SUBJECT: REVIEW, ACCEPT INPUT, AND APPROVE THE FY 18/19 BUDGET OPERATING AND CAPITAL FOR MARIN VALLEY MOBILE COUNTRY CLUB

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1 1 STAFF REPORT MEETING DATE: May 14, 2018 TO: FROM: City Council Peggy Flynn, Assistant City Manager Chris Blunk, Deputy Public Works Director/City Engineer Maureen Chapman, Accounting Supervisor 922 Machin Avenue Novato, CA (415) FAX (415) SUBJECT: REVIEW, ACCEPT INPUT, AND APPROVE THE FY 18/19 BUDGET OPERATING AND CAPITAL FOR MARIN VALLEY MOBILE COUNTRY CLUB REQUEST Consider, review, accept input, and possibly take action on the FY 18/19 Operating and Capital Budget for the Marin Valley Mobile Country Club (MVMCC). DISCUSSION Section 9 of the Management Agreement of the MVMCC documents outlines the process and timeline for the annual budget preparation for MVMCC. As stated in the Management Agreement, it is the responsibility of the property manager, Frei Real Estate, to prepare and present a proposed budget to the Park Acquisition Corporation (PAC), residents and then the City. City staff, Frei Real Estate (property management company), Matt Greenberg (park manager), and the PAC have all reviewed the proposed budget in detail to gain clarity and understanding. In addition, the PAC Board presented the budget and accepted resident feedback at its April 4, 2018 meeting and presented the updated budget at its May 2, 2018 board meeting. For Council s consideration, attached are the following documents for your review: 1. Proposed 18/19 Operating Budget 2. Proposed 18/19 Capital Improvement Budget Below are the key points for Council s consideration of the budget and specific budget recommendations. Overview With preparation of the budget, there are some financial parameters to consider as the budget is prepared. The budget needs to ensure appropriate operating expenses for the Park, plus make investments in key capital facilities for both the short term and long term. In addition, the City has a goal of saving significant funds over the next several years in order to help fund replacement and reinvestment of the Park s private utility infrastructure.

2 2 As a reminder, there is a specific Debt Service Coverage Ratio which must be met as outlined in the loan agreement with the Bank of Marin. The coverage ratio, also known as "debt service coverage ratio," (DSCR) is the ratio of cash available for debt servicing to interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity's (person or corporation) ability to produce enough cash to cover its debt (including lease) payments. The coverage ratio does not include contributions made to the Capital Improvement Budget. For MVMCC, the DSCR is calculated annually only; not monthly. Per the Bank of Marin Loan, the Park must maintain 2.00 annual Net Revenue or Coverage ratio each year. The Coverage Ratio calculation is estimated to be between 2.14 and 2.25 for FY 18/19 (as shown at the bottom of the Operating Budget). KEY OPERATING BUDGET RECOMMENDATIONS - FY 18/19 There are relatively few differences between the proposed 18/19 budget and the current 17/18 budget. Several areas of note are discussed below: 1. Rent (Budget Line #41110) MVMCC s rent is controlled by the City s Mobile Home Rent Control Ordinance No This ordinance sets the maximum general rent adjustment that can be passed through to residents each January 1. The amount of the rent adjustment is based on the San Francisco Bay Area Consumer Price Index ( CPI ) occurring over the twelve-month period immediately preceding the September 1, which immediately precedes January 1 of the year in which the increase is permitted. The rent charged for a mobile home space may increase by 100% of the percentage increase in the CPI, however based on the staff and park management recommendation below, no increases are included in this budget. 2. Wages (Budget Line #50100) Frei Real Estate is the property management company hired by the PAC to provide daily oversight of the operations and maintenance the Park. Three years ago, the Council approved the hiring of a full-time on-site Park Manager to increase the communication, feedback, and management of the Park. At this point, the staffing complement is relatively stable, consisting of the Park Manager, two maintenance staff. The bookkeeping function is also performed by the Park Manager. The recommended increase for wages for both the park manager and bookkeeper is 6%. Since the aforementioned staff are employees of Frei Real Estate, not the City, the actual decisions about performance evaluations, compensation increases, and other personnel matters are left to Al Frei and Frei Real Estate. 3. Utilities (Budget Line #s to 52700) Utility costs are anticipated to increase about 7% from the current year estimated actual costs. These costs are partially offset by the utility payments collected from residents. 4. Insurance Property & Liability (Budget Line #s 57300) This year, the insurance carrier was no longer able to provide the appropriate coverages. City staff was able to secure replacement coverage, but at a higher premium.

