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2007/ 08 Adopted Operating Budget
City Council
BobWasserman, Mayor
BobWieckowski, Vice Mayor
Steve Cho, Councilmember
Anu Natarajan, Councilmember
Bill Harrison, Councilmember
City Executive Staff
Fred Diaz, City Manager
Harvey E. Levine, CityAttorney
Christine Daniel, Deputy CityManager
Melissa Stevenson Dile, Deputy CityManager
DawnAbrahamson, City Clerk
NancyCarlson, Human Resources Director
Harriet Commons, Finance Director
Marilyn Crane, Information Technology Services Director
Daren Fields, Economic Development Director
Annabell Holland, Parks & Recreation Director
NormHughes, City Engineer
Jill Keimach, Community Development Director
BruceMartin, Fire Chief
Jim Pierson, Transportation & Operations Director
Jeff Schwob, Planning Director
Suzanne Shenfil, Human Services Director
Craig Steckler, Chief of Police
Elisa Tierney, Housing and Redevelopment Director
Budget Team
Catherine Chevalier, BudgetManager
Ray Durant, Assistant Finance Director
ChunChan, ManagementAnalyst II
Tricia Fan, SeniorAccountant
Elisa Chang, ExecutiveAssistant/ GraphicArtist
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Department Budget
Coordinators
Susan Aro
Arquimides Caldera
CharlieCaulfield
SylviaDelaney
Irene Klebanivska
Sarah Madden
Budget and Accounting
Services Staff
Corina Campbell
Gloria I. del Rosario
Tricia Fan
Krysten Lee
TishSaini
Ellen Zhou
Monica Pinto
Cheryl Renaud
Kelly Sessions
Karena Shackelford
LoriTaylor
MayaWilliams
The Government Finance Officers Association of
the United States and Canada ( GFOA)
presented an award for Distinguished
Presentation to the City of Fremont for
its annual budget for the fiscal year
beginning July 1, 2006.
In order to receive this award,
a governmental unit must
publish a budget document
that meets program criteria
as a policy document, as an
operations guide, as a
financial plan and as a
communications device.
The award is valid for a
period of one year only. This
is the ninth consecutive year
theCity has earned the award.
We believe our current budget
continues to conformto program
requirements.
Acknowledgments
Putting together a budget requires a great deal of effort from many people.
The City Manager and Budget Team would like to thank the Budget and
Accounting Services Staff, Department Budget Coordinators and others
for their invaluable assistance:
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Guide to the Document
 Table of Contents ............................................................................... 3
 Guide to the Document ....................................................................... 5
Budget Overview
 Budget Overview ............................................................................... 7
Summary Information
 CitywideOrganization Chart ............................................................ 19
 City of Fremont Profile ..................................................................... 21
 All City Funds Schedule ................................................................... 25
 Citywide Position Changes ............................................................... 27
 City Debt Summary .......................................................................... 29
 GannLimit ........................................................................................ 33
 Citywide Goals andObjectives ......................................................... 35
General Fund
 General Fund Summary .................................................................... 41
 Fund Revenues ................................................................................. 59
 Forecast ............................................................................................ 73
 Transfer Detail ................................................................................. 74
 Historical Comparison ...................................................................... 75
Other Funds
 Other Funds ...................................................................................... 77
 Cost Centers & Internal Service Funds ........................................... 79
 Special Revenue Funds .................................................................... 85
 RedevelopmentAgency Funds ......................................................... 91
 Capital Funds .................................................................................... 95
Capital Budget Summary
 Capital Budget Summary .................................................................. 99
Department Budgets
 CityCouncil .................................................................................... 113
 CommunityDevelopment ............................................................... 115
 EconomicDevelopment .................................................................. 121
 Fire ................................................................................................. 125
 Housing& Redevelopment ............................................................ 131
• RedevelopmentAgency Project Highlights ............................... 134
Table of
Contents
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 Human Services ............................................................................. 139
 Parks & Recreation........................................................................ 145
 Police .............................................................................................. 149
 Transportation and Operations........................................................ 155
 AdministrativeDepartments ........................................................... 161
• CityManager ............................................................................. 165
• CityAttorney ............................................................................. 167
• CityClerk .................................................................................. 171
• Finance ...................................................................................... 173
• Human Resources ..................................................................... 175
• InformationTechnology Services .............................................. 177
Staffing
 Permanent Position Summary ........................................................ 179
Policies & Glossary
• Policies and Practices ................................................................ 187
• Glossary of Budget Terms ......................................................... 207
Resolutions
• City of Fremont BudgetAdoption Resolution ............................ 213
• Appropriations Limit Resolution ................................................ 217
• Fremont RedevelopmentAgency Budget Resolution ................ 219
Table of Contents
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Guide to the
Document
The budget is both a spending plan for theCity’s available financial resources
and the legal authority for City departments to spend the resources for
public purposes. Through these resources, services are provided to meet
the needs of Fremont residents. The City Council and City staff respond to
the community’s needs in part through the budget. It balances not only
revenues and costs, but also community priorities and interests.
Document Organization
Budget Overview
The CityManager’s BudgetOverviewsets the context for budget decisions
by describing community and economic conditions affecting the budget. It
outlinesmajor initiatives underway and opportunities and challenges for the
coming year.
Summary Information
This section of the document presents an overall picture of the City and the
budget. It includes a description of the community, an organization chart,
summary financial tables, a summary of Citywide staffing changes
associated with the budget, and documentation of the City’s compliance
with State statutes and City policies regarding total expenditures and debt.
The section also presents a summary of departmental special projects in a
table that shows projects’ alignmentwith Citywide goals.
General Fund
Local government budgets are organized by funds in order to segregate
and account for restricted resources. Each fund is a separate accounting
entity. The General Fund provides the majority of resources for most of
the services cities typically provide, including the public safety, maintenance,
and general government functions required to support direct services to the
community. This section provides an analytical overview of the General
Fund for the budget year. This section also places the budget in context
with the financial forecast and provides a five- year historical review of
General Fund sources and uses.
Other Funds
The Other Funds section contains information regarding non- General Fund
sources of revenue. These funds are grouped into Cost Centers and Internal
Service, Special Revenue, RedevelopmentAgency, and Capital categories.
Internal Service funds are described in governmental accounting literature
as “ proprietary funds.” Special Revenue funds ( which include the Cost
Center funds) andCapital funds are grouped in the literaturewith theGeneral
Fund and debt service funds and are described as “ governmental funds.”
The distinction between how the budgeted resources are accounted for in
proprietary funds as compared to governmental funds is discussed in the
“ Basis of Budgetary Accounting” located in the Policies and Practices
section of the document. Adescription and financial summary is provided
for each category of Other Funds within the budget.
Capital Budget Summary
The Capital Improvement Program( CIP) is adopted biannually and includes
appropriations for projects for FiscalYears 2007/ 08 and 2008/ 09. Selected
excerpts from the Plan are included with the operating budget to present a
City of Fremont 2007/ 08 Adopted Operating Budget
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Guide to the Document
comprehensive picture of all the funds of theCity and to reflect fund transfers
approved between other operating funds and capital funds. This section
contains a description of theCIP funds, a summary of approved expenditures
by program category, and highlights of key projects for the current fiscal
year.
Department Budgets
Themajority of the budget document presents information on departmental
budgets. Each departmental section provides the following information:
 Department Mission Statement
 Description of Responsibilities and Services - The purpose of this
paragraph is to give the reader an understanding of the scope and
breadth of each service area’s ongoing functions and responsibilities.
 Special Projects - A list of significant departmental projects aligned
with the City Council’s goals.
 Sources of Funding - This information is in graphic formand illustrates
the funds from which departments receive financial resources.
Interfund transfers ( to the General Fund) cover administrative
department costs that are not funded by the General Fund. This
contribution is shown on the charts as “ overhead charges to other funds.”
 Expenditure Summary - This table provides the salary and benefits,
operating, and capital costs associatedwith the department for the fiscal
year. It also provides historical information and trends of previous
funding levels.
 MajorBudget Changes - Adescription of themajor budget changes is
included that compares the previous year’s budget with that for the
current year.
 Staffing - Ahistorical staffing graph shows the level of staffing for each
area. In addition, an organization chart displays individual positions
and titles.
Departments comprised of mulitiple, discrete service areas also present a
table summarizing their activities by those major service areas.
Staffing
This section contains a summary of authorized positions by department and
provides perspective on workforce trends.
Policies
This section details the City’s budget and financial policies.
Resolutions
This section contains resolutions approving and adopting the City budget,
theRedevelopmentAgency budget, and the appropriation limit for the fiscal
year.
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Budget Overview Honorable Mayor and Members of the City Council:
Executive Summary
When Fremont incorporated on January 23, 1956, it was a small town of
22,500 people, filled with dairy farms, apricot orchards, and cauliflower
fields. Today, Fremont is the fourth largest city in the Bay Area, and
fourteenth largest in California. With a diverse population of over 210,000,
Fremont is home to high- tech and bio- tech companies, top- notch schools,
acres of parks and open space, and local leaders committed to ensuring
Fremont’s bright future. The community celebrated 50 years of incorporation
in 2006, which provided an opportunity to look back on and celebrate our
rich heritage and all the community has accomplished. It was also an
excellent opportunity to look forward and plan for stillmore change, while
also retaining those qualities that make Fremont the special place it is.
The celebration of Fremont’s 50thAnniversary, led by theCelebrate Fremont
organization in collaboration with the City, is summed up by their vision
statement, “ Creating a legacy for tomorrow by cherishing our past
and connecting with our present.” There were a multitude of events in
2006 – celebrations throughout the year, planned and delivered by community
volunteers working in concert with City staff. The celebration began in
Januarywith a gala under a massive tent in Central Park and culminated in
a two- day September celebration, “ Celebrate Fremont @ the Park.”
Celebrate Fremont brought Fremont’s richly diverse community together,
and the resultswere spectacular as events unified the community, embraced
its rich cultural and historic diversity, and encouraged unprecedented
volunteerism.
With the 50th Anniversary celebration behind us, we now need to look
forward and need to plan for stillmore change. Likemany cities inCalifornia,
the City of Fremont continues to face an uncertain economic future. Years
of State takeaways of City dollars, coupled with a serious recession in the
early years of this decade, have taken their toll on the City’s finances, and
on the organization and the community. The City was fiscally responsible
Hands around the lake at the 50th Anniversary Celebration
Photo courtesy of The Argus
City of Fremont 2007/ 08Adopted Operating Budget
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BudgetOverview
during those difficult times by reducing spending throughout the organization
and by focusing on attracting and retaining retail businesses in order to
increase revenue.
Several years ago, the City cut costs by more than 25% and reduced staff
by more than 220 positions. Over the past year, we have finally begun to
see some modest improvement in our revenues, and we believe we can
prudently begin to address some of the critical public safety andmaintenance
issues that resulted from the severe reductions in FY 2002/ 03. Although
we may never be able to restore all of the services that were cut, we are
recommending some modest additions to the FY2007/ 08 budget, thanks in
part to improving revenues and the receipt of a five- year $ 1million Staffing
forAdequate Fire and EmergencyResponse ( SAFER) Grant from the U. S.
Department of Homeland Security. This grant will allow us to hire 10 new
fire fighters who will ultimately staff the new Fire Station 11 on the west
side of town. In addition, because of our modestly improving economic
picture, we are able to end the rotating fire station closures, we can add
eight new police staff, and we can provide some much- needed additional
funding for street maintenance.
The FY2007/ 08 budgetmaintains the City Council’s long- standing funding
priorities by allocating almost two- thirds of the budget to direct costs for
public safety and maintenance. The share of General Fund resources
budgeted for these purposes is actually 87% when overhead costs required
to support these functions are allocated. The FY2007/ 08 budget continues
most of the service reductions implemented since FY 2002/ 03, with the
exception of some much- needed additions to public safety staffing and an
additional one- time allocation for streetmaintenance.
Total budgeted resources will be adequate to support total budgeted
expenditures of $ 147.2million, so the budget is considered to be balanced.
Property taxes are expected to remain the City’s largest revenue source in
FY 2007/ 08. Despite the decline in other major revenues since the peak
year of FY2000/ 01, property tax revenues have remained strong. Although
the real estate market is beginning to slow down, compared to the vigorous
sales activity experienced in the past couple of years, property tax revenues
the Citywill receive in FY2007/ 08 are based on property assessed valuation
as of January 1, 2007, which reflects continued valuation strength.
Therefore, property tax revenues are projected to grow in FY 2007/ 08 to
$ 48.2million.
In contrast to the consistently strong trend for property tax, sales tax trends
are emblematic of the City’s revenue volatility. After reaching a high point
of $ 33.2 million in FY 2000/ 01, sales tax revenues endured a multi- year
decline to a low point of $ 26.8 million in FY 2003/ 04. The steep drop was
caused by the collapse of the SiliconValley technologymarket and Fremont’s
reliance on sales tax from high- tech manufacturers. Sales tax from the
high- tech sector nowappears to be stabilizing. In addition, the City’s efforts
to diversify and strengthen the sales tax base by increasing the consumer
retail sales and auto sales tax bases are beginning to pay off. Our revenue
City of Fremont 2007/ 08Adopted Operating Budget
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BudgetOverview
projections assume that sales tax revenues will grow modestly for
FY 2007/ 08, to $ 36.7 million ( including the “ triple flip” property tax
replacement for one- quarter of our sales tax).
If, in a given year, total resources available exceed total uses, the “ surplus”
increases fund balance. Fund balance has been a crucial resource for
cushioning the City’s transition to a lower revenue base in recent years.
