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03-08-2022 (Continued from March 1, 2022) Searchable Packet CC 03-08-2022 1 of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of 92 /6@"8>97/2+=49B5D5;7."EC"FGFF = !<,. !)(=0#20%!,/,#0,=0 !&+!$ !"#$%!> =-#$ 8 !"'" 6 CC 03-08-2022 6 of 92 CITY OF CUPERTINO Agenda Item 22-10559Agenda Date: 3/8/2022 Agenda #: 1. 2»¨°«©º:(Item 11 on March 1, 2022 Agenda)Consider accepting the Mid-Year Financial Report for Fiscal Year 2021-22; consider adopting Resolution No. 22-032 approving Budget Modification #2122- 189 increasing appropriations by $9,457,951 and revenues by $10,220,000 1.Consider Accepting the City Manager’s Mid-Year Financial Report for FY 2021-22 2.ConsiderAdoptingResolutionNo.22-032approvingBudgetModification#2122-189 increasing appropriations by $9,457,951 and revenues by $10,220,000 3.ConsiderApprovingtheConversionof(One)Limited-TermProjectManagerPositiontoFull- Term Position. 4.ConsiderApprovingAmendmentstoCity'sCommitted,UnassignedFundBalance,andUseof One Time Funds Policy which includes the following changes: a.ConsiderApproving$2,000,000contributionfromtheGeneralFundtotheCity’sSection115 Pension Trust b.ConsiderIncreasingtheCity’sGeneralFundEconomicUncertaintyCommittedReserveby $5,000,000 c.ConsiderEstablishingaGeneralFundCapitalProjectCommittedReserveintheamountof $10,000,000 Presenter: Kristina Alfaro, Administrative Services Director CITY OF CUPERTINOPage 1 of 1Printed on 3/4/2022 powered by Legistar© 7 CC 03-08-2022 7 of 92 CITY COUNCIL STAFF REPORT Meeting: March 1, 2022 Subject Accept the Mid-Year Financial Report for Fiscal Year 2021-22; Consider Adopting Resolution No. 22-XXX approving Budget Modification #2122-189 increasing appropriations by $9,457,951 and revenues by $10,220,000. Recommended Action 1.Consider Accepting -Year Financial Report for FY 2021- 22. 2.Consider Adopting a draft resolution 22-XXX approving Budget Modification #2122-189 increasing appropriations by $9,457,951 and revenues by $10,220,000. 3.Consider Approving the Conversion of (One) Limited-Term Project Manager Position to Full-Term Position. 4.Consider Approving Amendments to Citys Committed, Unassigned Fund Balance, and Use of One Time Funds Policy which includes the following changes: a.Consider Approving $2,000,000 contribution from the General Fund to the Citys Section 115 Pension Trust. b.Consider Increasing the Citys General Fund Economic Uncertainty Committed Reserve by $5,000,000. c.Consider Establishing a General Fund Capital Project Committed Reserve in the amount of $10,000,000. Background On June 15, 2021, the City Council adopted the Fiscal Year (FY) 2021-22 Budget, a $148,845,235 spending plan for the City of Cupertino that was funded by $132,850,958 of revenues and $15,994,277 of fund balance. On November 16, 2021, Council received g plan as part of ts First Quarter Financial Report, which revised the budget to account for encumbrances of $16,868,361 and carryover appropriations of $53,863,626 from FY 2021-22. These carryover appropriations included $18.5 million in capital projects, $19 million for Vallco Town Center, and $5.9 million for Transportation projects. Encumbrances represent funds for 1 8 CC 03-08-2022 8 of 92 obligations related to unfilled purchase orders or unfilled contracts that are rolled over from one year to the next until those obligations are fulfilled or terminated. Carryover appropriations are unencumbered funds for unfinished projects that are carried over for use in the following fiscal year in order to complete those projects. In the first two quarters of FY 2021-22, Council approved $9.6 million in additional appropriations mostly related to the American Rescue Plan Act of 2021 ($4.9 million), Junipero Serra Trail ($1.9 million) and First Quarter Adjustments ($1.6 million). This resulted in an amended budget of $229,162,354. These FY 2021-22 budget adjustments are summarized in the following table: Mid-Year Financial Report Summary of Budget Adjustments by Fund Discussion The Mid-Year Financial Report f December 31, 2021 and recommends adjustments to ensure the budget reflects the to changing spending priorities. As shown in the chart below, $11.3 million in budget adjustments are being requested that are offset with $1.8 million in budget reductions and $10.2 million in revenue. Included in the requested budget adjustments is a $10,000,000 transfer of excess unassigned fund balance from the General Fund to the Capital Reserve in accordance with Reserve and One Time Use Policy. Also included is the fourth of five annual $2 million contributions to the Section 115 Pension Trust, increase in Economic Uncertainty Reserve, and establishment of Capital Projects Reserve. If spending plan would total $238,620,305 across all funds. 2 9 CC 03-08-2022 9 of 92 A projected increase to unassigned fund balance in the amount of $740,119 across all funds would occur as summarized in the table below. Recommended Adjustments FundDepartment Expenditure Revenue Fund Balance Description (Use of) PARKS & RECREATION DEPARTMENT 560P&R 10,300 - (10,300)Tree Maintenance 560P&R 9,350 220,000 210,650 Additional Revenue Estimate and Bank Charges TOTAL PARKS & 19,650 220,000 200,350 RECREATION DEPARTMENT PUBLIC WORKS DEPARTMENT 280Public Works - 910,000 - (910,000)Lawrence-Mitty Park Debris Removal, Clean Up, and Tree CIPRemoval 420Public Works - (1,847,699) - 1,847,699 All-Inclusive Play Area Budget Reduction CIP 520Public Works 350,000 - (350,000)New Landfill Agreement and Solid Waste Consulting Services 630Public Works 26,000 (26,000)Leaf Blower Replacement TOTAL PUBLIC WORKS (561,699) - 561,699 DEPARTMENT NON-DEPARTMENTAL 100Non- 10,000,000 - (10,000,000)Transfer from General Fund to Capital Reserve Departmental 429Non- - 10,000,000 10,000,000 Transfer from General Fund to Capital Reserve Departmental TOTAL NON- 10,000,000 10,000,000 - DEPARTMENTAL TOTAL ALL 9,457,951 10,220,000 762,049 DEPARTMENTS 3 : CC 03-08-2022 10 of 92 G eneral Fund Update 4-Year Comparison of Revenues, Expenditures and Changes to Fund Balance The Cital Fund historical revenue, expenditures and fund balance demonstrates the City has historically budgeted the use of fund balance. This means the General Funds amended budget estimated appropriations to exceed revenues. This use was not due to a structural deficit but due to the transfer out of excess fund balance from the General Fund to the Capital Reserve in accordance with One-time use policy. Due to the Citys encumbrance and budget carryover process, actual expenditures in FY 2020-21 came in lower than expected which resulted in additional excess fund balance. Revenue As of mid-year, General Fund revenue is tracking at $46 million or 2% lower than the same time last year due to changes in the in various revenue sources as shown in the following table. 4 21 CC 03-08-2022 11 of 92 Comparison of FY 2020-21 and FY 2021-22 General Fund Mid-Year Revenues Sales Tax received as of mid-year was $10.2 million (or 43%) less than last year due to the timing for which payments from the State Board of Equalization are received. Staff anticipate the final second quarter allocation will result in comparable performance year-over-year. Since the start of the pandemic, the Citys business-to-business industry group and its County Pool allocation share has increased substantially. HdL, the Citys sales tax consultant, recently provided a report on sales tax performance during the period July-September 2021. Restaurants and Hotels, General Consumer Goods, Fuel and Service Stations, Building and Construction, and Autos and Transportation were up 71%, 16%, 75%, 3%, and 4%, respectively, representing substantial recovery from conditions experienced earlier in the pandemic. This strong recovery was vastly overshadowed activities in the business to business and pool allocations. Since the start of the pandemic, the Citys business-to-business and county pool allocations have vaulted and as has been expected, we are seeing some tapering of those trends as the State continues to recover and open businesses to the public. Property Tax revenue has come in higher than the same time last year by $445,000 (or 6%). Residential use values increased $829.9 million (or 5%) and represented 84.1% of all growth experienced in the City. Commercial properties posted an increase of $572.8 million or a year-over-year increase of 7.6%. Unsecured assets in Cupertino decreased $700 million (or 28.9%) and were primarily attributable to assets owned by Apple Inc. that were transferred to commercial. Overall, the FY 21-22 property tax revenues are anticipated to increase by 3.5% over the previous fiscal year. There is still uncertainty around post-pandemic impacts to property values, such as expanded and/or permanent 5 22 CC 03-08-2022 12 of 92 telecommuting. Despite the uncertainty, the Citys property tax base remains strong and HdL is currently projecting property taxes over the next five years as presented below: FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 $29,627,822 $30,897,951 $32,223,088 $33,616,114 $35,072,217 Transient Occupancy Tax continued to be impacted by COVID-19 and the shelter-in-place orders. As of December 31, 2021, the City recognized $1.3 million in transient occupancy tax, which represents 45% of the total amount budgeted in FY 21-22. It also represents an increase of 52% over the Mid-Year point of FY 2020-21 and indicates recovery consistent with the Citys estimations. Utility Tax decreased approximately $15,000 (or 1%) representing consistent performance over the previous year. Franchise Fees have increased by $57,000 (or 9%) primarily due to an increase in Recology franchise fees collected. Other Taxes have decreased by approximately $648,000 (or 38%) primarily due to a one- time construction tax payment received from PSI Storage in FY 20-21. Licenses and Permits increased by $237,000 (or 12%) due to increased volume in building inspection fees. Use of Money and Property increased by $35,000 (or 4%) due to increased interest earnings from the Citys investment portfolio. Intergovernmental Revenue has increased by $2.4 million (or 236%) due to the American Rescue Plan Act funding received. Charges for Services have increased by $1.7 million (or 32%) driven mainly by increases in cost allocation charges. Additionally, charges for services experienced increases due to plan check fees. Fines and Forfeitures have increased $52,000 (or 97%) primarily due to increases in citations administered over the prior year. 6 23 CC 03-08-2022 13 of 92 Miscellaneou s revenue has decreased by $59,000 (or 6%) due primarily to an increase to an ongoing donation from Apple Inc. to fund additional law enforcement services that were offset with decreases in miscellaneous development agreement contributions. Transfers In have increased by $4.8 million (or 32,316%) due to a $4.8 million transfers related to the American Rescue Plan Act. Other Financing Sources decreased $35,000 (or 40%) due to a reduction in refundable deposit administrative fees collected over the previous fiscal year. Expenditures As of mid-year, overall expenditures in the General Fund are up $9.2 million (or 22%) when compared to the same time last year due primarily to increases in transfers out for the American Rescue Plan Act. The following table shows the differences between General Fund expenditures as of the mid-year in the current fiscal year and the prior fiscal year: Comparison of FY 2020-21 and FY 2021-22 General Fund Mid-Year Expenditures Salary and Benefits increases are approximately $1.8 million (or 14%). Compensation increases are due primarily to labor negotiations approved by Council on July 16, 2019. Increases in salary, driven by cost-of-living adjustments and equity adjustments, can be anticipated for the span of the negotiation term ending June 30, 2022. Additionally, the FY 21-22 Adopted Budget included 6 new full-time benefitted positions (FTE). Shortly after the start of the fiscal year, the City Attorneys Office moved from a contract service to in-house which also increased the FTE count. These classifications also experienced increases due to the timing of pay periods year-over-year. In FY 20-21, there were 12 pay periods in the first half the year and 13 pay periods in FY 21-22. These increases 7 24 CC 03-08-2022 14 of 92 were offset by increases due to vacancy savings through attrition. Benefit increases were primarily due to retirement, health, and workers compensation costs. Materials costs are down approximately $100,100 (or 5%) due primarily to decreases across Public Works materials accounts, specifically water and electrical charges. Contract Services have increased approximately $324,000 (or 3%) due primarily to increases in the Citys sheriff contract with the County. The increases were offset by reductions due to the City Attorney function moving from contract to in-house. Cost Allocation increases are approximately $737,000 (or 14%) due primarily to increases in I&T and Human Resources charges. Capital Outlay costs are up approximately $9,000, due to capitalizable facilities costs that were not incurred in the previous fiscal year. Special Projects increases are approximately $295,000 (or 45%) due to fluctuations in one- time expenditures. Transfers Out increases are approximately $6.0 million (or 59%) and are due to a one- time transfer out within the General Fund for the American Rescue Plan Act. Other Financing Uses have increased $235,000 (or 231%) due to refundable deposit on- call contracts for the Community Development Department. All Other Funds Update and Year End Projections Revenue As of mid-year, revenue in all other funds is tracking at $40.2 million (or 91%) higher than the same time last year due primarily to an increase in transfers from the General Fund to the Capital Improvement Program and a one-time development agreement contribution to the Citys Park Dedication Special Revenue Fund. 8 25 CC 03-08-2022 15 of 92 Other Taxes increased approximately $9.1 million (or 3,455%) due to a one-time development agreement (Westport) received in the Park Dedication Special Revenue Fund. Use of Money and Property increased by approximately $102,000 (or 19%) due to increased interest earnings from the Citys investment portfolio compared to the previous fiscal year. Intergovernmental Revenue remained relatively consistent over the previous fiscal year. Charges for services increased approximately $1.0 million (or 24%) primarily due to increases in Youth, Teen, and Recreation and Sports Center compared to the previous fiscal year. Fines and forfeitures increased approximately $30,000 (or 770%) due to an increased volume in citations administered over the prior year. Miscellaneous revenue decreased approximately $2.0 million (or 100%) due primarily to a relative reduction year-over-year in Apple donations received for various City bike/ped capital projects as these projects near completion. Transfers In increased approximately $10.9 million (or 90%) due to an increase in new Capital Improvement Program projects in FY 21-22 require a transfer out of the Capital Reserve. Other financing sources increased approximately $32,000 (or 21%) due to an increase in cost allocation revenues received by Human Resources for Workers Compensation. 