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HomeMy WebLinkAbout09.19.2022 Staff: Committee Members: Christian Clegg, City Manager Councilmember, Andrae Gonzales – Chair Mario Orosco, Budget Officer Councilmember, Kenneth Weir Councilmember, Eric Arias Special Meeting of the Budget and Finance Committee of the City Council – City of Bakersfield Monday, September 19, 2022 12:00 p.m. City Hall North, First Floor, Conference Room A 1600 Truxtun Avenue, Bakersfield CA 93301 A G E N D A 1. ROLL CALL 2. PUBLIC STATEMENTS a. Agenda Item Public Statements b. Non-Agenda Item Public Statements 3. ADOPTION OF THE MAY 23, 2022, AGENDA SUMMARY REPORT 4. NEW BUSINESS a. Discussion and Committee Recommendation regarding City Reserve Policy – McKeegan b. Discussion and Committee Recommendation regarding PSVS Measure N Financial Management Policy – Clegg c. Discussion and Committee Recommendation regarding Procurement Authority – McKeegan d. Notice of Funding Availability and Affordable Housing Update- Saldana 5. COMMITTEE COMMENTS 6. ADJOURNMENT Staff: Committee Members: Christian Clegg, City Manager Councilmember, Andrae Gonzales – Chair Mario Orosco, Budget Officer Councilmember, Kenneth Weir Councilmember, Eric Arias Regular Meeting of the Budget and Finance Committee of the City Council – City of Bakersfield Monday, May 23, 2022 12:00 p.m. City Hall North, First Floor, Conference Room A 1600 Truxtun Avenue, Bakersfield CA 93301 A G E N D A The meeting was called to order at 12:02 p.m. 1. ROLL CALL Committee members present: Councilmember Andrae Gonzales Councilmember Ken Weir Councilmember Eric Arias Staff present: Christian Clegg, City Manager Josh Rudnick, Deputy City Attorney Randy McKeegan, Finance Director Mario Orosco, Budget Officer Kevin Truelson, Assistant to the City Manager Brianna Carrier, Assistant to the City Manager Jena Covey, Risk Manager Gary Hallen, Assistant City Manager Anthony Valdez, Assistant to the City Manager Additional Attendees: Andrew Brown, Director, High Mark Capital Rosalva Flores, Brown Armstrong CPA Members of the Public Budget & Finance Committee May 23, 2022, Agenda Summary Report Page 2 2. PUBLIC STATEMENTS a. Agenda Item Public Statements – No public statements. Non-Agenda Item Public Statements – No public statements. 3. ADOPTION OF THE FEBRUARY 28, 2022, AGENDA SUMMARY REPORT The report was adopted as submitted. 4. NEW BUSINESS a. Discussion and Committee Recommendations regarding Pension Section 115 Trust Update – McKeegan Finance Director, Randy McKeegan, provided a general overview of the upcoming presentations on the unfunded liabilities of the City, connected to City pensions, new pension rate stabilization trust, and briefly touched on the retiree medical trust fund. Finance Director, Randy McKeegan introduced consultants from GovInvest and PARS who would provide presentations. Dan Matusiewicz with GovInvest, would cover CalPERS costs and provide background on the pension costing tool the City procured that allows more accurate and up-to-date calculations, which in part can allow better tracking of the funding plan of the new pension trust. Representatives from Public Agency Retirement Services (PARS) would cover City retiree medical trust and investment returns connected to the combined trust established. Finance Director, McKeegan would later wrap up the discussion on options that staff would like the committee to consider on strategies to fund the new trust with the anticipation of overall City reserve policy preparation that will be presented for approval next fiscal year. Dan Matusiewicz, GovInvest presented to the committee on pension funding. Committee Member, Ken Weir, asked why the information being provided was based on 2021. Finance Director, McKeegan was able to provide clarification. Mitch Barker, Executive Vice President, PARS, provided an overview of their role as the trust administrators for the section 115 pension. Mr. Barker explained the team effort between PARS, US Bank, and High Mark Capital Management. Andrew Brown, Director, High Mark Capital Management provided an overview of economic, and market forecast and performance. Committee member, Weir asked whether, at some point in time, the investment would be able to continuously pay for the insurance benefit and how long would that be? Finance Director McKeegan, referred to the actuary that projected funding through 2038 with a more recent actuary report to come. Budget & Finance Committee May 23, 2022, Agenda Summary Report Page 3 Finance Director, McKeegan wrapped up the presentation requesting consideration of the proposed pension trust funding strategy to include: • Annual contribution based on savings from advanced unfunded accrued liability (UAL) payment • Fixed Percentage of surplus fund balance calculated at year-end • Annual