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CITY OF BRENTWOOD

2007/ 08 — 2008/ 09

OPERATING BUDGET

Every year the City selects a theme for the covers of its major financial documents — the

CIP Budget, the Operating Budget, the Cost Allocation Plan, the Fiscal Model and the

Comprehensive Annual Financial Report. This year each of the covers will portray an

aspect of the City’s recently adopted tagline — HERITAGE · VISION · OPPORTUNITY. This

year’s Operating Budget cover depicts the vision for the Brentwood Boulevard Corridor,

a neighborhood- oriented “ Grand Boulevard”.

COVER: All of the photos depict elements appropriate for a “ Grand Boulevard”. The

photo in the upper left had corner is an example of an office building. The photo in the

upper right hand corner shows examples for a neighborhood. The photo in the bottom

left corner is an example of mixed use buildings— retail and residential. The photo in the

bottom right corner shows an example of a boulevard. The picture in the middle depicts

examples of storefront styles and elevations.

CITY OF BRENTWOOD

OPERATING BUDGET

2007/ 08 – 2008/ 09 Operating Budget Page i

City Officials

Robert Taylor......................................................................................................................... ......... Mayor

Robert Brockman ................................................................................................................... Vice- Mayor

Chris Becnel ................................................................................................................... Council Member

Brandon Richey.............................................................................................................. Council Member

Erick Stonebarger ......................................................................................................... Council Member

Executive Team

Donna Landeros................................................................................................................... City Manager

Damien Brower ................................................................................................................... City Attorney

Craig Bronzan ........................................................................................ Director of Parks & Recreation

Karen Chew......................................................................................................... Assistant City Manager

Pamela Ehler ........................................ City Treasurer / Director of Finance & Information Systems

Mark Evenson ..................................................................................................................... Chief of Police

Bailey Grewal ........................................................................ Director of Public Works / City Engineer

Howard Sword ............................................................................ Director of Community Development

CITY OF BRENTWOOD

OPERATING BUDGET

TABLE OF CONTENTS

2007/ 08 – 2008/ 09 Operating Budget Page ii

Budget Preface

City Officials and Administration ............................................................................................................................... .................................... i

Table of Contents ............................................................................................................................... ............................................................ ii

Budget Message ............................................................................................................................... ............................................................. xi

City Organizational Chart ............................................................................................................................... ........................................... xxv

Community Services Location Map ............................................................................................................................... .......................... xxvi

Certificate of Award – GFOA ............................................................................................................................... .................................. xxvii

Certificate of Award – CSMFO ............................................................................................................................... .............................. xxviii

Budget Documents ............................................................................................................................... ..................................................... xxix

Budget Policy ............................................................................................................................... ............................................................ xxxii

Budget Development Process ............................................................................................................................... .................................. xxxiv

Budget Calendar ............................................................................................................................... ...................................................... xxxiv

City Revenue Sources ............................................................................................................................... .............................................. xxxvi

City Expenditures ............................................................................................................................... .................................................... xxxix

Constitutional Spending Limits ............................................................................................................................... ..................................... xl

Significant Accounting Policies ............................................................................................................................... .................................... xli

Long- Term Debt ............................................................................................................................... ........................................................ xliii

Capital Improvement Budget Overview ............................................................................................................................... ..................... xlvi

Capital Improvement Program Summary ............................................................................................................................... .... xlvii

Non- Recurring Capital Costs ............................................................................................................................... ...................... xlviii

Capital Improvements for Fiscal Years 2007/ 08 and 2008/ 09 ...................................................................................................... xlix

Capital Improvement Program Revenue Summary ......................................................................................................................... liv

Capital Improvement Program Accomplishments ............................................................................................................................ lv

Resolution No. 2007- 150 ( Adopting the City’s Operating Budget for Fiscal Years 2007/ 08 – 2008/ 09) ........................................................................ lvi

Resolution No. 2007- 147 ( Establishing an Appropriations Limit) ........................................................................................................................ lvii

Annual Budget Summary ( All Funds) ............................................................................................................................... ................ 1

General Fund

Ten Year Projection ............................................................................................................................... .................................................... 11

Fund Balance ............................................................................................................................... ................................................................ 12

Revenue and Interfund Transfers Graph ............................................................................................................................... ....................... 14

Revenue Summary ............................................................................................................................... ......................................................... 15

Revenue Detail......................................................................................................................... ..................................................................... 16

CITY OF BRENTWOOD

OPERATING BUDGET

TABLE OF CONTENTS

2007/ 08 – 2008/ 09 Operating Budget Page iii

General Fund ( Cont.)