3 3 5. Capital Expenses (Budget Line #57700) The FY 18/19 budget allocates $545,000 for investment in the Capital Improvement Budget. The budget includes $100,000 for brush removal, a carryover from FY 17/18. Details about the Capital Improvement Budget are below. KEY CAPITAL IMPROVEMENT BUDGET RECOMMENDATIONS - FY 18/19 The proposed MVMCC Capital Improvement Project (CIP) budget is attached for Council and resident review. Construction of the new retaining wall above Clubview Drive and new accessible walkways at the clubhouse front entry are anticipated to be completed by the end of the 2017/18 fiscal year within the current budget appropriation. Staff has updated the CIP budget to reflect capital project cost estimates planned for 2018/19. The CIP budget proposes the following investments: Short-Term CIP Projects $50,000 for continued pavement, driveway and cul-de-sac overlays. $175,000 for the design and construction of accessibility upgrades to the clubhouse restrooms and pool/workout area restrooms. Accessibility Improvements (Clubhouse Exterior): The Clubhouse Entrance and Pool Area ADA Improvements Project has been bid and awarded to the low bidder, Coastside Concrete, for $142, 954. The work is scheduled to begin this summer in conjunction with the retaining wall construction and includes replacement of the concrete walkways in front of the clubhouse to conform with accessibility requirements. There will also be new curb ramps installed at the accessible parking spaces along Marin Valley Drive. An automatic door actuator was added to the clubhouse main entrance in early 2017 as a part of these ongoing accessibility upgrades. Accessibility Improvements (Clubhouse Interior): A project has been proposed in the 2018/19 MVMCC CIP Budget to analyze, design, and construct accessibility improvements to the clubhouse restrooms and the pool/workout area restrooms. Due to the nature of the work required to meet accessibility codes in these spaces, it is likely that existing flooring, countertops and other restroom fixtures will need to be replaced. City staff intend to work with MVMCC residents when selecting finish materials and will strive to specify water- and energy-saving fixtures and devices to the greatest extent possible. $100,000 to continue to address slope stability and geotechnical issues such as retaining walls, v-ditches, drainage facilities, and erosion control measures. Retaining Walls: The MVMCC Slope Stability Evaluation Project is continuing. In 2017, Miller Pacific Engineering Group completed an update of the previous MVMCC slope stability evaluation. Erosion control measures were applied to some slopes during 2017 based on Miller Pacific Engineering recommendations. Slope Stability Site 24, located behind the

4 4 clubhouse and identified as a priority, will have a new retaining wall constructed during the summer of The city added this new wall to an existing citywide capital improvement project in an effort to reduce project development costs and construction costs for the smaller scope of work at MVMCC. $20,000 to complete a facility condition assessment and replacement recommendation schedule for the sanitary sewer system, including backup generators, pump stations, force main, and all appurtenances. Sanitary Sewer Equipment Assessment: The sanitary sewer pump stations and backup generators are a critical infrastructure component at MVMCC. Under a new CIP project for 2018/19, it is proposed that a qualified professional review the condition of these systems and prepare a recommended equipment maintenance/replacement schedule for the sanitary sewer system. Actual equipment replacement would occur under separate, future budget items as needed. Long Term Infrastructure Planning Funding from Infrastructure Reserve Fund $20,000 to continue to upgrade water system components. RECOMMENDATION Approve the annual operating and capital budget for MVMCC for FY 18/19. ATTACHMENTS 1. Proposed Operating Budget 2. Proposed Capital Budget