contributions from $4 million (in FY 2021-22) to $10 million All with the understanding that proposed contributions would be dependent on the City’s needs for ongoing operations and related budgetary commitments. City Manager, Clegg provided the committee with further input on the proposed strategies for discussion and consideration. Committee members were all in favor of the first proposal of annual contribution based on savings from UAL payment as well as the second option of a fixed percentage or surplus fund balance calculated at year- end. Committee Member, Gonzales asked Finance Director, McKeegan, to provide his input on the third option. Mr. McKeegan noted that although the option was modeled it may not be as flexible as an adopted policy. Committee member, Gonzales requested that option three be evaluated a little more as a viable option. Committee member, Gonzales also suggested that the City provide messaging to the public to better explain unfunded liability. Committee Member, Weir made a motion to bring forward the first option of annual contribution based on savings from advanced UAL payment. The motion was unanimously approved. b. Discussion and Committee Recommendation regarding insurance Rates and Self-Insurance Fund – Covey/McKeegan Risk Manager, Jena Covey provided a brief overview of the self-insured fund and introduced Conor Boughey with Alliant Insurance Services who presented on Projection Insurance Costs and Market Conditions. Mr. Boughey provided the committee with an overview of liability & property market summaries and workers’ compensation, along with a summary of costs. Committee member, Weir made a motion to recommend insurance rates and forward them to City Council for approval. The motion was unanimously approved. Budget & Finance Committee May 23, 2022, Agenda Summary Report Page 4 c. Discussion and Committee Recommendation regarding FY20-21 Annual Audit Reports – McKeegan Finance Director, McKeegan provided an overview of the FY20-21 Annual Audit Reports provided by auditors Brown Armstrong. Rosalva Flores with Brown Armstrong was introduced to assist with any committee member questions. Committee member, Weir made a motion to move FY20-21 Annual Audit Reports forward to City Council for approval. The motion was unanimously approved. d. Discussion and Committee Recommendations regarding PSVS Policy Ongoing Expenditures – Clegg City Manager, Clegg provided a brief overview of the PSVS Policy Ongoing Expenditures to ensure that we have one-time monies to complete large capital projects as well as have a reserve for flexibility for immediate and future needs. City Manager, Clegg requested a committee discussion on which expenditures to include in the ongoing expenditure policy. 5. COMMITTEE COMMENTS No committee comments 6. ADJOURNMENT Meeting adjourned at 2:09 p.m. Page 1 Public Safety & Vital City Services Measure “N” Financial Management Policy POLICY STATEMENT AND PURPOSE 1. PURPOSE The City’s Measure N Financial Management Policy documents the methods the City will use to demonstrate prudent financial management over Measure N tax revenue in conjunction with Council-approved Ordinance 4958 (“Bakersfield Public Safety/Vital Services Measure Transactions and Use Tax Ordinance”) and Resolution 009-19 (“Established the Citizens Oversight Committee for the Bakersfield Public Safety/Vital Services Measure N”). This additional policy: • Establishes a Measure N Reserve Fund to address unforeseen revenue fluctuations, unanticipated expenditures, and similar circumstances; • Establishes a limit for ongoing cost expenditures; • Reiterates the spending priorities established by ordinance and establishes that future budget allocations will be prioritized based on City Council Goals; • Requires annual financial and compliance audits by the City’s external independent auditors in addition to the City’s. 2. BACKGROUND Voter approval of the City of Bakersfield’s Public Safety and Vital City Services Measure (Measure N) in November 2018 authorized the implementation of locally controlled one-cent transactions and use tax which became effective April 1, 2019, and has no sunset date. The objectives of Measure N are “to maintain and enhance vital city services.” Measure N contains thirteen (13) specific community spending priorities including: 1. Increasing police staffing to improve police response times, reduce crime, and increase neighborhood police patrols. 2. Improving rapid response to assaults and robberies. 3. Maintaining / improving rapid response to gang violence. Page 2 4. Investigating and proactively preventing property crimes, burglaries, and vehicle thefts. 5. Keeping public areas safe and clean. 6. Strengthening the capacity of the Special Enforcement Unit. 7. Expanding the School Resource Officer Program. 