City of Rancho Cucamonga

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1 City of Rancho Cucamonga Fiscal Year 2017/18 Proposed Budgets Budget Study Session June 8, 2017

2 Poised for New Success Over the last several years, the City has seen many changes: Record levels of growth 2006 to 2008 Great Recession from 2008 to 2010 Recovery of lost gains completed by FY 2016/17..finally! For FY 2017/18, the City is poised for greater success and new heights it has not reached before and also greater costs and challenges

3 Poised for New Success Local Economic Forecast Low crime rate Excellent education system Growing sources of employment Ranked among the Top 50 places in the U.S. to start a family Ranked one of the 20 best cities in the U.S. to find a job Job growth in the I.E. over the last year was 3.2% In March 2017, the City s unemployment rate decreased to 3.8% Below 5% is considered full employment

4 Poised for New Success

5 Poised for New Success The City s approved Economic Development Strategic Plan focuses on specific target industries, including the key sectors: Manufacturing Retail/Accommodation/Food Services Professional/Scientific and Technical Services Opportunities now for growth in this area Lower our dependence on construction (a lower paying industry highly dependent on growth) Ensure we don t become overly reliant on consumer retail which is very cyclical in nature Success of this employment sector is tied to both education of the workforce and commuting patterns

6 Poised for New Success Higher degrees of post graduate education are tied to increasing median household income

7 Poised for New Success As the City matures and increases opportunities in the employment sectors which better fit with our educated workforce, these changes will improve commuting patterns:

8 Poised for New Success Building the Community of Tomorrow The City is looking to create the community amenities, including housing, which will be attractive to millennials This will create a more full spectrum of housing options for all generations Projects under consideration provide options on the rental and for sale side which include Urban resort-like amenities Public gathering spaces Third place spaces Highly designed landscape and architectural aesthetics Walkable, pedestrian-friendly safe communities

9 Poised for New Success By creating and combining the components which make up the environment where Millennials increasingly choose to live, the City is creating a community which will attract these younger buyers and renters from the coastal areas where they are currently choosing to reside.

10 Poised for New Success Rancho Cucamonga remains below its historic pricing high points of the early 2000 s, and offers relative affordability versus the Los Angeles and Orange County region.

11 Poised for New Success Because of our high employment, and relatively built-out status, the City will not be able to meet the demand for new housing; however, this same dynamic will help ensure that real estate in the City remains a strong commodity for years to come.

12 Poised for New Success In the Inland Empire rental market, Rancho Cucamonga already has the highest rents and lowest vacancy rate of any community.

13 Poised for New Success With these new buyers, and a community designed for higher levels of education and aspiration, will also come the employment sectors and employers the City is targeting for future growth. As noted earlier, Rancho Cucamonga was ranked one of the top 50 places in the nation to start a family based on: Average cost of initial home purchase Crime statistics Population of young families in the area Our goal is to improve even more in those rankings over the next five years.

14 Poised for New Success The City s efforts are challenged by increased fixed costs such as utilities Offset by: Investing in Solar RC Reducing consumption through Drought-tolerant landscaping Newer, more efficient irrigation

15 Poised for New Success Fiscal restraint is key as we transition to a new era of modest growth and equally robust costs increases Important not to balance budget using one-time growth in development revenues (which are not sustainable) for ongoing costs (like personnel) Maintaining a conservative approach to a balanced budget based on sustainable revenues is fundamental

16 City General Fund Key Revenues City General Fund budget comprised of multiple sources including seven key revenues (91.7% of total General Fund revenues) Sales tax Vehicle license fees (VLF and Motor Vehicle in Lieu) Franchise fees Property tax (includes post-rda property tax and property transfer tax) Development fees Business licenses Transient occupancy taxes

