HomeMy WebLinkAboutAGENDA REPORT 2024 0403 CCSA REG ITEM 09BCITY OF MOORPARK, CALIFORNIA
City Council Meeting
of April 3, 2024
ACTION RECEIVED AND FILED.
BY A. Hurtado.
B. Consider the City of Moorpark’s Long-term Financial Plan. Staff Recommendation:
Receive and file the City of Moorpark’s Long-term Financial Plan. (Staff: Troy
Brown, City Manager)
Item: 9.B.
MOORPARK CITY COUNCIL
AGENDA REPORT
TO: Honorable City Council
FROM: Troy Brown, City Manager
DATE: 04/03/2024 Regular Meeting
SUBJECT: Consider the City of Moorpark’s Long-term Financial Plan
BACKGROUND
Having celebrated the City's 40 years of incorporation last year, a number of long-term
planning efforts have been completed or are underway to chart the future course of the
City. In addition to development of many long-term plans around facilities and
infrastructure improvements to ensure sustainability of city services, we have faced a
number of extraordinary circumstances in recent years. These circumstances have
resulted in increased costs for service delivery, volatility in revenues, and in particular
sales tax shift from brick-and-mortar to online sales continues to expand. The City is
experiencing higher peaks and valleys of vital revenues sources while simultaneously
seeing a higher demand of city services to meet the ongoing needs of residents.
At the direction of the City Council in 2023, staff has developed a Long-term Financial
Plan (LTFP) to provide more focus and attention on the overall long-term fiscal
sustainability of the City. The goal of the LTFP is to serve as a proactive tool to ensure
long-term efficient and effective management of city services, finances, operations, and
capital improvement projects. In addition, the LTFP will serve as a budget model for the
General Fund in its forecasting of revenues and expenditures over a 10-year period.
The findings and conclusions of the LTFP will provide an opportunity for the City to reflect
and shift its view of the future as different conditions arise. Although the LTFP is not an
accounting tool, it is valuable for policy makers by providing a look into the financial future
of the City and the myriad of demands placed on the City. The LTFP can qualify and
quantify decisions and guide the decision-making process by placing a focus on
maintaining the current quality of services, enhancing services and/or programs,
forecasting economic recessions, and identifying projected long-term financial
imbalances early. The LTFP takes a forward-looking view at the City’s General Fund
operating revenues and expenditures. Its purpose is to identify financial trends, shortfalls,
Item: 9.B.
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opportunities, and issues so the City can proactively address them. It does so by
projecting the future fiscal results of continuing the City’s current service levels and
policies. The LTFP lays the foundation for the budget, aiding both the City Manager and
City Council in establishing priorities and allocating resources appropriately. This year’s
forecast continues the economic recovery from the downturn that impacted local, state,
national, and global economies. The LTFP serves as a roadmap to aid the City in its
financial decisions over the next few years to ensure expenditures and revenues stay in
balance while sustaining vital services and programs to meet the needs of the community.
Components of the LTFP are focused on emerging issues and has been documented for
public review to encourage input and feedback from various stakeholders. This plan
includes a statement of current financial position and trend analysis forecast, which
includes projections looking ahead 10 years through Fiscal Year (FY) 2033/34. The LTFP
is not able to predict with certainty the City’s fiscal future, rather it serves as a tool to
highlight significant issues or patterns that must be addressed if the City’s goals are to be
achieved.
The City of Moorpark’s LTFP is critical to the City Council’s financial planning process. It
underpins our long-term financial sustainability while meeting the needs and expectations
of the community and delivering the City Council’s Strategic Directions highlighted in its
City Council Goals and Objectives.
The LTFP is pivotal in setting the high-level financial parameters that guide the
development and refinement of Council’s budgeted plans, strategies, and actions; and
generates information that assists decisions about the mix, timing, and affordability of
future outlays on operating activities, renewal, and replacement of existing assets and
funding of additional assets. It is also instrumental in ensuring the City of Moorpark
delivers enhanced services now and in the future by providing optimal value-for-money
community outcomes.
In developing the LTFP, a number of key assumptions are applied. For this LTFP, the
audited financial actual numbers from the 2021/22 Annual Comprehensive Financial
Report form the basis for year one of the Plan. Years two through 10 present nine
inclusive years of financial projections underpinned by the base data. The model
assumes that overall, service levels will remain materially unchanged throughout the
planning period. However, there is recognition of some exceptions to this, outlined below:
•Local, national, and global economies are facing uncertainty due to the prolonged
economic recovery following the COVID-19 pandemic. Despite the sustained
efforts and long recovery, Moorpark – in addition to all levels of government – have
a role to play in stimulating the economy and assisting those in financial hardship.
•The City has implemented an updated new fee structure for services it provides.
The new fees will better align the City to recover more of its costs for services
offered to the development community.