Instead of spending all of the revenue received during the “ boom” years of
the late 1990s, the City set aside a portion of annual revenues in fund
balance for use in future years. When revenues dropped suddenly during
FY 2001/ 02 and the City anticipated a year- end budget shortfall, the City
used $ 10 million of fund balance to balance the budget. If fund balance had
not been available, the Citywould have had to use reserve funds or suddenly
cut services, through staffing layoffs, to end the year in financial balance.
In FY 2006/ 07, the City is expecting to add $ 3.2 million to fund balance.
This will result in undesignated fund balance of $ 9.3million with which to
begin FY 2007/ 08. Of this amount, $ 5.8 million is expected to be used to
help balance the budget, add some critically needed public safety staffing,
and make an additional contribution for maintenance of the City’s streets.
The key assumptions in the FY 2007/ 08 budget are as follows:
1. Despite mixed signals, Fremont’s economy will continue to enjoy
modest growth during FY2007/ 08, enablingGeneral Fund resources
to increase by approximately 6%.
2. City efforts at managing through the downturn, combined with
modestly improving revenues, now mean that rotating fire station
closures can end, 18 additional public safety staff can be added,
and a one- time contribution of $ 1.5 million for backlogged street
maintenance will bemade in FY 2007/ 08.
3. In response to a change in accounting and financial reporting rules
for retiree medical costs, $ 2.3 million will be set aside, contingent
on positive results at themid- year budget review, to begin funding
this obligation on an actuarial basis.
4. Cash in the amount of $ 2.8 million will be transferred to the Risk
Management Fund in exchange for land of that same value held by
that fund, contingent on positive results at the mid- year budget
review.
5. As a result of adding both ongoing and one- time expenditures to the
FY 2007/ 08 budget, costs will exceed projected revenues by
$ 5.8 million, requiring the use of a portion of undesignated fund
balance to balance the budget. The use of fund balance allows the
City to address critical community service needs earlier thanwould
otherwise be the case. We expect revenues to exceed expenditures
in FY 2008/ 09.
City of Fremont 2007/ 08Adopted Operating Budget
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BudgetOverview
In addition to the 18 newpublic safety positions in the General Fund, there
are other staffing changes in the organization. The total authorized staffing
Citywide is increasing from 884.17 fulltime equivalent positions ( FTEs) in
FY 2006/ 07 to 912.12 FTEs in FY 2007/ 08, an increase of 27.95 FTEs.
The balance of the increase consists of some new positions in other funds
that are grant- or fee- funded ( 5 FTEs), and some temporary positions that
have been converted to regular positions. This is a continuation of services
the City has been providing, and these 8.2 FTEs reflect that continuity.
These increases are partially offset with some position eliminations
( 3.25 FTEs). This net addition of 9.95 FTEs in other funds will have no
impact on the General Fund.
Major City Initiatives
Capitol Avenue/ Mixed- Use Retail Project: The Capitol Avenue project
is an exciting, retail- focused, mixed- use development thatwill be a catalyst
project for further development of the City’s Downtown. The project is
proposed to include the extension of CapitolAvenue to Fremont Boulevard
and will encompass portions of Fremont Plaza, as well as the City’s seven-acre
property adjacent to State Street.
The City has partneredwith the
owners of Fremont Plaza and
Blake Hunt Ventures to
develop ground- level shops and
restaurants along the new
extension of Capitol Avenue,
and residential units located
above the retail. Parking is
designed to be located in
structures behind the retail and
residential components. The
retail componentwill be focused on providing aMain Street- style, pedestrian-friendly
upscale retail environmentwith a large public plaza in themiddle of
CapitolAvenue to provide a focal point for a diverse array of programming
and public events. Staff will continue negotiations with the City’s
development partners over the next year, concluding with bringing a
development agreement to the Council for consideration.
Pacific Commons: Pacific Commons is an 880,000- square foot retail
center located at I- 880 and
Auto Mall Parkway. The first
stores at Pacific Commons
opened in October 2004, and
the center has thrived ever
since, bringing in additional
sales tax dollars. Some of the
businesses at PacificCommons
includeCostco, Lowe’s, Circuit
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BudgetOverview
City, Bassett Furniture, Kohl’s, and Old Navy. Restaurants include Claim
Jumper, PF Chang’s China Bistro, Panera Bread, and In- N- Out Burger.
Additional storeswill be opening inmid- late 2007 as the last phase of Pacific
Commons is completed.
The nearby Fremont Auto Mall has also proven to be a success. During
the past year, a new Land Rover/ Volvo/ Jaguar dealership and Nissan
dealership opened. Magnussen Lexus moved to a new, larger location
within theAutoMall, and the Toyota dealership is also undergoing amajor
expansion.
Biotech: Fremont’s biotech andmedical device industry cluster continues
to develop. Amgen, the world’s largest biotechnology company, purchased
Fremont- based Abgenix last year and will soon be expanding their
manufacturing facilities in Fremont. Boston Scientific renewed and
increased their lease holdings to five buildings. In addition to these two
large expansions, Fremont also had other transitions. Protein Design Labs
and Scioswill bemoving, leaving behind significant available space thatwill
be a priority for Economic Development staff to re- tenant. While some
larger firms outgrew their space, small to mid- size life science firms are
still interested in Fremont and staff continues to meet with potential
businesses and market local
sites. The Ardenwood
business district, in particular,
will continue to be a regional
focus of the life sciences
industry due to the purchase
of the former Sun
Microsystems campus in
Newark ( across Route 84
from Ardenwood) and its
conversion to the Pacific
Research Center.
Major League Baseball: The Oakland Athletics baseball team currently
resides inMcAfee Coliseumin Oakland. The owner of theA’s, LewWolff,
has for some time expressed his discontent with the current stadium,
particularly in terms of its size and having to share the playing field with a
major league football team.
In June 2005, the City of Fremont expressed its interest in workingwith the
A’s should a viableOakland location not become available, and in an attempt
to provide an alternative site in order to keep the A’s in the East Bay.
Subsequently, theA’s expressed interest in a large vacant parcel leased by
Cisco Systems fromProLogis ( formerlyCatellusDevelopment Corporation)
at Pacific Commons. Throughout a large portion of 2006, theA’s were in
discussions with Cisco Systems regarding the potential re- use of the Cisco
site in Fremont. In November 2006, theA’s and Cisco Systems announced
a deal for the property, along with baseball stadium naming rights.
City of Fremont 2007/ 08Adopted Operating Budget
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BudgetOverview
A’s owner LewWolff introduced himself and his proposed BallparkVillage
concept to the Fremont community and City Council at a January 2007 City
Council work session. TheA’s are still in discussions with Cisco Systems
and ProLogis to complete the private transactions necessary to begin the
process of development. Once those are finalized, we expect to receive a
development ( land use) application, which would be the first step in a
thorough public review process to analyze the Ballpark Village concept.
That review process would include environmental and traffic studies, as
well as numerous public hearings before both the Planning Commission
and the City Council.
General Plan Update: State law requires cities to adopt a comprehensive
General Plan, which serves as the basis for all future development decisions
in the community. In FY2006/ 07, theCity launched an update to itsGeneral
Plan, which was last comprehensively rewritten in 1991.
To kick off that effort, thousands of communitymembers visited theGeneral
Plan tent at the Celebrate Fremont event in Central Park to learn about the
update process and to weigh in on Fremont’s future. Subsequently, the
City Council and the Planning Commission held a series of joint study
sessions on community planning and design, and staff initiated a series of
technical studies that will feed into the Plan. In addition, a group of
volunteers worked with City staff to devise a strategy for community
involvement – an important aspect of the update process.
In FY 2007/ 08, the General Plan update process will continue in earnest,
with extensive community input and a visioning process, completion of
technical studies, and continued meetings with the City Council and City
Boards and Commissions. Completion of a draftGeneral Plan is anticipated
in mid 2008, with adoption of a final plan slated for mid 2009.
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BudgetOverview
Redevelopment: There are a number of exciting redevelopment projects
underway. All of these projects will help revitalize the Redevelopment
Project Areas and bring new revenue into Fremont.
Centerville: One of the largest projects underway in the Centerville district
is the Agency- owned Centerville Unified Site, located on a 6.6- acre site
along Fremont Boulevard near Thornton Avenue. This year the Agency
anticipates selecting a developer for the site, negotiating a disposition and
development agreement, and commencing the entitlement process for a
new development. This development will be a public/ private partnership
between the selected developer and the Redevelopment Agency, focused
on creating a mix of uses and architectural design consistent with the
character of Centerville.
A new project in the Centerville area is the exploration of recreational
facilities ( indoor aswell as outdoor) for City- owned property and buildings
at Dusterberry and Peralta. This will be a joint partnership between the
Redevelopment Agency and the City’s Parks and Recreation Department.
WorkinFY2007/ 08will focus onfeasibility, includingdeveloping a conceptual
plan and cost estimates for potential building reuse.
Irvington: The Washington Boulevard and Paseo Padre Parkway Grade
Separation is the largest redevelopment project in the Irvington district.
This $ 111 million project, which will build an overpass on Washington
Boulevard and an underpass on Paseo Padre Parkway to separate car,
bicycle, and pedestrian traffic fromrailroad crossings, is described in detail
in the Capital Projects section of this overview.
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BudgetOverview
The Bay Street Streetscape and Parking Project is one of the cornerstones
for Irvington’s revitalization. The project was initiated to transform the
street environment for this three- block stretch of Bay Street to support
existing, and create new, commercial and residentialmixed uses, as well as
to encourage other public and private investments in and around the Five
Corners in Irvington.
Since its original approval in 2004, project implementation has faced some
challenges. As a result, modifications that relocated the public parking lot,
reduced the right- of- way requirements for street improvements, added a
traffic circle for improved circulation, and extended street improvements to
include Papazian Way and Trimboli Way were approved in May 2006.
Staff then secured a
$ 1.57million grant from
the Metropolitan Trans-portationCommission
to
help implement the
modified project.
Construction of the
parking lot is scheduled
for 2007, followed by
utility undergrounding in
2008 and the streetscape
improvements in 2009.
TheRedevelopmentAgency has also beenworkingwith the property owners
of theMonument Center Shopping Center, located on Fremont Boulevard
at the Five Corners intersection. In conjunction with the property owners,
staff will continue to assess private sector interest in development
opportunities for the site.
During FY2007/ 08, staffwill initiate effortswith property owners and local
community members to refine the vision for Main Street. The first steps
for this project include a physical inventory and a land use assessment to
identify opportunities for implementing the Irvington Concept Plan. In
addition, work on the Grimmer Boulevard Greenbelt Gateway project will
begin this year, as described in the Concept Plan. In cooperation with
individual property owners, revitalization efforts in Irvington will continue
to encourage the rehabilitation of buildings, particularly around the Five
Corners area, through theAgency’s Commercial Rehabilitation Program.
In the housing arena, the RedevelopmentAgency provided $ 6.5 million of
affordable housing funds to assist with the financing of Irvington Terrace.
BRIDGE Housing is developing this $ 36 million project, located on the
former Tri- City Patio World site, which will provide 100 affordable
apartments for families and individuals. Construction began in December
2005, and completion is expected in the summer of 2007. Adjacent to
Irvington Terrace, Regis Homes of Northern California is building Park
Lane and ParkLaneWest, a for- sale condominiumand townhome residential
development consisting of 258 market- rate and 25 affordable homes.
City of Fremont 2007/ 08Adopted Operating Budget
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BudgetOverview
Niles: The 138- acre Niles Redevelopment Project Area is located at the
western edge of Niles Canyon, near the intersection of Niles and Mission
Boulevards. For the past several years, Redevelopment Agency staff has
been working with the community on the development of the Niles Town
Plaza.
Located on the north side of Niles Boulevard on an approximately two-acre
portion of the former Union Pacific ( UP) Railyard Property, at H and
I Streets, the $ 4.25 million Town Plaza will consist of landscape
improvements, a fountain, an amphitheater and stage area, and two
rehabilitated historic railroad buildings. Once development is completed,
the plaza will act as an anchor for what will ultimately be a two- storymain
street- style development on the remainder of the former UP property and
two abuttingCity- owned parking lots. The ultimate build- out of this project
will transform Niles Boulevard into a more typical two- sided commercial
street. Environmental remediation of the property is scheduled to begin by
September 2007. The Town Plaza is slated for completion by fall 2008.
In conjunction with the redevelopment of the former UP property and its
environs, theRedevelopmentAgencywill begin the design and development
of a pedestrian link connecting the former UP property and Niles historic
commercial core to the more visible Niles Canyon Railway passenger
boarding/ disembarkation platformandMission Boulevard. The first step in
this project will be selecting the optimal location and type ( e. g., pedestrian
bridge, at- grade railroad crossing) of connection and determining the cost
of construction.
Capital Projects: Despite the challenges in the City’s General Fund, we
continue to work on a variety of major capital projects. These projects can
proceed because they do not rely on the City’s General Fund. Rather, their
funding comes from such sources as redevelopment, traffic impact fees,
State and regional sources, and the Fire SafetyBond ( Measure R) approved
by Fremont voters in 2002.
Grade Separation Project: The $ 111millionWashingtonBoulevard/ Paseo
Padre Parkway Grade Separation Project in the Irvington District is the
largest public works project undertaken in the City’s history. The project
includes building an overpass on Washington Boulevard between Bruce
Drive and Roberts Avenue and an underpass on Paseo Padre Parkway
between Shadowbrooke Common Road and Hancock Drive to separate
car, bicycle, and pedestrian traffic from railroad crossings. The project
also includes the relocation of about one and a half miles of the active
Union Pacific ( UP) railroad tracks up to 500 feet to the east of where they
are now in the area between Paseo Padre Parkway and Washington
Boulevard.