17 City General Fund Revenues *Includes Property Transfer Tax

18 City General Fund Revenues

19 City General Fund Operating Budget

20 Operating Budget Analysis: City General Fund Challenges on the expenditure side: Minimum wage increases For FY 2018/19, it will cost the City $102,000 to implement the minimum wage increases Increase in required PERS employer contribution rate from 16.69% to 24.52% over the next five years Subsidies to landscape maintenance districts in the total amount of $673,350 Police Department s budget will increase $1,752,740 due to increased public safety pension and labor costs and the addition of one Sergeant and one Sheriff s Service Specialist

21 Operating Budget Analysis: City General Fund Continue to apply the California Municipal Health Financial Diagnostic to the City General Fund Supports City Council s goal to increase public transparency and share information regarding the City s sound financial underpinning

22 FY 2017/18 Budget Changes Top priorities Implementation of 2015 Economic Development Strategic Plan Focus on critical infrastructure projects Improvements to public safety and critical community services Continued development of technology and workforce reorganization Priorities were carefully developed to be consistent with the City Council Goals

23 Economic Development Economic development has always been of primary importance to the City in sustaining our excellent public services and facilities As we approach buildout, it becomes ever more critical to ensure that each remaining project contributes more revenue to the overall City than it consumes in services and costs

24 Economic Development A few examples of the activity, innovation, and growth occurring at the local level include: Hotel development is booming in Rancho Cucamonga New supermarkets are coming to Rancho Cucamonga Expanded housing opportunities are under construction or going through entitlement Restaurant development throughout the City is in full swing Expanded recreational opportunities are coming soon Advanced Manufacturing and corporate offices are growing in Rancho Cucamonga

25 Infrastructure Rancho Cucamonga is clearly a primarily built out community Some of our earliest infrastructure is 30+ years old and may be needing refurbishment, replacement, or additional maintenance A good example of this is the parks and landscaping on the west side of town Without a new funding source, these improvements will eventually deteriorate or facilities will need to be disposed of West Side Oversight Committee is working with City staff and the City Council to review all west side landscape expenditures and help communicate these pressing concerns to the residents in affected areas

26 Infrastructure The great challenge for the City is to properly fund both maintenance and repair of existing facilities while continuing to build out the remaining community facilities necessary to serve a resident base of 175,000 to 200,000 people Rancho Cucamonga is fortunate because most infrastructure projects are funded by the reserves which have been set aside over the years to ensure the City was able to meet future obligations These long-term planning efforts were challenged in 2012 when the State eliminated Redevelopment, seizing $197,000,000 in reserves saved up over 25 years

27 Infrastructure When the current economic recovery first began, the City Council challenged staff to start replacing those reserves Rebuilding is in progress Budgeted General Fund reserve contributions: FY 2013/14: $ 508,630 FY 2014/15: $ 607,480 FY 2015/16: $ 700,000 FY 2016/17: $1,000,000 FY 2017/18: $1,025,000

28 Infrastructure Key infrastructure projects for FY 2017/18: Construction of a $2 million Phase 1 of a Rancho Cucamonga Fiber Optic Network to provide for a Public-Private partnership involving high speed broadband access to maximize economic development and attract new businesses to the City s aging logistics area Replacement of the leased Family Sports Center with the City s own Gymnasium ($13.14 million) Installation of $3.9 million Cucamonga Storm Drain Upper Phase 3 Construction of $2.1 million Public Works Services warehouse at the Corporate Yard Purchase of City street lights from SCE ($9.7 million) and retrofit of lights to LED ($4.1 million)

29 Infrastructure LMD 4R water conservation and landscape renovation projects ($440,000) $600,000 in spending for concrete replacement $575,000 for the tree maintenance contract, including increasing the trimming frequency $100,000 in new or upgraded ADA ramps citywide Design of Etiwanda Creek Park, Phase II ($538,000) Over $1 million in funding for new traffic signals, $140,000 in signal upgrades, $320,000 in traffic signal synchronization funding and $650,000 in funds to upgrade existing signals into the City s Intelligent Transportation System