9 26 CC 03-08-2022 16 of 92 Expenditures As of mid-year, overall expenditures are tracking at $28.0 million (or 40%) higher than the same time last year due primarily to increases in transfers out and contract services. Salary and Benefits increases are approximately $287,000 (or 7.6%). Compensation increases are due primarily to labor negotiations approved by Council on July 16, 2019. Increases in salary, driven by cost-of-living adjustments and equity adjustments, can be anticipated for the span of the negotiation term ending June 30, 2022. These classifications also experienced increases due to the timing of pay periods year-over- year. In FY 20-21, there were 12 pay periods in the first have the year and 13 pay periods in FY 21-22. Materials have remained relatively consistent over the previous fiscal year. Contract Services have increased approximately $1.1 million (or 70%) due, but not limited, to increased services provided at the Sports Center. Cost Allocation increased approximately $115,000 (or 11%) due primarily to increases in Innovation & Technology, Human Resources, and Finance charges. Capital Outlays decreased approximately $1.2 million (or 19%) due to a relative reduction in the number of projects progressing compared to last year including, but not limited to, the Library Expansion and the acquisition of Lawrence Mitty Park. Special Projects decreased approximately $739,000 (or 31%) due to decreases in annual asphalt project spending. Debt Service decreased approximately $1.3 million (or 77%) due to the refinancing of the Citys Certificates of Participation. 10 27 CC 03-08-2022 17 of 92 Transfers Out increased $9.8 million (or 489%) due to an increase in new Capital Improvement Program projects in FY 21-22 that require a transfer out of the Capital Reserve. Budget Adjustment Requests As of the mid-year a few departments are requesting budget adjustments to ensure they end the year within budget appropriations. The recommended adjustments are summarized in the table below: Recommended Adjustments FundDepartment Expenditure Revenue Fund Balance Description (Use of) GENERAL FUND 100Non-Departmental 10,000,000 - (10,000,000)Transfer from General Fund to Capital Reserve TOTAL GENERAL FUND 10,000,000 - (10,000,000) SPECIAL REVENUE FUND 280CIP 910,000 - (910,000)Lawrence-Mitty Park Debris Removal, Clean Up, and Tree Removal TOTAL SPECIAL REVENUE 910,000 - (910,000) FUND CAPITAL PROJECTS FUND 420CIP (1,847,699) - 1,847,699 All-Inclusive Play Area Budget Reduction 429Non-Departmental - 10,000,000 10,000,000 Transfer from General Fund to Capital Reserve TOTAL CAPITAL (1,847,699) 10,000,000 11,847,699 PROJECTS FUND ENTERPISE FUND 520Public Works 350,000 - (350,000)New Landfill Agreement and Solid Waste Consulting Services 560Parks & Recreation 10,300 - (10,300)Tree Maintenance 560Parks & Recreation 9,350 220,000 210,650 Additional Revenue Estimate and Bank Charges TOTAL ENTERPRISE FUND 369,650 220,000 (149,650) INTERNAL SERVICE FUND 630Public Works 26,000 - (26,000)Leaf Blower Replacement TOTAL INTERNAL 26,000 - (26,000) SERVICE FUND TOTAL ALL 9,457,951 10,220,000 762,049 FUNDS Lawrence-Mitty Park (CIP) (280-99-009) The future site of the Lawrence Mitty Park is a vacant parcel of land that is easily accessible and attracted numerous trespassers to congregate on the property. Although the Lawrence Mitty Park and Trail Master plan is underway, some pre-development work is necessary to secure the site and make it less attractive to trespassers until construction commences. Since the site was mainly used by the County as a storage yard, there are stockpiles of construction and demolition debris on site which create barriers for trespassers to be fully obstructed from Lawrence Expressway. The removal 11 28 CC 03-08-2022 18 of 92 of the debris and enhancing security measures would make it less attractive for those trespassers currently residing on the property. The pre-development work includes coordination efforts to relocate the trespassers, removal, and disposal of approximately 3,300 cubic yards of debris, clean-up of the materials left onsite by trespassers, and tree trimming. The total cost is estimated to be approximately $910,000. All-Inclusive Play Area (CIP) (420-99-051) All-Inclusive Play Area Budget Reduction On February 19, 2021, staff issued a memorandum to City Council to provide an update on Jollyman Park All-Inclusive Playground and Grant. As stated, a Request for Proposals (RFP) was issued in December 2019 for professional fundraising services for the Jollyman Park Playground. Three firms were found qualified to provide services. Further evaluation following this process concluded that the fundraising goal for the Playground was too high. During this time, the COVID-19 pandemic shutdowns commenced and it was not appropriate to proceed with designing a project that might substantially exceed the available funding. Experiences by other similar all-inclusive projects elsewhere in the County indicated that the greater than $2 million donation goal was too high. After this conclusion, staff contacted the County to inquire about adjusting the project to structure it for success. Collaboration continued with County staff to identify lower, more realistic fundraising target, associated adjustment of project features to meet goals while reducing total project cost, and longer timeline for project delivery. As a result, staff are recommending a reduction to the fundraising goal of $1 million and an associated reduction of the total project budget of $1,847,699. Resource Recovery (520-81-801) New Landfill Agreement and Solid Waste Consulting Services agreement expires in November 2023. All available options for waste disposition need to be considered, including renewing the current agreement, routing construction and demolition debris to a separate facility, and routing materials through a materials recovery facility. Additionally, the current Franchise Agreement with Recology requires a cost-based rate adjustment review process to inform the maximum rates for year four, which begins February 1, 2024, and recommends a performance review during rate year four. Originally anticipated to begin in July 2022, review of timelines and deadlines suggests and earlier start to this long process is advisable, so creation of this special project and one-time appropriations of $350,000 are being requested as a mid-year adjustment to allow preliminary work to begin during FY 21-22. Blackberry Farm Golf Course (560-63-616) Tree Maintenance - $10,300 in additional appropriations are being requested for tree maintenance, including preventative tree work to remove dense or dead trees at the 12 29 CC 03-08-2022 19 of 92 Blackberry Farm Golf Course. Due to the recent drought, more tree maintenance has been needed to reduce risk to the golf course users. Additional Revenue Estimate and Bank Charges - The Blackberry Farm (BBF) Golf Course requires $9,350 of additional appropriations for bank charges that have resulted due to unanticipated increases in program revenues. Due to the pandemic, golf continues to be popular and one of the safer outdoor activities available to the community. Revenue received from club and cart rentals, merchandise sold at the pro shop, and green fees have exceeded what was originally estimated. The program requires additional funds to continue to cover the excess bank charges from the additional revenue earned and the projected revenue ($220,000) for the rest of the fiscal year. Equipment Maintenance (630-85-849) Leaf Blower Replacement Staff are requesting $26,000 in additional appropriations to replace the Citys numerous leaf blowers. These funds will be used to comply with Cupertino's new blower noise ordinance that goes into effect November 2022 and reduce noise pollution in the community. This request will replace 55 blowers for service center maintenance staff. Due to supply shortages, staff are recommending the request at this time as opposed to waiting to include in the FY 22-23 Proposed Budget. Non-Departmental (100-90-001 & 420-90-001) Transfer to Capital Reserve Staff are recommending a $10,000,000 transfer of excess General Fund fund balance to the Capital Reserve for purpose of funding current and future capital projects. This request does not appropriate these dollars for specific projects; rather, it simply moves the cash out of the General Fund and into the Capital Reserve. Section 115 Trust (PRSP) Staff are recommending an additional contribution of $2,000,000 to the Citys Section 115 Trust (Pension Rate Stabilization Program). The City established this trust with PARS in 2018 for purposes of 1) maintaining local control over assets, 2) mitigating impact of large pension cost fluctuations, 3) potential for higher investment returns than General Fund, and 4) asset diversification. The trusts assets are required to be used to pay CalPERS for related retirement costs; however, at this time, staff do not anticipate drawing down from this trust in the near future. In 2018, the City made an additional contribution of $8,000,000 and had recommended funding $2 million annually for five (5) years. With this strategy, the trust would accumulate sufficient funds to pay the difference between a 7% and 6.25% discount rate, or approximately $42 million. With a total principal contribution amount of $14 million to date, approving this $2 million additional contribution will allow the City to be on schedule to address this funding gap by 2037. This transfer request moves 13 2: CC 03-08-2022 20 of 92 funds from the General Funds unassigned fund balance classification to the restricted fund balance classification and therefore does not require a budget adjustment or appropriation. Per the Citys Committed, Unassigned Fund Balance, and Use of One Time Funds Policy, funds in this trust may be used only at the discretion of City Council. Staffing The Amended Budget as of December 31, 2021, has a total of 203.75 FTEs (208.75 including City Council). Staff are recommending the following changes which will have no fiscal impact for the remainder of FY 21-22. Reclassify (One) Limited-Term Project Manager Position to Full Term Position - The majority of active projects residing with the CIP group are longer than 1 - 2 year projects. Presently there are two limited term CIP Project Manager positions, expiring November 2022 and Jrt into regular term positions. The project manager in this position is working on long term projects, as are all the Project Managers, and it would be a disruptive and financially ineffective to the progress of the projects if CIP were to lose this Project Manager positions. CIP Group staff strive to d having talented, dependable, and experienced Project Managers is important. The reclassification of this position will allow the City to continue utilizing the Project Managers to complete their projects and take on additional projects without any disruption. Fund Balance s General Fund ended FY 2020-21 with $96.9 million in total fund balance. As part of the FY 2021-22 Adopted Budget, the City projected ending the fiscal year with $83.1 million in total fund balance. As of the First Quarter Report, the City updated its year-end projections for FY 2021-22 to $111.9 million in total fund balance, an increase of $28.8 million due to increases in revenues received and lower expenditures in FY 2020-21. Projected year-end fund balance as of mid-year FY 2021-22 is estimated to be $101.8 million. The $101.8 million projection includes a one-time transfer out of $10 million to the Capital Improvement Program Reserve Fund, a $2 million contribution to the Section 115 Pension Trust, an increase to the Economic Uncertainty Reserve from $19 million to $24 million, and the establishment of a $10 million Committed Capital Projects Reserve. If approved, projected ending unassigned fund balance will be $37.2 million. 