Schedule of Interfund Transfers ............................................................................................................................... .................................... 22

Expenditures Graph ............................................................................................................................... ...................................................... 23

Expenditure Summary ............................................................................................................................... .................................................. 24

Summary of Expenditures by Category ............................................................................................................................... ........................ 26

Personnel Services Expenditure Summary ............................................................................................................................... ................... 27

Supplies and Services Expenditure Summary ............................................................................................................................... .............. 29

Internal Service Expenditure Summary ............................................................................................................................... ........................ 31

Capital Outlay Expenditure Summary ............................................................................................................................... .......................... 33

Listing of General Fund Divisions ............................................................................................................................... ................................ 35

Legislative ............................................................................................................................... ..................................................................... 36

City Administration

Organizational Chart ............................................................................................................................... ..................................................... 39

City Manager ............................................................................................................................... ................................................................ 43

City Clerk ............................................................................................................................... ...................................................................... 46

Human Resources ............................................................................................................................... ......................................................... 49

City Attorney

City Attorney ............................................................................................................................... ................................................................ 56

Finance and Information Systems

Administrative Services ............................................................................................................................... ................................................ 63

Purchasing ............................................................................................................................... ..................................................................... 66

Business Services ............................................................................................................................... .......................................................... 69

Financial Services ............................................................................................................................... ......................................................... 72

Non- Departmental ............................................................................................................................... ......................................................... 75

Community Services ............................................................................................................................... ..................................................... 78

CITY OF BRENTWOOD

OPERATING BUDGET

TABLE OF CONTENTS

2007/ 08 – 2008/ 09 Operating Budget Page iv

Police

Police ............................................................................................................................... ............................................................................ 83

Youth Diversion Program ............................................................................................................................... ............................................. 87

Community Development

Economic Development ............................................................................................................................... ................................................ 92

Building ............................................................................................................................... ........................................................................ 95

Planning ............................................................................................................................... ........................................................................ 99

Planning Commission ............................................................................................................................... ................................................. 103

Public Works

Street Maintenance ............................................................................................................................... ...................................................... 109

Development Engineering ............................................................................................................................... .......................................... 113

Construction Inspection ............................................................................................................................... .............................................. 117

Traffic & Transportation ............................................................................................................................... ............................................. 121

NPDES ............................................................................................................................... ........................................................................ 125

Parks and Recreation

Recreation Administration ............................................................................................................................... .......................................... 132

City Pool ............................................................................................................................... ..................................................................... 135

Park and Recreation Commission ............................................................................................................................... ............................... 138

Youth Commission ............................................................................................................................... ..................................................... 140

Park Planning ............................................................................................................................... .............................................................. 142

Cultural Arts ............................................................................................................................... ............................................................... 145

Community Center ............................................................................................................................... ...................................................... 148

Senior Programs ............................................................................................................................... .......................................................... 150

Sports ............................................................................................................................... .......................................................................... 153

Programs ............................................................................................................................... ..................................................................... 156

Landscape Operations ............................................................................................................................... ................................................. 159

Police Activity League ............................................................................................................................... ................................................ 163

CITY OF BRENTWOOD

OPERATING BUDGET

TABLE OF CONTENTS

2007/ 08 – 2008/ 09 Operating Budget Page v

Capital Improvement Program

Summary ............................................................................................................................... ..................................................................... 171

Revenue and Expenditure Summary ............................................................................................................................... ........................... 172

Capital Improvement Program Administration ............................................................................................................................... ........... 173