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•Varied or additional services will need be added over time in response to changes
in community needs and preferences, specifically in the area of public safety. The
LTFP assumes that any variations in the demand for services will not impact the
financial bottom line, unless otherwise stated.
•Increases in the amount of general fund dollars for park maintenance will continue
to rise resulting in a greater transfer to the parks maintenance fund to cover these
expenses.
•Employee salaries are projected to increase by the consumer price index. The
ability to pay employees remains of vital importance to the City; however, the ever-
changing desires of employee attraction and retention remain a core objective of
the City to ensure consistent service delivery.
•Operating surplus’ must be achieved to restore reserve fund balances following
the allocation of funds for major capital improvement projects such as:
o Acquisition and renovation of 323 Science Drive to serve as a new City Hall;
o Design and construction of a new 18,000 sq. ft. library; and,
o Maintenance and repair of existing roadway assets equaling $14.1M in
2020/21 and totaling $97.6M across the 10-year period.
STRATEGIC CONTEXT
The LTFP is a strategic component of Council’s financial management framework and
supports the delivery of the City Council Strategic Goals and Objectives. The Strategic
Framework illustrated below outlines our organizational planning framework and
highlights the importance of community feedback into this process.
The LTFP is integral to Council’s suite of Strategic Management Plans providing the
critical link between the:
•City Council Goals and Objectives;
•Bi-Annual Community Survey;
•Pavement Management Program;
•Capital Improvement Plans;
•General Plan;
•Various master plans (Parks and Recreation, Arts, Arroyo Simi Trail, etc.); and,
•Annual Budget.
Optimizing the integration between these strategic intentions ensures Council develops
and implements a robust and transparent system of financial management aimed to
uphold and maintain Council’s long term financial sustainability.
KEY INFLUENCES AND RISKS
This LTFP generates information which is used to guide decisions about City Council
operations into the future; however, as with any long-term plan, the accuracy of this LTFP
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is subject to many inherent influences. These variables and risks can be divided into
three main groups:
External Influences – items outside of City Council’s control:
•Unforeseen economic changes or circumstances such as:
o Financial and volatile economic impacts;
o Interest rates fluctuations; – localized economic growth – residential
development & new business development;
o Consumer Price Index (a rolling five-year average determined by using the
information provided by the U.S. Department of Labor, for all urban area
consumers within the Los Angeles/Long Beach/Anaheim metropolitan area
during the prior year.);
o Cost of natural resources such as fuel and water;
o A change in the level of legislative compliance; and,
o Cost shifting (i.e. increased levies, new development impact fees to ensure
development fully “pays its own way,” etc.).
•Variable Climatic Conditions such as:
o Climate change – storm or force majeure events (i.e. Easy Fire of October
2019)
o Flooding;
o Wildfires;
o Drought and more.
Internal Influences – items that Council can control:
•Agreed service level review outcomes;
•Infrastructure asset management;
•Depreciation (valuations can be considered an external influence);
•Fee/tax increases and other financial influences;
•Performance management;
•Efficiencies in service delivery and administrative support; and,
•Salaries and benefits.
Outside Influences – items the Council cannot control but can shape and guide:
In addition to the influences previously mentioned, outside influences also exist and are
realized by Moorpark residents and businesses. These drivers are manifested and
realized through a variety of inputs such as:
•Community needs and expectations;
•Input from the bi-annual community survey;
•City Council Goals and Objectives; and,
•Other outside key strategies generated from other governmental agencies
(state mandates, federal regulations, etc.).
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In order to minimize the inherent risks of long-term financial planning, the Council should
review and update the LTFP at least annually to ensures that the most recent economic
data and forecasts are being used.
BASIS OF PREPARATION
The LTFP is key to establishing funding requirements of Council’s Asset Management
Plans and other strategic community planning and implementation, ensuring we continue
to operate in a financially sustainable manner. The LTFP enables Council to effectively
and equitably manage service levels, ensure asset funding, and make revenue raising
decisions balanced with achieving its financial strategy and key performance indicators.
In developing the LTFP, key financial principles are established that underpin the
Council’s forecast financial performance and position over a 10-year time frame. The
LTFP incorporates a number of statutory and discretionary reports and assumptions. Due
to the variable nature of the assumptions focusing on changes in the economy, an annual
review of the LTFP provides the Council with the opportunity to review the financial
principles to easily adapt to these external influences, and changes in proposed service
levels or projects. This effort involves annual review and input from the City Council and
the Administration, Finance and Public Safety Committee.
The financial projections contained within the LTFP, provide an indication of Council’s
direction and financial capacity into the future and is intended to be viewed as a guide to
future actions or opportunities. This in turn encourages Council to analyze the future
effects and impacts of current decisions made by Council.
