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CC 11-07-23 Item No. 11 Mitigation Fee Act Annual and 5-Year Report FY 22-23_Written CommunicationsCC 11-7-2023 Written Communications Item No. 11 Mitigation Fee Act - an Annual & Five- Year Report for (FY) 2022-2023 From:Kitty Moore To:Kirsten Squarcia; Pamela Wu; City Clerk Subject:Written Communications and Questions for Nov 7 CC Mtg Item 11 Date:Monday, November 6, 2023 9:58:46 AM Attachments:June 30 2023 Balances B Report of City-wide Fund BalancesNet Position June 2023.pdf Questions added to 2022 Development Impact Fee Report Questions[45].pdf Dear City Manager and City Clerk, Please include the attachments for Written Communications. My questions for Staff are in the attachment. They are in red and are follow-ups to last year’s questions on the matter. The June 30, 2023 fund balances are included for convenience. Thank you very much, Kitty Moore Kitty Moore​ Councilmember City Council KMoore@cupertino.gov (408) 777-1389 June 2023 Report of City‐wide Fund Balances/Net Position Beginning Fund Balance Ending Fund Balance Fund Type Fund Number/Name as of May 31, 2023 Revenues Expenditures as of June 30, 2023 General Fund 100  General Fund 129,318,250                                     4,375,093                           4,841,240                           128,852,104                                      General Fund 130  Investment Fund 229,425                                             ‐                                           ‐                                          229,425                                             Special Revenue Funds 210  Storm Drain Improvement 2,140,100                                          ‐                                           ‐                                          2,140,100                                          Special Revenue Funds 215  Storm Drain AB1600 1,872,123                                         6,696                                   ‐                                          1,878,819                                          Special Revenue Funds 230  Env Mgmt Cln Crk Strm Drain 855,531                                            561,196                              96,578                                1,320,149                                          Special Revenue Funds 260  CDBG 1,143,163                                         321                                     1,367                                  1,142,117                                          Special Revenue Funds 261  HCD Loan Rehab 222,300                                             ‐                                           ‐                                          222,300                                             Special Revenue Funds 265  BMR Housing 5,308,215                                         30                                       11,553                                5,296,692                                          Special Revenue Funds 270  Transportation Fund 11,445,366                                       258,694                              148,406                              11,555,653                                        Special Revenue Funds 271  Traffic Impact 766,576                                             ‐                                           ‐                                          766,576                                             Special Revenue Funds 280  Park Dedication 18,678,878                                       30,000                                1,980                                  18,706,898                                        Special Revenue Funds 281  Tree Fund 76,299                                              962                                      ‐                                          77,261                                               Debt Service Funds 365  Public Facilities Corp 2,322,250                                          ‐                                          2,315,400                           6,850                                                 Capital Project Funds 420  Capital Improvement Fund 21,579,164                                       53,333                                127,237                              21,505,261                                        Capital Project Funds 427  Stevens Creek Corridor Park 158,146                                             ‐                                           ‐                                          158,146                                             Capital Project Funds 429  Capital Reserve* 13,953,210                                        ‐                                           ‐                                          13,953,210                                        Enterprise Funds 520  Resource Recovery 4,598,417                                         134,397                              178,707                              4,554,107                                          Enterprise Funds 560  Blackberry Farm 578,902                                            63,787                                51,905                                590,784                                             Enterprise Funds 570  Sports Center 1,978,606                                         351,037                              355,275                              1,974,368                                          Enterprise Funds 580  Recreation Program 2,906,858                                         191,795                              110,786                              2,987,867                                          Internal Service Funds 610  Innovation & Technology 1,809,410                                          ‐                                          280,885                              1,528,525                                          Internal Service Funds 620  Workersʹ Compensation 2,184,612                                          ‐                                          3,302                                  2,181,311                                          Internal Service Funds 630  Vehicle/Equip Replacement 2,169,528                                          ‐                                          169,511                              2,000,016                                          Internal Service Funds 641  Compensated Absence/LTD 790,565                                            8,938                                  8,145                                  791,359                                             Internal Service Funds 642  Retiree Medical (1,250,810)                                         ‐                                          114,597                              (1,365,407)                                         Total 