Capital Improvement Program Project Services ............................................................................................................................... ......... 177

Roadway CIP Projects ............................................................................................................................... ................................................ 178

Community Facilities CIP Projects ............................................................................................................................... ............................. 179

Parks and Trails CIP Projects ............................................................................................................................... ..................................... 180

City CIFP Capital ............................................................................................................................... ........................................................ 181

Drainage CIP Projects ............................................................................................................................... ................................................. 182

Vineyards Projects ............................................................................................................................... ...................................................... 183

Solid Waste CIP Projects ............................................................................................................................... ............................................ 184

Water CIP Projects ............................................................................................................................... ...................................................... 185

Wastewater CIP Projects ............................................................................................................................... ............................................. 186

Solid Waste Enterprise

Net Assets ............................................................................................................................... ................................................................... 192

Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 193

Revenue and Expense Summary ............................................................................................................................... ................................. 194

Revenue Detail ............................................................................................................................... ............................................................ 195

Expense Detail ............................................................................................................................... ............................................................ 196

Operations ............................................................................................................................... ................................................................... 197

Utility Billing ............................................................................................................................... .............................................................. 201

Transfer Station ............................................................................................................................... ........................................................... 204

Replacement ............................................................................................................................... ................................................................ 208

Water Enterprise

Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 215

Revenue and Expense Summary ............................................................................................................................... ................................. 216

CITY OF BRENTWOOD

OPERATING BUDGET

TABLE OF CONTENTS

2007/ 08 – 2008/ 09 Operating Budget Page vi

Water Enterprise ( Cont.)

Revenue Detail ............................................................................................................................... ............................................................ 217

Non- Potable Water ............................................................................................................................... ...................................................... 226

Wastewater Enterprise

Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 237

Revenue and Expense Summary ............................................................................................................................... ................................. 238

Revenue Detail ............................................................................................................................... ............................................................ 239

Lateral Maintenance ............................................................................................................................... .................................................... 248

City Rentals Enterprise

Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 259

Revenue and Expense Summary ............................................................................................................................... ................................. 260

Revenue Detail ............................................................................................................................... ............................................................ 261

CAM Main Rental ............................................................................................................................... ....................................................... 262

College Rental ............................................................................................................................... ............................................................. 264

Incubator Rental ............................................................................................................................... .......................................................... 266

CITY OF BRENTWOOD

OPERATING BUDGET

TABLE OF CONTENTS

2007/ 08 – 2008/ 09 Operating Budget Page vii

Housing Enterprise

Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 274

Revenue and Expense Summary ............................................................................................................................... ................................. 275

Revenue Detail ............................................................................................................................... ............................................................ 276

Housing Administration ............................................................................................................................... .............................................. 277

Housing Rental ............................................................................................................................... ........................................................... 280

Special Revenue Funds

Reserves ............................................................................................................................... ...................................................................... 283

Revenue Detail ............................................................................................................................... ............................................................ 287

Gas Tax ............................................................................................................................... ....................................................................... 294

Police Grants ............................................................................................................................... ............................................................... 295

Other Grants ............................................................................................................................... ................................................................ 296

Economic Development ............................................................................................................................... .............................................. 297

Arts Commissions Programs ............................................................................................................................... ....................................... 298

Agriculture Park & History Admin ............................................................................................................................... ............................. 300

Asset Forfeiture ............................................................................................................................... ........................................................... 301

Abandoned Vehicle Abatement ............................................................................................................................... .................................. 302

PEG Media ............................................................................................................................... .................................................................. 303

Measure C ............................................................................................................................... ................................................................... 304

Water Facility ............................................................................................................................... ............................................................. 305

Roadway Facility/ Street Improvement ............................................................................................................................... ....................... 306

Parks & Trails ............................................................................................................................... ............................................................. 307

Storm Drain ............................................................................................................................... ................................................................. 308

Wastewater Facility ............................................................................................................................... .................................................... 309

Community Facilities ............................................................................................................................... .................................................. 310

Fire Fees ............................................................................................................................... ...................................................................... 311

Open Space ............................................................................................................................... ................................................................. 312

Facility Fee Administration ............................................................................................................................... ........................................ 313

Agriculture Administration ............................................................................................................................... ......................................... 314

Agriculture Land ............................................................................................................................... ......................................................... 316

CITY OF BRENTWOOD

OPERATING BUDGET

TABLE OF CONTENTS

2007/ 08 – 2008/ 09 Operating Budget Page viii

Special Revenue Funds ( Cont.)