The Grade Separation Project will benefit Fremont in a number of ways.
First, it will facilitate the future BART extension toWarmSprings and San
Jose by allowing the BART trains to travel at grade once they emerge from
City of Fremont 2007/ 08Adopted Operating Budget
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BudgetOverview
underneath Central Park and Lake Elizabeth. Keeping the trains at grade
is both less expensive for BART and less disruptive for residents and
businesses near the BART tracks. Second, the project will improve safety,
reduce traffic delays, and eliminate the need for freight trains to sound
their horns when approaching and crossingWashington Boulevard, High
Street, Main Street and Paseo Padre Parkway ( the train crossings at High
andMain Streets will be eliminated by the relocation of the UP tracks). In
turn, eliminating traffic backups at train crossings will help reduce cut-through
traffic on neighborhood streets and improve safety in the area by
separating pedestrians, bicycles and vehicles from the railroad tracks.
TheGrade Separation Projectwas
originally projected to cost
approximately $ 75 million.
However, escalating construction
and utility relocation costs have
increased the price tag to about
$ 111 million. The City has
committed $ 42.8 million in
redevelopment funds and traffic
impact fees to the project. During
the last year, the City obtained an
additional $ 31 million in State
funding, thereby eliminating the
previous $ 21 million funding gap
and providing sufficient funding for ongoing construction cost increases.
With this additional revenue, theCity has obtainedmore than $ 68million in
outside funding from the State and regional sources like the State Grade
Separation account, Alameda County Congestion Management Agency
( CMA), bridge tolls, the County’s Measure B half- cent sales tax, and a
partnership with BART to bring in State Traffic Congestion Relief funds.
The $ 48.1 million contract was awarded in late March and construction
began inMay. Construction is scheduled to last until late 2010.
Fire Safety Bond Projects: In November 2002, Fremont voters approved
Measure R by 74.4%, thereby authorizing the City to issue $ 51 million in
general obligation bonds, to be repaid by a property tax levy. Proceeds
from these bonds are to be used to replace three fire stations, build a public
safety training center, and make remodeling and seismic improvements to
seven existing fire stations.
To date, $ 35 million in bonds
has been issued, and one of
the new fire stations
( Station 8 in North Fremont)
is complete. This is the first
new fire station to open in
Fremont since the early
1990s. Station 6 inCenterville
is under construction, and
design work for Station 2 in
Niles is underway.
City of Fremont 2007/ 08Adopted Operating Budget
17
Of the stations being remodeled, five of those are complete ( Station 4 at
Pine and Paseo Padre Parkway, Station 5 in Warm Springs, Station 7 at
Grimmer andAutoMall Parkway, Station 9 at Stevenson Place, and Station
10 inArdenwood). The remodel of Station 1 in the Central BusinessDistrict
is nearing completion, leaving Station 3 in Irvington as the last station to be
remodeled. The public safety training center will consist of a Police gun
range and Fire training facilities, both of which are in design.
Conclusion
Fremont has embarked on its second fifty years. It is clear from the success
of Celebrate Fremont that people here care deeply about their community.
Theywant to help, theywant to participate, theywant to maintain Fremont
as a safe place in which to raise their families, and they want to leave a
legacy for future generations. Our role as an organization is to continue to
find effective ways to work with our residents and business community to
ensure that Fremont remains a place that people will want to celebrate now
and in the future.
Fred Diaz
CityManager
City of Fremont 2007/ 08Adopted Operating Budget
18
City of Fremont 2007/ 08Adopted Operating Budget
19
City of Fremont Organization Chart
Fiscal Year 2007/ 08
Fremont Community
City Council
Commissions Boards
City Attorney City Manager
Deputy City
Manager
Community
Development
Deputy City
Manager
Economic
Development
Transportation
& Operations
Police
Fire
Finance
Information
Technology
Services
Human
Resources
City Clerk
Parks &
Recreation
Human
Services
Building &
Safety
Planning
Housing &
Redevelopment
Engineering Maintenance
Operations
Environmental
Services
20
The City of Fremont, fifty years ago ( 1956)
Niles
Irvington
Centerville
Mission San Jose
Warm Springs
City of Fremont 2007/ 08Adopted Operating Budget
21
History
Fremont’s rich heritage can be traced to the Ohlones, natives of the land,
and to the Spanish priestswho establishedMission San Jose, the first Spanish
mission located inland. Since those early days, Fremont’s rich soil, central
location, and excellent climate have continued to attract newcomers to this
area. In the mid- 1840s, John C. Frémont mapped a trail through Mission
Pass to provide access for American settlers into the southeastern San
Francisco BayArea. During the Gold Rush era, theMission area attracted
miners headed for the California gold fields. Governor Leland Stanford
acquired land in the Warm Springs area, where he planted vineyards and
built one of the first wineries in the state. The Niles district made history
when the last tracks needed to connect the transcontinental railroad were
laid there. Further acclaim came to Niles when Charlie Chaplin filmed
“ The Tramp” at the Essanay Movie Studio there. In 1853, Washington
Township was established and included the communities of Mission San
Jose, Centerville, Niles, Irvington, andWarmSprings. On January 23, 1956,
these communities joined to formthe City of Fremont.
Quality of Life
Fremont, located in southern Alameda County,
stretches from the San Francisco Bay to the top
of Mission Peak above historic Mission San Jose
in the east. With a population of over 210,000,
Fremont is the fourth largest city in the San
FranciscoBayArea and ranks 91st among themost
populous cities in the nation according to the
California State Department of Finance. Fremont
is approximately 92 square miles in size and
includes the 450- acre Central Park and 80- acre
Lake Elizabeth, along with 51 other parks, five
community centers, and extensive sports facilities.
Fremont is also home to the Don Edwards San
Francisco BayNationalWildlife Refuge, adjacent
to Coyote Hills Regional Park.
Fremont enjoys a high rate of home ownership, a
low crime rate, and a quality of life that is considered to be one of the best
in the United States. For example, Fremont was rated as the best place in
which to raise healthy children in the nation, and Men’s Health magazine
rated Fremont # 1 in the nation for men’s health. Fremont residents can
expect a first- rate menu of local services, including a highly rated public
education system, excellent public safety program, and recreation, park,
and other leisure activities. In addition to beautiful parks and extensive
recreational facilities, Fremont is easily accessible to three international
airports, severalmajor educational institutions, the BayArea Rapid Transit
system, and professional sports and cultural opportunities. Fremont is also
home toWashington Hospital, a community asset for over 50 years.
City of Fremont
Profile
City of Fremont 2007/ 08Adopted Operating Budget
22
Profile
Government
Incorporated January 23, 1956
Fremont is a General Law Council/
Manager City governed by a five-member
City Council with a directly
elected Mayor, all elected at large.
Number of directly elected Mayors
( since 1978): 5
Number of City Managers since
Incorporation: 7
Full- time Employees
FY 2007/ 081
CommunityDevelopment....... 108.30
Economic Development .......... 4.69
Fire………………............... 161.00
General Government…...…. 87.40
Human Services...….......….. 52.32
Transportation& Operations.... 116.15
Police………………….....… 302.00
Parks and Recreation……..... 67.35
Housing & Redevelopment...... 12.91
Total……………............... 912.12
Demographics
Land Area: 92 square miles
Population
1956…………...…………… 22,443
1960………….………..…… 43,634
1970………….….……..…. 102,321
1980…………...………….. 127,454
1990……………...……….. 173,116
2000………....……………. 203,413
20062 ................................... 210,158
Climate3
Average Temperature: 59oF ( 15oC)
Avg. Annual Precipitation: 13.6”
Level of Educational Attainment
of people 25 years and older4
College Degree……………… 43%
Associate Degree............…… 8%
Some College, no Degree…… 20%
High School Graduate……… 17%
Grades 9- 12 ( No Diploma)...… 7%
Less than 9th Grade………….. 5%
Median Age4: 35
Mean Household Income
( 2007 projection) 5: $ 115,100
Racial Composition4
Asian..........................…… 49.8%
African- American………….... 2.1%
White…...................……... 33.9%
Othe r….. . .. . .. . .. .. . .. . ..……. .11.7%
Two or more....................……... 2.5%
( Hispanic/ Latino may be of any race)
Business
Major Employers, listed in order of
number of employees6
New United Motor Mfg. ( NUMMI)
Fremont Unified School District ( FUSD)
WashingtonHospital
Lam Research Corporation
Boston Scientific/ Target
WesternDigital
AXT Incorporated
City of Fremont
Office Depot
OplinkCommunications
Avanex
Solectron California Corp./ Fine Pitch
Sysco Food Services
Kaiser Permanente Medical Group
Protein Design Labs
Flash Electronics
Intervideo
Sanmina- SCI
Hewlett Packard
Therma Wave Inc.
Distribution of jobs by major employment
sectors ( 2007 projection) 5
Agriculture/ Nat. Resources……... 0.1%
Manufac./ Wholesale/ Trans.……. 40.4%
Retail………………………..... 9.8%
Financial/ Prof. Service................. 16.7%
Health/ Ed./ Recreation.…………. 22.9%
Other……………. ... ... ... ..… 10.1%
Total Jobs…………............… 93,950
City of Fremont 2007/ 08Adopted Operating Budget
23
Profile
Services by Other
Governmental Units
Education: Fremont Unified School
District and Fremont- Newark
CommunityCollegeDistrict
Flood: Alameda County Flood
Control andWater Conservation
District
Parks: East Bay Regional Park
District
Public Transportation: Bay Area
Rapid Transit District, Alameda-
Contra Costa Transit District, ACE
Train, and Capitol Corridor Train
Sewer: Union Sanitary District
Gas and Electricity: Pacific Gas and
Electric
Water: Alameda County Water
District
Education
Fremont Unified School District
( FUSD) has 29 elementary
schools, 5 junior high schools, 5
high schools and a continuation
school.
FUSD Average SAT Score7: 1694
Percentage of FUSD graduates
attending8:
University of California: 19.0%
California State University: 15.0%
Ohlone College is a public, two-year,
open- admission community
college with an average
enrollment of 12,650 students per
semester. 9
Notes
1 FY2007/ 08Adopted Operating Budget, City of Fremont
2 California State Department of Finance
3 National Weather Service
4U. S. Census 2000
5Association of Bay Area Governments ( ABAG)
6City of Fremont, Economic Development Department
7California Department of Education
8California Postsecondary Education Commission
9Ohlone College, Office of College Relations
Community Services
Family Resource Center: 1
Parks: 52
Senior Center: 1
Community Centers: 5
Fire Stations: 10
City of Fremont 2007/ 08Adopted Operating Budget
24
25
The “ Summary of All Funds” schedule on the following page groups the
City’s funds into five categories:
 General Fund
 Cost Center/ Internal Service
 Special Revenue
 Redevelopment
 Capital
The first three categories include the City’s operating funds, and the last
two are special purpose fund categories. Funding for most of the City
operations andmost of its services comes fromthe first three fund categories.
The Fremont RedevelopmentAgency’s budget is adopted separately by the
City Council when it sits as the governing board of the Redevelopment
Agency. The budget for Capital funds is reviewed and adopted by the City
Council as part of the Capital Improvement Program( CIP).
The “ Summary ofAll Funds” schedule consolidates all funds Citywide and
presents the total available resources and total use of resources, including
beginning fund balances, revenues, expenditures, “ transfers in,” and “ transfers
out.” This consolidation is achieved by eliminating all transfers between
funds that are within the same fund category and all internal service fund
charge transfers. Such eliminations are similar to those made to produce
the City’s government- wide financial statements, as mandated by GASB
34. These eliminations avoid the double counting thatwould otherwise occur
if these proposed transactions were shown as either additional transfers or
as additional revenues and expenditures. Therefore, the “ Total Expenditures”
and “ Total Revenues” lines for all funds present the true budgeted
expenditures and revenues expected to be received and spent by the entire
organization.
Please refer to the General Fund section and the Other Funds section
of this document for more information.
All City Funds
Schedule
City of Fremont 2007/ 08Adopted Operating Budget
26
All City Funds Schedule
Note: Some internal charges between funds are classified as either transfers or expenditures to clarify
departmental budget resources and appropriations. This results inminor differences between the individual
departmental budgets and amounts shown in the Summary of All Funds schedule above.