8. Maintaining a fully staffed and equipped Class II Rated Fire Department. 9. Reducing homelessness through partnerships with service providers to increase outreach, sheltering, and construction of affordable housing. 10. Addressing the fiscal stability of the City of Bakersfield. 11. Creating jobs through economic development, business retention/attraction, and workforce development. 12. Enhancing amenities throughout the community to improve the quality of life and attract visitors. 13. Enhancing neighborhoods through additional code enforcement and improved park maintenance. These 13 priorities guide all investments for enhanced City services, programs, and projects funded by Measure N. 3. POLICY 3.1 Measure N Reserve The City shall maintain a Measure N Reserve dedicated to mitigating the financial risk that can occur from the effects of unforeseen revenue fluctuations, unanticipated expenditures, and similar circumstances. The amount of money held in this reserve will be a stated percentage of budgeted operating expenses which is viewed as a reliable indicator of its ongoing needs. This is so that the City of Bakersfield reserve stays consistent with the size of the budget over time. The Measure N Reserve Policy will be governed by the same guidelines established in the General Fund Reserve Policy. The City’s long-range forecasting model will be used to track the estimated growth of the annual budget and the related contribution requirements to stay within the established range of reserves. If the minimum reserve balance is not met during the forecast period, the Finance Director and/or Budget Officer will develop a plan to bring the reserve balance to the desired amount. This plan will be offered to the City Council’s Budget and Finance Committee for consideration. 3.2 Ongoing Costs The intent for limiting Measure N Ongoing Cost allocations is to 1.) ensure that the City can sustainably fund current obligations into the future and 2.) preserve Measure N resources to fund strategic, large scale one-time projects. • Measure N revenues committed to ongoing costs shall be limited to seventy percent (70%) of the proposed annual Measure N budget. Page 3 • Ongoing Costs are defined as those costs that represent a long-term commitment (20 years); costs that would have significant impacts on core services if those services were reduced; costs that would be the last budget cuts that would be recommended by staff. • Ongoing Cost examples include personnel costs (salaries and benefits); contracts for services necessary for personnel to carry out their duties; contract services in support of core operations (i.e., Brundage Lane Navigation Center). • Measure N revenue, above the amount needed to fund the Measure N Reserve and beyond the seventy percent (70%) ongoing cost limit, will be allocated to one-time investments focused on maintaining and enhancing vital city services and in direct alignment with City Council Goals. 3.3 Governance and Transparency Measure N revenue and expenditures should be transparent to the City Council, Measure N Citizens Oversight Committee, and Bakersfield residents. To achieve this transparency, Measure N resources will be accounted for and reported separately to facilitate review by the Council and the Citizens Oversight Committee. In addition, the Finance Director and/or Budget Officer shall report to Council and the Citizens Oversight Committee annually during the budget development process or other open meetings: • The funded status of Measure N Reserve. • The City’s annual financial and compliance audit will include revenues and expenditures for the Measure N Fund. • Major events that occurred that will likely impact the future funded status of ongoing Measure N programs. MEMORANDUM DATE: September 15, 2022 TO: Budget & Finance Committee FROM: Paul Saldaña, Economic & Community Development Director SUBJECT: Affordable Housing Trust Fund – Notice of Funding Availability Recommendations Background: On July 14, 2021 the Bakersfield City Council adopted Resolution No. 124-2021 to establish the Bakersfield Affordable Housing Trust Fund (AHTF). The intent of the AHTF was to use local funds to leverage and draw in additional outside resources to increase the pool of financing to support the construction of affordable housing. On June 3, 2022 the City of Bakersfield released its first Notice of Funding Availability (NOFA) to solicit proposals from qualified applicants to construct quality, affordable housing. The NOFA included the following sources of funding: Affordable Housing Program Allocation Public Safety and Vital Service $1,995,000 American Rescue Plan Act $5,000,000 Permanent Local Housing Allocation – Year 1 $1,644,356.90 Permanent Local Housing Allocation – Year 2 $2,555,840.10 Total $11,195,197 NOFA Results: Cumulatively, the