30 Infrastructure Rancho Cucamonga s goal for local street maintenance is no less than a 79% pavement condition index (PCI) and more towards our goal of 85% California roads are at a 66% PCI Rancho Cucamonga s combined PCI is 73% with local streets at 71%

31 Infrastructure Funding utilized for local streets overlay and slurry seal programs; sidewalk and ramp improvements; and transportation related infrastructure projects includes: $3,115,000 in estimated Gas Tax revenues and fund balance; $2,649,000 in estimated Measure I revenues; $3,945,000 in estimated Citywide Infrastructure Improvement Fund revenues and fund balance; and $500,000 in General Fund revenues

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35 Fiber Master Plan Summary Current demand for high speed broadband and connectivity is high and the Internet of Things era has arrived. The Fiber Master Plan shows that the opportunity to form a gigabit broadband utility is feasible and important for economic development and smart city Six year - $12 million capital investment plan to connect and expand 50 miles of conduit infrastructure to key strategic City areas In partnership with the private sector, creation of a multipurpose fiber network to drive value across a range of municipal and community functions and education Promote the City as a Gigabit Community

36 Existing City Fiber Route Pro Forma

37 Empire Lakes Fiber Route Pro Forma

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46 Public Works Services Warehouse Indoor workshop for facilities staff Eliminate leased and unsecured outside storage containers Provide permanent home for Animal Center Kitten Nursery Potential partnership with Chaffey College Provide additional solar power to offset energy use Cost: $2.14 million

47 Public Safety/Community Services Long-term goal is to keep deputy to citizen staffing ratios stable Last year, committed to add one Sheriff Service Specialist and four new Deputies, three of which were partially grant funded (grant funding was not received) Propose adding one Sergeant and one Sheriff Service Specialist for FY 2017/18 ($375,000), along with provided funding for prior year positions not funded by grant ($1 million) Cost increases between $2 million and $3 million expected for FY 2018/19 due to additional raises and retirement costs

48 Public Safety/Community Services Implementation of technology as force multiplier Automated License Plate Readers (ALPRs) Public Safety Video Network (PSVN) cameras Other new technologies such as the Internet of Things and GIS applications to track and map trends in real time Public safety has always been the City Council s highest priority and remains so today.

49 Public Safety/Community Services Part II crimes decreased to fewer than 8,000 (below 2014 levels) Part I crimes decreased to fewer than 4,000, also below 2014 levels Overall, response times generally stayed equal to 2015 at 4.2 minutes for emergency and critical calls Increased funding for part-time Park Rangers is proposed Will free up time for sworn law enforcement to focus on higher priority calls

50 Public Safety/Community Services Funding for special needs performance at Lewis Family Playhouse that provides less stimulus than many of the regular shows Silver Fox Senior Transportation Program will be expanding to add a third bus subsidized by SBCTA Recipient of a 2016 Helen Putnam Award, the City's 24-hour Kitten Nursery will continue into its third season

51 Personnel/Technology Rancho Cucamonga (like other cities) delivers the vast majority of its services through our personnel Single largest expense as we are a service-based business During the Great Recession, the City s workforce shrank by 25% or over 110 full time equivalent positions Coming out of the recession, City Council directed staff to focus on moderating growth in new personnel to help control personnel related costs

52 Personnel/Technology City accomplished this goal through Continued implementation of new technology Strategic personnel decisions Ways we are leveraging new technologies to serve as force multipliers across the organization: Accela Automation building permit and Electronic Document Review process Implementing additional modules in OneSolution, the City s finance system, to automate processes

53 Personnel/Technology Expanding the Public Safety Video Network and Automated License Plate Reader systems to ensure that there is an automated, 24-hour technological ring around the City to assist the Police Department in solving crimes Implementing new ESRI software to be able to visualize building projects in three dimensions to ensure a better fit with the surroundings Completion of a Data Network Infrastructure that provides 1 Gbps city wide and 10 Gbps in the Library facilities Installation of Smart Street Lights that provide self-reporting on outages, can monitor and manage power utilization and connect with existing data network infrastructure