14 31 CC 03-08-2022 21 of 92 General Fund Classification of Fund Balance To date, s external auditors have not completed their revis financials. Revenue, expenditure, and fund balance totals listed in this report are preliminary and subject to change after a full review by the Citty Staff does not anticipate many, if any, changes to these figures. Per Committed, Unassigned Fund Balance, and Use of One Time Funds Policy, unassigned fund balance over $500,000 are to be used in the following order to replenish committed fund balances with any remaining balances to be placed in the Capital Reserve: 1.Economic Uncertainty increasing from $19 million to $24 million th 2.PERS - $2 million contribution (4 of 5 contributions) 3.Sustainability Reserve 4.Capital Projects - $10 million 5.Unassigned Staff recommend increasing the Economic Uncertainty Reserve from $19 million to $24 million. This increase more accurately reflects the formula stated in the Citys Committed, Unassigned Fund Balance, and Use of One Time Funds Policy (page 105 of the Adopted Budget). Staff are also recommending the establishment of a Committed Capital Projects Reserve with a starting balance of $10 million. The Citys Capital Improvement Program (CIP), while it has been funded with grants and donations, has primarily been funded with General Fund resources ($68 million over the last 6 fiscal years). As a result, the CIP has 15 32 CC 03-08-2022 22 of 92 become heavily reliant on a funding source that may not always have similar levels of funding from one year to the next. Establishing a Committed Reserve will provide financial planning support to ensure resources are readily available to fund future CIP projects. This reserve will be established at $10 million and, only with City Council authority, will be used to fund future capital projects. Performance Measures & Workload Indicators Updated performance measures and workload indicators that align with government and private industry best practices have been included in the Mid-Year Financial Report. Attachment C represents the status of the performance measures as of Mid- Year. City Manager Discretionary Fund As part of the FY 2021-22 Adopted Budget, City Council recommended and approved the reduction of the City Manager Discretionary Fund to an annual amount of $75,000. The quarterly budget reports will detail the City Managers use of the discretionary fund and may include recommendations to replenish depending on the extent and nature of use. As of December 31, 2021, $2,400 was used to assist with funding a Tripepi Smith contract for the Housing Op-Ed. American Rescue Plan Act of 2021 (ARP) On September 7, 2021, City Council approved use of American Rescue Plan Act of 2021 funding allocation and approved budget modification #2122-162 increasing appropriations in the General Fund (100-90-001 page 583 of the FY 2021-22 Adopted Budget) by $4,847,386.50 and revenues in the General Fund by $4,847,386.50. Of the four (4) allowable uses of funds: 1.Public Health/Negative Economic Impacts, 2.Premium Pay, 3.Revenue Loss, and 4.Investments in Water, Sewer, and Broadband Staff recommended, and City Council approved the allocation of use towards Revenue Loss. City staff anticipate realizing these losses before December 31, 2023, the end of the period of availability. This action allows the City to maintain current levels of operations and government services and affords City Council the continued ability to consider new projects and initiatives in the future. The budget modification moves dollars from the General Funds Non-Departmental Department to all other Departments in the General Fund for purposes of substantiating and reporting the use of grant dollars received. As expenditures are incurred, and revenue losses are realized, the City will recognize the $4,847,386.50 in revenues on a matching basis. As of 16 33 CC 03-08-2022 23 of 92 December 31, 2021, the City has recognized $3,054,213 of ARP revenues ($286,248 in Q2). Below is the status of the specific items as of December 31, 2021, that were approved by ARP funding. Conclusion The Mid-Year Financial Report shows the City is well-positioned to move forward. City staff recommend adjustments of $9,457,951 in new appropriations funded by $10,220,000 in revenues. If approved, the Citys fund balance will increase by $762,049. Prepared by: Zach Korach, Finance Manager Reviewed by: Kristina Alfaro, Director of Administrative Services Approved for Submission by: Jim Throop, City Manager Attachments: A Draft Resolution B Mid-Year Financial Report for Fiscal Year 2021-22 C Mid-Year Performance Measures D Mid-Year Budget Adjustment Journal E Budget Transfers Detail as of 12.31.2021 F Committed, Unassigned Fund Balance, and One Time Funds Policy (Clean) G Committed, Unassigned Fund Balance, and One Time Funds Policy (Redline) 17 34 CC 03-08-2022 24 of 92 Attachment A RESOLUTION NO. 22-XXX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AMENDING THE OPERATING BUDGET FOR FISCAL YEAR 2021-22 BY APPROPRIATING, TRANSFERRING, AND UNAPPROPRIATING MONIES FOR SPECIFIED FUNDS WHEREAS, the orderly administration of municipal government depends on a sound fiscal policy of maintaining a proper ratio of expenditures within anticipated revenues and available monies; and WHEREAS, accomplishing City Council directives, projects and programs, and performing staff duties and responsibilities likewise depends on the monies available for that purpose; and WHEREAS, the City Manager has determined that the balances from the funds specified in this resolution are adequate to cover the proposed amended appropriations, and therefore recommends the fund reallocations described herein. NOW, THEREFORE, BE IT RESOLVED that the City Council does hereby approve the recommended fund reallocations and ratifies the attached amended appropriations as set forth in Exhibit A. PASSED AND ADOPTED at a special meeting of the City Council of the th City of Cupertino this 8 day of March 2022, by the following vote: Vote Members of the City Council AYES: NOES: ABSENT: ABSTAIN: 35 CC 03-08-2022 25 of 92 SIGNED: ________ ________________________ Darcy Paul, Mayor Date City of Cupertino ATTEST: ________________________ ________________________ Date Kirsten Squarcia, City Clerk Attachment A Appropriation Appropriation Revenue Fund Balance Amendment by Fund Amendment Amendment (Use of) General Fund $10,000,000 $- ($10,000,000) Special Revenue Fund $910,000 $- ($910,000) Capital Projects Funds ($1,847,699) $10,000,000 $11,847,699 Enterprise Fund $369,650 $220,000 ($149,650) Internal Service Fund $26,000 $- ($26,000) Total Appropriation $9,457,951 $10,220,000 $762,049 Amendment All Funds (Exhibit A) 36 CC 03-08-2022 26 of 92 37 CC 03-08-2022 27 of 92 38 CC 03-08-2022 28 of 92 39 CC 03-08-2022 29 of 92 3: CC 03-08-2022 30 of 92 41 CC 03-08-2022 31 of 92 42 CC 03-08-2022 32 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: City Manager's Office, City Clerk Division GOAL: Streamline information processing for Council, staff and community members for compliance with State requirements and facilitate independent and transparent access to public information. FY20 FY21 FY22 Ongoing Jul-JunJul-JunJul-DecTarget Enabled by…Measure City Council minutes for meetings Online presented for Council approval by the 100%100%100%100% information and following regular meeting updated records Adopted City Council resolutions and that can be ordinances processed and scanned to easily accessed Laserfiche within a week of Clerk’s 60%80%80%100% in a timely office receipt of final, signed document manner. Public Record Act requests responded 100%100%100%100% to by the Statutory deadline date Response to records requests to comply with State law of 10 days. So that… All can fully participate in local government to achieve the community & organizational goals. 43 CC 03-08-2022 33 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: Administration, City Manager's Office, Sustainability Division GOAL: Implement Cupertino’s Climate Action Plan and General Plan Sustainability Element to achieve quantifiable emissions reductions, conserve finite resources, and achieve utility cost avoidance and savings across municipal operations and community partners. FY20 FY21 FY22 Ongoing Enabled by…MeasureJul-JunJul-JunJul-DecTarget Anagency % community-wide emissions reduced 15% implementing from baseline of 307,288 MT CO2e/yrreduction 2018 inventory: 24% decrease in Council and by 2020 emissions from baseline community (261,195 (258,659 MT CO2e/yr) sustainability MT goals to CO2e/yr) effectively Initiate and implement all Climate safeguard Action Plan near-term measures shared resources. % initiated 100% 100%100%100% % complete or ongoing 79%79%79%100% % municipal operations emissions 2018 inventory: 66% reduction 15% Engaged reduced from baseline of 1,865 MT in emissions from baseline: 642 reduction community CO2e/yr MTCO2eby 2020 partners and 1 Cupertino's GHG inventories are conducted roughly every 3-5 years. volunteers supporting CAP implementation So that… Cupertino is a thriving City to live, work, learn and play. 44 CC 03-08-2022 34 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: Administration, City Manager's Office, Office of Communications Division GOAL: Promote and increase interest and participation in City services, programs, initiatives, and projects while building community pride and positive identification with the City among its residents. FY20 FY21 FY22 Ongoing Enabled by…MeasureJul-JunJul-JunJul-DecTarget Social media engagement: total number Leveraging the of followers including City Hall communication 10% Nextdoor, Facebook, Twitter, and skills, 31,90635,17737,367annual Instagram accounts knowledge, and increase experience of employees while utilizing existing Social media engagement: average and emerging 10% number of engagements (reactions, technologies to 72.366.585.1annual comments, shares, and clicks) per post enhance, increase on City Hall Facebook account improve, and streamline the Cupertino 311: Average response time to communication Average customers organization-wide (in days): process. 2.8 Days3.5 Days3.3 DaysClose Time 5 Days So that… Residents have access to timely, engaging, and important information Clicks have now been added to the engagement metric, which will bump up the average number. The performance measure for “Access Cupertino: Average response time to customers organization-wide” was revised as Access Cupertino was replaced by Cupertino 311 in September 2017. The target has been revised to “Average Close Time,” which reflects how many days it took to handle a request. The Cupertino 311 Application is administered through the IT Department, but each individual department is responsible for responding to its own requests. Response times are organized by request category. 45 CC 03-08-2022 35 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: Administration, City Manager's Office, Video Division GOAL: Video Division oversees numerous outreach projects, public meetings, internal equipment upgrades, and public events. These activities coincide with the City Council and City’s expectation for a positive presence in the community and communications and transparency to residents. Enabled by… FY20 FY21 FY22 Ongoing 24/7 government access MeasureJul-JunJul-JunJul-DecTarget Percentage of total video productions channel, radio station, 145%522%362% performed vs scheduled productions (city 100% digital signage network, 32/2247/929/8 meetings excluded) City website, and Percentage of total engineering projects vs 233%250%300% numerous online video 100% scheduled projects 7/315/66/2 platforms. Total video views on YouTube and Granicus 5% annual 215,607246,31383,417 platforms combined*increase * Percentage skewed due to pandemic - more overall views due to daily press conference postings So that… Public awareness, interest, understanding,and participation in the issues, programs, and services presented by the City of Cupertino can be enhanced. 46 CC 03-08-2022 36 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: City Manager's Office, Economic Development Division GOAL: To actively pursue opportunities in the areas of business attraction, retention, and expansion as a means of promoting economic vitality, and strengthening the City’s sales tax base to support Cupertino’s excellent quality of life for its residents, businesses, and daytime population. FY20 FY21 FY22 Enabled by… MeasureJul-JunJul-JunJul-DecOngoing Target Effective Maintain Economic Development 2,0002,5002,5002,800 partnerships Business Connect Subscribers and proactive Economic Development Economic Development Business 113*212 per year Workshops & Events programs to support local businesses. *limited due to COVID So that… Cupertino's economyand sales tax revenue base are diversified to further enhance the City's financial stability and its ability to provide quality amenities to the community. 47 CC 03-08-2022 37 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: Law Enforcement Law Enforcement Goal: Maintain a safe environment to live, work, learn and play. FY20 FY21 FY22 Ongoing Enabled by…MeasureJul-JunJul-JunJul-DecTarget Priority 1 3.513.404.315 minutes Response time for emergency callsPriority 2 6.376.076.529 minutes All members of the Priority 3 11.9611.8011.2820 minutes community are % programs maintaining minimum Teen Academy 83%92%90%80% safe, informed, Citizen Academy65%N/AN/A80% attendance empowered and supported. 