FINANCE STRATEGY
The City of Moorpark continues to employ a strategic approach to financial planning that
is influenced by the current and predicted economic environment, our financial position
and the impacts on the organization both internally and externally. Employing this
strategic approach is designed to ensure:
•Support of the achievement of the City Council’s Goals and Objectives;
•Long-term financial sustainability;
•Intergenerational equity;
•Needs and expectations of the Moorpark community are met;
•Delivery of appropriate, targeted, effective and efficient services; and,
•Responsible rate increases.
This leads to achieving:
•Continued funding to ensure City infrastructure is replaced and maintained when
required (includes roads, trails, City-owned properties, and open spaces);
•Commitment to major projects which span more than one year;
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•Continually funding the full life-cycle costs of any new or enhanced services or
construction of new assets through savings, rate increases or grant funding;
•Implementation of strategies to ensure new development “pays its way” related to
infrastructure and community amenities such as parks, pools, street/sidewalk
maintenance, etc.; and,
•Maintaining existing services at current service levels.
Key Economic Assumptions
It is important that the LTFP reflects the most recent economic data and forecasts
available. A review is conducted each year to ensure that the underlying parameters and
assumptions are reasonable given the current economic conditions and expectations.
The key economic indicators and drivers used in this Plan are summarized in the Table 1
below:
Table 1 – LTFP Key Assumptions
Property Tax
Growth
Sales Tax
Growth
Changes to
General Fund
Transfer-Parks
Change to
Salaries &
Benefits
Investment
Growth for
Infrastructure
2.0% 2.0% TBD 2.5% 0%
Population Growth - The City’s population has grown slowly over the past 10 years to
36,284, and decreased slightly to 35,514 persons according to the latest population
figures from the California Department of Finance. Comparing this growth over the prior
10-year period from 2005 to 2015, the City experienced 4% growth in 2005 from a
population of 34,500 to 36,009 in 2015 as depicted on the chart below. This emphasizes
that the City is approaching build-out.
City of Moorpark Population Changes – 1990 to 2021
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Property Tax Growth – 2.0% annual increase
In the FY 2023/24 Budget, property tax is projected to total $5.23M or 23% of total general
fund revenues. Property tax growth has been strong over the past several fiscal years
and revenues in this category are now consistently above pre-recession levels. On
average, the City can expect to receive only $0.083 from every property tax dollar
collected for real property in the City. Property tax revenues are mainly distributed to a
number of other governmental agencies for a variety of services to support residents
needs such as schools, County services, and fire protection to name a few. Property
taxes are fairly predictable since Proposition 13 (1978) limits increases to property tax to
2% per year. Improvements to land or change of ownership provide for a reassessment
of land valuation, which can result in increases higher than 2%. On average, property
taxes can be expected to increase by 2% per year as historically performed.
Several residential and commercial development projects in the City have either been
recently entitled or re-entitled which will add to the City’s property tax base. Some of
these projects include:
•High Street Depot – 79 residential units with approximately 14,000 sq. ft. of
commercial space (construction underway);
•Hitch Ranch – 755 residential units (construction anticipated in 2025);
•Beltramo Ranch – 47 detached residential units (construction timeline unknown);
•North Ranch – 139 detached residential units (construction timeline unknown);
•Green Island Villas – 69 multi-family units (construction timeline unknown);
•Pacific Communities – 284 detached small-lot residential units (construction
timeline unknown); and,
•Everett Street Terraces – 60 residential condominium units (construction timeline
unknown).
$ 0
$ 500,000
$ 1,000,000
$ 1,500,000
$ 2,000,000
$ 2,500,000
$ 3,000,000
$ 3,500,000
$ 4,000,000
$ 4,500,000
19
9
9
-
0
0
20
0
0
-
0
1
20
0
1
-
0
2
20
0
2
-
0
3
20
0
3
-
0
4
20
0
4
-
0
5
20
0
5
-
0
6
20
0
6
-
0
7
20
0
7
-
0
8
20
0
8
-
0
9
20
0
9
-
1
0
20
1
0
-
1
1
20
1
1
-
1
2
20
1
2
-
1
3
20
1
3
-
1
4
20
1
4
-
1
5
20
1
5
-
1
6
20
1
6
-
1
7
20
1
7
-
1
8
20
1
8
-
1
9
20
1
9
-
2
0
20
2
0
-
2
1
20
2
1
-
2
2
20
2
2
-
2
3
20
2
3
-
2
4
Property Taxes
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Although each of these projects will add to the City’s property tax base, it is important to
recognize that revenues derived from residential development in the form of property
taxes are insufficient to meet the ongoing cost to service new development with the City
receiving only 2% of assessed values. This was further confirmed in 2023 when graduate
students of the Master of Public Policy and Administration program at California Lutheran
University completed an analysis of the “Housing Production Fiscal Impacts on the City
of Moorpark” to examine the financial impacts of residential development on existing
services to determine the extent of the financial impacts on City resources.
The quantitative and qualitative analysis undertaken by the students revealed five
recommendations to address the impacts of development on the City.
