RESOLUTION OF THE COUNCIL OF THE CITY OF CHICO ADOPTING THE FY

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1 C,1 17'3'P.O City Council Agenda Report Meeting Date: 6/16/15 TO: City Council FROM: Administrative Services Director ( ) RE: Fiscal Year Proposed Annual Budgets REPORT IN BRIEF: The Council will be presented with a summary of the FY Proposed Annual Budget for the City of Chico and Successor Agency to the Chico Redevelopment Agency, the Ten-Year Capital Improvement Program, and Budget Policies (Item 4.3.) Recommendation - The Administrative Services Director requests that the council at the conclusion of the Budget Session, adopt the following resolution (Item 4.5. B). RESOLUTION OF THE COUNCIL OF THE CITY OF CHICO ADOPTING THE FY PROPOSED AND FINAL BUDGET FOR THE CITY OF CHICO, THE CHICO PUBLIC FINANCING AUTHORITY AND THE CITY OF CHICO PARKING AUTHORITY FISCAL IMPACT: The FY Proposed Budget includes two separate Budget Messages for the City (Exhibit A) and the Successor Agency to the Chico Redevelopment Agency (Exhibit B). These memos outline the major highlights, fiscal challenges and programs for the ensuing fiscal year for each entity. DISCUSSION: On 4/7/15, the City Manager and Administrative Services Director provided Council with a Draft Proposed Budget. A presentation followed that included information on staff's understanding of budgetary goals, financial accomplishments, current obstacles, proposed solutions, and finally a focus on the health of the City's General Fund. Staff demonstrated that that the General Fund would be in balance in fiscal year and highlighted significant changes in revenue, expenditures, proposed changes to the personnel allocation schedule, capital projects, and a discussion on General Fund transfers. On 5/5/15, the City Manager held a budget work session that included City Directors and Managers discussing their proposed operating budgets for fiscal year At this meeting, the City Manager will present his Proposed Budget to Council for adoption. In order to ensure that Council and the Community have had a sufficient opportunity to review the Budget, this meeting will cover the following areas: -f i. CL>/-6 /

2 Meeting Date: 6/16/15 RE Fiscal Year Proposed Annual Budgets Page 2 Agenda Item City Manager Introduction and Budget Overview TBID Presentation Agenda Item Budget Policies Agenda Item 4.4 Fund Summaries Department Operation Budgets Capital Improvement Plan General Fund Five Year Plan Staff will answer questions and make changes to the Proposed Budget as directed by Council. Prepared by: Approved by: CE» tr Ridnk' Fields, CPA, Administrative Services Director M16 0 Arrk Mark Orme, City Manager DISTRIBUTION: City Clerk (3) ATTACHMENTS: Exhibit A - City of Chico Budget Message Exhibit B- Successor Agency to the Chico Redevelopment Agency Budget Message

3 OFFICE OF THE CITY MANAGER 411 Main Street (530) P.O. Bo 3420 Fax: (530) CITYoTCHICO INIC 1872 ('hico. CA DATE: May 27,2015 TO: Honorable Mayor and Members of the City Council FROM: Mark Orme. City Manager SUBJECT: Requested Adoption of the ] 6 Proposed Annual Budget Honorable Mayor and Members of the Council: It gives me great pleasure to submit to the City Council the Proposed Annual Budget. This document represents what likely will be the most significant policy document adopted by the City Council on an annual basis, primarily because it allocates the City's scarce and limited financial resources towards essential services and programs identified by the City Council. through citizen input, and is essential in preserving and enhancing the City of Chico as a great place to live, work, educate and recreate. Rebuilding for fhe Future This budget continues to focus on fiscal stability and sustainability. In the Government Finance Officers Association collected financial data from 1,993 cities. Of those cities, 23 had a negative unassigned fund balance, which represents the status of their General Fund reserves. Chico ranked 18th,in other words, only fi ve of those cities had a larger hole in their reserve funds - one of which is Pinole, California. This represents the bottom of our fiscal situation, and as this and next year will show, the City is digging itself out from the abyss at a pace not typically seen in any government setting. But, the bottom line is that the City should have never aljowed this situation to occur in the first place. My tenure here, over the past two plus years, has shown me that this City has the ability and resiliency to see this through due to the fortitude of the City Council, the dedication of City staff. and through the support of our citizens and community partners. While and stand out as Chico's most trying fiscal times, and represent years of rebuilding and strengthening. It is clear that City staffhave been resilient in the face of reduced resources, and the focus is turning to doing more with less, through creating efficiencies, realizing priorities, and sacrificing time and energy as City leadership rebuilds Chico's financial foundation. The City's $8.2 million General Fund deficit was reduced down to $4.5 million in 2014, while the City contributed more resources Exhibit "A"