Affordable Housing In- Lieu ............................................................................................................................... ....................................... 317

Public Art Administration ............................................................................................................................... ........................................... 318

Public Art Acquisition ............................................................................................................................... ................................................ 320

Parking In- Lieu ............................................................................................................................... ........................................................... 321

98- 1 City Wide Assessment District ............................................................................................................................... ........................... 322

Community Facilities District # 2 ............................................................................................................................... ................................ 326

Community Facilities District # 3 ............................................................................................................................... ................................ 327

Community Facilities District # 4 ............................................................................................................................... ................................ 328

Community Facilities District # 5 ............................................................................................................................... ................................ 329

94- 1 Blackhawk LLD Assessment District ............................................................................................................................... ................. 330

95- 5 California Spirit LLD Assessment District ............................................................................................................................... ......... 331

95- 6 Gerry Ranch LLD Assessment District ............................................................................................................................... .............. 332

95- 2 Hawthorn LLD Assessment District ............................................................................................................................... ................... 333

95- 7 Greystone LLD Assessment District ............................................................................................................................... .................. 334

95- 8 Garin LLD Assessment District ............................................................................................................................... .......................... 335

97- 1 Hancock LLD Assessment District ............................................................................................................................... .................... 336

98- 5 Arroyo Seco LLD Assessment District ............................................................................................................................... .............. 337

98- 3 Solana LLD Assessment District ............................................................................................................................... ........................ 338

98- 4 Birchwood Estates LLD Assessment District ............................................................................................................................... ..... 339

99- 3 Spa L ............................................................................................................................... ................................................................... 340

99- 4 California Grove ............................................................................................................................... ................................................. 341

99- 5 Deer Creek ............................................................................................................................... .......................................................... 342

99- 6 Trailside ............................................................................................................................... .............................................................. 343

99- 7 Termo ............................................................................................................................... ................................................................. 344

99- 8 Gerry Ryder ............................................................................................................................... ........................................................ 345

99- 9 Richmond America ............................................................................................................................... ............................................. 346

00- 2 Lyon Woodfield ............................................................................................................................... .................................................. 347

00- 3 CA Orchard ............................................................................................................................... ........................................................ 348

00- 4 Brentwood Park ............................................................................................................................... .................................................. 349

01- 1 Laird Property ............................................................................................................................... ..................................................... 350

02- 2 Oak Street ( Schuler- Lyon) ............................................................................................................................... .................................. 351

02- 3 Apricot Way ( Pringle) ............................................................................................................................... ........................................ 352

02- 4 Braddock & Logan ............................................................................................................................... ............................................. 353

02- 5 Sand Creek & Brentwood Blvd. ............................................................................................................................... ......................... 354

CITY OF BRENTWOOD

OPERATING BUDGET

TABLE OF CONTENTS

2007/ 08 – 2008/ 09 Operating Budget Page ix

Special Revenue Funds ( Cont.)

02- 6 Balfour & John Muir ............................................................................................................................... .......................................... 355

02- 7 San Jose & Sand Creek ............................................................................................................................... ....................................... 356

02- 8 Lone Tree Arco ............................................................................................................................... ................................................... 357

02- 9 Balfour Plaza ............................................................................................................................... ...................................................... 358

02- 11 Lone Tree Plaza ............................................................................................................................... ................................................ 359

02- 12 Sunset Industrial ............................................................................................................................... ............................................... 360

02- 13 Stonehaven ............................................................................................................................... ....................................................... 361

03- 2 Meritage Lone Tree ............................................................................................................................... ............................................ 362

03- 3 Brookdale Court ............................................................................................................................... ................................................. 363