48 CC 03-08-2022 38 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: Innovation & Technology Innovation & Technology Goal: Provide superior delivery of information and technology services to city employees and constituents while continually enhancing levels of engagement. FY20 FY21 FY22 Ongoing Enabled by…MeasureJul-JunJul-JunJul-DecTarget GIS: % of time spent Developing Application10%25%25%35% Tools and GIS: % of time Maintaining services leverage 65% 90%75%70% applications existing, GIS: Met Requests within SLA (map, emerging and 97%98%100%100% data, Web maps, Cityworks, schema, innovative other) completed technologies to GIS: Increase Property Information enhance, 900/600 665/2,671691/533838/575 (Internal/External) site visits per month improve, and streamline GIS: Cityworks utilization - # of assets business and Cupertino maintains vs # of assets 45/31 45/3145/3545/45 communications maintained in Cityworks. Also the % 70%20%50%20% processes increase of work units completed (WOs, INSP,SRs) Infrastructure: Percentage based upon 71% number of scheduled projects/Number 80%86%100% of projects completed on time Integrated Infrastructure: Percentage based upon information 93% 90% number of HelpDesk tickets/SLA 93%94% services enable measurements customers’ Infrastructure: % Customer satisfaction access to the 85% based upon Satisfaction Rate from 99.1%98.7%100.0% tools and helpdesk tickets information they Infrastructure: % of network uptime need, when and 99% 99.9%99.9%100.0% where they need (not including planned maintenance) it Applications: % of citywide-enterprise 95% application project management 96%95%95% performed on time and on budget 5% Applications: Number of website site 1,624,377800,164823,496annual visits/Number of site hits increase Applications: Number of support request for the applications support 45655520 per month * Not tracked 49 CC 03-08-2022 39 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: Administrative Services Finance Goal: Financial Stability - Provide a sustainable level of core services that are funded from ongoing and stable revenue sources. FY20 FY21 FY22 Ongoing So that…Measure Jul-JunJul-JunJul-DecTarget General Fund fund balance as a % of The City is 69%103%78%35% budgeted appropriations financially AA+AA+AA+AA+ responsible. Credit Rating Actual revenue vs. budget (% below -7%-19%-35%10% budget) The City can 17%15%23%5% invest in Actual expenditures (% below budget) Community Funding allocated to high priority priorities. 43%53%53%63% services (Public Works, Community Development, Law Enforcement) So that… Citizens can enjoy high quality services that meet community priorities. Human Resources Goal: To create a thriving organization with meaningful careers in public service. So that… FY20 FY21 FY22 Ongoing TheCity can MeasureJul-JunJul-JunJul-DecTarget ensure a safe # of Worker’s Compensation Cases 1510130 working Total recordable Injury Rate YTD 5.70%LMLM0% environment for % absenteeism all employees 3%2%2%2% (% of total annual work hours) % turnover rate 3%5%3%1% % Employee satisfaction N/AN/AN/A100% The City attracts % Employee participation in wellness and retains a 47%43%47%75% activities talented Average # of applications received per workforce 41704850 recruitment Recruitment timeline - # days from 85787060 hiring request to offer letter The agency builds # of employees using the Telework N/AN/AN/A17 a flexible and program productive work % Utilization of full-service employee arrangement. 100%N/A*N/A*100% portal *Data not applicable So that… Citizens can enjoy high quality services that meet community priorities. 4: CC 03-08-2022 40 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: Community Development Department Community Development Goal: Review and guide development activity to ensure compliance with relevant codes and policies, and alignment with community values to promote and enhance Cupertino's community-wide quality of life. FY20 FY21 FY22 Jul-JunJul-JunJul-DecOngoing Target Enabled by…Measure Efficient planning and 92%93%93%80% Building permit applications shall be building plan reviewed within 15 business days. services and Customer/Applicants visiting the enhanced Building Permit Counter shall be assisted 93%**100%***80% customer within 15 minutes service. Applicants visiting the Planning Counter shall be assisted within 15 minutes 91%**100%***50% Effective code enforcement Building permit applications 63%****75% services. reviewed/issued over-the-counter (OTC) Below market rate rental and purchase 111411 15 per year vacancies filled Housing resources and referrals Affordable and 10912982 100 per year provided Below Market Complimentary/courtesy prelim app 83%79%69% 80% Rate Housing reviews completed within 4 weeks programs and Average number of days to initiate 0.210.0770.059< 7 public service investigation of code complaints grants. Code enforcement cases resolved without 85%98%91%80% issuance of citations Landlord-tenant counseling and dispute 284623 100 per year resolution cases provided Public Outreach Events 4**** 12 per year *Data provided from July 2019 - February 2020 due to shelter-in-place mandate. ** No data due to closure of city hall. *** In-person appointment started July 15, 2021, the counters were temporary closed in January 10, 2022 due to the surge of the COVID-19 Omicron variant. So that… Cupertino is a thriving City to live, work, learn and play. 51 CC 03-08-2022 41 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: Parks and Recreation Parks and Recreation Goal: Create a positive, healthy and connected community. FY20 FY21 FY22 Ongoing Enabled by… Jul-JunJul-JunJul-DecTarget Measure City investment in % of Parks and Recreation Department quality recreation customers surveyed who rate services 98%94%91%85% and community as good or excellent programs % of programs maintaining minimum 62%46%79%80% registration % Department's total cost recovery for 37%39%50%40% all (direct and indirect) costs Improved -16%-39%117%+1% % change in participants* business processes to improve 8937450 # of new programs or events offered customer *Increase due to more programs offered and partial reopening of services. experience So that… Cupertino has an exceptional system of parks and services that align with community values. 52 CC 03-08-2022 42 of 92 City of Cupertino FY 21-22 Budget Performance Measures Department: Public Works Capital Project Delivery Goal: Develop and deliver projects on time and within budget that serve the resident's needs and supports the City's stability and growth So that… FY20 FY21 FY22 Ongoing City funds Jul-Jun Jul-JunJul-DecTarget Measure capital improvement Percentage of projects completed on 95%90%100%95% projects. budget Percentage of construction projects 78%90%100%95% completed on time Projects are *FY21: 10 projects completed, 9 projects on budget and time utilized by the *FY22: 2 projects completed community. Benefit:Residents and businesses are assured their community is being improved by insightful, targeted and efficient useof taxes and fees towards maintaining and improving the City's facilities and assets. 53 CC 03-08-2022 43 of 92 Environment Goal: Protect our natural environment for current and future generations. FY20 FY21 FY22 Ongoing So that... Jul-JunJul-JunJul-DecTarget Measure City is Percent of businesses in compliance responsible for 95%96%N/A*75% during annual proactive stormwater a pollution prevention inspections comprehensive Percent of non-exempt businesses and 100% by storm water CY 2019 multi-family accounts separating 79%**81%***7/1/2022 pollution 64% organics (SB1383) prevention 100% by program. Percent trash/litter reduction achieved to 92%88% N/A**** 7/1/2022 meet Stormwater Permit requirements Diversion rate from all single-family, Potential multi-family, and commercial accounts 54%53%52%55% pollutants are as reported by Recology tonnage reports stopped before entering the storm drain Respond to reports of actual or potential 89%89%97%95% system. discharge the same business day % of plan reviews completed in required 83%90%91%100% City implements number of days solid waste Cubic yards of compost distributed via 1,000 CY 740 CY1,165 CY240 CY collection compost site services that % of vegetation obstructions resolved encourage within 15 days from time of report* 38%31%35%100% diversion of waste from landfills. *Inspections occur in the spring only **as of 12/31/2020 ***as of 9/7/2021 ****calculated for Annual Report in September Diversion of solid waste from Benefit: Current and future residents enjoy a healthy, sustainable environment. landfill is maximized, compost is produced for communityuse, recyclable material is sold to help offset collection costs and methane gas emissions at landfills are reduced. 54 CC 03-08-2022 44 of 92 Development Services Goal: Provide timely review and permitting of privately completed improvements within the public right of way. So that… FY20 FY21 FY22 Ongoing Improvements MeasureJul-JunJul-JunJul-DecTarget within the public right of Respond to complete plan submittals or 95%93%95%90% wayhave applications within two (2) weeks engineering oversight and Respond to complete encroachment are constructed 93%92%94%90% permit applications within two (2) weeks to City standards. Respond to public inquiries at the Public Works counter in City Hall within 15 95%**95% minutes *In-person counter closed starting March 2020 Benefit: Customers can expectquality reviews and permitting on a defined Public schedule, and the community can expect quality public facilities. improvements are consistent and meet the needs of the community. Grounds Division Goal: Provide well maintained, clean, and safe areas for the community’s recreational use and enjoyment at optimal life cycle costs. FY20 FY21 FY22 Ongoing So that...MeasureJul-JunJul-JunJul-DecTarget The City Percentage of 311 requests that are consistently responded to and closed within 3 72%74%85%80% funds park business days maintenance and safety Percentage of the 2,964 park inspections, improvement including play grounds, performed 3 100%100%50%100% programs. times weekly Parks are Percentage of Backflow Prevention maintained in Devices inspected, tested and repaired 100%100%50%100% good,usable annually condition; safety programs are Benefit:Cupertino has a well maintained public park systemthat meets the effective. needs of the community and is beneficial to personal wellness. 55 CC 03-08-2022 45 of 92 Streets Division Goal: Timely maintenance of public sidewalks, streets, streetlights and storm drain system in good condition to ensure safe, environmentally compliant, and accessible infrastructure that minimizes liability and has an optimal life cycle cost. FY20 FY21 FY22 Ongoing Jul-JunJul-JunJul-DecTarget So that…Measure Pavement condition index (PCI) > or The City 85858582 equal to 82 consistently Percent of the 2199 storm drain inlets funds street and 94%95%1%100% inspected and cleaned in fiscal year storm drain Percent of Inlets with Trash Capture maintenance 100%100%50%100% Screens inspected and cleaned twice and safety yearly improvement Percentage of roadway regulatory & 5.1%5.5%2.8%7% programs. street name signs repaired or replaced Percentage of trip and fall complaints investigated and mitigated within 2 100%100%100%98% business days Percentage of reported streetlight Street and outages investigated and repaired in 3 89%90%90%90% storm drain systemsare business days maintained in a Benefit: Cupertino has well maintained street and storm drain systemsthat good condition; meet the needs of the community. safety programs are effective. Trees and Right of Way Division Goal: Maintain and enhance the City's street trees and medians to ensure a safe, healthy and environmentally conscious Urban Forest. FY20 FY21 FY22 Ongoing Jul-JunJul-JunJul-DecTarget So that...Measure The City Percentage of 311 requests that are consistently responded to and closed within 3 96%95%83%95% funds street business days tree and median Percentage of trees inspected and maintenance maintained in the yearly maintenance 76%97%23%100% and safety zone (8 year maintenance cycle) programs Percentage of trees planted versus trees 76%92% 78% removed101% 69/91187/20266/84 # planted/# removed Street trees and medians remain in good Benefit: Cupertino has ahealthy and safe urban forest and medians provide health and good aesthetic and environmental value. condition 56 CC 03-08-2022 46 of 92 Facilities and Fleet Division Goal: Timely maintain City Facilities and City Fleet to meet staff, community and environmental requirements at an optimal life cycle cost. FY20 FY21 FY22 Ongoing Jul-JunJul-JunJul-DecTarget So that…Measure The City consistently Percentage of preventative maintenance funds facility 82%83%97%85% work orders completed for Fleet assets and fleet within 14 days of the due date. maintenance, fleet procurement, and safety improvement Percentage of facilities maintenance 90%89%83%90% programs. requests closed within 30 days. Facilitiesand Benefit: Cupertino has well maintained, usable, andsafe facilities and fleet Fleet remain in good and in order to meet the needs of staff and the community. operable condition. Transportation Division Goal: Ensure the efficiency and safety of the transportation system for all modes of travel. FY20 FY21 FY22 Ongoing So that...MeasureJul-JunJul-JunJul-DecTarget Percentage of non-emergency traffic Infrastructure 90%90%93%100% signal requests addressed within 72 indicates good hours. condition; safety Percentage of emergency traffic signal 100%100%100%100% programs are requests addressed within 2 hours. effective. Percentage of traffic engineering 95%95%95%95% requests responded to within 72 hours Annual mileage increase of separated 0.721.300.661 mile bicycle lanes and pedestrian paths. Benefit: Having a safe and efficient transportation system that is inviting for all modes of travel. 