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HomeMy WebLinkAbout2025-039 - Resolution RESOLUTION NO. 2025-039 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, COMMITTING TO THE LEVEL OF FISCAL RESERVES FOR THE CITY OF RANCHO CUCAMONGA WHEREAS, the Rancho Cucamonga City Council desires to protect existing services; and WHEREAS, the Rancho Cucamonga City Council desires to be prepared for emergencies; and WHEREAS, the Rancho Cucamonga City Council desires to maintain good fiscal management and fiscal structure to operate a municipal corporation; and WHEREAS, the Rancho Cucamonga City Council desires to maintain the financial strength required to obtain beneficial bond ratings for the City. NOW,THEREFORE, the City Council of the City of Rancho Cucamonga, California, does hereby resolve on this 26th day of June 2025 that the level of fiscal reserves maintained by the City of Rancho Cucamonga as of fiscal year end are committed to the goals as outlined in the City's Fund Balance Policy, attached to this resolution as Exhibit A. Resolution No. 2025-039— Page 1 of 2 PASSED, APPROVED, and ADOPTED this 26th day of June, 2025. L. Dennis Michael, Mayor ., ATTEST: 014 evy, City Cler STATE OF CALIFORNIA COUNTY OF SAN BERNARDINO ) ss CITY OF RANCHO CUCAMONGA ) I, Kim Sevy, City Clerk of the City of Rancho Cucamonga, do hereby certify that the foregoing Resolution was duly passed, approved, and adopted by the City Council of the City of Rancho Cucamonga, at a Special Meeting of said Council held on the 26th day of June, 2025. AYES: Hutchison, Kennedy, Michael, Scott, Stickler NOES: None ABSENT: None ABSTAINED: None Executed this 26'h day of June, 2025, at Rancho Cucamonga, California. tlOiwD Sevy, City Cle Resolution No. 2025-039— Page 2 of 2 EXHIBIT A r r CITY OF RANCHO CUCAMONGA r r rr , rr • CITY OF RANCHO CUCAMONGA ' RANCHO CUCAMONGA FIRE PROTECTION DISTRICT FUND BALANCE POLICY POLICY NO.: EFFECTIVE: June 15, 2011 REVISED: June 26, 2025 APPROVED: PURPOSE This Fund Balance Policy establishes the procedures for reporting both restricted and unrestricted fund balance in the financial statements. Fund balance will be required to be reported using the five classifications based on the extent to which the City and Fire District are bound by the constraint on resources reported in the fund. The policy also authorizes and directs the Finance Director to prepare financial reports showing fund balance classifications as required by Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB Statement No. 54 improves how fund balance information is reported and enhances decision-making value. The Fund Balance Policy creates certain commitments and assignments of fund balance, which will help ensure adequate financial resources to protect the City and Fire District against unforeseen circumstances and events, such as revenue shortfalls and unanticipated expenditures. GENERAL POLICY Fund balance is basically the difference between the assets and liabilities reported in a governmental fund. GASH Statement No. 54 established five categories for classifying fund balance, each of which identifies the extent to which the City Council and Fire District are bound by the constraint of reserves in the governmental fund. Nonspendable fund balance—Includes amounts that cannot be spent or are legally or contractually required to be maintained intact. For the City and Fire District, this includes prepaid costs and noncurrent receivables, out it is not limited to them. Restricted fund balance — reflects the same definition as restricted net assets, which are constrained to be used for a specific purpose by external parties, such as creditors, grantors, contributors, laws, or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. FUND BALANCE POLICY PAGE 2 OF 6 Committed fund balance — amounts that are committed for a specific purpose. These funds require action from the City Council or Fire Board to establish, remove, or change the specified use. a 15 m Assigned fund balance—amounts that have been set aside and are intended to be used a' for a specific purpose but are neither restricted nor committed. Assigned amounts m cannot cause a deficit in unassigned fund balance. 7 Unassigned fund balance — funds that are not reported in any other category and are available for any purpose within the General Fund. The General Fund is the only fund that will have a positive unassigned fund balance. Nonspendabe and restricted fund balances are not addressed in this policy due to the nature of their restrictions. Spending Prioritization for Fund Categories When an expenditure is incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned)amounts are available, it is the accounting policy of the City and Fire District to consider restricted amounts to be reduced first. Similarly, when an expenditure is incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used, it shall be the accounting policy of the City and Fire District that committed amounts would be reduced first, followed by assigned amounts, and then unassigned amounts. Committed Fund Balance The City Council (which also acts as the Board of Directors for the