5 Draft #2 ATTACHMENT 1 Marin Valley Mobile Country Club Proposed Budget Acct # NWS Acct DETAIL INCOME Proposed Budget Proj. Actual Act thru Feb Space Rent no increase in rent 2,398,982 2,398,982 2,398,982 1,599, Late Fees Actual late fees Jul-Feb Avg $30/mo 360 1, Laundry Actual laundry income Jul-Feb Avg $75/mo 900 1, Staff's Mobile Home Rent $1079/mo; $1087/mo Jan-Jun 12,996 12,882 12,882 8, Vehicle Parking Fees/RV Actual parking fees Jul-Feb Avg $750/mo 9,000 10,440 8,955 5,970 Total Permanent Rent 2,422,238 2,424,704 2,422,057 1,614, Electric Per estimate analysis +5% (Park Billing Historical Data) 234, , , , Garbage $9,800/mo $ , , ,152 73, Gas Per estimate analysis +5% (Park Billing Historical Data) 154, , ,032 86, Sewer LGS $898 per unit = $23,423/mo 281, , , ,254 Total Utilities 787, , , , Investment Income Per City Staff 40,000 34,000 38, Other Income Grant Income - - Total Other Income 40,200 34,200 38, TOTAL INCOME 3,249,612 3,216,688 3,200,964 2,108,688 EXPENSES Wages - Park Manager 6% increase 77,910 73,500 73,711 49, Wages - Bookkeeper 6% increase 16,695 15,750 20,029 13, Wages-Maintenance no increase 31,689 31,689 31,759 21, Wages-Assistant Maintenance no increase 23,751 23,751 23,845 15, Wages-Performance Comp Staff's Mobile Home Rent $1079/mo $1087/mo 12,996 12,882 12,882 8, Travel Manager Mileage Reimbursement Total Wages 163, , , , P/R Taxes Estimate - Employer Payroll Taxes 18,050 14,700 16,828 11, Insurance - Health Onsite Staff 8,760 8,760 8,760 5, Workers Comp Estimate based on rates from workers comp 17,250 22,500 15,455 10,303 Total P/R Taxes/Insurance 44,060 45,960 41,043 27,362 TOTAL EMPLOYEE COSTS 207, , , , Electric Per estimate analysis (prev year Actual + 5%) 244, , , , Garbage - contract $10,650/mo based on current contract +5% incr 134, , ,733 81, Garbage Periodic Dumpsters for Resident Clean up - 8,000 8,000 4,950 3, Gas Per estimate analysis (prev year Actual +5%) 134, , ,216 70, Sewer LGS $898 per unit = $23,573/mo 282, , , , Water Based prev year on act +10% 89,000 78,800 92,316 61,544 Total Utilities 892, , , , Concrete Maintenance Estimate Fire Abatement Estimate for brush/weed clearing per fire dept requirements 45,000 45,000 38,700 25, Landscape Maintenance DelToro $1,060/mo + $7,500 extra/yr (weed control) 20,220 20,000 13,035 8, Maintenance Home Repairs Estimate 1,000 1,000 1,943 1, Operating Supplies & Equip Estimate operating supplies (cleaning supplies & consumables) 4,800 4,800 4,543 3, Pool Supplies & Equipment Actual July-Feb Avg $350/mo chemicals + $380 svc 8,760 12,000 6,930 4, General Repairs Common Area maintenance and repairs 45,000 45,000 37,144 24, Security Contract Patrols $660/mo 7,920 7,920 7,980 5, System Maintenance - Gas $1800/Ann. Gas Leak Survey-$10,200/Repairs 16,250 16,250 3,113 2, System Maintenance - Electrical Main switch service / Repairs ave $520/mo 19,500 19,500 16,675 11, System Maintenance - Generator Maintenance contract ($2,500)+ repairs 5,200 5,200 24,129 24, System Maintenance - Sewer Actual prev year ave $1,250/mo, sewer line clearing/repairs 20,000 23,400 14,945 9, System Maintenance - Water Repairs to Water Lines - water main break Feb ,663 23, System Maint - Storm Drain Estimate 10,000 10, Street Crack Seal Repair Estimate 15,000 15, Tools & Equipment Repair R&R Park tools and equipment 2,000 2, Trees Estimate tree trim and removal (MG) 65,000 65,000 65,000 46, Uniforms Park Staff Shirts/Jackets/Raingear Utility Maintenance Unanticipated service/repairs to meters etc 3,120 3, Vehicle Maintenance Repairs/service/DMV fees 3,000 3,000 1,954 1, Contingency Estimate 8,000 8, Total Repairs/Maintenance 301, , , ,005 5