4 to its critical priorities. This clearly shows we are going iii the right direction, as the initial General Fund deficit in the year prior was an astounding $15.2 million. In the City is making good on increasing funding to address deferred maintenance items. strengthening Code Enforcement capabilities. improving is financial accountability systems. and eliminating deficit spending. While the City is living within its means, the goal is to continue to dig out of the abyss, grow stronger and be able to weather future fiscal dowliturns, address increasing capital maintenance needs (streets. public infrastructure, etc.), and fund future unfunded liabilities. As what should be a continuing endeavor for al] ful]-service Cities. several of our City's departments are looking at or engaging in reorganization to focus limited resources on key priorities. The City is moving aggressively in the area of public safety to strengthen boots on the ground to preserve Chico's amazing quality of life and improve the community oriented nature of law enforcement. Fire services are being reorganized to focus on community risk reduction and protection activities, truly reshaping the face of what traditional fire service models dictate to better benefit Chico residents and show the capabilities of what a top flight fire-rescue department can achieve when they are willing to break the moid. Additionally, Public Works and Community Development are evaluating how to provide faster and better service, through our plan check process, to ensure that what direct control the City has on economic development is achieved; while the Citys award winning TeamChico economic development model continues to conduct the necessary external activities to enhance and address the growth of our private sector partners. Back to Basics The City is looking to evaluate programs, services, and activities to strengthen those that provide for the City's core service deliveries and contribute to the five City Council priorities. Where the City can leverage public-private partnerships. the City will continue to evaluate such efforts in order to limit the impacts on existing staff and in an effort to maximize their utilization through redeploying them to core functions. The ultimate goal is to increase the City's effectiveness in key areas and smartly grow the number of staff to provide efficient and cost-effective service. During the past eight years of fiscal distress. the City decentralized activities such as purchasing. document management, contract oversight. and decision-making. The unintended consequences of which created silos, leading to a lack of communication and coordination, as well increased delay and inefficiency. Stairs efforts this year will be to centralize certain City-wide activities and implement controls to facilitate more accountability. communication, and coordination. Excellence in Public Service The Chico City Council continues to advocate for civic engagement and transparency, with the goal of making residents able to be more connected and empowered; to work with the City to make positive change happen, This requires every City employee to understand how

5 their work connects to what residents see as being important to their daily lives. Staff will continue to focus on the bottom line - delivering quality, essential services to Chico residents. as well as begin the process for defining perionnance metrics for basic services. It has been a privilege to work with the talented Budget Team (which included all of the Department Directors) and all City staff in producing this budget. This exercise certainly gave us all a greater appreciation for the collaboration and effort that goes into creating a budget that's sustainable, while working toward achieving Council priorities. Sincere thanks and appreciation go to Administrative Services Director Frank Fields, and his primary budget team of Barbara Martin, Scott Dowell, Lynn Theissen and Kimberly Graciano. They are supported by a great staff whose efforts help ensure we have a strong, transparent, and accountable fiscal structure, while ensuring thjs document is presented on time and in balance. A special thanks also goes to Assistant City Manager Chris Constantin for his continued due diligence and strategic nature to help in the evaluation of City operations and in achieving successful fiscal outcomes in this City's daily efforts. It truly is an honor and a privilege to work with the consummate professionals on staff and the dedicated Council who provide the necessary policy directive that is essential for the City of Chico to provide the quality services this community deserves and expects. Respectfully submitted, Mark Orme, City Manager

6 CITY(*CHICO INC 1872 SUCCESSOR AGENCY TO THE CHICO REDEVELOPMENT AGENCY FY PROPOSED ANNUAL BUDGET MESSAGE TO. City Council DATE: June 16, 2015 FROM: City Manager SUBJECT: Successor Agency to the Chico Redevelopment Agency FY Proposed Annual Budget On June 29, 2011 Assembly Bill No. 1 x 26 was enacted, which called for the dissolution of all California redevelopment agencies as of October 1, Also enacted at the same time was AB 1 x 27, which allowed agencies to continue if they agreed to transfer a certain dollar amount to the State to help balance the State budget. A lawsuit challenging the constitutionality of both bills was filed shortly after they were enacted, and the California Supreme Court imposed a stay pending its decision on the constitutionality of the legislation. On December 29, 2011, the Court struck down the continuation bill, but upheld ABlx 26, the dissolution bill. In its decision, it extended the dissolution date to February 1, 2012, and extended certain other ABlx 26 deadlines. ABlx 26 established a Successor Agency for each dissolved redevelopment agency. The purpose of the Successor Agency is to implement the dissolution of the redevelopment agency in compliance with the law, and to provide staff support to an Oversight Board comprised of locally appointed individuals. The City of Chico became the Successor Agency to the former Chico Redevelopment Agency (RDA) on February 1, 2012, by the operation of law. Subject to the approval of the Oversight Board and the California Department of Finance, the Successor Agency manages redevelopment projects currently underway, makes payments identified on the Recognized Obligation Payment Schedule and disposes of redevelopment assets and properties as directed. The City of Chico assumed most of the housing assets and obligations of the former RDA. For the most part, the work and obligations of the Successor Agency are funded from the former tax increment revenues that are distributed by the Butte County Auditor-Controller. The Oversight Board of the former Redevelopment Agency approved the Successor Agency Administrative budget for FY at its meeting on February 4, Respectfully submitted, Mark Orme, City Manager Exhibit "B"