The recommendations were:
1.Create an initiative to be placed on the ballot to increase fees for the residents of
Moorpark;
2.Implement specific programs and facilities to meet the needs of children and
seniors;
3.Diversify the economy within the City of Moorpark;
4.Implement mixed-use development projects; and,
5.Implement community facility districts within established housing developments.
*Copies of the full California Lutheran University analysis are available upon request.
The City receives a small portion of property tax revenues derived from secured
properties in the City. As shown on the below graph, the Moorpark General Fund only
receives approximately $0.08 of every dollar with remaining amounts allocated to various
governmental agencies for service provision within their respective service areas.
Moorpark Unified School District receives the largest portion of property tax allocations
receiving approximately $0.33 of every dollar, a 300% greater share than the City. The
following illustration shows a breakdown of the distribution of Property Tax dollars derived
from secure properties in the City.
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Source: HdL Coren & Cone
Sales Taxes – 2.0% annual increase
In the FY 2023/24 Budget, sales taxes are projected to total $5.30M or 23% of total
general fund revenues. Property tax growth has been strong over the past several fiscal
years and revenues in this category are now consistently above pre-recession levels.
The City’s sales tax rate is 7.25%, like that of other cities in the County with the exception
of Oxnard, Ventura, Port Hueneme, and Santa Paula who have higher sales tax rates.
More importantly, the City’s sales tax portfolio relies heavily on business-to-business and
general consumer goods.
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2013-14 2014-15 2015-16 2016-17 2017-18
$3,747,284 $3,679,295 $3,992,211 $3,967,466 $4,088,872
2018-19 2019-20 2020-21 2021-22 2022-23
$4,336,676 $4,040,141 $4,575,526 $5,219,884 $4,948,566
Revenues from sales taxes is one of the most volatile revenue resources for the City and
follows economic indicators. During time of national economic prosperity, sales taxes
tend to be higher due to additional disposable income being available in households.
Currently, only goods and consumables generate sales taxes in California, while services
are not taxed.
The retail industry is a strong contributor to sales tax revenues for the City. Globally, this
industry is experiencing transformation as the proliferation of online sales penetrating the
consumer market are occurring at a rate higher than originally contemplated by experts.
Online sales transactions do not result in a point-of-sale transaction resulting in sales
taxes flowing to countywide pools rather than direct allocations to the City. The City
received a portion of sales taxes from the countywide pool based on a percentage
commensurate to total sales generated by neighboring cities in the County, rather than
direct allocations where the City receives its full one percent (1%) of every dollar. Growth
in online shopping is also causing a strain on traditional brick-and-mortar stores resulting
in less foot traffic and larger profit margins to cover rents and leases. This results in
retailers such as Toys R Us, Sears, and others shuttering sites or retooling their business
model to keep pace with online giants like Amazon who are gaining market share at high
rates.
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
CITY OF MOORPARK - 10 YEARS SALES
TAX HISTORY
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According to HdL, the City’s sales tax consultant, over the period from 2012 to 2017 sales
from brick-and-mortar sales experienced an increase of 10%, while growth from online
sales have increased 88% over the same period.
Due to antiquated statewide sales tax policies, local municipalities often receive no sales
taxes from online sales because there is no direct point-of-sale in the community. Yet
cities still depend on revenues from point-of-sale to repair streets, roads and infrastructure
used by delivery companies that transport goods over local roads to deliver to residents.
It is important to note that revenues derived from sales and property together make
up approximately 46% of all general fund revenue sources for the City.
Property Tax In-Lieu (Motor Vehicle License Fee) (2% annual increase) – Property Tax
In-Lieu of Motor Vehicle License Fee growth is linked to assessed valuation; therefore,
the annual increase mirrors the increase in Property Tax revenue.
Franchise Fees (2% annual increase) – The City receives several revenues from
Franchise Fees. The Refuse Franchise Fee with Waste Management (WM) is set at 6%,
Charter Communication franchise rate is 5%, DirectTV franchise rate is 5%, Edison
franchise rate is 2%, Southern California Gas pays a 2% franchise rate, Crimson Gas
pays began at a base rate of $2,220 which has increased by CPI since inception, and
AT&T pays a 5% franchise rate. Although the rates of these services can increase from
year to year based on many external factors, there have not been large swings in these
revenues and the historical trend shows a modest 1% increase.
In addition, the City has seen a steady decline in the Franchise Fee revenue from
traditional cable providers as there is an increasing trend towards satellite and internet
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providers. Finally, the City negotiated a Most Favored Nation clause in the franchise
agreement with WM. As a result of recent contract negotiations with neighboring cities,
the residents can expect a reduction in residential rates by 1% and no increase
commercial rates through 2025. Based on the above-mentioned factors, Franchise Fees
are projected to increase at a modest rate of 1% mirroring population growth.
