-
unit housing complexes
under control of Housing
Authority
TOTAL:
If jurisdiction has Housing Authority:If jurisdiction does not have Housing Authority:
11+ Points – A
8-10 Points – B
5-7 Points – C
2-4 Points – D
0-1 Points – F
10+ Points – A
7-9 Points – B
4-6 Points – C
1-3 Points – D
0 Points – F
58
20 www.lung.org/california 1-800-LUNG-USA 1-800-586-4872
REDUCING SALES OF TOBACCO PRODUCTS
Policy Provisions:
(1) Require tobacco retailers to pay an annual fee that sufficiently covers administration and enforcement
efforts, including compliance checks;
(2) Requirement that all retailers obtain a license to sell tobacco and renew it annually;
(3) Provision that any violation of a local, state or federal tobacco law is considered a violation of the license;
and
(4) Financial deterrent through fines and penalties for violations that includes suspension and revocation of
the license.
1 Point 2 Points 3 Points 4 Points Total Points
Tobacco Retailer
Licensing
A sufficient annual fee and
0 of the other 3 provisions
outlined above or licensing
ordinance with insufficient
annual fee and any of the
other 3 provisions outlined
above
A sufficient annual
fee and 1 of the
other 3 provisions
outlined above
A sufficient annual fee
and 2 of the other 3
provisions outlined
above
A sufficient annual
fee and the other 3
provisions outlined
above
TOTAL:
4+ points – A 3 points – B 2 points – C 1 point – D 0 points – F
EMERGING ISSUES BONUS POINTS
Bonus Points Total Points
Secondhand Smoke (Bonus
Point)
There is a strong definition of smoke, smoking or tobacco product that would include
electronic cigarettes or other new and emerging tobacco products in a jurisdiction’s
secondhand smoke laws.
Tobacco Retailer License
(Bonus Point)
There is a strong definition of smoke, smoking or tobacco product that would include
electronic cigarettes or other new and emerging tobacco products in a jurisdiction’s
tobacco retailer licensing ordinance.
Tobacco Retailer Location
Restrictions
(Bonus Point)
Restricts businesses that sell tobacco from being located within certain distance of
schools and/or parks. Or the policy prohibits a tobacco retailer from being located
within a certain distance of other retailers. Or there is a limit to the number of
tobacco retailer licenses that can be issued.
Sampling of Tobacco Products
(Bonus Point)
Prohibits sampling or nominal cost distribution of all or some tobacco products or in
all locations.
Sales in Pharmacies
(Bonus Point)Prohibits sales at all or some pharmacies
Flavored Tobacco Products
(Bonus Point)
The sale of flavored tobacco products, including cigars, little cigars, pipe tobacco and
electronic cigarettes is prohibited.
Minimum Pack Size of Cigars
(Bonus Point)Prohibits the sale of cigars in individual or small packages, which increases the price
and makes them less attractive to youth.
TOTAL:
Each of the seven Emerging Issues can receive 1 bonus point. Receiving a total of 4 or more of these bonus
points adds one point to the Overall Tobacco Control points.
59