57 CC 03-08-2022 AttachmentD 47 of 92 MidYearFY202122RecommendedAdjustments FundGLAccountExpendituresRevenuesFundBalanceDescription GENERALFUND 100GeneralFund1009000180090210,000,000(10,000,000)TransferfromGeneralFundtoCapitalReserve TOTALGENERAL10,000,000(10,000,000) FUND SPECIALREVENUEFUND 280ParkDedication28099009700702910,000(910,000)LawrenceMittyParkDebrisRemoval,CleanUp,andTree Removal TOTALCAPITAL910,000(910,000) PROJECTSFUND CAPITALPROJECTSFUND 420Capital42099051900905(1,847,699)1,847,699AllInclusivePlayAreaBudgetReduction ImprovementProjects 429CapitalReserve4299000142140110,000,00010,000,000TransferfromGeneralFundtoCapitalReserve TOTALCAPITAL(1,847,699)10,000,00011,847,699 PROJECTSFUND ENTERPRISEFUNDS 520ResourceRecovery52081801750XXX350,000(350,000)NewLandfillAgreementandSolidWasteConsulting Services 560BlackberryFarm560636164204337,7007,700AdditionalRevenueEstimateandBankCharges GolfCourse 560BlackberryFarm560636164204446,3006,300AdditionalRevenueEstimateandBankCharges GolfCourse 560BlackberryFarm56063616450403206,000206,000AdditionalRevenueEstimateandBankCharges GolfCourse 560BlackberryFarm(10,300)TreeMaintenance 5606361670070210,300 GolfCourse 560BlackberryFarm560636167007079,350(9,350)AdditionalRevenueEstimateandBankCharges GolfCourse TOTALENTERPRISE369,650220,000(149,650) FUNDS INTERNALSERVICEFUNDS 630Vehicle6308584960060826,000(26,000)LeafBlowerReplacement Replacement TOTALINTERNAL26,000(26,000) SERVICEFUNDS TOTALALLFUNDS9,457,95110,220,000762,049 58 CC 03-08-2022 AttachmentE 48 of 92 BudgetTransfersasofDecember31,2021 GLAccountAmountDescription 10010100700702ContractServicesGeneralServiceAgreement$2,400HousingOpEdTripepiSmithCMDiscretionary 10014123719705ContingenciesContingencies$(2,400)HousingOpEdTripepiSmithCMDiscretionary $ 10012120600642MaterialsTelphoneandDataServices$(1,040)DivisionaltransfertofundsatelitephonewithCounty 10012633600642MaterialsTelphoneandDataServices$1,040DivisionaltransfertofundsatelitephonewithCounty $ 10071705500501EmployeeCompensationSalariesFullTime$115,115EconomicDevelopmentManagerTransferfromContractServices 10071705501500EmployeeBenefitsRetirementSystem$36,019EconomicDevelopmentManagerTransferfromContractServices 10071705501502EmployeeBenefitsPers1959SurvEmpr$41EconomicDevelopmentManagerTransferfromContractServices 10071705501505EmployeeBenefitsHealthInsurance$12,473EconomicDevelopmentManagerTransferfromContractServices 10071705501506EmployeeBenefitsDentalInsurance$918EconomicDevelopmentManagerTransferfromContractServices 10071705501507EmployeeBenefitsMedicare$1,669EconomicDevelopmentManagerTransferfromContractServices 10071705501508EmployeeBenefitsLifeInsurance$482EconomicDevelopmentManagerTransferfromContractServices 10071705501509EmployeeBenefitsLongTermDisability$438EconomicDevelopmentManagerTransferfromContractServices 10071705501511EmployeeBenefitsVisionInsurance$120EconomicDevelopmentManagerTransferfromContractServices 10071705501513EmployeeBenefitsRecBucks$335EconomicDevelopmentManagerTransferfromContractServices 10071705700702ContractServicesGeneralServiceAgreement$(167,610)EconomicDevelopmentManagerTransferfromContractServices $ 10015141600642MaterialsTelphoneandDataServices$432SeniorAssistantCAOCellPhone 10015141700702ContractServicesGeneralServiceAgreement$(432)SeniorAssistantCAOCellPhone $ 10015141600642MaterialsTelphoneandDataServices$432CAOCellPhone 10015141700702ContractServicesGeneralServiceAgreement$(432)CAOCellPhone $ 10015141600613MaterialsGeneralSupplies$10,425CAOannualsubscriptions 10015141700702ContractServicesGeneralServiceAgreement$(10,425)CAOannualsubscriptions $ 10015141500501EmployeeCompensationSalariesFullTime$158,398SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141501500EmployeeBenefitsRetirementSystem$49,563SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141501502EmployeeBenefitsPers1959SurvEmpr$42SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141501505EmployeeBenefitsHealthInsurance$12,426SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141501506EmployeeBenefitsDentalInsurance$915SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141501507EmployeeBenefitsMedicare$2,297SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141501508EmployeeBenefitsLifeInsurance$480SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141501509EmployeeBenefitsLongTermDisability$436SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141501511EmployeeBenefitsVisionInsurance$120SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141501513EmployeeBenefitsRecBucks$334SeniorAssistantCityAttorneyreclassforsalaryandbenefits 10015141700702ContractServicesGeneralServiceAgreement$(225,011)SeniorAssistantCityAttorneyreclassforsalaryandbenefits $ 10015141500501EmployeeCompensationSalariesFullTime$255,000CityAttorneyreclassforsalaryandbenefits 10015141500506EmployeeCompensationCarAllowance$4,200CityAttorneyreclassforsalaryandbenefits 10015141501500EmployeeBenefitsRetirementSystem$79,790CityAttorneyreclassforsalaryandbenefits 10015141501502EmployeeBenefitsPers1959SurvEmpr$62CityAttorneyreclassforsalaryandbenefits 10015141501505EmployeeBenefitsHealthInsurance$4,500CityAttorneyreclassforsalaryandbenefits 10015141501506EmployeeBenefitsDentalInsurance$1,372CityAttorneyreclassforsalaryandbenefits 10015141501507EmployeeBenefitsMedicare$3,698CityAttorneyreclassforsalaryandbenefits 10015141501508EmployeeBenefitsLifeInsurance$720CityAttorneyreclassforsalaryandbenefits 10015141501509EmployeeBenefitsLongTermDisability$654CityAttorneyreclassforsalaryandbenefits 10015141501511EmployeeBenefitsVisionInsurance$179CityAttorneyreclassforsalaryandbenefits 10015141501513EmployeeBenefitsRecBucks$500CityAttorneyreclassforsalaryandbenefits 10015141501517EmployeeBenefitsDeferredComp$19,500CityAttorneyreclassforsalaryandbenefits 10015141700702ContractServicesGeneralServiceAgreement$(370,175)CityAttorneyreclassforsalaryandbenefits $ 10032308600606MaterialsSoftware$(8,000)Softwarepurchasetocontractservice 10032308700702ContractServicesGeneralServiceAgreement$8,000Softwarepurchasetocontractservice $ 10032308600606MaterialsSoftware$(15,000)Softwarepurchasetocontractservice 10032308700702ContractServicesGeneralServiceAgreement$15,000Softwarepurchasetocontractservice $ 10088846700702ContractServicesGeneralServiceAgreement$(435,185)Transfertospecificcontractserviceaccountfortrackingpurposes 10088846700709ContractServicesCrossingGuard$435,185Transfertospecificcontractserviceaccountfortrackingpurposes TOTAL$ 59 CC 03-08-2022 49 of 92 Fiscal Policies Ï Committed, Unassigned Fund Balance, and Use of One Time Funds Policy PURPOSE Toestablishassignedandunassignedfundbalanceandonetimeusepolicies. SCOPE TheGeneralFundandCapitalFunds. POLICY Tomaintainsufficientcommittedandunassignedfundbalance(generalfundonly)ineachfund fortheabilitytomeetfollowingeconomicuncertainties: EconomicUncertainty ɋ$24,000,000andrepresentstwomonthsofGeneralFund(GF) operatingexpendituresexcludingtransfersoutplusatwoyeardropintotalgeneralfund revenueof13%orapproximately1.5months,excludingtheuseofreserves.Transfersoutare primarilyusedtofundCapitalProjectsanddonotrepresentongoingexpenditures.This assignmentwillchangefromyeartoyearbasedonbudgetedgeneralfundexpendituresand revenues. Mitigateshorttermeconomicdownturnsandvolatilityinrevenues(2yearsorless) Sustaincityservicesintheeventofanemergency Meetrequirementsfordebtreserves Meetoperatingcashflowrequirementsasaresultofdelayinthereceiptoftaxes,grant proceedsandotheroperatingrevenues PERS ɋ$20,491,004andrepresentstheinitialinvestmentintothe"¯º¿ȟ¹PensionRate StabilizationProgram(PRSP).Asaresultofthesignificantincreaseinretirementcostsbasedon themostrecentactuarialforecast,theCityelectstoestablishandfundasecondarypensiontrust toassistinstabilizingthepotentialimpactofpensioncostvolatilityonthe"¯º¿ȟ¹operating budget.Annualcontrib utionssubsequenttotheinitialfundingaredeterminedbycalculating thedifferencebetween"§²/$12ȟcurrentdiscountrateandamoreconservativeratedetermined bytheCity.Thisdifferenceistobetransferredtothepensiontrustandtobeusedsolelyforthe benefitofmembersintheplan.FundsinthistrustaretechnicallyȠ¸«¹º¸¯©º«ªȡunder GovernmentalAccountingStandardsBoard(GASB)StatementNo.54inthatthefundsare legallyrestrictedtobeusedforretirementcosts;however,thetimingforwhichthesefundsmay beusedisonlyatthediscretionofCityCouncil. 5: CC 03-08-2022 50 of 92 CapitalProjects$10,000,000andrepresentstheamountofGeneralFundresourcesreadily availabletofundfuturecapitalprojectsinthe"¯º¿ȟ¹CapitalImprovementProgram(CIP).The "¯º¿ȟ¹CapitalProjectsFundshasa$5,000,000reservethreshold;however,establishinga secondaryreserveinthe"¯º¿ȟ¹GeneralFundwillenablemoreefficientandaccurateshortand longtermcapitalbudge tingandplanning. SustainabilityReserve ɋ"»¶«¸º¯´µȟ¹SustainabilityDivisionoverseesthe"¯º¿ȟ¹ClimateAction Plan(CAP),whichdefinesstrategiestoreducegreenhousegasemissions,andprovides residents,businessesandschoolswithprogramsandservicesfocusedonenergyefficiency, renewableenergy,waterconservation,alternativetransportationandothersustainableactions. TheCityreceivesrebatesforprojectsthatsuccessfullymeettheeligibilityrequirementssuchas energyorwaterefficiency.Iftherebateswerenotinitiallybudgeted,theyarecategorizedas committedfundbalanceintheGeneralFund.Thepurposeofthisreserveistohelpsupport futuresustainabilityprojects/programs. Unassigned ɋ$500,000andrepresents1%ofthetotalgeneralfundoperatingbudget.This assignmentmaychangefromyeartoyearbasedonbudgetedgeneralfundexpenditures. Absorbunanticipatedoperatingneedsthatariseduringthefiscalyearthatwerenot anticipatedduringthebudgetprocess Absorbunexpectedclaimsorlitigationsettlements CapitalImprovement ɋ$5,000,000andrepresentsaveragedollarsspentforcapitalprojectsin thelastthreefiscalyears.Thisassignmentmaychangefromyeartoyearbasedonactuals dollarsspentoncapitalprojectsandanticipatedfuturecapitalprojectneeds. Meetfuturecapitalprojectneedssoastominimizefuturedebtobligations TheCityshallnotusefundbalances/reservesinlieuofrevenuestopayforongoingexpenses exceptasspecificallyprovidedinthe"¯º¿ȟ¹reservepolicy. 61 CC 03-08-2022 51 of 92 Thechartbelowsummarizesreservepolicylevelsasdescribedabove: FundingReserve PriorityReserveLevel Escalator¹Description GENERALFUND 1Economic$24,000,000GFBudgetedForeconomic UncertaintyOperatingdownturnsand Expenditures²majorrevenue GFBudgetchanges. Revenue³ 2PERS$20,491,004BudgetedForpensioncost Citywideincreases. Retirement Costs 3CapitalProjects$10,000,000NoneForfuturecapital projectfunding. 4Sustainability$127,891GFBudgetForfuture Reserve Revenue³sustainability projects/programs. 5Unassigned$500,000BudgetedGFFormidyear Operatingbudget Expenditures²adjustmentsand redeploymentinto thefiveyear budget. CAPITALPROJECTSFUNDS 6Capital$5,000,000NoneReservessetaside Improvementforfuturecapital projects. ______________ ¹Roundedtothenearesthundredthousand ²ExcludesTransfersOut ³Excludestheuseofreserves ChangestoCommittedFundBalance ɋAllreserveslistedinthispolicy,withtheexceptionof thePERSrestrictedreserve,areclassifiedasCommittedFundBalanceunderGASBStatement No.54.Committedfundbalanceiscomprisedofamountsthatcanbeusedonlyforthe specificpurposesdeterminedbyaformalactionoftheµ¼«¸´³«´ºȟ¹highestlevelofdecision 62 CC 03-08-2022 52 of 92 makingauthority.ChangestocommittedfundbalancesmustbeapprovedbyCityCouncil. Thispolicywillbereviewedannuallyaspartofthebudgetprocess. Replenishmentprocessɋ ShouldtheCityneedtoutilizeanyofthecommittedfundbalances listedinthispolicy,recommendationwillbebroughttoCityCouncilforapprovalandaplanto replenishthecommittedbalancewillbedevelopedinconjunctionwithitsuse. Excess ɋFundingofthesereserveswillcomegenerallyfromonetimerevenues,annualnet income,andtransfersfromotherreservesthatexceedpolicylevels.Theywillbefundedinthe followingpriorityorderwithanyremainingfundstobeplacedintheCapitalReserve: 1)EconomicUncertainty 2)PERS 3)CapitalProjects 3)SustainabilityReserve 4)Unassigned 63 CC 03-08-2022 53 of 92 Fiscal Policies Ï Committed, Unassigned Fund Balance, and Use of One Time Funds Policy PURPOSE Toestablishassignedandunassignedfundbalanceandonetimeusepolicies. SCOPE TheGeneralFundandCapitalFunds. POLICY Tomaintainsufficientcommittedandunassignedfundbalance(generalfundonly)ineachfund fortheabilitytomeetfollowingeconomicuncertainties: EconomicUncertainty ɋ$1924,000,000andrepresentstwomonthsofGeneralFund(GF) operatingexpendituresexcludingtransfersoutplusatwoyeardropintotalgeneralfund revenueof13%orapproximately1.5months,excludingtheuseofreserves.Transfersoutare primarilyusedtofundCapitalProjectsanddonotrepresentongoingexpenditures.This assignmentwillchangefromyeartoyearbasedonbudgetedgeneralfundexpendituresand revenues. Mitigateshorttermeconomicdownturnsandvolatilityinrevenues(2yearsorless) Sustaincityservicesintheeventofanemergency Meetrequirementsfordebtreserves Meetoperatingcashflowrequirementsasaresultofdelayinthereceiptoftaxes,grant proceedsandotheroperatingrevenues PERS ɋ$20,491,004andrepresentstheinitialinvestmentintothe"¯º¿ȟ¹PensionRate StabilizationProgram(PRSP).Asaresultofthesignificantincreaseinretirementcostsbasedon themostrecentactuarialforecast,theCityelectstoestablishandfundasecondarypensiontrust toassistinstabilizingthepotentialimpactofpensioncostvolatilityonthe"¯º¿ȟsoperating budget.Annualcontributionssubsequenttotheinitialfundingaredeterminedbycalculating thedifferencebetween"§²/$12ȟcurrentdiscountrateandamoreconservativeratedetermined bytheCity.Thisdifferenceistobetransferredtothepensiontrustandtobeusedsolelyforthe benefitofmembersintheplan.FundsinthistrustaretechnicallyȠ¸«¹º¸¯©º«ªȡunder GovernmentalAccountingStandardsBoard(GASB)StatementNo.54inthatthefundsare legallyrestrictedtobeusedforretirementcosts;however,thetimingforwhichthesefundsmay beusedisonlyatthediscretionofCityCouncil. 