Transient Occupancy Tax (TOT) (2.5% annual increase) - The current TOT rate within
City limits is 10% and can only be changed with majority voter approval. Similar to sales
tax, TOT is tied to economic activity and consumer confidence. Although increases have
been higher over the past three fiscal years no new hotels are currently anticipated during
the next 10 years.
Gasoline Tax (0.5% annual increase) – This is a very volatile funding source subject to
several global economic indices. Minimal increases are projected for gas taxes primarily
due to declining gas tax revenues resulting from development of more fuel-efficient
vehicles, including hybrid and electrical cars, off set by the rise in gasoline prices and
growth in population.
General Fund transfer for Parks/Landscape Maintenance District (LMD) Maintenance - In
July 1999, the City established the Parks and Recreation Maintenance and Improvement
District (Improvement District) for the maintenance and improvement of City parks. It was
initiated by the Council to provide funding in place of Parks Maintenance Assessment
District No. AD 85-1 (AD 85-1), which was disbanded in July 1998 as a result of
Proposition 218. The Improvement District is based on a “special” assessment. This
means that the City assesses property owners for that portion of park maintenance and
improvement activities that generate a “special” benefit. All activities that generate a
“general” benefit must be funded from non-assessment revenue, typically the General
Fund and Park Improvement Funds.
The budget for installation, maintenance, and servicing costs of the City’s parks for FY
2023/24 is $6,368,345, which is $691,061 higher than the initial budget used in FY
2022/23. In FY 2023/24, the assessment will generate approximately $978,307 in
revenue, an increase of $41,182 over the amount generated in FY 2022/23. At its current
rate, assessment revenue will cover approximately 15% of the total budget for operations
and improvements or only 24% of the 75% cap for the “special” benefit the City is eligible
to assess. The General Fund is estimated to subsidize $1,569,169 in current year FY
2022/23 and is budgeted to spend $1,592,086 in FY 2023/24. Even though these costs
have increased over the years and is expected to continue to increase, actual funding
levels in this area – resulting from the actual transfer versus budgeted transfer – has
decreased.
A concerted effort has been underway since 2018 to contain costs in this area. Cost
cutting measures have been implemented that have played a significant role in reducing
costs here. In April of 2020, the City Council approved the redistribution of the City’s
LMDs among three areas of contract responsibility for landscape maintenance services.
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This redistribution allows the underfunded LMDs to be serviced under one contractual
service area, while the fully funded LMD areas are distributed across two separate,
similarly-sized contractual service areas. This updated distribution also allowed staff to
explore service level reductions in the underfunded LMD contractual service area to
reduce landscape maintenance costs and lower the burden on the General Fund, while
maintaining the existing levels of landscape maintenance service in the fully funded
LMDs. At the same time, staff also investigated possible service level reductions to the
parks landscape maintenance services that would similarly lower costs. Some of the
activities taken to control costs here have included:
•Investment in capital improvements in the City’s parks to remove turf areas to
address environmental circumstance and reduce water usage;
•Changes to parks and underfunded landscape maintenance services;
•Mowing: No change to sports fields. Mowing at passive parks changed from
weekly to every other week. Mowing of turf areas in the underfunded LMDs would
also change from weekly to every other week. Edging changed from weekly to
every other week at all parks;
•Shrub Pruning: Changed from “as necessary” to monthly;
•Fertilization: Removed from contractual services and will be completed by in-house
staff. Activity will focus on sports fields to keep passive parks and LMD areas from
growing too quickly between mowings;
•Custodial Services: Removed from park services contract. Services transferred to
City janitorial services contractor;
•Weeding: Changed from weekly to monthly and modified to include mechanical
weed control in combination with the use of herbicides approved by the Ventura
County Agricultural Commissioner;
•Debris and Litter Removal: Changed from daily to weekly. Service for refuse bins
remains unchanged;
•Sport Court and Picnic Area Cleaning: Changed from daily to weekly;
•Ballfield Dugout/Bleacher Cleaning: Changed from daily to weekly;
•Playground Site Inspection and Raking: Changed from daily to twice weekly;
•Parking Lot/Hardscape Cleaning: Cleaning of hardscape surfaces, sidewalks,
parking lots, access roads, decomposed granite trails and walkways changed from
weekly to every other week;
•Drinking Fountain Maintenance: Changed from daily to weekly;
•Swale, Catch Basin, and Drain Cleaning: Changed from weekly to “as needed”;
and
•Irrigation Repairs: Inspections changed from weekly to monthly. Materials will be
provided by the City on City’s account with a local vendor.
Transferring of General Fund dollars to other funds to support other services is a subsidy
of the other service. Chart 3 below shows the amount of actual dollars transferred to the
Parks and LMD funds to support maintenance in those funds. This results in less funds
available to provide other vital services.