Summary of All Funds
Total Cost Center/ Special Total
General Internal Revenue RDA Capital All
( Thousands of Dollars) Fund Service Funds Funds Funds Funds Funds
Revenues
Intergovernmental:
Property Taxes $ 48,177 $ - $ - $ 30,777 $ - $ 78,954
Property Taxes ( VLF Replacement) 14,847 - - - - 14,847
Triple Flip - Sales Tax Replacement 8,547 - - - - 8,547
Sales & Use Taxes 28,103 - 842 - - 28,945
Vehicle License Fees 1,522 - - - - 1,522
Other Intergovernmental 816 - 7,476 - 5,891 14,183
Business License Taxes 6,999 - - - - 6,999
Hotel/ Motel Taxes 3,222 - - - - 3,222
Property Transfer Taxes 1,697 - - - - 1,697
Franchise Fees 8,484 - - - - 8,484
Charges for Services 3,606 20,879 6,145 - 2,671 33,301
Fines 3,371 - - - - 3,371
Investment Earnings 2,368 644 15 3,679 2,225 8,931
Paramedic Fees 1,141 - - - - 1,141
Other Revenues 1,067 436 1,523 800 3,822 7,648
Total Revenues 133,967 21,959 16,001 35,256 14,609 221,792
Total Transfers In 7,435 7,615 50 - 39,135 54,235
Total Available Resources
( Revenues plus Operating Transfer In) 141,402 29,574 16,051 35,256 53,744 276,027
Expenditures
General Government 12,401 - - - - 12,401
Police 52,452 - 1,215 - - 53,667
Fire 29,888 - 522 - - 30,410
Transportation and Operations - 1,755 5,877 - 24,167 31,799
Community Development:
Planning - 3,964 - - - 3,964
Building & Safety - 5,612 - - - 5,612
Engineering - 6,417 - - - 6,417
Community Preservation 747 - - - - 747
Housing and Redevelopment - - 143 43,118 - 43,261
Human Services 3,483 619 7,734 - - 11,836
Parks and Recreation - 6,167 - - - 6,167
Non- departmental 3,372 ( 822) 1,180 - 20,115 23,845
Less: Cityw ide Savings ( 1,000) ( 1,000)
Debt costs 150 - 809 7,499 8,695 17,153
Total Expenditures 101,493 23,712 17,480 50,617 52,977 246,279
Total Transfers Out 47,812 3,376 702 260 3,700 55,850
Resources Used:
( Expenditures plus Operating Transfers Out) 149,305 27,088 18,182 50,877 56,677 302,129
Net Results of Operations:
( Resources Available less Resources Used) ( 7,903) 2,486 ( 2,131) ( 15,621) ( 2,933) ( 26,102)
Beginning Fund Balance - 6/ 30/ 07 ( est.) 43,941 8,358 15,998 93,437 27,528 189,262
Fund Balance - 6/ 30/ 08 ( est.) $ 36,038 $ 10,844 $ 13,867 $ 77,816 $ 24,595 $ 163,160
27
Citywide Position
Changes
Overview
2002/ 03 2003/ 04 2004/ 05 2005/ 06 2006/ 07 2007/ 08
PUBLIC SAFETY
Fire 176.00 157.60 153.00 153.00 153.00 161.00
Police 337.75 292.90 299.10 294.00 294.00 302.00
TOTAL 513.75 450.50 452.10 447.00 447.00 463.00
OTHER COMMUNITY SERVICES
Community Development 129.60 103.32 102.90 105.10 106.42 108.30
Economic Development 4.70 3.64 4.75 4.64 4.64 4.69
Human Services 44.95 40.57 40.67 43.97 43.97 52.32
Transportation & Operations 137.10 115.60 116.15 113.40 112.90 116.15
Parks and Recreation 74.25 70.10 68.85 67.35 67.35 67.35
Housing and Redevelopment 17.35 13.04 14.68 14.54 13.99 12.91
TOTAL 407.95 346.27 348.00 349.00 349.27 361.72
ADMINISTRATIVESYSTEMS
City Manager's Office 4.00 3.00 3.00 3.00 2.40 3.00
Administrative Systems Office 11.10 5.50 6.50 5.30 5.30 4.70
City Attorney 13.00 12.00 11.00 10.75 10.75 10.75
City Clerk 10.50 7.50 7.40 6.40 6.30 5.30
Finance 30.05 25.40 26.40 25.75 25.75 24.75
Information Technology Services 21.00 20.40 20.40 20.40 20.40 21.90
Human Resources 21.00 17.00 17.50 17.00 17.00 17.00
TOTAL 110.65 90.80 92.20 88.60 87.90 87.40
CITYWIDETOTAL 1032.35 887.57 892.30 884.60 884.17 912.12
Note: Historical staffing information reflects the current organizational structure. Positions previously
displayed in departments that were eliminated as part of the FY 2006/ 07 reorganization ( Maintenance, and
Development and Environmental Services) have been redistributed to new departments ( Community
Development, Transportation and Operations, and Parks and Recreation) with the same adjustments made to
historical data to assist the reader with comparisons.
The total authorized permanent staffing level for the FY 2007/ 08 budget is
the first notable increase in several years. Staffing levels are increasing,
primarily in the area of public safety. However, staffing levels for themost
basic services— Police, Fire, and Maintenance — remain at their lowest
level in at least 13 years when viewed in relation to Fremont’s population,
and the City’s overall staffing ratio of employee per thousand remains the
lowest inAlameda County.
The authorized level of 912.12 full time equivalent positions ( FTEs) is 27.95
FTEs higher than the FY2006/ 07 level of 884.17. The increase in net FTE
positions is primarily attributable to the addition of newpublic safetypositions.
The FireDepartment is adding ten newfirefighter positions as a result of the
SAFER grant; however, their overall FTEs are increasing by only 8.0 net
new positions as a result of the ongoing reorganization strategies of the
department and the transfer of the Management Analyst position for
Environmental Compliance to the Transportation and Operations
Department. The Police Department is increasing by 8.0 FTEs, with the
addition of seven new police officers and one new sergeant.
City of Fremont 2007/ 08Adopted Operating Budget
28
The increase of 8.35 FTE positions in the Human Services Department is a
combination of factors. There are 3.75 newpositions, namely, twoCounselors
funded by the Mobile Mental Health Grant from the County, a Clinical
Supervisor in the Youth and Family Services program, funded by Early
Prevention, Screening, Diagnosis and Treatment ( EPSDT) funds. Another
0.75 FTE Case Manager position that was added during FY 2006/ 07, and
is supported by funding from the Alameda County Health Department.
The remaining positions that appear as new in the Human Services
Department are conversions of former temporary positions to regular status.
These positions are supported by fees and/ or grants and, therefore, do not
require additional General Fund support.
TheHousing and RedevelopmentDepartment staff is decreasing by 1.0 FTE
as a result of the elimination of a vacant Housing Program Coordinator
position. The remaining changes in the overall FTEs include the conversion
of 2.0 FTEs in the Community Development Department and 2.0 FTEs in
the Transportation and Operations Department from temporary to regular,
aswell asmainly offsettingmiscellaneous adjustments of existing positions.
The net increase inmiscellaneous adjustments equates to 0.6 FTE positions,
and is spread among several departments. Additional information on
departmental staffing, along with organizational charts, is located in the
departmental budget section of this document.
29
Cities have primarily three choices in financing their operations and funding
public facilities: pay- as- you- go, debt financing, and public- private ventures.
The City has adopted a Long- Term Capital Debt Policy that sets the
guidelines for issuing debt and provides guidance in the timing and structuring
of long- term debt commitments. The City will consider the issuance of
long- termdebt obligations only under the conditions outlined in the policy
displayed in the Policies section of this document. Current and future planned
debt payments affecting the operating budget are detailed on the “ transfers
summary” located in the General Fund section of this budget.
With respect to the Redevelopment Agency debt, staff is monitoring the
collection of tax increment to ensure that all bonds are repaid when the tax
increment cap is reached ( currently projected to be FY 2011/ 12). The
Redevelopment Agency Bonds contain call provisions, beginning in
FY 2006/ 07, to ensure that all bonded indebtedness is repaid prior to reaching
the tax increment cap.
The following charts summarize theCity’s existing long- termdebt and future
debt obligations related to that existing debt.
City Debt
Summary
D e b t O u ts ta n d in g F is c a l Ye a rs E n d in g 2 0 0 6 a n d 2 0 0 7
2 0 0 6 2 0 0 7
R e d e v e lo pm e n t A g e n c y
B o n d s , S e rie s 2 0 0 4 ( re fi o f 2 0 0 0 ) $ 3 7 ,3 4 5 ,0 0 0 $ 3 3 ,6 9 5 ,0 0 0
R e d e ve lo pm e n t A g e n c y Ta x a b le H o u s in g B o n d s 1 6 ,0 2 0 ,0 0 0 1 3 ,9 5 0 ,0 0 0
T o ta l T a x A l lo c a tio n B o n d s $ 5 3 ,3 6 5 ,0 0 0 $ 4 7 ,6 4 5 ,0 0 0
G e n e ra l O b l ig a tio n B o n d s
G e n e ra l O b lig a t io n B o n d s , E le c t io n o f 2 0 0 2 S e rie s A 9 ,6 3 0 ,0 0 0 9 ,4 3 0 ,0 0 0
G e n e ra l O b lig a t io n B o n d s , E le c t io n o f 2 0 0 2 S e rie s B 2 5 ,0 0 0 ,0 0 0 2 5 ,0 0 0 ,0 0 0
T o ta l G e n e ra l O b l ig a tio n B o n d s $ 3 4 ,6 3 0 ,0 0 0 $ 3 4 ,4 3 0 ,0 0 0
C i ty ' s C e r ti fic a te s o f P a r tic ip a tio n - G e n e ra l F u n d
1 9 9 0 P u b lic F in a n c in g A u th o rit y 4 ,5 7 5 ,0 0 0 4 ,2 2 5 ,0 0 0
1 9 9 1 P u b lic F in a n c in g A u th o rit y 3 ,8 0 0 ,0 0 0 3 ,7 0 0 ,0 0 0
1 9 9 8 P u b lic F in a n c in g A u th o rit y 1 7 ,0 6 5 ,0 0 0 1 6 ,5 1 5 ,0 0 0
2 0 0 1 P u b lic F in a n c in g A u th o rit y 3 2 ,8 4 5 ,0 0 0 3 2 ,1 1 0 ,0 0 0
2 0 0 1 B P u b lic F in a n c in g A u th o rit y 9 ,0 9 5 ,0 0 0 8 ,7 4 5 ,0 0 0
2 0 0 2 P u b lic F in a n c in g A u th o rit y 3 5 ,1 4 0 ,0 0 0 3 4 ,2 6 5 ,0 0 0
2 0 0 3 P u b lic F in a n c in g A u th o rit y 2 1 ,0 9 5 ,0 0 0 2 0 ,2 6 0 ,0 0 0
S u b - T o ta l $ 1 2 3 ,6 1 5 ,0 0 0 $ 1 1 9 ,8 2 0 ,0 0 0
1 9 9 8 P u b l ic F in a n c in g A u th o r i ty
F rem o n t F am ily R e s o u rc e C e n te r $ 1 1 ,0 9 0 ,0 0 0 $ 1 0 ,8 3 0 ,0 0 0
T o ta l C e r ti fic a te s o f P a r tic ip a tio n $ 1 3 4 ,7 0 5 ,0 0 0 $ 1 3 0 ,6 5 0 ,0 0 0
T o ta l T a x A l lo c a tio n B o n d s, G e n e ra l O b l ig a tio n B o n d s,
a n d C e r ti fic a te s o f P a r tic ip a tio n $ 2 2 2 ,7 0 0 ,0 0 0 $ 2 1 2 ,7 2 5 ,0 0 0
City of Fremont 2007/ 08Adopted Operating Budget
30
* RDA bonds may be called and repaid earlier if the tax increment cap is reached before the bonds mature.
Annual Debt Service Requirements
City's Certificates
City's Certificates of Participation - General General
of Participation - Source of Payment Obligation Bonds Obligation Bonds
Source of Payment Fremont Resource Election of 2002 Election of 2002
General Fund Center Series A Series B Redevelopment *
FY 2007/ 08 $ 8,695,467 $ 809,244 $ 614,917 $ 1,146,485 $ 7,498,856
FY 2008/ 09 8,880,355 813,361 609,867 1,146,485 7,498,596
FY 2009/ 10 8,828,631 813,119 604,117 1,647,560 7,496,286
FY 2010/ 11 8,805,401 812,118 597,967 1,659,185 7,487,881
FY 2011/ 12 8,814,093 816,459 598,208 1,669,760 7,479,124
Thereafter 118,229,181 13,628,606 12,528,881 38,586,051 17,173,518
Total Principal & Interest 162,253,128 17,692,907 15,553,957 45,855,526 54,634,261
Less Interest ( 42,433,128) ( 6,862,907) ( 6,123,957) ( 20,855,526) ( 6,989,261)
Total Principal $ 119,820,000 $ 10,830,000 $ 9,430,000 $ 25,000,000 $ 47,645,000
City of Fremont 2007/ 08Adopted Operating Budget
31
City Debt Summary
Legal Debt Margin
Under State law, the City has a legal debt limitation not to exceed 15% of the total
assessed valuation of taxable property within the City boundaries. In accordance
with California Government Code section 43605, only the City's general obligation
bonds are subject to the legal debt limit. With only $ 34,430,000 of outstanding debt
subject to the legal debt limit and a legal debt limit of $ 4,227,214,580 the City is not
at risk of exceeding its legal debt limit.
Computation of Legal Debt Margin as of June 30, 2006
Assessed Valuation ( Net) 1 $ 28,181,430,530
Debt Limit: 15% of assessed value $ 4,227,214,580
Less Outstanding Debt ( Subject to Legal Debt Limit) 34,430,000
Legal Debt Margin $ 4,192,784,580
1 Source: Alameda County- Controller's Office Certification.
Compliance with Long- Term Capital Policy
The City of Fremont's Long- Term Capital Debt Policy, adopted by the City Council
on May 7, 1996, and revised and readopted with the CIP on July 8, 1998,
requires that General Fund supported debt service will not exceed 7% of total
General Fund budgeted expenditures and transfers out. With FY 2007/ 08
General Fund supported debt service of $ 8,695,467, and a debt level limit of
$ 10,106,250, the City has not exceeded its debt service limit.