54 Personnel/Technology Made possible by modest, sustained revenue growth, the FY 2017/18 Proposed Budget continues the trend of improving services to the community through strategic personnel decisions Included in the FY 2017/18 Proposed Budget is a modest set of personnel changes and reclassifications at a net of approximately $235,000, including salary and benefits Reflects the net addition of seven full-time positions and the net reduction of three FTE part-time positions Contingent upon reaching agreement with the relevant City bargaining groups concerning these changes as a package with other MOU provisions

55 Operating Budgets The operating budgets for Rancho Cucamonga are comprised of the following: City General Fund $80,757,570 Fire District Operational Funds $35,014,090 Library Fund $ 5,163,710 In addition to the operating budgets, the complete City budget includes other special funds which are restricted from use for general municipal operations. The total budget for Special Funds (including CIP) is $110,785,460. The Fire District s Capital Fund budget is $15,690,640.

56 Fire District and Library Revenues Principal revenue source is property tax; fluctuates based on: County s annual inflation adjustment New secured properties being added to the tax roll Typically property tax changes lag one to two years behind other revenue changes Fire District post-rda property tax revenues are allocated between the District s General Fund and the Capital Reserve Fund to provide for current operational needs

57 Changes in Operating Budgets and Reserves

58 Operating Budget Analysis: Fire District FY 2017/18 Fire District Operating Budget: $35,014,090 A $1,771,330 or 5.33% increase from prior year No use of reserves for the operating budget Continues to redistribute operating expenses in various areas to improve accountability and transparency No increase in CFD assessments for six years in a row Continues to suspend Fire Inspection Fees

59 Operating Budget Analysis: Fire District Applied the California Municipal Health Financial Diagnostic to the Fire District for the second year Improves accountability and transparency Fire District is financially stable and healthy

60 Operating Budget Analysis: Library FY 2017/18 Library Budget: $5,163,710 A $432,980 or 9.15% increase from prior year Includes funding for a replacement Bookmobile Replaces desktop PCs used by the public Maintains funding for books and materials for adults and children at both libraries Continues successful entrepreneurial endeavors to support operating budget

61 City Operating Budgets City General Fund, Library Fund, and Fire District Operational Funds Public Safety: 59.9% * *A healthy city typically has between 50% and 70% of its budget dedicated to public safety. An unhealthy city is in excess of 70%.

62 Special Districts There are 35 special assessment districts in the City; most created prior to Prop 218 Continuing challenge: West-side Districts Measure A rejected in November 2015 City General Fund provides a General Benefit Equivalent payment to PD 85 and LMD 1; capped to provide equity with the East-side Districts

63 Special Districts Recommended changes for FY 2017/18 include: District Recommendation Change (%) Maximum Assessment Recommended Assessment LMD 2 Increase 2.7% $ $ LMD 4-R Decrease -5.0% $ $ LMD 6-R Increase 2.7% $ $ LMD 9 Increase 75.0% $ $ CFD B Increase 2.0% $1, $1,264.91

64 Fiscal Summary Proposed FY 2017/18 Budget is a product of past and continuing fiscal discipline enhanced by a recovering economy Following is a summation of all FY 2017/18 City budgets: City General Fund $ 80,757,570 Library Services $ 5,163,710 Fire Protection District $ 50,704,730 Special Funds (including CIP) $110,785,460

65 Conclusion Rancho Cucamonga knows how critical it is to prepare for the future, as it was created to be the City with a plan With a new Economic Development Strategic Plan, the City has a clear set of goals for a healthy economic future By reinvesting in infrastructure and focusing on all the elements of a world class community (housing, schools, leisure, shopping, fiscal sustainability, public safety, community health and vitality), Rancho Cucamonga is sowing the seeds today so that the residents of tomorrow will reap the benefits.

66 Any Questions or Comments?