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Personnel Costs – The City’s business is people serving people to provide municipal
services and personnel costs are currently the largest General Fund expenditure minus
police services. In FY 2022/23, personnel expenses totaled $5.9 million or 26% of total
General fund expenditures and transfers out for FY 2022/23. There are 76.48 full-time
and designated part-time General Fund positions across all departments. This is an
increase of 15.7 positions since 2015. Citywide staffing levels are constantly adjusted
not only to create better workflows to serve the public, but to move important initiatives
forward. The City should remain vigilant before adding ongoing personnel costs in the
future to ensure employee morale and productivity remain high, while combatting fatigue,
employee retention, and burnout.
City of Moorpark
Position History
For the Fiscal Years 2014/15 to 2023/24
Department FY 2014/15
Actuals
FY 2023/24
Actuals
Variance Ten-Year
Change
1.City Manager’s Office 12.48 7.72 -4.76 -38.1%
2.*Finance/Administrative Services 6.00 10.30 4.3 71.6%
3.Community Development 8.00 11.00 3.0 37.5%
4.Parks, Recreation and
Community Services 25.73 35.73 10.0 38.8%
5.Public Works 13.86 11.73 -2.13 -15.3%
Total 66.07 76.48 10.41 15.7%
*Three positions were moved from the City Manager’s Office to the Finance Department
to create an Administrative Services Department in 2017.
$999,787
$1,165,975
$1,202,407
$1,360,393
$1,469,077
$1,335,666 $1,685,621
$1,495,638
$1,340,430
$1,154,621
$1,196,027
$1,060,566
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
Ax
i
s
T
i
t
l
e
06/30/20
13
06/30/20
14
06/30/20
15
06/30/20
16
06/30/20
17
06/30/20
18
06/30/20
19
06/30/20
20
06/30/20
21
06/30/20
22
06/30/20
23
06/30/20
24
GF Transfer $999,78 $1,165,$1,202,$1,360,$1,469,$1,335,$1,685,$1,495,$1,340,$1,154,$1,196,$1,060,
GF Transfer
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Salaries and Wages
The FY 2023/24 forecast for salaries and wages has fully costed for 76.48 Full Time
Equivalents and is in line with the approved Bargaining Agreements and wage increases
for staff. The salaries and wages staff costs for year 2 (FY 2023/24) has been assumed
including a 3% salary increase. The current Bargaining Agreement is due to expire on
June 30, 2025, and the increase in salaries and wages for FY 2024/25 and any years
thereafter will be subject to negotiated amounts in future bargaining agreements.
Traditionally the City has negotiated wage increases commensurate with the Consumer
Price Index (CPI). Salary increases for future years have been assumed at 2.0 percent.
A point of consideration will be the appropriateness of this strategy in the overall desire
to attract and retain employees, while at the same time ensuring the City maintains fiscal
sustainability in providing adjustments above CPI.
Benefit costs (healthcare, vision, dental, and retirement) also comprise total
compensation. Increases in the benefits area are calculated on a proportional scale vis
a vis salaries. This LTFP currently includes increases to benefits totaling 1.5% of total
wage costs.
Police Contract (4% annual increase) - The City contracts with Ventura County Sheriff
Department (VCSD) for police services. VCSD has consistently suggested a 5% increase
on a year-over-year basis to account for salary and overhead cost increases. Typical
HISTORICAL COLA ADJUSTMENTS-MOORPARK
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0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25
Cost of Living Adjustment vs.
Consumer Price Index (LA Area) by Fiscal Year
COLA CPI - LA Mar
10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25
COLA 0.00%0.00%0.00%1.00%1.00%1.00%1.00%2.00%2.00%1.00%0.00%2.00%2.00%7.00 3.00
CPI -LA Mar 1.90%3.00%2.00%1.30%1.00%0.50%1.70%2.70%3.80%2.70%1.90%2.20%8.50%3.70%TBD
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increases over the past 10 years has averaged increases of approximately 4.0%. In FY
2022/23, the costs for police services exceeded $8M for the first time in the City’s history.
Improvements/Infrastructure Investment
The City of Moorpark is responsible for the management, operation, and maintenance of
a diverse asset portfolio that provides services and facilities for our community. Council
has historically preferred to purchase capital expenditure items on cash basis, limiting the
use of debt service.
Investments in infrastructure assets are normally captured through overhead allocation
methodologies to cover expenses for replacement of building fixtures, information
technology, and vehicle replacement. Underfunding of these activities leads to excessive
single-year outlay to cover costs, rather than sinking these expenses overtime.
The largest capital asset owned by the City is its streets and roadway network. In October
2023 the City Council adopted a Pavement Management Program and Pavement
Rehabilitation Plan, which valued these assets at $99.6M.