Computation of Compliance with Debt Service Limit
Total General Fund Budgeted Expenditures and Transfers Out $ 144,375,000
( does not include one- time $ 2.8M transfer to Risk Management Land)
Policy Debt Level Limit,
7% of Total Budgeted Expenditures and Transfers Out $ 10,106,250
Less General Fund Supported Debt Service 8,695,467
Policy Debt Margin $ 1,410,783
City of Fremont 2007/ 08Adopted Operating Budget
32
City Debt Summary
Compliance with Long- Term Debt Policy
The City’s Long- TermDebt Policy limits General Fund- supported debt to a
maximumof 7% of totalGeneral Fund budgeted expenditures and transfers
out. The City has been in compliance with this policy since it was adopted
by the City Council in 1996. The forecast for long- termdebt indicates that
the Citywill remain in compliance and will not exceed 7% of total General
Fund budgeted expenditures and transfers out. Over the next two years, the
averageGeneral Fund- supported debtwill be $ 8.8million. The FY2007/ 08-
FY2011/ 12 CIP includes additional debt- funded projects. Because of the
timing of the issuance of debt and the timing of commencement of debt
service payments, staff believes the City will continue to be in compliance
with the Council’s Long- TermDebt Policy.
Compliance with Long- Term Debt Policy
FY 2002/ 03 - 2008/ 09
5.6
6.5
4.4
5.6
8.1 8.7 8.9
2.9 1.0
3.6
2.9
1.0
1.4 1.3
0
1
2
3
4
5
6
7
8
9
10
11
12
FY 02/ 03 FY 03/ 04 FY 04/ 05 FY 05/ 06 FY 06/ 07 FY 07/ 08 FY 08/ 09
$ Millions
General Fund Debt Service Future General Fund Debt Service Debt Policy Margin
33
Gann Limit Article XIIIB of the California Constitution ( enacted with the passage of
Proposition 4 in 1979, with modifications under Proposition 111 passed
in June 1990 and implemented by California Government Code sections
7900, and following) provides the basis for the Gann appropriation
limitation. In brief, theCity’s appropriations growth rate is limited to changes
in population and either the change in California per capita income or the
change in the local assessment roll due to new, non- residential construction.
The formula to be used in calculating the growth rate is:
% change in population + 100
100
times
either
% change in per capita income + 100
100
or
% change in non- residential assessed value + 100
100
The resultant rate times the previous appropriation limit equals the new
appropriation limit.
Both theCalifornia per capita personal income price factor and the population
percentage change factors are provided by the StateDepartment of Finance
to local jurisdictions each year. Population percentage change factors
estimate changes in the City’s population between January of the previous
fiscal year and January of the current fiscal year. Reports that present
changes in new, non- residential assessed value are provided by the County
of Alameda. These numbers provide the basis for the factor to be used in
the City’s calculation of the Gann Limit. Of the two methods above, the
City is using the “ new, non- residential assessed valuation” factor because it
results in the higher appropriations limit.
OnMay 1, 2007, the State Department of Finance notified each city of the
population changes and the per capita personal income factor to be used in
determining appropriation limits. The calculation as applied to the City of
Fremont for 2007/ 08 is:
The population on January 1 of the previous year ( 210,150) compared to
the population on January 1, 2007 ( 211,662), is 1,512, or a 0.72% increase.
The change in new, non- residential assessed valuation is 4.53%.
The factor for determining the year- to- year increase is computed as:
0.72 + 100 X 4.53 + 100 = 1.0528
100 100
City of Fremont 2007/ 08Adopted Operating Budget
34
Gann Limit
Applying this year’s factor of 1.0528 to last year’s limit of $ 416,536,423,
the Gann Limit for FY2007/ 08 yields $ 438,540,443.
Based on an operating budget of $ 147,175,000, Fremont is not at risk of
exceeding the Gann Limit. The Gann Limit is adopted by the City Council
concurrently with the adoption of the FY 2007/ 08 operating budget.
35
Citywide Goals
and Objectives
In 2002, the City Council adopted a Strategic Plan that outlines a vision for
the long- term future of Fremont and proposes strategies and short- term
goals for achieving the vision. The Plan has three main purposes. First, it
communicates the City’s vision for the future to residents, businesses, and
City employees. Second, it provides guidance so that decisions are good
for today’s challenges and good for the City in the future. Making decisions
in the context of a shared vision developed through collaboration ensures
broad commitment to the success of the plan. Finally, the Strategic Plan
provides a sound framework for long- termdepartmental planning.
For budgeting purposes, the long- termdesired outcomes and values outlined
in the plan have been adapted as Citywide goals that support the City
Council’s vision. The goals are used as a framework for ensuring alignment
of department special projects with the City Council’s vision. This section
of the budget document presents the City Council’s vision and goals from
the 2002 Strategic Plan. It also includes amatrix that illustrates the alignment
of departmental special projects with Citywide goals. Special projects
presented here may be abbreviated for format purposes. The full narrative
text for each special project is displayed in the departmental section of the
budget document.
City Council’s Vision
Fremont, in the year 2020, will be a globally- connected economic center
with communitypride, strong neighborhoods, engaged citizens fromall
cultures, and a superb qualityof life.
Citywide Goals
1. Strong communityleadership
CityCouncil, Boards, and Commissionsworkwith the community to create
the long- termvision for Fremont and provide policy direction and guidance
to the City organization. The City Manager and staff carry out the long-termvision
on a daily basis through a variety of services and activities.
2. Asafe community
People value a feeling of safety and security within their community. In
Fremont, residents work together and with City staff to prevent crime and
solve problems in their neighborhoods.
3. Avibrant local economy
The local economy is comprised of a strong, diversified commercial and
industrial base, providing high- quality employment for the region. It is
balanced with a strong retail sector and healthy neighborhood commercial
districts.
City of Fremont 2007/ 08Adopted Operating Budget
36
Citywide Goals
andObjectives
4. Thoughtful, orderly use of land and protection of environmental
resources
The City values a harmonious blend of natural and physical environments,
with particular priority for preservation of open space, such as the hillface
and baywetlands. Thoughtful land use and conservation also protect people’s
social and financial investments in the community.
5. Safe and effective transportation systems
Quality of life is highly dependent on high quality transportation systems,
which enable people to get around easily. Alternatives to automobile
transportation, such as walking, cycling, and public transit are also valued.
6. Public facilities and programs for recreation
Public facilities provide individual and family entertainment, relaxation, and
education. Fremont’s public amenities include parks, community centers,
historic estates, a golf course, and related programming.
7. Historic character
Preservation of historic properties, neighborhoods, and commercial districts
enables the community to adapt to change and embrace a progressive future
while remaining true to its heritage and historic character.
8. Buildingacaringcommunity
Fremont is a community where members care for each other and value
services that help families and individuals to live self- sufficiently with a
respectable quality of life. The community values a range of housing
opportunities balancedwith employment opportunities to ensure that people
who work in Fremont may also live here.
9. Strongfamilies and healthychildren
Fremont is proud of its identity as an excellent place for families and children.
The City partners with the school district and other agencies and groups to
foster growth in families and provide opportunities for youth development
and community involvement.
10. Involvement of a diverse population
Fremont is an inclusive community thatwelcomes people of all ages, ethnicity,
income, and background. The City believes that all segments of the
populationmust be engaged and involved inmaking community decisions in
order to ensure a high quality of life and effective democracy.
11. Effective andefficient citygovernment
The Fremont communitywants honest, responsive city government serving
the community’s interestswith progressive, equitable, and fiscally responsible
service delivery.
City of Fremont 2007/ 08Adopted Operating Budget
37
Citywide Goals
andObjectives
** The above are summaries of the full statement of each goal which may be found in the respective department's subsection of the " Department
Budgets" section of this document.
Special Projects Summary**:
Community Values
Strong community leadership
A safe community
Vibrant local economy
Thoughtful, orderly use of land and
protection of environmental resources
Safe and effective transportation
systems
Public facilities and programs for
recreation
Historic character
Building a caring community
Strong families and healthy children
Involvement of a diverse population
Effective and efficient city government
COMMUNITY DEVELOPMENT DEPARTMENT:
1 Deliver responsive and timely services to develop high quality community supported projects. X X
2 Expand electronic plan checking to reduce review time and customer printing costs. X
3 Complete a draft update to the City’s General Plan by June 2008. X X X X X X X X
4 Partner with the Redevelopment Agency to complete soil cleanup and begin construction of the
Niles Town Plaza.
X
5 Collaborate with the Redevelopment Agency to manage site disposition of the former City
Corporation Yard.
X X
6 Develop Design Review Guidelines to maintain the character of existing neighborhoods. X X
7 Update the City’s Williamson Act policies and ordinances consistent with State Dept. of
Conservation audit findings.
X
8 Update the Sign Ordinance to improve the user friendliness of the City’s sign regulations. X
9 Update the City’s Wireless Telecommunications Ordinance. X
10 Adopt new building codes and assist industry implement new codes into design projects. X X
11 Address potential hazards and blight of unpermitted repairs or failing pre- cast walls. X X
ECONOMIC DEVELOPMENT DEPARTMENT:
1 Serve as a liaison between property owners, developers, and staff on development issues. X X X
2 Provide high quality services and resources to local small businesses ( e. g. workshops and
business counseling).
X
3 Work with City departments to conduct land use analysis and zoning improvements to increase
economic growth.
X X X
4 Update the retail market assessment and strategic plan to include an expansion and recruitment
plan.
X X X
5 Collaborate with the City Manager's Office in facilitation of the proposed baseball
stadium/ ballpark village.
X
FIRE DEPARTMENT:
1 Continue implementation of the Fire Bond projects ( e. g. fire stations and training center). X X
2 Accept a $ 1 million grant from the DHS to recruit, hire, and train ten new firefighters. X
3 Complete a Citywide evaluation of first- due response district assignments. X X X
4 Conduct a review of the Field HAZMAT Team to improve performance and effectiveness. X X
5 Complete the purchasing process for the third phase of the apparatus replacement plan. X
6 Develop and implement a Pre- Plan Firefighting ( PPFF) program to reduce loss and minimize
injury.
X X
7 Implement a new code of ethics and develop and implement a code of conduct. X X
8 Participate in regional and statewide activities and training by providing instructors and
resources.
X X
9 Update the Fire and Life Safety Division website. X
10 Fulfill DHS grant requirements for terrorism preparedness and NIMS compliance. X X
City of Fremont 2007/ 08Adopted Operating Budget
38
Citywide Goals
andObjectives
** The above are summaries of the full statement of each goal which may be found in the respective department's subsection of the " Department
Budgets" section of this document.
Special Projects Summary**:
Community Values
Strong community leadership
A safe community
Vibrant local economy
Thoughtful, orderly use of land and
protection of environmental resources
Safe and effective transportation
systems
Public facilities and programs for
recreation
Historic character
Building a caring community
Strong families and healthy children
Involvement of a diverse population
Effective and efficient city government
HOUSING AND REDEVELOPMENT DEPARTMENT:
1 Enter into a new Disposition and Development Agreement for the Centerville Unified Site. X
2 Complete renovation of the Tri- City Volunteers building on Joseph Street. X
3 Complete the widening of Central Avenue. X
4 Begin construction of the Hansen Avenue sidewalk improvements. X
5 Enter into Owner Participation Agreements to complete the Baine St. and Joseph St. sidewalk
improvements. X
6 Begin construction of the Bay Street Streetscape and Parking project. X X
7 Initiate planning for Phase II of the former rail yard site and other properties that frame the
proposed Niles Plaza. X
8 Initiate master planning and design criteria for the vacant Henkel Surface Technologies
property. X
9 Partner with Human Services on the County’s Every One Home Plan to end homelessness. X X
10 Launch a marketing campaign to provide housing rehabilitation loans to very low, low, and
moderate income households. X X
11 Implement an Affordable Housing Plan Strategy to ensure at- risk units remain affordable. X X X
12 Provide rental subsidies to young adults aged out of foster care during their vocational training
program. X X
13 Provide rent reduction to eligible Housing Scholarship Program participants during training
programs. X X
HUMAN SERVICES DEPARTMENT:
1 Strengthen the senior service network through the RWJ Fresh Ideas Grant. X X X
2 Develop a Mobile Mental Health Team to address the needs of homebound seniors with mental
illness. X X
3 Support the volunteer- driven mini- grant program and develop an after- school childcare
program at Cabrillo Elementary School. X X X
4 Expand Family Economic Success services at the Family Resource Center ( FRC). X X
5 Develop a plan to expand and coordinate volunteer recruitment and placement at the FRC. X X X
6 Expand early childhood/ parent education services through a multi- cultural parent education
program. X X
7 Increase adolescent access to mental health and drug treatment services by partnering with
FUSD. X X
8 Explore the feasibility of establishing a multi- disciplinary team to work with probationary
youth. X X X
PARKS AND RECREATION DEPARTMENT:
1 Collaborate with the Engineering Division to oversee the design and construction of the Water
Park. X X
2 Participate in the planning process for new park facilities to optimize park maintenance
resources. X X
3 Continue to manage the Recreation Division’s enterprise and customer service operating model. X X X
City of Fremont 2007/ 08Adopted Operating Budget
39
Citywide Goals
andObjectives
** The above are summaries of the full statement of each goal which may be found in the respective department's subsection of the " Department
Budgets" section of this document.
Special Projects Summary**:
Community Values
Strong community leadership
A safe community
Vibrant local economy
Thoughtful, orderly use of land and
protection of environmental resources
Safe and effective transportation
systems
Public facilities and programs for
recreation
Historic character
Building a caring community
Strong families and healthy children
Involvement of a diverse population
Effective and efficient city government
POLICE DEPARTMENT:
1 Prioritize and provide the most effective basic police services within the available resources. X X
2 Develop a model volunteer citizen patrol force to act as the eyes and ears of the Fremont PD. X X X X X
3 Develop and deploy a five- officer Street Crimes Unit to address contemporary crime trends. X
4 Oversee and participate in the construction of police firearms training facilities. X X
5 Expand the Community Engagement Team to increase outreach and collaboration efforts. X X X
6 Evaluate and implement changes to Detention Center functions. X X
7 Assess strategies of Investigations staff to incarcerate or disrupt significant offenders. X X
8 Create an enhanced interactive briefing setting through the use of digital and electronic
technology. X X
9 Enhance the capabilities of field personnel through the issuance of digital technology. X X
TRANSPORTATION AND OPERATIONS DEPARTMENT:
1 Improve public building maintenance by creating an intranet website to provide information
and receive customer requests.