Rancho Cucamonga Fire Protection District), as the City's highest level of decision-making authority, may make commitments of fund balance for specific purposes pursuant to constraints imposed by formal actions taken, such as an ordinance or resolution. A committed fund balance cannot be used for any other purpose unless the City Council or Fire Board changes or removes a commitment through the same type of formal action taken to establish the commitment. City Council or Fire Board action to commit fund balance needs to occur within the fiscal reporting period; however, the amount can be determined in a subsequent period. • Changes in Economic Circumstances The City General Fund's fund balance commitment for changes in economic circumstances is established at a goal of a nine-month reserve, or 75% of the City General Fund's adopted expenditure budget for operations in the upcoming fiscal year. Similarly, the Fire Districts fund balance commitment for changes in economic circumstances is established at a goal of a nine-month reserve, or 75% of the Fire District's adopted expenditures budget for operations in the upcoming fiscal year. The specific uses of the fund balance commitment include 1)the declaration of a state or federal state of emergency or a local emergency as defined in Rancho Cucamonga Municipal Code Section 2.36.020; or 2) a change in economic circumstances in a given fiscal year that results in revenues to the City or Fire District being insufficient to cover expenditures for one or more fiscal years. The City Council or Fire Board may, by the FUND BALANCE POLICY PAGE 3 OF 6 affirming vote of four members, change the amount of this commitment and/or the specific uses of these monies. • Facilities Capital Replacement The City General Fund and Fire District's fund balance commitment for their respective facilities' capital replacement is established as a minimum funding goal of 50% of capital assets value comprised of construction in progress (excluding infrastructure), building improvements, and improvements other than building. • Working Capital The City General Fund's fund balance commitment for working capital is established as a minimum funding goal of 5% of the City's General Fund adopted expenditure budget for the upcoming fiscal year. The Fire District's fund balance commitment for working capital is established as a minimum funding goal of 50% of the Fire District's adopted expenditure budget for the upcoming fiscal year. • Self-Insurance The City General Fund's and Fire District's fund balance commitment for payment of workers' compensation, general liability, and employment practices liability claims is established as a minimum funding goal of nine times the City and Fire District's yearly self-insurance reserve for all types of insurance coverage. • PASIS Workers' Compensation Tail Claims The Fire District's fund balance commitment for payment of outstanding workers' compensation claims remaining after its withdrawal from PASIS is established at a goal equal to the claims cost detail report from the Fire District's third-party administrator at the end of the fiscal year, plus 15%. • Employee Leave Payouts The City General Fund's and Fire District's fund balance commitment for employee leave payouts is valued to completely payout vacation, sick, and other leave balances in accordance with the memorandum of understandings for the City and Fire District's bargaining groups as of the last day of the fiscal year. • Vehicle and Equipment Replacement The Fire District's fund balance commitment for replacing fire safety vehicles and equipment, as determined based on its replacement criteria, is established as a minimum funding goal of 50% of the Fire District's vehicle and equipment replacement value. • Law Enforcement The City General Fund's fund balance commitment for public safety purposes, including operations, equipment, capital outlay, capital facilities, personnel, and booking fees. The FUND BALANCE POLICY PAGE 4 OF 6 funding goal is 100% of the most recently approved Schedule A from the San Bernardino County Sheriffs Department. • Economic Development Strategic Reserve The City General Fund's fund balance commitment for the acquisition and development of key properties to promote economic development for the benefit of the City as a whole and potentially generate ongoing revenues through negotiated agreements with third parties, including, but not limited to, land leases or public-private partnerships. The funding goal is the equivalent of the current value of a 10-acre mixed-use site on Foothill Boulevard as of January 1 of each year. • Seasonal Weather Emergency Reserve The City General Fund's fund balance commitment is to provide a dedicated reserve for unanticipated costs incurred due to damage resulting from severe weather emergencies, such as wind, flood, fire, extreme hot or cold, and other forces of nature, to avoid adversely impacting the City's operating budget. The City will appropriate funding to the reserve on a regular and periodic basis for these events. The funding goal is 100% of the highest- costing severe weather event in the three most