The report provided a budget-based model and pavement preservation scenario for the
next five years based on pavement conditions determined from March 2022. The
“Moorpark Budget” which was used as a funding model for the Pavement Management
Program was based on a pavement preservation budget of $800,000 per year, which
correlates with the funding received from the Local Streets and Roads Funding Program.
For FY 2022/23, the City received $785,353 from the Local Streets and Roads Funding
Program.
Public Safety Costs Trend
75/23 /2022
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The Budget Scenarios contained in the Plan detailed various funding scenarios:
•An investment of $800,000/year (“Moorpark Budget”): overall PCI drops from 68
to 67, backlog increases from 3% to 10%;
•An investment of $960,000/year: (“Steady state PCI”) of 68, backlog increases
from 3% to 10%;
•An investment of $1,000,000/year: (“Recommended Budget”) PCI increases to 69,
backlog increase from 3% to 10%;
•An investment of $1,560,000/year: (“Target PCI”) raises theoretical target PCI to
72, backlog increases from 3% to 9%; and,
•An investment of $5,600,000/year: (“Fix All Budget”) PCI increases to 81,
maintains backlog condition at 3%.
Like many cities across the country, funding for maintenance of the City’s roadway
network is insufficient to meet the needs of the City. The primary source of funding for
the maintenance of streets and roads is from Gas Taxes. Due to limited funds available
from the Local Streets and Roads program, should the Council desire to enhance its
roadway/sidewalk network, additional general fund dollars are needed to augment Local
Streets and Road program dollars. As indicated in the Pavement Management Report
and the above graph, the City would need to provide $38.4M per year over the next 5
years to fully improve all deficiencies on local streets and roads. No additional general
fund dollars are included in the LTFP for these improvements.
When all the assumptions are aggregated using actuals from FY 2021/22 as a base year
and are extrapolated out 10 years, the model calculates anticipated revenues and
expenditures based on historical levels of growth. The results of the straight-line
projections of the LTFP are graphically depicted below. Presuming the assumptions
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manifest themselves over the next 10 years as projected in the LTFP, in FY 2025/26 the
City’s expenditures will exceed resources resulting in an ongoing structural deficit for the
City. As previously mentioned, the model presumes no service augmentations or
investments in infrastructure or other capital assets of the City.
Results: Long Term Financial Plan - Unadjusted
The LTFP serves as a powerful planning tool and can project the financial impacts using
many assumptions. Ultimately, the City Council has within its authority the ability to
influence the LTFP through expenditure control and/or revenue enhancement
opportunities. Assuming the aforementioned context previously described, expenditures
will continue to increase due to a number of uncontrollable expenses related to personnel
such as health care and retirement costs. The implementation of the Public Employee
Pension Reform Act has played a significant role in containing ongoing retirement costs
from rising at the levels seen previously in the state.
Graph 1 – No adjustments
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Scenario 1: Expenditure Reduction
As a contract City, many city services available to residents and businesses are offered
by contractors. The City contracts for Building & Safety, police services, engineering,
plan check/review, tree trimming, streetlight maintenance, landscaping and park
maintenance, and many more. A core number of employees provide parks and
recreation, animal/vector control, and administration. Finance, Human Resources, and
Information Systems make up the core of support services for City staff. This “contract”
model provides flexibility for the City to provide services as revenue trends change over
time. During periods of prosperity when service demands are high for development and
other contracted services, additional contractors are used to provide timely services.
Conversely, during periods of austerity contracted services can be reduced to align
expenses with available resources.
This is important in the context of expenditure reductions that can be made by existing
City staff. To reduce costs for City-related activities, expenditure reductions in programs
and other challenging options exist. While these options are available, they are used in
worst-case scenarios and result in staff impacts and services reductions for the
community. Some options include: freezes on travel/training, wage increases, specialty
programs intended to attract and retain employees, vacation cash outs, non-backfilling of
vacant positions, furloughs and ultimately layoffs are some of the options available. While
it is possible to meet short term financial needs through expenditure holds and reductions,
long-term structural deficits require both expenditure reduction and revenue
enhancements.
Ultimately, while cost-containment is a viable short-term approach toward fiscal
sustainability, cost escalation usually outpaces revenue growth. Cutting expenditures will
buoy the organization for unanticipated revenue declines resulting from cyclical economic
factors; however, inflation, unemployment, interest rates, consumer confidence, and
other economic factors will result in price escalation for the City.
Further, maintaining service levels are important values for the community. As noted in
each of the last two biannual community surveys, residents note their affinity for local
property values. By keeping our City safe, clean, and well-maintained, we can help
protect our local property values. Further, the Ventura County Sheriff’s Office has
diligently kept our City safe while keeping costs low. In fact, Moorpark has the lowest
public safety costs per capita in the area; however, police and emergency response costs
are beginning to rise. We need additional funds to maintain the same level of police
service our residents expect and deserve.