NOFA was open for 49 days. Fourteen applications were submitted by nine applicants requesting $24,051,041 to build/rehabilitate approximately 548 housing units. Consistent with the NOFA, applications were reviewed and scored by three internal staff members using the following criteria: - The experience and financial capability of the development team; - The relationship of the proposed development to the surrounding community, its quality, configuration, appearance, and service of community needs; - Market conditions, project feasibility, and level of current funding commitment to begin the Project; - Project readiness; - Consistency with the goals and objectives of the Affordable Housing Trust Fund; - Application completeness as it relates to the requirements of this NOFA. Recommendations: Staff has prepared the attached Memorandum and recommendations for funding. After today’s presentation, staff will be contacting the proposed applicants to discuss next steps. Note: $638,960.02 of Permanent Local Housing Allocation funding is currently reserved to support the development of Accessory Dwelling Units and will not be allocated under the current NOFA recommendations. Each project receiving a reserved allocation of funding will be subject to further underwriting and funding adoption by the Bakersfield City Council prior to officially receiving a commitment of funds. This item is an informational item only, therefore staff recommends that the Budget and Finance committee receive and file the presentation. Attachments: A. Affordable Housing Trust Fund Funding Recommendations $ Request Recommendation Source Comments Ward 1 800 South Baker  Street Housing  Authority of  the County of  Kern $792,850 $792,850 PHLA 8 8 1‐bedroom rental units for affordable  housing located on an infill lot at 800  South Baker Street. 2 2 4th Street  Senior  Aprtments Golden Empire  Affordable  Housing Inc. II $719,953 $719,953 PHLA 16 16 1‐bedroom units for very‐low, low, and  moderate income seniors located on a  vacant lot owned by the Bakersfield Senior  Center. Project is phase one of a multi‐ phase undertaking to redevelop the  existing Bakersfield Senior Center complex. 2 2 Renaissance at  Baker Housing  Authority of  the County of  Kern $1,898,628 $1,200,000 ARPA 85 85‐unit affordable housing complex with  5,000 square feet of ground floor  commercial on the corner of Baker Street  and Kentucky Street. 2 3 City View Housing  Authority of  the County of  Kern $3,355,515 $2,612,638 ARPA/PSVS 37 37‐units of affordable housing for low and  moderate income families for  homeownership in northeast Bakersfield.  Property is directly east of the recently  completed Residences at East Hills  complex. 3 3 Letzring Lane  Senior Housing Housing  Authority of  the County of  Kern $2,000,000 $1,997,657 PHLA/ARPA 150 150‐units of new construction affordable  housing for seniors located on a 5.94 acre  parcel of land in south Bakersfield on 4215  Letzring Lane.  1 4 Auburn Street  Apartments Chelsea  Investment  Corporation $2,500,000 $1,200,000 PSVS 60 60‐unit affordable housing development  on 3.58 acres of land in northeast  Bakersfield at 6201 Auburn Street.  3 4 Habitat for  Humanity ‐ New  Construction Habitat for  Humanity ‐  Golden Empire $3,389,700 $800,000 ARPA 10 Funds to construct ten homes in  Bakersfield for low‐income  homeownerhsip on vacant, infill lots. 2 & 3 5 Brentwood  Crossings DANCO Group  of Companies $2,289,277 $1,233,267.68 PLHA 58 58‐unit affordable housing development  for farmworker families in east Bakersfield,  located at 7350 Willis Avenue. 3 5 Habitat for  Humanity ‐  Homeowner  Rehab Habitat for  Humanity ‐  Golden Empire $295,653.75 $0 UNK Funding to support a homeowner rehab  program for low‐income seniors, veterans,  and people with disabilities. vary 6 Habitat for  Humanity ‐  Rehabilitation Habitat for  Humanity ‐  Golden Empire $1,099,564 $0 3 Funds to rehabilitate three homes in  Bakersfield for low‐income  homeownerhsip. 3 7 Northrup  Housing Pacific  Engineering $450,000 $0 8 Rehabilitate an existing structure into 8‐ units of affordable housing located at 301  Northrup Street. 2 8 Bakersfield  Housing NOFA DOD  Construction $759,900 $0 3 To build a duplex on 320 Clifton Street and  an home for homeownership on a  property to be identified. 2 9 Eye Street  Modern Living Brower  Holding LLC $2,500,000 $0 86 86‐unit mixed‐income housing with  commercial tenants on the ground floor.2 10 Water of Life  Project I Leon's  Cabinets $2,000,000 $0 24 Four buildings of new construction  containing 24 units of affordable housing  located on a vacant parcel in southeast  Bakersfield. 2 $24,051,041 $10,556,365.68 548  FY 21‐22 Contingent  2021‐2022 Bakersfield Affordable Housing Trust Fund (AHTF) Funding Recommendations Rank Project Name Applicant Units