03- 5 West Summerset ............................................................................................................................... ................................................. 364

03- 7 Garin Ranch Commercial ............................................................................................................................... ................................... 365

04- 2 Balfour Griffith Commercial ............................................................................................................................... .............................. 366

05- 2 South Brentwood Blvd Commercial ............................................................................................................................... ................... 367

06- 4 Villa Amador ............................................................................................................................... ...................................................... 368

Internal Service Funds

Revenue and Expenditure Summary ............................................................................................................................... ........................... 370

Revenue Detail ............................................................................................................................... ............................................................ 371

Summary of Expenditures by Category ............................................................................................................................... ...................... 377

Emergency Preparedness ............................................................................................................................... ............................................ 379

Information Services ............................................................................................................................... ................................................... 380

Equipment Replacement ............................................................................................................................... ............................................. 383

Information Systems Replacement ............................................................................................................................... ............................. 385

Facilities Replacement ............................................................................................................................... ................................................ 387

Tuition ............................................................................................................................... ......................................................................... 389

Fleet Maintenance Service ............................................................................................................................... .......................................... 390

Facilities Maintenance Services....................................................................................................................... ........................................... 393

Parks & LLD Replacement ............................................................................................................................... ......................................... 396

Insurance ............................................................................................................................... ..................................................................... 397

CITY OF BRENTWOOD

OPERATING BUDGET

TABLE OF CONTENTS

2007/ 08 – 2008/ 09 Operating Budget Page x

Debt Service Funds

Introduction ............................................................................................................................... ................................................................. 399

Summary of Fund Balances ............................................................................................................................... ........................................ 400

Summary of Revenues ............................................................................................................................... ................................................ 401

Summary of Expenditures ............................................................................................................................... ........................................... 404

Redevelopment Agency

List of Officers ............................................................................................................................... ............................................................ 409

Revenue ............................................................................................................................... ...................................................................... 415

Administration & Projects ............................................................................................................................... .......................................... 417

Low/ Moderate Housing ............................................................................................................................... .............................................. 421

Debt Service ............................................................................................................................... ................................................................ 424

Resolution ............................................................................................................................... ................................................................... 426

Appendix

Adopted Equipment List ............................................................................................................................... ............................................. A- 1

Vehicle Replacement List ............................................................................................................................... ........................................... A- 2

Compensation Plan ............................................................................................................................... ..................................................... A- 5

New Personnel Requests ............................................................................................................................... ............................................. A- 9

Summary of Positions ............................................................................................................................... ............................................... A- 10

City Basic Data ............................................................................................................................... ......................................................... A- 12

History of Population Growth ............................................................................................................................... ................................... A- 13

Ten Year Personnel History ............................................................................................................................... ...................................... A- 14

Guide to Funds by Fund Numbers ............................................................................................................................... .............................. B- 1

Glossary of Terms ............................................................................................................................... ....................................................... C- 1

Acronyms ............................................................................................................................... .................................................................... D- 1

Index ............................................................................................................................... ......................................................... E- 1

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xi

June 2007

The Honorable Mayor, Members of the City Council and Citizens of Brentwood

City of Brentwood

Brentwood, California 94513

Dear Mayor Taylor, Members of the City Council and Citizens of Brentwood:

I am pleased to submit the Recommended Operating Budget for the City of Brentwood and the Brentwood Redevelopment Agency for

Fiscal Years 2007/ 08 and 2008/ 09. The City’s Operating Budget of $ 246.6 million and the Redevelopment Agency’s Budget of $ 10.8

million adhere to the City Council’s objectives and support the City Council’s strategic initiatives.

Strategic Initiatives

( listed alphabetically)

Customer Service

Economic Development

Infrastructure and Public Facilities

Neighborhood Improvement

Public Safety

Regional / Local Transportation

Technology

The question asked most frequently these days, with regards to the housing downturn and its affect on the City’s budget, is whether

the City can support the current service levels without borrowing from reserves, cutting services or laying off employees? The answer

is “ Yes”. Credit for the City’s financial stability should be given to the current and previous City Councils’ conservative fiscal

decisions. The City is well prepared to work for the future, while conservatively managing our current resources.