225,835,084$                                   6,036,280$                        8,816,874$                        223,054,491$                                    * For reporting purposes, this fund rolls up/combines with Fund 420 Printed July 06, 2023 For more information on funds, please see cupertino.org/fund‐structure The following are Staff responses to Councilmember Moore’s questions regarding Development Impact fees in 2022, further questions or information are provided by Moore in red. The fund balances in the Development Impact Fee report differ from the fund balances in the budget and Annual Comprehensive Financial Report (ACFR) due to how investment income and Cost Allocation Plan (CAP) expenses are accounted for. It has been the City’s practice to exclude mark-to-market adjustments and CAP expenses from the Development Impact Fee reports. Mark-to-market adjustments account for the fair value of investments based on the market price at the end of each fiscal year. 1) The budget shows Traffic Impact and Transportation Fund accounts. The Traffic Impact account appears to align with the Traffic Impact Fees, but CC Moore was unsure what the Transportation Fund was associated with (somewhere around $12M). It does not appear to align with anything in the impact fee report, so we will need to have an answer for this. The Transportation Fund is not reported on the Development Impact Fee report as revenues are not from development impact fees. The Transportation Fund accounts for the City's gas tax, vehicle registration fees, and grant revenues and expenditures related to the maintenance and construction of City streets. Traffic Impact is Special Revenue Fund 272 which had a June 30, 2023 ending balance of $776,311 which does not match the $802,090 shown in Attachment A page 7. What accounts for this difference? There is an estimated cost of $59,780,125 for projects in the Transportation Impact Fee Nexus Study. What are these projects? 2) What is the AB 1600 Storm Drain fee associated with? Where do these monies come from, and what are they used for? Accounts for AB1600 revenue from storm drain fees. Revenues were collected from developers as a result of connections to the storm drainage system or impacts to the storm drain system from development. Monies are used for storm drain improvement and maintenance. 3) She sees a number for the BMR Fees at $5,933,166, but the mitigation fee act report shows an unrestricted balance as of 6/30/22 of $5,462,532. What is the discrepancy? Matt and I believe this is probably just because some funds have been encumbered, but not spent, but we will want to verify that. The June 2022 Treasurer’s Report was printed on July 20, 2022. At that time, the year-end close process was not complete, and the fund balance was not finalized. The final year-end fund balance will be reported in the FY 2021-22 ACFR. Also, the Development Impact Fee report differs from the budget and ACFR as described above. Page 2 of the Report shows our BMR RHNA total of 356 VLI, 207 LI, and 231 MI for a total of $160.3 M. Our 2023-2031 allocation is: Very Low Income 1,193 x $241k/unit = $287,513,000 Low Income 687 x $213k/unit = $146,331,000 Moderate Income 755 x $ $123k/unit = $ 92,865,000 Total using the City estimated costs: $526,709,000 How were the costs per unit derived? Would the City please show the new RHNA numbers we need to meet to improve the transparency of the report? 4) Again, the Park Fee total in the budget is somewhere around $22M, but the amounts in the impact fee report do not add up to that total. Why? The June 2022 Treasurer’s Report was printed on July 20, 2022. At that time, the year-end close process was not complete, and the fund balance was not finalized. The final year-end fund balance will be reported in the FY 2021-22 ACFR. Also, the Development Impact Fee report differs from the budget and ACFR as described above. This year the June 30, 2023 ending fund balance for Special Revenue Fund 280 Park Dedicationis $18,706,898 and does not match the $7,984,137 fund balance shown on page 5 of the report. How is the $11M discrepancy accounted for? What projects are the $11M going towards? Should they be added in the report? This item has the opposite problem of Traffic Impact, there there are unkown projects with a high cost shown and insufficient funds, but it is fairly consistent with the June 30, 2023 balance provided to the public, but for the Park fee, there continues to be a much greater balance shown to the public in the June 30, 2023 fund balance report than the Development Impact fee report shows, which is a repeat of last year, and part of why I wanted the subcommittee formed, to work on understanding this issue and see if it is a discrepancy or not. 5) Where are the impact fees being held (it appears to be 100 200-223) and where are these shown in the budget? The majority of developer deposits are being held in 100 220-223. 100 220-223 is a liability account and is therefore not budgeted. The N. Stelling/I-280 Bridge Pedestrian Lighting & Upgrades project is budgeted in 420-90-971 900-905. The De Anza/McClellan/Pacifica Signal Modification project is budgeted in 420-99-036 900-905 (encumbered in Kimley-Horn PO 2021- 390). Other transportation projects in the Development Impact Fee report are not budgeted and are recorded in 100 220-223. May we know how much is in the liability account since these are items which will need to be funded? 6) In the Mitigation Fee Act report, we identify a series of transportation related projects. Where are the funds from these projects held? Assuming they are aggregated in one account, can that account be broken down to show what is in it? See 5. 7) A definition of each storm drain fund. 210 Storm Drain Improvement Accounts for the construction and maintenance of storm drain facilities, including drainage and sanitary sewer facilities. Projects are funded by the Capital Reserve. 215 Storm Drain AB1600 Accounts for AB1600 revenue from storm drain development impact fees. Revenues were collected from developers as a result of connections to the storm drainage sewer system. 230 Environmental Management/Clean Creek/Storm Drain Accounts for activities related to operating the Non-Point Source Pollution Program. Revenues are from parcel taxes. Thank you, this (3 accounts) is a little confusing as was seen regarding the SCB emergency 54” pipe repair as to which account should be paying and I know Staff is working on resolving which account should pay, and that the SCB drain will come back to council with an update as to which account is being debited. 8) Are Art in-lieu of fees or the public art program requirements considered Development Impact Fees? Should either of these amounts, particularly the in-lieu of fees, be included in this report? There may be some new guidance on this?