64 CC 03-08-2022 54 of 92 CapitalProjects$10,000,000andrepresentstheamountofGeneralFundresourcesreadily availabletofundfuturecapitalprojectsinthe"¯º¿ȟ¹CapitalImprovementProgram(CIP).The "¯º¿ȟ¹CapitalProjectsFundshasa$5,000,000reservethreshold;however,establishinga secondaryreserveinthe"¯º¿ȟ¹GeneralFundwillenablemoreefficientandaccurateshortand longtermcapitalbudgetingandplanning. 65 CC 03-08-2022 55 of 92 SustainabilityReserve ɋ"»¶«¸º¯´µȟ¹SustainabilityDivisionoverseesthe"¯º¿ȟ¹ClimateAction Plan(CAP),whichdefinesstrategiestoreducegreenhousegasemissions,andprovides residents,businessesandschoolswithprogramsandservicesfocusedonenergyefficiency, renewableenergy,waterconservation,alternativetransportationandothersustainableactions. TheCityreceivesrebatesforprojectsthatsuccessfullymeettheeligibilityrequirementssuchas energyorwaterefficiency.Iftherebateswerenotinitiallybudgeted,theyarecategorizedas committedfundbalanceintheGeneralFund.Thepurposeofthisreserveistohelpsupport futuresustainabilityprojects/programs. Unassigned ɋ$500,000andrepresents1%ofthetotalgeneralfundoperatingbudget.This assignmentmaychangefromyeartoyearbasedonbudgetedgeneralfundexpenditures. Absorbunanticipatedoperatingneedsthatariseduringthefiscalyearthatwerenot anticipatedduringthebudgetprocess Absorbunexpectedclaimsorlitigationsettlements CapitalImprovement ɋ$5,000,000andrepresentsaveragedollarsspentforcapitalprojectsin thelastthreefiscalyears.Thisassignmentmaychangefromyeartoyearbasedonactuals dollarsspentoncapitalprojectsandanticipatedfuturecapitalprojectneeds. Meetfuturecapitalprojectneedssoastominimizefuturedebtobligations TheCityshallnotusefundbalances/reservesinlieuofrevenuestopayforongoingexpenses exceptasspecificallyprovidedinthe"¯º¿ȟ¹reservepolicy. Thechartbelowsummarizesreservepolicylevelsasdescribedabove: FundingReserve PriorityReserveLevel Escalator¹Description GENERALFUND 1EconomicGFBudgetedForeconomic Uncertainty$1924,000,000Operatingdownturnsand Expenditures²majorrevenue GFBudgetchanges. Revenue³ 2PERS$20,491,004BudgetedForpensioncost Citywideincreases. Retirement Costs 3CapitalProjects$10,000,000NoneForfuturecapital projectfunding. 66 CC 03-08-2022 56 of 92 4Sustainability$127,891GFBudgetForfuture Reserve Revenue³sustainability projects/programs. 5Unassigned$500,000BudgetedGFFormidyear Operatingbudget Expenditures²adjustmentsand redeploymentinto thefiveyear budget. CAPITALPROJECTSFUNDS 6Capital$5,000,000NoneReservessetaside Improvementforfuturecapital projects. ______________ ¹Roundedtothenearesthundredthousand ²ExcludesTransfersOut ³Excludestheuseofreserves ChangestoCommittedFundBalance ɋAllreserveslistedinthispolicy,withtheexceptionof thePERSrestrictedreserve,areclassifiedasCommittedFundBalanceunderGovernment AccountingStandardsBoard(GASB)StatementNo.54.Committedfundbalanceiscomprised ofamountsthatcanbeusedonlyforthespecificpurposesdeterminedbyaformalactionofthe µ¼«¸´³«´ºȟ¹highestlevelofdecisionmakingauthority.Changestocommittedfundbalances mustbeapprovedbyCityCouncil.Thispolicywillbereviewedannuallyaspartofthebudget process. Replenishmentprocessɋ ShouldtheCityneedtoutilizeanyofthecommittedfundbalances listedinthispolicy,recommendationwillbebroughttoCityCouncilforapprovalandaplanto replenishthecommittedbalancewillbedevelopedinconjunctionwithitsuse. Excess ɋFundingofthesereserveswillcomegenerallyfromonetimerevenues,annualnet income,andtransfersfromotherreservesthatexceedpolicylevels.Theywillbefundedinthe followingpriorityorderwithanyremainingfundstobeplacedintheCapitalReserve: 1)EconomicUncertainty 2)PERS 3)CapitalProjects 3)SustainabilityReserve 67 CC 03-08-2022 57 of 92 4)Unassigned 68 CC 03-08-2022 58 of 92 CITY OF CUPERTINO Agenda Item 22-10560Agenda Date: 3/8/2022 Agenda #: 2. 2»¨°«©º Ȏ(Item 12 on March 1, 2022 Agenda)/¸µ¸«¹¹Ɏ»¶ª§º«Ɏµ¬Ɏº®«Ɏ'µ»¹¯´Ɏ$²«³«´ºɎ4¶ª§º«ȍɎ§´ª ¸«¼¯«½ȍɎª¯¹©»¹¹ȍɎ§´ªɎ§¶¶¸µ¼«Ɏ¹«²«©º¯µ´Ɏµ¬Ɏ¹º§±«®µ²ª«¸¹Ɏ¸µ»¶ 1«©«¯¼«¸«¶µ¸º§´ª¶¸µ¼¯ª«¬««ª¨§©±µ´º®«¶¸µ¸«¹¹ȍ¸«¼¯«½º®«¹º§±«®µ²ª«¸¹¹«²«©º¯µ´¶¸µ©«¹¹ȍ§´ª ©µ´¹¯ª«¸Ɏ§¶¶¸µ¼§²Ɏµ¬Ɏº®«Ɏ¹º§±«®µ²ª«¸¹Ɏ¸µ»¶ /¸«¹«´º«¸ȎɎ!«´Ɏ%»ȍɎ"µ³³»´¯º¿Ɏ#«¼«²µ¶³«´ºɎ#¯¸«©ºµ¸ CITY OF CUPERTINOPage 1 of 1Printed on 3/4/2022 powered by Legistar© 69 CC 03-08-2022 59 of 92 CITYCOUNCILSTAFFREPORT Meeting:March1,2022 Subject ProgressupdatereportfromEMCPlanningGroupregardingtheHousingElement updateprocess.DiscussionandapprovaloftheHousingElementupdateStakeholders group. RecommendedAction ReceivereportandprovidefeedbackontheprogressoftheHousingElementupdate, reviewtheStakeholdersselectionprocess,andconsiderapprovaloftheStakeholders groupmembership. Discussion Background th TheCityiscurrentlypreparingits6CycleHousingElementupdate,whichcoversthe planningperiodof2023to2031.TheHousingElementispartof"»¶«¸º¯´µȟ¹GeneralPlan andidentifiespoliciesandprogramsintendedtomeetthehousingneedsofthe"¯º¿ȟ¹ currentandfutureresidents,atalllevelsofincome.Statelawrequiresthateverycityand countyinCaliforniaadoptaHousingElementeveryeightyearstoreflecttheRegional HousingNeedsAllocation(RHNA)establishedforeachjurisdictionbytheState.The "¯º¿ȟ¹RHNAis4,588unitsforthe20232031planningperiod. Oncea°»¸¯¹ª¯©º¯µ´ȟ¹RHNAhasbeendeterminedcitiesmustdemonstratethattheyhave adequatehousingsitestoaccommodatetheirRHNA.Thereareguidelinesandspecific requirementsonsiteselection,thatensuretheCityhaspoliciesinplacetosupportthe developmentofhousingforpersonsatallincomelevels,asspecifiedbyStatelaw.The Cityispresentlyintheprocessofrefiningandfinalizingitssiteselectioninventory,which hasbeenthefocusoftwoPlanningCommissionstudysessionsonJanuary25,and February22,2022,withafollowupstudysessiononFebruary28,2022.Completingthe siteselectioninventoryisakeystepinthehousingElementupdateprocessthatwill enabletheCitytodefinethescopeoftheHousingElementupdateandassesstheupdate inaccordancewiththeCaliforniaEnvironmentalQualityAct(CEQA). 6: CC 03-08-2022 60 of 92 Analysis OnSeptember21,2021,theCityCouncilawardedaconsultantagreementtopreparethe th 6CycleHousingElementupdatetoEMCPlanningGroup(EMC).SincethattimeEMC andCitystaffhaveheldtwoCityCouncilstudysessions,onSeptember28andNovember 16,2021,focusingontheoverallHousingElementupdateprocessandStaterequirements th thathavegreatlyexpandedtheroleandextentofpublicoutreachrequiredforthe6 Cycle.Additionally,aseparateHousingCommissionstudysessionandcommunity workshopwereheldonDecember9,2021.Thesemeetingswerefollowedbythethree previouslymentionedPlanningCommissionstudysessionsinJanuaryandFebruary 2022thatfocusedonthesiteselectioninventoryprocess. AttachedtothisbriefstaffreportisamemorandumpreparedbyEMCthatdiscussesthe principalStaterequirementsoftheHousingElementupdateprocess,thecurrentstatus ofthe"¯º¿ȟ¹HousingElementupdate,andthesitesselectioninventoryguidancereceived fromthePlanningCommissionatthe"µ³³¯¹¹¯µ´ȟ¹recentstudysessions.Additionally, $,"ȟ¹memorandumprovidesanupdateontheStakeholdersGroupapplicationand selectionprocess.TheformationofaStakeholdersGroupispartofanextensiveongoing outreacheffortbyEMCtosolicitinputfromandincludeabroadspectrumofcommunity ³«³¨«¸¹ȟideasandperspectivesintotheHousingElementupdate. NextSteps $,"ȟ¹scopeofworkincludesarobustpublicengagementplan,includingpublic meetingsandstudysessions,communityworkshops,stakeholdergroupmeetings,online engagement,andtranslation/interpretationservicestobecompletedinamanner ensuringthataStatecompliantHousingElementcanbepresentedtotheCityCouncil bythe2º§º«ȟ¹January31,2023deadline. ThenextimmediatestepintheHousingElementupdateprocessisaCityCouncilwork sessionscheduledforMarch15,2022tofurtherdiscussthesitesselectionprocess. SustainabilityImpact Nosustainabilityimpacts. FiscalImpact Nofiscalimpact. Preparedby:LukeConnolly,SeniorPlanner PiuGhosh,PlanningManager Reviewedby:BenjaminFu,DirectorofCommunity DianneThompson,AssistantCityManager ChristopherJensen,CityAttorney 2 71 CC 03-08-2022 61 of 92 Approvedby:JimThroop,CityManager Attachments: SupplementalStaffReportMemobyEMC A6thCycleHousingElement4¶ª§º«Ɍ/»¨²¯©EngagementActivitiestodate BStakeholdergroupQuestions CListofRecommendedstakeholderscoresandresponsetoprimarynarrativequestion DHCDRevisionrequestletterforMontereyPark 3 72 CC 03-08-2022 62 of 92 73 CC 03-08-2022 63 of 92 o o o o 74 CC 03-08-2022 64 of 92 75 CC 03-08-2022 65 of 92 76 CC 03-08-2022 66 of 92 77 CC 03-08-2022 67 of 92 78 CC 03-08-2022 68 of 92 79 CC 03-08-2022 69 of 92 7: CC 03-08-2022 70 of 92 81 CC 03-08-2022 71 of 92 82 92 of 72 03-08-2022 CC CC 03-08-2022 73 of 92 84 CC 03-08-2022 74 of 92 85 CC 03-08-2022 75 of 92 86 CC 03-08-2022 76 of 92 87 CC 03-08-2022 77 of 92 88 CC 03-08-2022 78 of 92 89 CC 03-08-2022 79 of 92 8: CC 03-08-2022 80 of 92 STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCYGAVIN NEWSOM, DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT DIVISION OF HOUSING POLICY DEVELOPMENT 2020 W. El Camino Avenue, Suite 500 Sacramento, CA 95833 (916)263-2911 / FAX (916) 263-7453 www.hcd.ca.gov Steven Sizemore Interim Director of Community & Economic Development City of Monterey Park 320 W Newmark Avenue Monterey Park, CA 91754 Dear Steven Sizemore: th RE: The City of Monterey Park of 6 Cycle (2021-2029) Draft Housing Element Thank you for submitting the City of Monterey Park’s (City) draft housing element received for review on October 7, 2021. Pursuant to Government Code section 65585, subdivision (b), the California Department of Housing and Community Development (HCD) is reporting the results of its review. In addition, HCD considered comments from the Public Counsel and Linda Tang pursuant to Government Code section 65585, subdivision (c). The draft element addresses many statutory requirements; however, revisions will be necessary to comply with State Housing Element Law (Article 10.6 of the Gov. Code). The enclosed Appendix describe the revisions needed to comply with State Housing Element Law. As a reminder, the City’s 6th cycle housing element was due October 15, 2021. As of today, the City has not completed the housing element process for the 6th cycle. The City’s 5th cycle housing element no longer satisfies statutory requirements. HCD encourages the City to revise the element as described above, adopt, and submit to HCD to regain housing element compliance. For your information, pursuant to Assembly Bill 1398 (Chapter 358, Statutes of 2021), if a local government fails to adopt a compliant housing element within 120 days of the statutory deadline (October 15, 2021), then any rezoning to accommodate the regional housing needs allocation (RHNA), including for lower-income households, shall be completed no later than one year from the statutory deadline. Otherwise, the local government’s housing element will no longer comply with State Housing Element Law, and HCD may revoke its finding of substantial compliance pursuant to Government Code section 65585, subdivision (i). 91 CC 03-08-2022 81 of 92 Steven Sizemore Page 2 Public participation in the development, adoption and implementation of the housing element is essential to effective housing planning. Throughout the housing element process, the City should continue to engage the community, including organizations that represent lower-income and special needs households, by making information regularly available and considering and incorporating comments where appropriate. For your information, some general plan element updates are triggered by housing element adoption. HCD reminds the Countyto consider timing provisions and welcomes the opportunity to provide assistance. For information, please see the Technical Advisories issued by the Governor’s Office of Planning and Research at: http://opr.ca.gov/docs/OPR_Appendix_C_final.pdf and http://opr.ca.gov/docs/Final_6.26.15.pdf. Several federal, state, and regional funding programs consider housing element compliance as an eligibility or ranking criteria. For example, the CalTrans Senate Bill (SB) 1 Sustainable Communities grant; the Strategic Growth Council and HCD’s Affordable Housing and Sustainable Communities programs; and HCD’s Permanent Local Housing Allocation consider housing element compliance and/or annual reporting requirements pursuant to Government Code section 65400. With a compliant housing element, the City meets housing element requirements for these and other funding sources. We are committed to assisting the City in addressing all statutory requirements of State Housing Element Law. If you have any questions or need additional technical assistance, please contact Tristan Lanza, of our staff, at tristan.lanza@hcd.ca.gov. Sincerely, Melinda Coy Housing Accountability Enclosure 92 CC 03-08-2022 82 of 92 APPENDIX CITY OF MONTEREY PARK The following changes are necessary to bring the City of Monterey Park’s (City) housing element into compliance with Article 10.6 of the Government Code. Accompanying each recommended change, we cite the supporting section of the Government Code. Housing element technical assistance information is available on HCD’s website at http://www.hcd.ca.gov/community-development/housing-element/housing-element-memos.shtml. Among other resources, the housing element section contains HCD’s latest technical assistance tool, available at http://www.hcd.ca.gov/community-development/building-blocks/index.shtml and includes the Government Code addressing State Housing Element Law and other resources. A.Review and Revision The element must provide a cumulative evaluation of the effectiveness of past goals, policies, and related actions in meeting the housing needs of special needs populations (e.g., elderly, persons with disabilities, large households, female-headed households, farmworkers, and persons experiencing homelessness). B.Housing Needs, Resources, and Constraints 1. General: The element provides