recent fiscal years, or a minimum of$1 M, whichever is greater. • Community Benefit Proiects A portion of the City General Fund's fund balance is received from development projects, typically by means of a development agreement, is committed to addressing the impacts typically associated with, but not limited to, large warehouse, industrial, and commercial developments, including affordable housing demand, future greenhouse gas emissions, fire protection services, electric vehicle charging, reduction in vehicle miles traveled, pedestrian safety improvements, carbon capture, alternative energy production, noise reduction, community services and environmental justice. • Public Safety Personnel Affordable Housing A portion of the Fire District's fund balance is committed to providing additional funding to match the City's contributions to help with the creation of affordable for-sale housing for public safety personnel, including but not limited to Fire District employees. Funding may be used for silent seconds, closing costs, assistance with obtaining financing, or to help buy down the cost of design and construction of single-family housing units. The funding goal for this reserve is established as the value of the affordability gap to construct 50 housing units that are affordable at the 60% California Tax Credit Allocation Committee (TCAC) median income with a 4% tax credit scenario per unit, or $192,600 per unit, for a total funding goal of$9,630,000. Assigned Fund Balance Amounts that are set aside and are intended to be used by the City or Fire District for specific purposes but are neither restricted nor committed are reported as assigned fund balance. Assigned amounts cannot cause a deficit in unassigned fund balance. The authority to establish assigned fund balance is delegated to the City Manager or Finance Director for the purpose of FUND BALANCE POLICY PAGE 5 OF 6 reporting these amounts in the annual financial statements. No formal action is required to remove an assignment. As such, the following are a few examples of assigned fund balance. • Economic and Community Development Special Services The City General Fund's fund balance is assigned for contracts, special services, or projects associated with Economic and Community Development special projects or initiatives; City Council goals, such as contract services for Economic and Community Development code development; or an amount for operating costs for Planning, Building and Safety, and Engineering Departments, excluding capital and project management costs. • Habitat Mitigation and Sphere of Influence Issues The City General Fund's fund balance is assigned for ancillary costs related to annexations within the City's sphere of influence area, including mitigation issues and legal challenges, and for the creation of a multi-species habitat conservation plan, including the acquisition of habitat conservation land. • Community Services Programs The City General Fund's fund balance is assigned for nonrecurring costs and capital improvements to support community service programs, including classes, special events, and theatrical and recreational activities sponsored by the Community Services Department. These funds aim to enable spending that strategically implements, supports, or enhances programs provided by the Community Services Department. • Animal Center Facility Replacement The City General Fund's fund balance is assigned for capital improvements to support animal services and care operations, including facility maintenance and replacement to provide medical care and treatment, education and outreach programs, and unforeseen circumstances and emergencies. • City Infrastructure Replacement The City General Fund's fund balance is assigned for the replacement of the City's infrastructure network, including for maintaining, upgrading, and replacing the infrastructure assets within the City. These funds are set aside to ensure the long-term sustainability, safety, and functionality of public facilities and systems as the backbone for the City's infrastructure. • Civic Center and Epicenter Master Plans The City General Fund's fund balance for the development and implementation of two master plans aimed at creating economic opportunities,fostering community engagement, and promoting an environment that integrates transportation, commercial activities, public spaces, and cultural amenities. The purpose of the master plans will be to develop the possibility for a range of purposes centered around a transient-oriented mixed-used district in and around Haven Avenue, Arrow Route, Rochester Avenue, and the Epicenter. FUND BALANCE POLICY PAGE 6 OF 6 Unassigned Fund Balance Unassigned fund balance is the residual fund balance classification for the City's General Fund. The General Fund is the only governmental fund that would report a positive unassigned fund balance. For all other governmental funds, if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned, it may be necessary to report a negative unassigned fund balance, and the department with responsibility for the fund should develop a plan to replenish the balance.