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xii

One of the hardest parts of serving in government is the desire to say “ yes” to the many compelling needs during the good times,

without planning for inevitable downturns. When the downturns occur it is extremely difficult to unwind the previous spending

decisions without huge disruptions in services. The City Council and staff have worked very hard over the last three years to prepare

for this downturn. The City has continued to have a goal of 1.5 police officers per 1000 residents, one of the highest levels of public

safety funding in California. At the same time we have limited the number of new employees hired to insure that our work force is

sustainable during economic downturns.

This recommended budget funds the current number of employees and the salary adjustments that are included in our labor

agreements. The City is very fortunate to have a very talented and dedicated workforce and we want to continue to make the City of

Brentwood an employer of choice in our region. Additionally, the City has continued the investment in infrastructure to support

future growth while maintaining the quality of our streets, parks and neighborhoods for our current residents.

The City continues to work to “ bring Brentwood’s vision to reality” through the Downtown Specific Plan, the Civic Center Plan and

the Brentwood Boulevard Specific Plan. These three plans will completely change the look of the older parts of Brentwood which

haven’t benefited from development to the same degree as the newer parts of the City.

I wish to thank the City Council for the recently adopted Strategic Plan which has provided the clear policy direction and goals used to

prepare the recommended Operating Budget. I would also like to express my appreciation to all those staff members who have taken

the time to participate in the development of the Operating Budget. A tremendous amount of effort and attention to detail has gone

into the preparation of this budget document, representing many hours of work by staff members throughout the organization.

The City is firmly committed to meeting each and every challenge that building a premier community might bring. This budget is the

next step towards meeting those challenges. By continuing to follow the budget policy set forth by the City Council, Brentwood will

continue to deliver the highest level of service permitted by the available resources.

Sincerely,

Donna Landeros

City Manager

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xiii

Mission Statement

Bringing Brentwood’s Vision to Reality

Vision and Culture

We are an organization of dedicated professionals working together to make Brentwood

the very best, preserving its rich heritage and keeping Brentwood in the hearts of the

people.

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xiv

BUDGET OVERVIEW

This Operating Budget underscores the City Council’s commitment to continue to make cost containment a high priority while

adhering to the Budget Development Guidelines. Fiscal strength and long- term financial stability are key components of these

principles, which have resulted in a projected General Fund Reserve of $ 23.8 million for FY 2007/ 08. The following budgetary

principles guided the City in preparation of this budget:

1. The Operating Budget is balanced, with on- going revenues covering on- going expenditures.

2. Revenues are conservatively estimated to insure revenues support expenditures.

3. The budget does not use reserves for on- going operating costs.

4. For capital projects, all associated costs are identified in order to properly consider future financial impacts.

5. Each Enterprise Fund reflects the true cost of operation, including direct and indirect costs of services provided by

the General Fund.

6. Activities supported by user fees should be fully cost recoverable.

7. Discretionary funds are not earmarked thereby allowing maximum flexibility in funding decisions on an annual

basis.

Key Budget Initiatives

􀂃 The City of Brentwood, along with many other areas in the State, has recently experienced a dramatic slowdown in

residential development and pullback in the housing market. The City’s population has increased at an annual average rate

of 12.8% over the past decade. The past three years have seen the City’s population growth slow from 12.9% in 2004/ 05

to 9.3% in 2005/ 06 and down to 6.4% in 2006/ 07. We are expecting this slowdown in residential development to continue

over the next two years and are anticipating population growth under 5% per year through build out. As a result of the

slowdown in population growth development fee income, once a leading source of revenue for the General Fund, will

decrease while revenues from property and sales taxes will increase from a newly expanded commercial and economic

base.

