Item 4C - Quarterly Interim Financial Update for the Quarter Ended September 30, 2015 E M <
1 ® a ROSEMEAD CITY COUNCIL
** ∎7
* STAFF REPORT
Fr TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: JEFF ALLRED, CITY MANAGER �4
DATE: OCTOBER 27, 2015
SUBJECT: QUARTERLY INTERIM FINANCIAL UPDATE FOR THE QUARTER
ENDED SEPTEMBER 30, 2015
SUMMARY
Attached is the City of Rosemead Quarterly Financial Update for the Quarter Ended
September 30, 2015 for City Council review. Also, attached are the Treasurer's Reports
of Cash and Investments for the City, the Rosemead Housing Development
Corporation, and the Rosemead Successor Agency at September 30, 2015. It should
also be noted that the reports for the Fiscal Year ended June 30, 2015 are currently
being prepared and reviewed by the City's auditor and should be available in early
January 2016.
Staff Recommendation
Staff recommends that the City Council receive and file the Financial Update report
(Attachment A) and the Treasurer's Reports of Cash and Investments (Attachment B).
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
Carolyn A. Chu
Finance Director
Attachment A'. Quarterly Financial Update for the Quarter Ended September 30, 2015
B: Treasurer's Report of Cash and Investments
ITEM NO. 4.0
APPROVED FOR CITY COJNCIL AGENDA'.
Attachment A
Q1 City of Rosemead
Quarterly Interim Financial Update
zols-ls For the Quarter Ended 9/30/15
With only 25% of the fiscal year completed, Property Tax In-Lieu of VLF. Property Tax In-
major revenues generated from taxes (Property lieu of Vehicle License Fees, the City's number
Tax, Sales Tax and Property Tax In-Lieu) have one revenue source, was the creation of the
not yet been received. Additionaly, many State's 2004 budget balancing Triple Flip
expenditures related to annual payments for computation. In it, 90% of the City's Vehicle
memberships or insurance are due in July so License Fees (VLF) was swapped for a like
expenditures in some categories may appear amount of revenue from the State's portion of
higher than normal, but that is to be expected. property tax. It is paid in two equal
installments, one in January and one in May.
GENERAL FUND There has been no indication that the amount
General Fund Financial Condition: With only will vary from the revenue estimate.
25% of the year completed, 8% of estimated
revenues have been collected and that is Sales & Use Tax. The first two monthly
slightly higher than a year ago. AU categories payments (July and August) in the fiscal year are
appear to be on target and annual revenues are accrued (counted) in June for the 2014-15 Fiscal
expected to meet or exceed expectations. By Year. This is done because the sales tax
the end of this quarter 23% of total collected in these months are for sales
appropriations had been spent and that is generated in the prior year. Since this
consistent with a year ago. accounting is done the same each year, the
actual revenue will catch-up with the budgeted
Top Ten Revenues. The top ten revenues revenues once all 12 monthly payments have
account for about 90% of total General Fund been received. Two new stores, Ulta and
Revenues. By focusing on these, we can quickly Petsmart, opened recently which will increase
get a sense of the revenue picture for the year. sales tax as well. Staff has met with our sales
Because of the timing and frequency of certain tax consultant and while the early sales tax
revenues, such as VLF Tax In-Lieu, Sales Tax In- trends are relatively flat, they appear to be in-
Lieu and Utility Franchise Fees it is important to line with our budgeted figures.
keep in mind that when taken literally they can
be misleading. Overall, these key revenues are Financial Aid/Low & No (Property Tax). This
performing as expected for this time of the revenue does not flow in 12 equal installments;
fiscal year. instead, about 85% of the revenue is collected
between December and May. Therefore, the
(Thousands) minimal collection in the first quarter of the
Tap Ten Revenues Budget YTn Actual Percent year is normal and does not create cause for
VIE Tax In-Lieu $5,697 - 0%
Sales&Use Tax 3,861 370 9% concern.
Property Tax 2,406 66 3%
Trans occupancy Tit. 1,610 0% Transient Occupancy Tax. Transient Occupancy
Sales Franchise rees 1,097 - 0%
Sales Tax In-Lieu 903 - 0% Tax (TOT) revenues are expected to be $35,000
Building Permits 1,183 483 41% higher than in the prior year due to the
Parking Fines Citations 425 66 16% additional rooms at the Doubletree Hotel. Third
Court Fines 180 24 13%
5%
Interest Earnings _ 75 19 25% quarter TOT revenues are earned and reported
Total - $17,037 $1,028 6% in the first quarter but not collected until
Page 1
Attachment A
October. Therefore, the zero dollar amount in year has been steady with a solid mixture of
the first quarter is to be expected. Additional commercial and residential projects. This
increases in TOT can be expected once the Qiao should help continue the positive momentum
Garden Hotel is completed. for the next several months.
Franchise Fees. Utility Franchise Fees are one Parking Citations/Court Fines. These fines are
of the top ten budgeted revenues but they are collected at the Public Safety Center, through a
paid annually in the third quarter of the fiscal third party collection service and the courts.
year. Along with the Utilities, the City also Although this is only the first quarter of the
receives a franchise payment from our waste year, collections are down slightly from the
hauler of $125,000 per quarter which previous fiscal year.
significantly strengthens this revenue category.