X
2 Begin retrofitting or replacing diesel vehicles and equipment to meet CARB requirements. X X
3 Implement a household hazardous waste program for Fremont residents. X X
4 Update the transportation element of the City’s General Plan, including the travel demand
model.
X X X
5 Support expansion of the City’s Photo Red Light Enforcement Program to include new
locations. X X
6 Review the City’s building energy conservation measures to determine additional conservation
measures.
X
7 Replace the roof and select heating and air conditioning equipment at the Senior Center. X
8 Begin the main contract for the Washington Blvd./ Paseo Padre Pkwy. Grade Separation
Project. X
9 Implement a surveillance program to identify and reduce illegal dumping. X
10 Develop a funding mechanism to ensure maintenance of new storm water treatment
requirements in the public right- of- way. X X
City of Fremont 2007/ 08Adopted Operating Budget
40
** The above are summaries of the full statement of each goal which may be found in the respective department's subsection of the " Department
Budgets" section of this document.
Special Projects Summary**:
Community Values
Strong community leadership
A safe community
Vibrant local economy
Thoughtful, orderly use of land and
protection of environmental resources
Safe and effective transportation
systems
Public facilities and programs for
recreation
Historic character
Building a caring community
Strong families and healthy children
Involvement of a diverse population
Effective and efficient city government
ADMINISTRATIVE DEPARTMENTS:
1 Facilitate major land use and economic development projects, including the proposed baseball
stadium/ ballpark village. X X X
2 Create an organizational development program focused on leadership and management training. X X
3 Establish an interdepartmental team to redesign the City's website. X
4 Enhance organizational emergency preparedness efforts in conjunction with the Fire
Department. X X
5 Provide interdepartmental training ( e. g. contract processing & Public Records Act request
processing). X
6 Guide and manage legal aspects of special development projects pending in the City. X X X
7 Review and update standard agreements, including indemnity and insurance provisions. X
8 Continue to streamline the City Council agenda process and provide prompt responses to the
public. X
9 Develop a mechanism for obtaining and using customer feedback in the City Clerk's
Department. X
10 Develop improvements to the purchasing ordinance to reduce City costs. X
11 Investigate opportunities for making plans and specifications available online to potential
bidders. X
12 Explore options for implementing banking services option using the bank’s e- payables
program. X
13 Collaborate with City Clerk’s office to reduce records storage costs and improve document
management.
X
14 Research web- based applications for business license renewals. X
15 Revise the Personnel Rules and Regulations to reflect current statutory requirements. X
16 Develop and implement an on- line employment application process. X
17 Partner with the City Manager’s Office to establish an organizational development program. X
18 Review Citywide payroll processes for consistency and compliance with laws and MOU. X
19 Establish a Citywide benefits review committee to maximize health care benefit choices. X
20 Develop a mechanism for obtaining and using customer feedback in the Human Resources
Department.
X
21 Expand and promote interagency cooperation for GIS data sharing and options for public
access applications. X X
22 Study requirements of an online land use/ building permit application. X
23 Restructure process for street address issuance to enable electronic exchange and increased
efficiency.
X
24 Augment the existing network infrastructure and upgrade the existing network wiring. X
25 Support the Police Department in the installation and maintenance of video systems in patrol
cars. X X
26 Research replacement systems for the current telephone notification system. X X
27 Develop a funding and deployment plan for an organization- wide upgrade to VOIP
technology.
X
28 Develop a mechanism for obtaining and using customer feedback in the ITS Department. X
41
General Fund
Summary
The General Fund is the City’s primary operating fund. It accounts for the
majority of financial resources and outlays for basic services such as police,
fire, and maintenance, as well as the administrative systems required to
support them. The fund also accounts for the City’s discretionary funding
sources ( e. g., property tax, sales tax, vehicle license fees, franchise fees,
and business license tax). As a rule, General Fund resources are used only
to fund operations that do not have other dedicated ( restricted) funding
sources. Operations that rely heavily on non- General Fund resources, such
as land development, recreation, and human services, are accounted for in
other funds. Information on these operations may be found in the “ Other
Funds” section of this document.
Since mid- 2001, the City’s budgeting environment has been characterized
by tremendous uncertainty. The recession in the high- tech sector of the
economy and State resource takeaways caused a 10% decline in General
Fund revenues between FY 2000/ 01 and FY 2003/ 04. Meanwhile, the
demand forCity services and the costs of providing themcontinue to increase.
Because city governments can only spend available resources, these factors
combined to prompt budget and staffing reductions ofmore than 20% since
FY 2002/ 03. Budget reductions of this magnitude necessarily resulted in
service reductions in all areas. In FY 2007/ 08, it looks as though, for the
first time since the cuts were made, revenues may have recovered to the
pointwhere staff believes it is possible to restore some public safety positions
and to make some progress towards addressing the street maintenance
backlog that has developed during the past several “ lean” years. The
“ Budget Overview” section of this document providesmore information on
these opportunities. This section provides information on the FY 2007/ 08
General Fund budget, including budget assumptions, expenditure and
revenue highlights, transfers to other funds, reserve funds, and the financial
forecast.
The FY2007/ 08 budget displayed in the table on the next page demonstrates
the City’s transition during these challenging economic times. Revenues
are projected to slightly exceed the costs of providing services in FY2006/ 07.
Despite the modest revenue recovery recently enjoyed by the City, the
costs of providing marginally additional services are projected to exceed
ongoing revenues in FY2007/ 08. While FY2008/ 09 revenues are projected
to again exceed costs, the still- mixed economic signals and the State’s
continued inability to balance its own budget pose significant challenges to
this outlook. The State LegislativeAnalyst does not anticipate a resolution
to the State’s budget challenges and, in fact, sees them worsening if
fundamental changes aren’tmade. Although the passage of Proposition 1A
precludes the State from looking to cities to help balance its budget for this
fiscal year, under certain conditions the State can once again take money
from cities beginning in FY 2008/ 09. For these reasons, the City is being
cautious about restoring positions to the budget, and relying on a portion of
undesignated fund balance to balance the FY 2007/ 08 budget.
City of Fremont 2007/ 08Adopted Operating Budget
42
General Fund Summary
NOTE: 1) The onlyGeneral Fund costs displayed in this chart for CommunityDevelopment are for Community
Preservation. Other department costs are displayed in theOther Funds section of this document. 2) Maintenance
activities can be found in the Capital Funds section of this document. 3) Recreation activities are funded in the
RecreationCostCenter with a combination of General Fund and fee revenues. Department costs can be found
in the Cost Center/ Internal Service section of this document.
General Fund
Program Budget Eliminating Total
General Contingency Investment Uncertainty Internal General
( Thousands of Dollars) Fund Reserve Reserve Reserve Transfers Fund
Revenues:
Intergovernmental:
Property Taxes $ 48,177 $ - $ - $ - $ - $ 48,177
Property Taxes ( VLF Replacement) 14,847 - - - - 14,847
Triple Flip - Sales Tax Replacement 8,547 - - - - 8,547
Sales & Use Taxes 28,103 - - - - 28,103
Vehicle License Fees 1,522 - - - - 1,522
Other Intergovernmental 816 - - - - 816
Business License Taxes 6,999 - - - - 6,999
Hotel/ Motel Taxes 3,222 - - - - 3,222
Property Transfer Taxes 1,697 - - - - 1,697
Franchise Fees 8,484 - - - - 8,484
Charges for Services 3,606 - - - - 3,606
Fines 3,371 - - - - 3,371
Investment Earnings 2,368 - - - - 2,368
Paramedic Fees 1,141 - - - - 1,141
Other Revenues 1,067 - - - - 1,067
Total Re venues 133,967 - - - - 133,967
Total Transfers In 7,435 1,642 328 - ( 1,970) 7,435
Total Available Resources
( Revenues plus Operating Transfe r In) 141,402 1,642 328 - ( 1,970) 141,402
Expenditures -
General Government 12,401 - - - - 12,401
Police 52,452 - - - - 52,452
Fire 29,888 - - - - 29,888
Transportation and Operations - - - - - -
Community Development: -
Planning - - - - - -
Building & Safety - - - - - -
Engineering - - - - - -
Community Preservation 747 - - - - 747
Housing and Redevelopment - - - - - -
Human Services 3,483 - - - - 3,483
Parks and Recreation - - - - - -
Non- departmental 3,372 - - - - 3,372
Less: Cityw ide Savings ( 1,000) - - - - ( 1,000)
TRANS Debt costs 150 - - - - 150
Total Expenditures 101,493 - - - - 101,493
Total Transfers Out 45,682 - - 4,100 ( 1,970) 47,812
Resources Us ed:
( Expenditures plus Operating Transfe rs Out) 147,175 - - 4,100 ( 1,970) 149,305
Net Results of Operations:
( Resources Available less Resource s Used) ( 5,773) 1,642 328 ( 4,100) - ( 7,903)
Beginning Fund Balance - 6/ 30/ 07 ( est.) 9,297 16,159 3,232 15,253 n/ a 43,941
Fund Balance - 6/ 30/ 08 ( est.) $ 3,524 $ 17,801 $ 3,560 $ 11,153 n/ a $ 36,038
City of Fremont 2007/ 08Adopted Operating Budget
43
General Fund Summary
Budget Assumptions
In addition to the general assumptions of continued revenue volatility and
State budget instability, the FY2007/ 08 budget is premised upon the following
specific assumptions:
1. Modestly improving revenues now mean that rotating fire station
closures can end, 18 additional public safety staff are authorized,
and a one- time contribution for backlogged street maintenance
will be made in FY 2007/ 08.
The City took early and decisive action tomeet the fiscal challenges of
the 2001 technology sector recession and overall economic downturn,
which was compounded by the September 11, 2001, terrorist attacks.
Department budgets were severely reduced, while the City struggled
tomaintain the highest priority services of police, fire, andmaintenance
to themaximumextent possible for the past five years. Current revenue
projections suggest that economic conditions have improvedmodestly,
although the effects of the current slowdown in housingmarkets and in
certain segments of the economy bearwatching. Apositive fund balance
is anticipated at the end of FY 2006/ 07. These positive indicators will
allow the City to add eight new positions to the Police Department. In
addition, the City has been awarded a Staffing for Adequate Fire and
Emergency Response ( SAFER) grant from the U. S. Department of
Homeland Security of $ 1 million over five years. This helps offset
some of the future uncertainty and provides resources to transition into
the full cost of adding ten new positions in the Fire Department, as well
as ending the rotating closure of fire stations. In addition, a one- time
contribution of $ 1.5 million will be made to the Capital Improvement
Program( CIP) to address some long- overdue streetmaintenance needs.
2. In response to a change in accounting and financial reporting
rules for retiree medical costs, $ 2.3 million will be set aside,
contingent on positive results at the mid- year budget review, to
begin funding this obligation on an actuarial basis.
Governmental Accounting Standards Board ( GASB) Statement 45
requires that other post- employment benefits ( OPEB), such as retiree
medical costs, be accounted for in a manner similar to retirement
benefits. The City, like most cities in the country, has historically
accounted for this cost on a pay- as- you- go basis. The actuarial valuation
performed as part of the City’s efforts to manage and control these
costs quantified the unfunded liability as of June 30, 2006. Based on
that valuation, additional resources need to be set aside, in addition to
the pay- as- you- go costs, to begin to fund this unfunded liability.
However, because of concerns about the sustainability of the current
modest economic recovery, the transfer of an additional $ 2.3 million is
contingent on positive results at the mid- year budget review.
City of Fremont 2007/ 08Adopted Operating Budget
44
General Fund Summary
3. Cash will be transferred to the Risk Management Fund in
exchange for land held by that fund, contingent on positive
results at the mid- year budget review.
Land was acquired by the City’s RiskManagement Fund in the 1980s
to settle a potential claim against the City. In order to ensure that the
RiskManagement Fund has sufficient liquidity to pay claims, theGeneral
Fund should make a one- time transfer of cash to the RiskManagement
Fund in an amount equal to the original acquisition price of the land
($ 2.8 million), so that the land can be removed from the Risk
Management Fund and reported with all of the City’s other capital
assets. Because of concerns about the sustainability of the modest
economic recovery, this transfer is contingent on positive results at the
mid- year budget review.
4. The costs added to the FY 2007/ 08 budget will exceed projected
revenues, requiring the use of a portion of undesignated fund
balance to balance the budget.
Instead of spending all of the revenue received during the “ boom”
years of the late 1990s, the City set aside a portion of annual revenues
in its General Fund fund balance for use in future years. Since the City
began cutting the budget in FY2002/ 03, it hasmetered in fund balance
annually as a resource to smooth the transition to a lower revenue
base. In FY 2007/ 08, the City is fortunate to have a cushion of fund
balance to absorb the $ 5.8 million shortfall in revenues resulting from
the addition of both ongoing and one- time expenditures to the budget.
Projections indicate that revenues will be adequate to cover these
additional costs in FY 2008/ 09, and in future years. The use of fund
balance allows the City to address critical community service needs
earlier than would otherwise be the case.
5. Despite mixed signals, the economy will continue modest growth
during FY 2007/ 08, enabling ongoing General Fund resources
to increase by approximately 5%.
Ongoing resources reflect the revenue “ base” that continues from year
to year, excluding one- time resources and losses. The growth is
attributable primarily to the continued strength of property tax revenues,
modest growth in the sales tax base, and modest growth in business
license taxes, franchise fees, and hotel/ motel taxes.