6 6 Draft #2 Marin Valley Mobile Country Club Proposed Budget Advertising & Promotion Estimate Bank Charges Actual Fees Ave $75/mo Copier Supplies/Repairs Estimate 1,500 1, Dues & Subscriptions Estimate, title 25, MH Residency Law updates Education & Seminars Onsite Staff Training 3,100 3,100 1, Legal Estimate, enforcement of Park documents/collections 15,000 15,000 1,745 1, Licenses & Permits Dvc-$1050/HCD-$4500/Pl,Spa Pmt $927,City $465 7,000 6,400 6,806 6, Office Supplies & Equipment Actual July-Feb Avg $450/mo add $80 p/mo water clbhs 6,500 10,000 5,321 3, Other Expense Estimate 5,500 5, Outside Services Park Billing $510/$150-ans serv/$200 pest/clbhs cl $795 p/qtr 13,500 14,000 12,936 8, Telephone Actual July-Feb Avg $900, phone, fax, internet 10,800 7,800 10,669 7,113 Total Office & Administration 64,750 65,034 40,010 28,943 TOTAL OPERATING COSTS 1,466,716 1,411,791 1,348, , In-Lieu of Tax Fees - Novato Per City Staff 77,240 75,768 73,860 50, Resident Humanitarian Services 12,000 12,000 12,000 5, Insurance-Prop & Liability City will provide 135,000 92,500 86,000 31, Insurance - D&O MARVAL 8,500 8,500 7,928 8, Management Fee $4,700 p/mo 56,400 56,400 56,400 37, Capital Expenses 485, , , , Audit Per City Staff 5,200 5,200 5,100 5, Mobile Home Rent Control Fee $60 per space per City's Rent Control Ordinance 18,900 18,900 18,900 18,900 Total Project Fees Costs 798, , , ,315 NET OPERATING INCOME 984, , , ,276 Bank of Marin Loan: Loan Principal Per City Staff 503, , , , Loan Interest Per City Staff 147, , , ,943 Total Loan Payments 651, , , ,115 1) Excess Revenue 333, , , ,161 Application of Budget 1) EXCESS REVENUE 333, , , , Owner Expense 50,000 50,000 25, PAC Expense 4,000 4,000 4,000 1, Park Improvement 20,000 20,000 20,000 9, Emergency Prep MVEST 5,000 5,000 5,000 3,846 TOTAL EXPENSES 2,995,128 2,956,231 2,962,380 1,829,445

7 ATTACHMENT 2 Marin Valley Mobile Country Club - FY 18/19 Proposed CAPITAL BUDGET Draft 2 SHORT-TERM CIP PROJECTS Actual Thru 8 Months YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 CAPITAL COMPONENT ASPHALT/STREETS/LIGHTS 2 Overlay 0 10,000 35,000 10,000 35,000 10,000 35,000 10,000 35,000 10,000 35,000 5 Driveways & Cul de sacs 0 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 9 COMMON AREA/RECREATION FACILITIES 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75, Clubhouse ADA Improvements 11 Phase 1 - ADA parking 2 spaces and exterior path of travel to Clubhouse 0 12 Phase 2 - Bathroom Accessibility Improvements (pool & clubhouse) 175, Phase 3 - Elevator 270, Phase 4 - Other minor ADA improvements 50,000 Repaint East Exterior Wall of Clubhouse 19,354 Lower Deck Replacement 32, New Ballroom Floor (to be initiated after ADA study complete) 50, GEO TECHNICAL - ROUTINE CAPITAL WORK 35 Slopes/Drains/V-ditches 15,183 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25, Retaining Walls 40,765 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75,000 75, Park Owned Mobilehomes 2,332 20,000 20, Park Vehicle (truck) 0 25, Sub Total Projected Expenditures 110, , , , , , , , , , , LONG-TERM INFRASTRUCTURE CIP PROJECTS 47 INFRASTRUCTURE - MVMCC Conditions Survey Dec Engineering/Planning Design Construction Docs 300, All Infrastructure System Replacement 3,000,000 3,000,000 2,000,000 2,000,000 2,000,000 2,000, Water System 20,000 25,000 30,000 30, Storm Drain System 52 Sanitary Sewer System 20, Two Pump Stations Maintenance 54 Complete Overhaul (2031) 55 Electrical System 56 Gas System 57 Slope Stability 5, , , Brush Removal (Carryover from 16/17 Budget Amendment) 100, Generator Failure July , Total Projects Conditions Survey Projected Expenditures 135, , ,000 25, ,000 3,030,000 3,000,000 2,030,000 2,000,000 2,000,000 2,000, TOTAL EXPENDITURES 246, , , , ,000 3,255,000 3,250,000 2,255,000 2,250,000 2,225,000 2,250, RESERVE FUNDS - USE OF FUNDS (see Forecast for Reserve Projections) 71 INFRASTRUCTURE RESERVE 72 Engineering Infrastructure Study 74 Phase 2 = Engineering Consultant for infrastructure study 17,270 Brush Removal (Carryover from 16/17 Budget Amendment) 39, Total Expenditures from Infrastructure Reserves 56,