data regarding various socio-economic characteristics across all components of the required analysis (e.g., segregation and integration, access to opportunity, displacement). However, the element must discuss and analyze this data for trends and patterns. Local Data and Knowledge: The element must include local data and knowledge to discuss and analyze any unique attributes about the City related to fair housing issues. The element should complement federal, state, and regional data with local data and knowledge where appropriate to capture emerging trends and issues, including utilizing knowledge from local and regional advocates and service providers. Also, the element must include other relevant factors that contribute to fair housing issues in the jurisdiction. For instance, the element can analyze historical land use and investment practices or other information and demographic trends. Outreach: While the element included some information on public engagement and outreach efforts (Appx. C, pg.6), to address outreach requirements of AB 686 (Chapter 958, Statutes of 2018), the element must describe meaningful; frequent, th The City of Monterey Park of 6 Cycle Draft Housing Element Page 1 December 6, 2021 93 CC 03-08-2022 83 of 92 and ongoing public participation with the community including key stakeholders. The element should describe any specific outreach efforts to organizations that represent special needs populations or members of protected classes. The element could also describe targeted efforts to engage specific communities that are experiencing several fair housing issues. Enforcement: While the element included a summary of fair housing complaints on a county-wide basis, the element needs to include information on fair housing complaints specific to the City and analyze those complaints for trends, patterns, and impact on protected classes. The element must also include an analysis of any findings, lawsuits, or judgements related to enforcement actions regarding fair housing. In addition, the element must discuss compliance with existing fair housing laws and regulations. For more information and guidance on this analysis, please visit pages 28-30 of the HCD’s AFFH guidance memo: Affirmatively Furthering Fair Housing (ca.gov). Racial/Ethnic Areas of Concentration of Poverty (R/ECAP): The element includes information relative to R/ECAP, but the analysis must also provide a regional comparison. In addition, the City has not fully addressed its concentrated areas of affluence. The combination of the R/ECAP and areas of affluence analyses will help guide goals and actions to address fair housing issues. The analysis should evaluate the patterns and changes over time at a local and regional level. Furthermore, the element does list one area of high poverty and segregation therefore the City should analyze this concentration and consider relevant factors such as past policies, practices, and investments as well as whether or not there is a concentration of subsidized housing units in that area. Sites Inventory: The element must include an analysis demonstrating whether sites identified to meet the regional housing needs allocation (RHNA) are distributed throughout the community in a manner that AFFH. Most of the sites identified in the inventory are concentrated in the northern part of the City. The element illustrated in Figure C-13 and C-18 that sites in the northern section of the City are areas that have higher concentrations of segregation and poverty. A full analysis should discuss this concentration and address the income categories of identified sites with respect to location, the number of sites and units by all income groups and how that effects the existing patterns for all components of the assessment of fair housing (e.g., segregation and integration, access to opportunity). The element should also discuss whether the distribution of sites improves or exacerbates conditions. If sites exacerbate conditions, the element should identify further program actions that will be taken to mitigate this (e.g., anti-displacement strategies). Contributing Factors: The element identifies many contributing factors to fair housing issues. In addition, the element should consider prioritizing these factors to better formulate policies and programs and carry out meaningful actions to AFFH. Goals, Priorities, Metrics, and Milestones: While the element provides additional analysis and identifies contributing factors to fair housing issues in the City, it does not th The City of Monterey Park of 6 Cycle Draft Housing Element Page 2 December 6, 2021 94 CC 03-08-2022 84 of 92 include sufficient action to overcome patterns of segregation and foster inclusive communities. As a result, programs must be added as appropriate to sufficiently respond to contributing factors to fair housing issues. The element must add, and revise programs based on a complete analysis and listing and prioritization of contributing factors to fair housing issues. Furthermore, the element must include metrics and milestones for evaluating progress on programs, actions, and fair housing results. For more information, please see HCD’s guidance at https://www.hcd.ca.gov/community-development/affh/index.shtml#guidance. 2. Cost-Burden: The element must quantify and analyze the total number of cost burdened households including cost burdened households by tenure. 3. Progress in Meeting the RHNA: The element indicates (page 4-4) that 229 units including 40 units affordable to lower-income households are planned, approved, or pending. The element must include additional information on the status of these units including any remaining entitlement that are needed prior to approval; and for projects approved, but not yet built, the jurisdiction must demonstrate the units are expected to be built in the planning period. The element must also include an analysis to demonstrate the affordability of the 40 units affordable to lower-income households based on actual or projected sales prices, rent levels, or other mechanisms establishing affordability in the planning period. Sites Identified in Prior Planning Periods: The sites inventory indicates that there are no sites that were included from previous planning period. However, pursuant to third party comments, there may be several sites that were included in the current sites inventory that had been utilized in past elements. The element should clarify and identify if sites were identified in prior planning periods. Realistic Capacity: While the element provides assumptions of buildout for sites included in the inventory, it must also provide support for these assumptions. For example, the element should demonstrate what specific trends, factors, and other evidence led to the assumptions. The City lists maximum density allowed in a zone multiplied by the size of the parcel. The estimate of the number of units for each site must be adjusted as necessary, based on the land use controls and site improvements, typical densities of existing or approved residential developments at a similar affordability level in that jurisdiction, and on the current or planned availability and accessibility of sufficient water, sewer, and dry utilities. th The City of Monterey Park of 6 Cycle Draft Housing Element Page 3 December 6, 2021 95 CC 03-08-2022 85 of 92 In addition, the element appears to assume residential development on sites with zoning that allow 100 percent non-residential uses. While the element mentions the identified sites represent a substantial opportunity for housing and the area is located near employment, it must still account for the likelihood of non-residential uses. The element should include analysis based on factors such as development trends, performance standards or other relevant factors. For example, the element could analyze all development activity in these nonresidential zones, how often residential development occurs and adjust residential capacity calculations, policies, and programs accordingly. Suitability of Nonvacant Sites: The element must include an analysis demonstrating the potential for redevelopment of nonvacant sites. The analysis mentioned a list of factors that were considered to determine development potential including improvement-to- land value ratio of less than one, the parcel’s existing use vs. zoned use, age of structure and underutilization. However, the analysis should describe why and how the factors demonstrate that these sites are suitable for development. In addition, the element needs to also analyze the extent that existing uses may impede additional residential development. The element can summarize past experiences converting existing uses to higher density residential development, include current market demand for the existing use, provide analysis of existing leases or contracts that would perpetuate the existing use or prevent additional residential development and include current information on development trends and market conditions in the City and relate trends to the sites identified. In addition, specific analysis and actions are necessary ifthe housing element relies upon nonvacant sites to accommodate more than 50 percent of the RHNA for lower- income households. For your information, the housing element must demonstrate existing uses are not an impediment to additional residential development and will likely discontinue in the planning period. (Gov. Code, § 65583.2, subd. (g)(2).) Absent findings (e.g., adoption resolution) based on substantial evidence, the existing uses will be presumed to impede additional residential development and will not be utilized toward demonstrating adequate sites to accommodate the RHNA. Small Sites: Sites smaller than a half-acre in size are deemed inadequate to accommodate housing for lower-income housing unless it is demonstrated that sites of equivalent size were successfully developed during the prior planning period for an equivalent number of lower-income housing units as projected for the site or unless the housing element describes other evidence the site is adequate to accommodate lower income housing. While the element lists some recent development on smaller sites, it should relate these trends to identified sites. For example, almost all of the recent developments had at least 40 units, but lots to be consolidated result in projects at smaller scale. In addition, it is unclear whether the examples result in housing affordable to lower-income households. The element should relate these example projects to the site strategyfor lot consolidation, particularly as it relates to facilitating housing affordable to lower-income households. The analysis should include conditions rendering parcels suitable and readyfor consolidation. th The City of Monterey Park of 6 Cycle Draft Housing Element Page 4 December 6, 2021 96 CC 03-08-2022 86 of 92 Zoning for Lower-Income Households: The element must demonstrate densities appropriate to accommodate housing for lower-income households. The element is relying on sites within the R-3 zone which currently have a maximum density of 25 units per acre. The site inventory assumes the maximum allowable density in these zones will be 30 units per acre, but the element only states that it will “consider” increasing the density to 30. Unless the element commits to increasing the zoning to 30 units per acre, the element must contain the analysis demonstrating that 25 units per acre is appropriate for facilitating development affordable to lower-income households in the City. Please note because zoning is not already in place at the beginning of the planning period, rezoning for these sites must be consistent with Government Code, § 65583.2, subdivision (h) and (i). Sites with Zoning for a Variety of Housing Types: Emergency Shelters: The element mentions emergency shelters are permitted in the Office Professional (O-P) Zone. The element must discuss available acreage in the OP zone, including typical parcel sizes and the presence of reuse opportunities and compare that capacity to identified need for emergency shelter. In addition, the analysis should address proximity to transportation and services and any conditions inappropriate for human habitability. "In addition, the element should describe how emergency shelter parking requirements are in line with AB139/Government Code section 65583, subdivision (a)(4)(A) or include a program to comply with this requirement.” Employee Housing: Employee Housing: The element must demonstrate zoning is consistent with the Employee Housing Act (Health and Safety Code, § 17000 et seq.) or add or modify programs. Specifically, section 17021.5 requires employee housing for six or fewer employees to be treated as a single-family structure and permitted in the same manner as other dwellings of the same type in the same zone. 4. th The City of Monterey Park of 6 Cycle Draft Housing Element Page 5 December 6, 2021 97 CC 03-08-2022 87 of 92 Development Standards: The element must identify and analyze all relevant land use controls impacts as potential constraints on a variety of housing types. The analysis should analyze land use controls independently and cumulatively with other land use controls. Specifically, the element must analyze floor area ratio requirements and describe the requirements for the mixed-use projects including any requirements for commercial uses or if 100 percent residential is allowed. Housing Overlay Zone: The element relies on sites Housing Overlay Zones that was adopted through the 2020 General Plan update. While some information was provided on how the overlay allows