6. Revenue estimates in the FY 2007/ 08 budget and the related
forecast have been increased 1% to compensate for the historical
tendency to underestimate revenues.
The unanticipated revenue shortfall in FY2001/ 02 notwithstanding, the
City’s actual revenues have generally exceeded projections by an
average of 2 to 3%. In addition, as we forecast revenues in periods of
economic slowdown or downturn, we rarely anticipate the strength of
the eventual economic recovery. Because unanticipated economic
City of Fremont 2007/ 08Adopted Operating Budget
45
General Fund Summary
eventswill affect revenues, it is difficult to predictwhich revenues will
exceed expectations in a given year. This assumption helps ensure we
are not overly conservative in our revenue projections, thereby potentially
prompting unnecessary service reductions.
7. The General Fund’s core reserves, totaling 15% of expenditures
and transfers in, will remain unused for FY 2007/ 08.
The Citymaintains twoGeneral Fund reserves, whose funding is linked
to total budgeted expenditures and transfers out: the Contingency
Reserve and the ProgramInvestment Reserve. Balances and potential
use of the Contingency Reserve and the Program Investment Reserve
are governed by City Council policies adopted with the FY 1996/ 97
budget. The Contingency Reserve is intended to mitigate the effects
of natural disasters or other severe unforeseen events and is to be
maintained at 12.5% of total operating expenditures and transfers out.
The ProgramInvestment Reserve is available to provide seed funding
for new initiatives that will generate ongoing external revenues; it is to
be maintained at 2.5% of total operating expenditures and transfers
out. Because the conditions for using these resources are not anticipated
to be present during FY 2007/ 08, these reserve balances are expected
to remain intact. In order to avoid over- funding these two reserves in
FY 2007/ 08, the one- time $ 2.8 million transfer of cash to the Risk
Management Fund in exchange for land has not been included in the
calculation of reserve levels.
8. The budget for employee salaries assumes an increase of 3%
over the FY 2006/ 07 levels. Actual cost for salaries will be
determined through negotiations with employee bargaining units.
The FY 2006/ 07 budget included a 3% inflation factor for employee
salaries. In 2007, all MOUs are open for renegotiation. The 3% cost
growth factor included in the FY 2007/ 08 budget provides an estimate
for budgeting purposes. If negotiated salary increases vary significantly
from the budget assumption, staff will develop options for the City
Council to adjust the budget for consistency with the adopted MOUs.
9. Total expenditures in the FY2007/ 08 budget and the related forecast
include a savings assumption of $ 1million per year ( approximately
0.7% of total resources budgeted for use in FY 2007/ 08) to
compensate for the historical tendency to under- spend total
resources allocated.
Despite consecutive years of budget reductions, managers continue to
hold positions vacant and restrain operational costs wherever possible.
Consequently, the City’s actual expenditure totals each year are
consistently at least $ 1 million less than budgeted. Building an
assumption for savings into the budget helps to ensure that projections
for year- end results are more accurate fromthe outset than they might
otherwise be.
City of Fremont 2007/ 08Adopted Operating Budget
46
General Fund Summary
10. The budget contains no provision for future State resource
takeaways. The City will respond to takeaways when the amount
and timing of takeaways are confirmed by State legislative action.
The FY2005/ 06 budget included a $ 2.7million property tax takeaway,
the second such annual takeaway adopted as part of the State’s
FY 2004/ 05 budget. Unfortunately, despite these and other previous
cuts to local government, the State continues to face a multi- billion
dollar deficit in FY 2006/ 07 and beyond. In 2004, voters approved
Proposition 1A, which ostensibly provides protection for local revenues.
In reality, however, it only clarifies the rules by which the State may
take local revenues. For example, the State is no longer allowed to
take local revenues, unless it has paid back funds previously taken.
While Proposition 1Aprovides limited protection fromState takeaways,
a permanent solution to the State’s problem will likely involve taking
some amount of City revenue.
Further takeawayswill be catastrophic for public safety, public facilities,
and other services. Despite increased State revenues this year, the
State’s structural budget gap remains, leaving local governments
vulnerable to additional State takeaways beginning in FY2008/ 09. That
is the first year, under the rules of Proposition 1A, that the State can
once again turn to cities to help balance its budget. Because it is difficult
to predict when, and if, the State will take additional local government
revenues, the budget does not assume a specific amount of revenue
that will be lost to the State, thereby minimizing the risks associated
with cutting services too far in anticipation of State cuts that may not
materialize. If it appears the State is thinking about additional takeaways,
staffwill develop contingency plans so that theCitymay quickly respond
to State actions. To support this assumption, the budget contains a
Budget Uncertainty Reserve that could be used to forestall the need
for immediate service cuts.
Resources
General Fund resources include revenues, transfers into the General Fund
fromother funds, and undesignated fund balance. Total budgeted resources
will be adequate to support total budgeted expenditures of $ 147.2 million,
so the budget is considered balanced. However, when one- time sources
( i. e., fund balance) are excluded, the sum of ongoing revenues, highlighted
in Table # 1, plus recurring transfers in from other funds, falls short of
covering the service costs by $ 5.8 million, or 3.9% of total expenditures.
Bridging the gap will require spending $ 5.8 million of undesignated fund
balance.
Property taxes are projected to remain the City’s largest revenue source in
FY 2007/ 08. Despite the decline in other major revenues since the peak
year of FY2000/ 01, property tax revenues have remained strong. Residential
property values comprise two- thirds of Fremont’s property tax base.
Relatively low mortgage interest rates and high demand for real estate
City of Fremont 2007/ 08Adopted Operating Budget
47
General Fund Summary
continue to drive residential property values higher. Property tax revenue
in FY 2006/ 07 is estimated to increase 9% over the prior year. Revenue
the City will receive in FY 2007/ 08 is based on property valuation as of
January 1, 2007, and reflects continued valuation strength, although the
market is beginning to slow down, compared to the vigorous sales activity
experienced in the past couple of years. Therefore, property tax revenues
are projected to growin FY2007/ 08 to $ 48.2million. Staff will continue to
monitor the real estate market. The effects of the current cooling trend in
transaction volume will temper staff’s outlook for FY2008/ 09.
In contrast to the consistently strong trend for property tax revenue, sales
tax trends are emblematic of the City’s revenue volatility. After reaching a
high point of $ 33.2 million in FY 2000/ 01, sales tax revenue endured a
multi- year decline to a low point of $ 26.8million in FY2003/ 04. The steep
drop was caused by the collapse of the Silicon Valley technology market
and Fremont’s reliance on sales tax from high- tech manufacturers. Sales
tax revenue from the high- tech sector now appears to be stabilizing. In
addition, the City’s efforts to diversify and strengthen the sales tax base by
increasing the consumer retail sales and auto sales tax bases are beginning
to pay off. While the receipts from recent quarters are encouraging, Chart
# 1 illustrates the volatility that complicates forecasting efforts. Although
the past fewquarters have been encouraging, staff ismindful of howquickly
sales tax revenues can fall away. Therefore, the revenue projections assume
that sales tax revenue will grow modestly for FY 2007/ 08.
Revenues FY2006/ 07est. FY2007/ 08budget Difference
Propertytaxes $ 45.0 $ 48.2 $ 3.2
Sales anduse taxes 26.5 28.1 1.6
" Triple flip" sales taxreplacement 8.1 8.6 0.4
Vehicle License Fees ( VLF) 1.4 1.5 0.1
VLFpropertytaxreplacement 13.7 14.8 1.1
Business license taxes 6.6 7.0 0.4
Franchise fees 8.0 8.5 0.5
Hotel/ motel taxes 2.9 3.2 0.3
Investment earnings 2.3 2.4 0.1
Other revenues 11.9 11.7 ( 0.2)
Ongoingrevenues subtotal 126.4 134.0 7.6
Recurringtransfers fromother funds 7.3 7.4 0.1
One- time items
Use of ( additionto) undesignated ( 3.2) 5.8 9.0
fundbalance
Total budgetedresources $ 130.5 $ 147.2 $ 16.7
Table # 1: Change inGeneral FundResources
FY2006/ 07 to FY2007/ 08 ($ millions)
City of Fremont 2007/ 08Adopted Operating Budget
48
General Fund Summary
The City now receives its sales tax revenue in two parts: 75% from the
traditional share of the sales tax paid on consumer purchases, and 25%
from the “ triple flip” property tax replacement revenue. The “ triple flip”
refers to the State’s mechanismfor financing its 2004 Economic Recovery
bonds, whereby the State receives 25% of cities’ sales tax revenue in
exchange for an equal amount of additional property tax. The amount of
property tax replacement revenue is equal to 25% of “ regular” sales tax
revenue generated in the prior fiscal year.
Vehicle license fee ( VLF) revenues also come to the City in two parts.
The first part, VLF paid by motorists, remains at one- third of historical
levels. VLF revenue is allocated statewide, based on population. The
second part is in the formof additional property tax revenues. The amount
received is based on the City’s growth in assessed property valuation in the
prior fiscal year. The total from both components is projected to growfrom
$ 15.1million in FY2006/ 07 to $ 16.4million in FY2007/ 08.
Hotel/ motel tax revenueswere rocked by the SiliconValley recession. While
not the City’s largest revenue source, hotel/ motel taxes declined by the
largest percentage, a staggering 60%, between FY2000/ 01 and FY2003/ 04.
This decline is the most striking, and perhaps most symbolic, example of
revenue volatility stemming from the downturn in the economy. Between
FY 1998/ 99 and FY 1999/ 00, hotel/ motel tax revenues nearly doubled,
growing to $ 4.3 million in FY 2000/ 01. Five years after the sharp drop,
staff believes the hotelmarketmay have stabilized; monthly receipts through
February 2007 show approximately 23% revenue growth from the same
period of 2006. The FY 2007/ 08 projection of 10% growth, which would
yield $ 3.2 million in revenue, reflects cautious optimism that the rebound
will continue.
Chart # 1 - Sales T ax Volatility: FY 1999/ 00 - FY 2006/ 07 ( Q4)
Quarterly Change* from Same Quarter of the Prior Year
- 20.0%
- 10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY 99/ 00 FY 00/ 01 FY 01/ 02 FY 02/ 03 FY 03/ 04 FY 04/ 05 FY 05/ 06 FY 06/ 07
* Data not necessarily reflective of actual revenues received. Data adjusted for economic period payment irregularities
to illustrate underlying economic conditions.
City of Fremont 2007/ 08Adopted Operating Budget
49
General Fund Summary
Business license taxes and franchise fees remain relatively stable, with
moderate growth projected for both. Business license taxes are projected to
yield $ 6.6million in FY2006/ 07, and $ 7.0million in FY2007/ 08. The City
levies franchise fees on providers of electricity, natural gas, residential garbage
and recycling, and cable television services. Franchise fee revenues are
based on franchisee gross revenues, which are largely a function of rates
and customer usage. Electricity and gas franchise fees are themost volatile,
and have the largest effects on City revenues. Increases in customer rates
and growth in number of customers result in a revenue projection of
$ 8.5 million for FY2007/ 08.
Table # 1 includes a line for “ other revenues,” which contains charges for
services, lawenforcement fines, paramedic fees, and State reimbursements
for mandated services. With the exception of State reimbursements for
mandated services, the revenues in this category are each projected to
grow modestly with the recovering economy, resulting in a $ 0.5 million
increase. This is offset by a decrease in Statemandated cost reimbursement
of $ 0.7million, for an overall reduction in this line of $ 0.2million. The State
reimburses cities for these costs as it has money to do so. As a result, even
though the City has a receivable due from the State for these costs of
$ 1 million, it is very difficult to predict when or if that reimbursement will
be received.
TheGeneral Fund receives transfers from other funds ( such as development
services and recreation services) for general government services ( such
as human resources, finance, and legal assistance) provided to operations
funded outside the General Fund. Charges are based on the non- General
Fund operation’s proportional share of the total operating budget expenditures
and transfers out. This proportional share of the total budget is the share of
general government service costs allocated. In FY 2006/ 07, transfers in
from other funds are projected to be $ 7.3 million. Based on budgeted
expenditures, transfers in are expected to total $ 7.4 million in FY 2007/ 08.
Undesignated fund balance is another resource available to balance the
budget. If, in a given year, total resources available exceed total uses, the
“ surplus” increases fund balance. Fund balance has been a crucial resource
for cushioning the City’s transition to a lower revenue base in recent years.
Instead of spending all of the revenue received during the “ boom” years of
the late 1990s, the City set aside a portion of annual revenues in fund
balance for use in future years. When revenues dropped suddenly during
FY 2001/ 02 and the City anticipated a year- end budget shortfall, the City
used $ 10 million of fund balance to balance the budget. If fund balance had
not been available, the Citywould have had to use reserve funds or suddenly
cut services, through staffing layoffs, to end the year in financial balance.
The City is expecting to add $ 3.2 million to fund balance in FY 2006/ 07.
This will result in undesignated fund balance of $ 9.3million with which to
begin FY 2007/ 08. Of this amount, $ 5.8 million is expected to be used to
help balance the budget, add some critically needed public safety staffing,
City of Fremont 2007/ 08Adopted Operating Budget
50
General Fund Summary
make an additional contribution for maintenance of the City’s streets, and
begin to fund the City’s unfunded liability for retiree medical costs.