Interest Earnings. Interest earnings is revenue
Property Tax In-Lieu of Sales Tax. Property Tax that is accrued based upon the period it is
In-Lieu of Sales Tax is another piece of the earned. While interest rates continue to be at
State's Triple Flip legislation. This revenue is historic lows and the Local Agency Investment
the same type of revenue swap as Property Tax Fund (LAIF) hovering around 0.33%, much of
In-Lieu of VLF and is received in January and the City's investable cash has been transitioned
May. For the 2014/15 fiscal year, the Triple Flip into FDIC insured Certificates of Deposit (CDs),
operated as it had in previous years. However, Federal Securities and Agencies and Corprate
in August 2015, the State Department of Bonds in accordance with our Investment
Finance will begin the "unwind' of the triple Policy. While these investment types are not
flip. Therefore, the sales tax amounts to be paying large sums, rates between 1% and 2%
paid from property tax are for that one quarter are far greater than the LAIF rate. The current
only. These are the last triple flip payments for year's budget remains consistent with the prior
which property tax will be the funding source. year.
The final "true-up" payments will be made in
August 2016 and this will end the triple flip. As Expenditures. At 23%, General Fund
the triple flip unwinds, there will be a slight expenditures are within budget parameters.
overlap of sales tax revenues as revenues from Since certain large one-time payments such as
the full 1% local rate that begins on January 1, insurance premiums are made at the beginning
2016 will begin appearing in City revenues. of the fiscal year along with increased part-time
Consequently, during 2015/16 it is estimated personnel costs for summer programs and
that we will see a small increase in net sales tax aquatics, its not uncommon to have first
revenues as a result of the overlap of both triple quarter expenditures higher than 25%. The
flip revenues and the return of the 1%sales tax. following table illustrates expenditures by
Please note that this relates to the property tax major category:
in lieu of sales tax only. Property Tax in lieu of
VLF payments will not be affected, and in fact (Thousands)
are constitutionally protected. stamps 56,241 $1,668 27%
Maint.&Operating 11,816 2,908 23%
Building Permits. Building Permit revenues are capital Outlay - -
Transfers In(Out) 1,050 - -
up $182,000 from the prior year which is a -- -- ---
i Total $20,107 $4,576 23%
significant increase. The primary reason for this --
increase is a new mixed use project on Garvey SPECIAL REVENUE FUNDS
Avenue as well as a sign of the improved Often certain revenues are raised for a specific
construction industry in the community. purpose. When specific purpose revenues are
Building activity during the first quarter of the
Page2
Attachment A
restricted as to their use they are usually operations will still need to be developed to
accounted for in special revenue funds such as ensure ongoing operations of the two senior
the ones below. The following tables housing complexes into the future.
summarize the financial condition of the City's (Thousands)
major special revenue funds. They are all within Revenues $429 $109 25%
budget expectations. While some of the funds Expenditures (826) 100) 12%
show negative balances year to date, they are Transfers In(Out) - -
all within budget parameters.
Balance,Year-to-Date ($3821 $9
(Thousands) OUTLOOK FOR THE FUTURE
Federal Grant Funds Budget VTD Actual Percent The City's General Fund revenues are projected
Revenues $999 $a .40%
Expenditures (999) (144) 14% to reflect modest increases over the prior fiscal
Transfers In(Out) - year. The Qaio Garden Hotel is under
Balance,Year-to-Date $0 $(140) construction and expected to be completed in
(Thousands) 2016. The Doubletree Hotel has completed
State Gas Tax Fund Budget YTD Actual Percent their expansion. Along with this hotel
Revenues $1.233 $328 27% expansion, there is the recent opening of Ulta
Expenditures (855) (78) 9% and Petsmart. Also, the Boiling Crab restaurant
Transfers(Out)-CIP (575)
Balance,Year-to-Date j51921 $250 is expected to open over the next fiscal year.
We do not have an expected completion date
(Thousands) yet on this project, however, the opening of
these new stores as well as the new restaurant
Revenues $1,903 $524 28% project and the expanded hotel project will
Expenditures (1,596) (635) 40% ,
Transfers(Out)-CIP (475) - - increase both our building permit revenue as
Balance,Year-to-Date ($168) $(112) i well as our sales tax and TOT revenue. Growth
in sales tax and TOT continue to be the sources
(Thousands) of greatest future opportunity to strengthen the
Revenues $602 $97 16% City's financial status. During 2015-16, the City
Expenditures (232) 132) 14% will continue to make an investment from its
Transfers(out) CIP - - General Fund reserves for the development of a
Balance,Year-to-Date $370 $65
Garvey Avenue Corridor Specific Plan and
(Thousands) Environmental Impact Report (EIR) to spur and
r 1 guide economic development at key
Revenues $816 526 3% opportunity sites.
Expenditures (794) (99) 12%
Transfers(Out)—CIP (225) -
Balance,Year-to-Date 15203) ($73) In conclusion, it is projected that the City's
General Fund balance will be in excess of $15
ROSEMEAD HOUSING DEVELOPMENT million at the end of the 2015-16 fiscal year. In
CORPORATION (RH DC) addition, the City has set aside an additional $3
As has been discussed in previous Quarterly million in a special trust fund for future retiree
Financial Updates, the RHDC funds are medical insurance obligations. While the City's
operating at non-sustainable levels. Recently General Fund is positive, the long term growth
the Department of Finance approved the of expenditures will still likely outpace the
Operating and Assistance Agreement between growth in revenues. Therefore, prudent
the RHDC and the Successor Agency as an spending and examining means to generate
Enforceable Obligation which will provide additional revenues must continue to be
funding to offset the annual shortfall for the pursued to ensure the City remains in a positive
near future. A long term plan for sustainable financial position.
Page 3
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