residential the element must include a complete description and analysis of the Overlay, including whether further zoning must be adopted to implement the overlay zones and the permitting procedure for access to the overlay. The element should also detail any affordability requirements, whether 100 percent residential uses are allowed, development standards, and what incentives or concessions for utilization. Parking Standards: The element must analyze studio and one bedroom parking requirementand requirement for enclose parking for its impact as a potential constraint on housing including project cost. The analysis should examine whether parking standards impede a developer’s ability to achieve maximum densities, and if there are provisions in place to provide parking reductions where less need is demonstrated, particularly for persons with disabilities, the elderly, affordable housing, and infill and transit-oriented development. Development Fees: The element has identified planning fees; however, the element must describe all required fees including impact and building fees. For example, the analysis could identify the total amount of fees and their proportion to the development costs for both single family and multifamily housing. Zoning and Fee Transparency: The element must clarify its compliance with new transparency requirements for posting all zoning and development standards for each parcel on the jurisdiction’s website pursuant to Government Code section 65940.1(a)(1). Local Ordinances: The element must specifically analyze locally adopted ordinances such as inclusionary ordinances or short-term rental ordinances that directly impact the cost and supply or residential development. The analysis should demonstrate local efforts to remove governmental constraints that hinder the locality from meeting its share of the regional housing need and from meeting the need for housing for persons with disabilities, supportive housing, transitional housing, and emergency shelters. Constraints on Housing for Persons with Disabilities: The element briefly describes its reasonable accommodation procedures including that a reasonable accommodation must be in general conformance with the City’s development and municipal codes and comply with the California Environmental Quality Act. However, the purpose of the reasonable accommodation is to provide exception to zoning and land use. As a result, the element must include a program to address this constraint. In addition, group homes for seven or more persons appears to be excluded from several zones allowing th The City of Monterey Park of 6 Cycle Draft Housing Element Page 6 December 6, 2021 98 CC 03-08-2022 88 of 92 residential uses and subject to a conditional use permit (CUP). The element should evaluate these requirements as constraints and include programs as appropriate. 5. Approval Time and Requests Lesser Density: The element must be revised to analyze requests to develop housing at densities below those anticipated in the sites inventory, including hinderance on the construction of the City’s share of the regional housing need and include programs as appropriate. 6. While the element identifies 441 assisted units, the element lists three properties that are at-risk of expiring within the next ten years for a total of 251 units. The element must identify local public agencies, public or private nonprofit corporations, and for- profit organizations with the legal and managerial capacity to acquire and manage at- risk projects pursuant to Government Code Section 65583, subdivision (a)(8)(C)). In addition, the element must list potential federal, state, and local funding sources that can be used to preserve the units. While the element analyzes the cost of replacement for units designated high risk, the element must analyze replacement costs for all units with expiring restrictions in the next ten years. Furthermore, the analysis should contain the following: Estimate the costs of producing new rental housing (comparable in size and rent levels to existing at-risk units) to replace units converting from affordable to market rate. The analysis should consider current land costs and either current construction costs (square footage rates for multifamily development) or the actual cost of recently completed units. Estimate the cost of preserving the identified assisted housing developments including acquisition and rehabilitation costs long-term affordability controls and project-based rent subsidies. th The City of Monterey Park of 6 Cycle Draft Housing Element Page 7 December 6, 2021 99 CC 03-08-2022 89 of 92 A project-by-project replacement/preservation cost estimate is not required (Government Code Section 65583(a)(8)(B)). The element can make an assessment of the appropriate strategy (replace vs. preserve) based on sample cost estimates. C.Housing Programs 1. To address the program requirements of Government Code section 65583, subdivision (c)(1-6), and to facilitate implementation, programs should include: (1) a description of the City’s specific role in implementation; (2) definitive implementation timelines; (3) objectives, quantified where appropriate; and (4) identification of responsible agencies and officials.Programs to be revised include the following: General: The element must provide discrete timing for all programs (e.g., month, year) to account for how often the action will occur as well as to ensure a beneficial impact throughout the planning period and quantify objectives where feasible. In addition,all programs should be evaluated to ensure meaningful and specific actions and objectives. Programs containing unclear language (e.g., “Evaluate”; “Consider”; “Encourage”; etc.) should be amended to include more specific and measurable actions. Program 1 (Residential Rehabilitation Program): The program must be revised to include a timeframe for implementation. Program 4 (Housing for Special Needs Population): The program must be revised to specify the incentives for developers and clarify what actions will “nurture partnerships” to educate and execute the development of supportive and transitional housing. Program 5 (Flexibility in Development Standards): The program must be revised to specify a timeline for implementing the actions of the program. Program 6 (Monterey Park Municipal Code): The program must be revised to remove the “if required” language from its objectives and actions. Program 9 (Sites Used in Previous Planning periods Housing Elements): The element must be revised to remove the “consider” language from its objective for rezoning or amending the MPMC. Program 10 (Mixed-Use Sites): The program must be revised to include the timing for each of its objectives. th The City of Monterey Park of 6 Cycle Draft Housing Element Page 8 December 6, 2021 9: CC 03-08-2022 90 of 92 Program 14 (Affordable Housing Development Incentives): The program must specify the actions that the city will take to “actively promote” housing development and to include timeframes with listed actions. 2. Gov. Code, § As noted in Finding B.3, the element does not include a complete site analysis; therefore, the adequacy of sites and zoning were not established. Based on the results of a complete sites inventory and analysis, the City may need to add or revise programs to address a shortfall of sites or zoning available to encourage a variety of housing types. In addition, the element should be revised as follows: Program 7 (Ensure Adequate Sites to Accommodate Regional Fair Share of Housing Growth): The program must be revised to clarify with specific actions and language how the city will “promote residential density” and list the measures that will be adopted to encourage affordability by design with timing. Also, if the element is relying on the R-3 zone and the City will need rezoning to allow up to 30 units per acre then the element will need a rezoning program for these sites that meet 65583.2(h) and (i). Lot Consolidation: As the element relies on consolidated small sites to accommodate the RHNA for lower-income households, it should include a program(s) to facilitate lot consolidation and development of housing on small sites. For example, the program could commit to (1) granting density bonuses above state density bonus law (Gov. Code, § 65915.); (2) deferring fees specifically for consolidation; (3) expediting permit processing; (4) identifying and targeting specific financial resources; and (5) modifying development standards. 3. As noted in Finding(s) B.4.and B.5, the element requires a complete analysis of potential governmental and nongovernmental constraints. Depending upon the results th The City of Monterey Park of 6 Cycle Draft Housing Element Page 9 December 6, 2021 :1 CC 03-08-2022 91 of 92 of that analysis, the City may need to revise or add programs and address and remove or mitigate any identified constraints. Specifically, the element recognizes that minimum lot size, high standards, and other standards in the MU-1 and MU-II zones are a constraint to achieving densities. However, the element lacks specific program commitments to mitigate or remove these constraints. The element could amend Program 6 (Monterey Park Municipal Code) to expressly state how that these standards will be modified or removed. This is especially critical because there are many sites identified in the inventory that do not meet minimum size requirements and would require lot consolidation to be developed. 4. As noted in Finding B1, the element must include a complete assessment of fair housing. Based on the outcomes of that analysis, the element must add or modify programs. While the element include Program 19 (Fair Housing Program) goals and actions must create meaningful impact to overcome contributing factors to fair housing issues and actions must have specific metrics and milestones. For example, Table 6-1 states the city will “incentives the development of more housing to accommodate the varied needs of different populations,” but does not describe how this action will be implemented. The program and its actions must each be concrete in affirmatively furthering fair housing (AFFH). In addition, currently the element only addresses AFFH in Program 19. The element could revise other program actions to address the City’s obligation to AFFH including how programs address housing mobility enhancement, new housing choices and affordability in high opportunity areas, place-based strategies for community preservation and revitalization and displacement protection. 5. The element includes Program 2 (Conserve At-Risk Housing) and specifies actions to monitor at-risk units. However,the element must include contacting property owners within at least one year of the affordability expiration dates on projects. Also, the program should be modified to include noticing requirements within three years and six th The City of Monterey Park of 6 Cycle Draft Housing Element Page 10 December 6, 2021 :2 CC 03-08-2022 92 of 92 months of the affordability expiration dates, in addition to coordinating with qualified entities such as non-profit organizations and establish specific time parameters around such actions. In addition, the element should be revised to adhere to current State Preservation Notice Law (Gov. Code 65863.10, 65863.11, 65863.13) which requires owners to provide tenants and affected public entities (including the City) notices regarding expiring rental restrictions starting three years before expiration. D.Quantified Objectives The element must include quantified objectives to establish an estimate of housing units by income category that can be conserved over the planning period. E. Public Participation While the City made effort to include the public through workshops and surveys, moving forward, the City should employ additional methods for public outreach efforts, particularly including lower-income and special needs households and neighborhoods with higher concentrations of lower-income and special needs households. For example, the City could conduct targeted stakeholder interviews or establish a committee representative of lower- income and special needs households in future public outreach efforts. HCD also received comments with many meaningful suggestions and other issues related to zoning and AFFH. HCD encourages the City to consider these comments which will be provided under a separate cover. In addition, HCD understands the City made the element available to the public concurrent with its submittal to HCD. By not providing an opportunity for the public to review and comment on a draft of the element in advance of submission, the City has not yet complied with statutory mandates to make a diligent effort to encourage the public participation in the development of the element and it reduces HCD’s ability to consider public comments in its review. The availability of the document to the public and opportunity for public comment prior to submittal to HCD is essential to the public process and HCD’s review. The City must proactively make future revisions available to the public, including any commenters, prior to submitting any revisions to HCD and diligently consider and address comments, including making revisions to the document where appropriate. HCD’s future review will consider the extent to which the revised element documents how the City solicited, considered, and addressed public comments in the element. The City’s consideration of public comments must not be limited by HCD’s findings in this review letter. th The City of Monterey Park of 6 Cycle Draft Housing Element Page 11 December 6, 2021 :3