Expenditures
The tech sector recession that began in 2001, coupled with the terrorist
attacks of September 11, 2001, caused a dramatic drop in City revenues in
FY 2001/ 02 and FY 2002/ 03. That relatively sudden revenue shock
prompted budget cuts of greater than 20% and service cuts throughout the
City organization. These cutswere disruptive to the community and to City
employees; 224 positionswere eliminated, approximately half ofwhichwere
filled and required layoffs. The continued bleak economic picture for the
five years following these events required the City to bring ongoing costs
into linewith a permanently lower revenue base. The City is nowbeginning
to see some modest improvement in its revenues and that, combined with
the receipt of a $ 1 million Staffing for Adequate Fire and Emergency
Response ( SAFER) grant fromtheU. S. Department of Homeland Security
over five years, will allow the City to begin to add back some desperately-needed
public safety staffing and make some additional money available
for long- overdue street maintenance. Because the City has unrestricted
fund balance with which to begin FY2007/ 08, these additions can bemade
earlier than might otherwise have been the case.
Charts # 2 and # 3: FY 2007/ 08
General Fund Budgeted Expenditures
Distributed by Department
Police
37%
Fire
21%
Transporation & Operations
12%
General Government
9%
Human Services
2%
Parks & Recreation
5%
Community Developement
3%
Debt
6%
Other
2%
Capital Projects
3%
Distributed by Function
Police
44%
Fire
25%
Maintenance
18%
Human Services
3%
Recreation
3%
Community Development
3%
Capital Projects
2%
Other
2%
City of Fremont 2007/ 08Adopted Operating Budget
51
General Fund Summary
FY 2007/ 08 budgeted expenditures and transfers to other funds total
$ 147.2 million. The budgetmaintains the City Council’s long- time funding
priorities by allocating almost two- thirds of the budget to direct costs for
public safety and maintenance. As Chart # 3 shows, the share of General
Fund resources budgeted for these purposes is actually 87% when overhead
costs required to support these functions are allocated.
The $ 147.2million budgeted for expenditures and transfers out in FY2007/ 08
is 12.8% higher than in FY 2006/ 07. Included in FY 2007/ 08 are two one-time
items: a $ 2.8 million cash transfer to the Risk Management Fund in
exchange for land of equal value held by that fund, and a $ 1.5 million
transfer to the Capital Improvement Program( CIP) for streetmaintenance.
When these items are factored out, the actual increase in FY 2007/ 08
budgeted expenditures and transfers out is 9.5%. The budget includes
funding for 18 new public safety positions, in addition to cost increases
attributable to rising costs ofmaintaining the balance of the existing, reduced
service base. Like all businesses, the City must cope with rising costs for
everything from service contracts and utilities to employee salaries and
health care.
BasicCity services, such as police, fire, andmaintenance, are labor- intensive.
Therefore, theCity’s budget is largely driven by labor- related costs, including
salaries, health benefits, and retirement systemcontributions. These costs
comprise 80% of the FY2007/ 08 budgeted expenditures ( excluding transfers
out to other funds), or $ 81.4million.
Risk management costs, specifically workers’ compensation and general
liability, are decreasing slightly in FY2007/ 08. This decrease is offset by
other cost increases for FY 2007/ 08, which are routine and modest, and
linked to assumptions for general consumer inflation. The budget for
materials, supplies, and other non- staffing items is increasing by2%.
Transfers Out to Other Funds
In addition to direct expenditures, the General Fund transfers resources to
other funds to support activities that cannot be supported through fees,
grants, or charges for service. These activities range from capital projects
and debt service, to maintenance and certain cost center operations, to
reserve accounts with specific purposes.
The transfer to the Capital Improvement Program ( CIP) for projects is
generally funded at $ 1.0million each year. Each year, there is also a transfer
of $ 1 million specifically for the Downtown Project. In FY 2007/ 08, an
additional $ 1.5million specifically for streetmaintenancewill be transferred,
for a total transfer of $ 3.5 million.
The transfer to Maintenance is increasing by $ 0.9 million, which is 4.6%
more than the FY 2006/ 07 level. This amount includes the transfer of the
City’s Environmental Compliance function fromthe Fire Department to the
City of Fremont 2007/ 08Adopted Operating Budget
52
General Fund Summary
Transportation and Operations Department, as well as partially covering
increasing employee costs.
Transfers to cost centers, which are enterprise- likemechanisms for funding
the Community Development, Recreation, and Senior Center functions,
are increasing by 3%, to $ 5.3 million total.
The transfer for debt service on the City’s outstanding capital debt is
increasing by $ 0.6million. Part of this increase is due to the payment of full
debt service on one of the outstanding debt issues ( in FY 2006/ 07, only a
partial payment was required from the General Fund because there were
sufficient reserves available to pay the balance of the payment). The balance
of the increase is attributable to the way in which bond covenants require
the City to budget for debt service on its variable rate debt ( generally, 1%
above the highest interest rate of the prior year). This is a “ worst- case”
scenario because experience has shown that actual debt service costs are
generally less than this amount.
There are two other proposed transfers out that are new this year. The
first is a one- time transfer of $ 2.8 million to the RiskManagement Fund in
exchange for land of the same value held by that fund. This land was
acquired by the City’s Risk Management Fund in the 1980s to settle a
potential claimagainst theCity. In order to ensure that theRiskManagement
Fund has sufficient liquidity to pay claims, theGeneral Fund shouldmake a
one- time transfer of cash to the Risk Management Fund in an amount
equal to the original acquisition price of the land ($ 2.8million), and the land
would be removed from the RiskManagement Fund and reported with all
of the City’s other capital assets. Because of concerns about the
sustainability of the modest economic recovery, this transfer is contingent
on positive results at the mid- year budget review.
The second new transfer is an ongoing transfer initiated in response to a
change in accounting and financial reporting rules for retireemedical costs.
GovernmentalAccounting Standards Board ( GASB) Statement 45 requires
that other post- employment benefits ( OPEB), such as retireemedical costs,
be accounted for in a manner similar to retirement benefits. The City, like
most cities in the country, accounts for this benefit on a pay- as- you- go
basis. The City had an actuarial valuation performed to quantify the amount
of its unfunded liability as of June 30, 2006. Based on that valuation,
$ 2.3 million needs to be set aside, in addition to the pay- as- you- go costs, to
begin to fund this unfunded liability. However, because of concerns about
the sustainability of the current modest economic recovery, this transfer is
contingent on positive results at the mid- year budget review.
The General Fund contains three reserves that may be funded with annual
transfers from the General Fund:
 the Contingency Reserve, which is intended to helpmitigate the effects
of natural disasters and severe, unforeseen events;
City of Fremont 2007/ 08Adopted Operating Budget
53
General Fund Summary
 the ProgramInvestment Reserve, which provides a source of working
capital for newinitiatives that have the potential to generate significant
funding from external sources; and
 theBudgetUncertaintyReserve, which is intended to offset quantifiable
revenue uncertainty in the budget.
Table # 2 summarizes the FY 2007/ 08 projected funding levels for each
reserve. Funding levels for the Contingency Reserve and the Program
Investment Reserve are linked to the amount of total expenditures and
transfers out budgeted each year ( 12.5% and 2.5%, respectively). However,
in order to avoid over- funding these two reserves, the one- time $ 2.8million
transfer of cash to the RiskManagement Fund in exchange for land has not
been included in the calculation of the reserve requirement. Based on the
proposed budget for expenditures and transfers out, adjusted as described
in the preceding sentence, the transfer to these reserves will total $ 2million
in FY2007/ 08. In addition, $ 4.1millionwill be transferred fromthe Budget
Uncertainty Reserve to the Capital Improvement Program( CIP) to provide
additional funding for capital projects.
As the table below illustrates, the two “ core” General Fund reserves
( ContingencyReserve and ProgramInvestmentReserve) are increasing from
$ 19.4million to $ 21.4million to keep their balances in compliancewithCity
Council reserve policies ( whichmay be found in the “ Policies andGlossary”
section of this document). The Budget Uncertainty Reserve level does not
have a targeted funding level, so there is no required contribution in
FY 2007/ 08. However, there is a transfer out to the CIP, as described
above, thatwill result in a decrease in this reserve balance from$ 15.3 million
to $ 11.2million ( 7.6%, or less than onemonth, ofGeneral Fund expenditures
and transfers out).
The FY 2007/ 08 budget does not anticipate the need to spend the City’s
two core reserves. However, experience since FY 2001/ 02 has reminded
the City how quickly the economy can change or the State can take City
revenues to solve its problems. Related budget experience has further
shown how quickly one- time resources ( fund balance, for example) can be
consumed in response to sudden revenue losses. With these lessons in
mind, the City is reluctant to spend reserves because they are one- time
resources, and once they are spent, they are gone. However, for FY2007/ 08,
the City is drawing down $ 4.1million of the Budget Uncertainty Reserve to
help fund some one- time capital projects.
Table # 2: General Fund Reserves
FY 2006/ 07
balance
FY 2007/ 08
transfer
FY 2007/ 08
projected use
FY 2007/ 08
balance
Contingency Reserve $ 16.2 million $ 1.6 million $ 0.0 million $ 17.8 million
Program Investment Reserve 3.2 million 0.4 million 0.0 million 3.6 million
Budget Uncertainty Reserve 15.3 million 0.0 million ( 4.1) million 11.2 million
Total General Fund Reserves $ 34.7 million $ 2.0 million $( 4.1) million $ 32.6 million
City of Fremont 2007/ 08Adopted Operating Budget
54
General Fund Summary
Financial Forecast
The financial forecast is a planning tool that helps staff identify important
trends and anticipate the longer- term consequences of budget decisions.
While not perfect, the forecast tools have been instrumental in modeling
the effects of such recent budget issues as rising retirement system costs,
the short- and long- term consequences of issuing variable rate debt, and
potential scenarios of future revenue performance. The ability to model
cost and revenue trends beyond the next budget year helps the City make
proactive budget decisions early in an economic cycle, such as the recent
economic downturn. As a case in point, delaying the budget cuts adopted
with the FY 2003/ 04 budget would have resulted in even larger gaps to
close, and more drastic solutions to endure, in the ensuing fiscal years.
The forecast is not a plan, but amodel based on cost and revenue assumptions
that are updated continuously. Of these components, future cost projections,
based on known costs, are relatively reliable. Revenue forecasts, on the
other hand, are based on assumptions related to future economic conditions,
which are fraughtwith uncertainty. Economic forecasts in financialmarkets
and the media swing from optimistic to pessimistic on a seemingly weekly
basis, and demonstrate the perils of committing to a particular prediction of
the future. For this reason, the forecast is updated continuously, and is the
subject of periodic CityCouncil discussion.
Key forecast assumptions:
 While Proposition 1A, passed by California voters in 2004, provides
limited protection for local revenues, potential State revenue takeaways
are not predictable enough to warrantmodeling, and are not included in
the forecast. The State can once again take money from local
government to balance its own budget beginning in FY2008/ 09.
 Significant additional revenueswithin existing revenue categories ( e. g.,
property and/ or sales tax) due to planned newconstruction are included.
 Most of the service reductions and corresponding budget reductions
implemented in prior years remain in place for the forecast period, with
the exception of newpublic safety staffing and additional contributions
for street maintenance and pre- funding of retiree medical costs.
 Commitments for fund transfers contained in the proposed FY2007/ 08
– FY 2011/ 12 CIP are included.
 Commitments for all known and anticipated debt service are included.
The financial forecast is located on page 73 of the budget document.
Projected costs exceed projected resources ( excluding fund balance and
reserves) in FY 2007/ 08. The forecast suggests that beginning in
FY 2008/ 09, resourceswill be adequate to support the service levels included
in the FY 2007/ 08 budget.
City of Fremont 2007/ 08Adopted Operating Budget
55
General Fund
Operating
Resources
General FundAvailable Resources
Fiscal Year 2007/ 08: $ 147,175,000
Property Tax
32%
Property Tax
( VLF Replacement)
Triple Flip 10%
Sales Tax
6%
Sales & Use Taxes
19%
Other Taxes & Fees
16%
Vehicle License Fees
1%
Fund Balance
4%
Interest Earnings
2%
Franchise Fees
2%
Operating Transfers In
5%
Other Revenues
2%
Hotel/ Motel Taxes
1%
City of Fremont 2007/ 08Adopted Operating Budget
56
General Fund
Allocation of
Resources
General Fund Expenditures
Fiscal Year 2007/ 08: $ 101,493,000
General Fund TransfersOut
Fiscal Year 2007/ 08: $ 45,682,000
Other
Human Services 4%
3%
General Government
12%
Fire
29%
Police
52%
Reserves
5%
Maintenance
&
Capital Projects
60%
Cost Centers
13%
Debt
22%
57
General Fund appropriations not directly associated with specific
departments are classified as “ nondepartmental.” Expenditures and certain
types of anticipated general savings that are not identified with or allocated
to individual departments are included in the non- departmental budget.
Budgeted Expenditures
• AnnualOperatingContingencyAccount
• Employee leave cash- out
• Propertytax administration fee, revenue audit
fees, and debt administration fees
• Other non- departmental
Non- Departmental Budget
$ 1,100,000
Non- Departmental
Budget
1,000,000
497,000
$ 3,372,000
775,000
City of Fremont 2007/ 08Adopted Operating Budget
58
59
General Fund
Revenues
Overview
Total FY 2007/ 08 General Fund estimated revenues ( excluding transfers
fromother funds and fund balance) are $ 134.0million, which is $ 7.6million,
or 6%, more than total estimated revenues for FY 2006/ 07. Seventy- six
percent of the City’s revenue is controlled by the State, including property
tax, sales tax, and vehicle license fees, all ofwhich the State hasmanipulated
in recent years.
In March 2000, Fremont and the rest of Silicon Valley were riding a stock
market crest and enjoying the fruits of that summer’s record shipments of
the high- tech products produced in the area. The winter 2000 “ dot- com”
collapse