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Graph 2 – 15% Salary Reduction in FY 2027/28
Revenue Enhancement Opportunities
In addition to fees for services, as noted the City receives revenues through sales and
property taxes. These are two major funding sources for the City. The below charts
illustrate and analyze the impact of various revenue enhancements from sales tax
enhancements, growth in property taxes borne from increased total Assessed Valuation
of the City through new development and attraction of high-sales tax businesses which
generate more than $1M per year.
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Scenario 2: ¼ Cent Sales Tax Enhancement
Base Year: $1.433M in FY 2027/28
The following model presumes the implementation of a ¼ cent sales tax enhancement on
sales transactions in the City. The City’s current sales tax rate is 7.25% on all taxable
transactions. Enhancing this amount by 0.25% yields an estimated $1.6M per year into
the General Fund. The resulting financial impact is depicted below:
Graph 3 – ¼ Cent Sales Tax Enhancement (FY 2026/27)
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Scenario 3: ½ Cent Sales Tax Enhancement
Base Year: $2.86M in FY 2027/28
The following model presumes the implementation of a ½ cent sales tax enhancement on
sales transactions in the City. The City’s current sales tax rate is 7.25% on all taxable
transactions. Enhancing this amount by 0.50% yields an estimated $2.86M per year into
the General Fund. The resulting financial impact is depicted below:
Graph 4 – ½ Cent Sales Tax
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Scenario 4: Increase in Assessed Valuation/Property Taxes
Base Year: $100M Additional Valuation Added Per Year Beginning in FY 2027/28
When new development occurs land values are reassessed to capture higher values
resulting from development of the property. Resident growth is underway in the City with many legacy projects now under construction. The actual amount of new revenues
resulting from changes in assessed valuation (AV) is difficult to project due to the valuation process which is undertaken by the Ventura County Assessor’s Office. While
some predictability is attainable by extrapolating the City’s portion of the property tax from land improvements, changes to land valuation without improvements is more challenging.
Given the level of development currently underway and projected development values which may be occurring later, some conservative assumptions can be presumed relative
to property value. The following models project an infusion of an additional $800,000 in property tax revenue – in addition to annual assumed property tax increases of 2% per year – occurring each year beginning in FY 2027/28. Development of land is speculative
and closed tied to broader economic indicators such as interest rates, construction costs, regulatory processes, local political will and more. The below illustration represents an
ongoing increase in overall AV from an injection of $800M in improvements, beginning in FY 2027/28.
Graph 5 – Growth in Assessed Valuation
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Scenario 5: High Sales Tax Business ($1M per year)
Base Year: 2027/28
High sales tax providers can generate substantial revenues for a local jurisdiction. As
sales become more centralized – meaning multiple goods or unique goods can be
obtained from a sole source – cities benefit by having unique sales transactional type
uses within their community. Some of the types of businesses that generate high sales
taxes are auto dealers, fulfillment centers, cannabis dispensaries, high-end specialty
stores, and hotels. Actual sales taxes from all retailers are dependent on inventory, retail
square footage, and actual receipts from taxable transactions.
Graph 6 – High Sales Tax Producer in FY 2026/27
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CONCLUDING COMMENTS
The City is currently in good fiscal health with a balanced budget in FY 2023/24. Strong
City Council leadership and staff management combined with sound financial and reserve
policies have enabled the City to weather economic downturns with minimal impact on
public services. The City’s investments in maintenance for the community will present
unique challenges that the City has not faced during the past 40 years. Slow population
growth, slow economic growth, and a shifting focus from new development to
rehabilitation of existing development all combine to lead to a slower growth in revenue
over the next 10 fiscal years than the City has experienced in the past. Although the
General Fund is projected to maintain a positive fund balance throughout the duration of
the Plan years, it is nonetheless projected to draw upon fund balance beginning in FY
2025/26 in order to meet operating and capital requirements of existing services and
programs. However, no capacity exists for the General Fund to support new or additional
services such as public safety augmentations and programs that have historically been
supported with non-General Fund revenue such as streets and roads. The draw down
upon fund balance also impacts the reserve available for capital projects. Although not
projected in this Plan, further cuts, or takeaways by the federal, state, or county
government would significantly strain the City’s ability to provide outstanding services to
residents.
ENVIRONMENTAL DETERMINATION
This action is exempt from the California Environmental Quality Act (CEQA) as it does
not constitute a project, as defined by Section 15378 of the State CEQA Guidelines.
Therefore, no environmental review is required.
FISCAL IMPACT
There is no direct impact associated with the approval of the proposed City of Moorpark
Long-term Financial Plan.
COUNCIL GOAL COMPLIANCE
This action is consistent with City Council Goal 1, Objective 1.1: “Public Safety Model”
and Goal 3, Objective 3.5: “Financial Sustainability.”
STAFF RECOMMENDATION
Receive and file the City of Moorpark’s Long-term Financial Plan.
Attachment: General Fund Summary
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ATTACHMENT
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