􀂃 In FY 2005/ 06 the City began implementing a 10- year plan to minimize its dependence on development impact fees from

housing developments, one of the City’s main revenue sources. One component of this plan addresses funding for staff

focused on Capital Improvement Program ( CIP) activities. In FY 2005/ 06 there were 16.66 employees, funded by CIP,

who were responsible for the management and administration of projects. As the City gets closer to build out,

development will slow but CIP projects will continue with funding from other sources such as Grants and the General

Fund. Additionally, demand for other City services will increase as the City’s population increases. The 10- year plan calls

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xv

for CIP staff to transition from CIP project management, funded by development impact fees, to positions which will meet

the demand for increased City services and which are funded by the General Fund. This plan is reflected in the FY

2008/ 09 budget which includes just 8.02 employee allocations funded by CIP.

􀂃 Investment yields have risen from historically low levels, although they are still below historical norms. As such, the

City’s investment income continues to be less than what was earned five years ago. The City is conservatively estimating

investment income for the General Fund will be $ 1,200,000 for FY 2007/ 08.

􀂃 The City has continued to be extremely conservative in hiring new, full- time employees. The 2007/ 08- 2008/ 09 operating

budget includes just one new position funded through the General Fund and a total of four new positions in the Enterprise

funds. The City has also incorporated the annual CPI increase of 3.1% for all salaries in the FY 2007/ 08 budget and has

also included a 3% CPI increase for salaries in FY 2008/ 09.

􀂃 One of the key issues to come to light in recent years is the cost of retirement benefits. The City began preparing for these

costs in FY 2004/ 05 by creating an Insurance Internal Service Fund. In FY 2004/ 05, the City began annually prepaying the

employer portion of the Public Employee Retirement System ( PERS), resulting in a savings of approximately $ 500,000 per

year, as well as transferring PERS savings associated with having unfilled positions which generated an additional

$ 500,000 per year in savings. The City has budgeted for the insurance fund to pay for an actuarial valuation report in FY

2008/ 09.

In an effort to raise public awareness of the true costs and rising liabilities of retiree medical benefits, Governmental

Accounting Standards Board ( GASB) issued Statement No. 45 which addresses how local governments should account for

their costs and obligations for retiree healthcare and how these costs should be reported. The City is required to implement

GASB 45 in FY 2008/ 09 and is in the process of completing an actuarial report to determine the amount of the City’s

unfunded liability.

􀂃 Due to the as yet undetermined impact of Proposition 218 ( see Legislative Issues) on

water, sewer and garbage rates, there are no rate increases currently budgeted for in

either the Solid Waste, Water or Wastewater Enterprise Funds.

LEGISLATIVE ISSUES

The State of California is experiencing a financial recovery which has positive impacts for the

City of Brentwood. When the State suffered from stagnant revenue growth following the dot-com

fall in the early 2000’ s, one of the mechanisms used to help balance the State budget was to

look to California cities for takeaways. Since the passage of Proposition 1A, the State has

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xvi

reversed this trend. The State’s proposed FY 2007/ 08 budget does not include any new takeaways and, with the recent passage of

Proposition 1B, the City of Brentwood expects to continue to benefit from the improving relationship that all California cities are

enjoying with the State. The key benefits in the State’s proposed budget for FY 2007/ 08 include:

􀂃 Proposition 42 – Proposition 42 is meant to dedicate the State’s share of sales tax on gasoline to transportation projects.

In the past, these funds were used to make up a portion of the State’s general fund shortfall. In FY 2006/ 07 the State

repaid $ 260,577 in Proposition 42 funds borrowed in prior years. The State is also planning to begin funding Proposition

42 on an annual basis in FY 2008/ 09. The City is expected to receive an estimated $ 471,304 the first year of the annual

funding of Proposition 42.

􀂃 Proposition 1B – Proposition 1B requires the State to allocate $ 2 billion to cities and counties for the following: relieving

traffic congestion and improving highway safety, air quality and port security. The money is to be allocated over five

years beginning in FY 2007/ 08. The City is expected to receive an estimated $ 1,458,044 in Proposition 1B funding.

􀂃 Proposition 218 – Proposition 218 requires notice and a public hearing prior to an increase in property related fees. These

include fees imposed as an “ incident of property ownership, not including gas, electric or developer fees. The City has

contracted with outside counsel to assist with ensuring any future rate increases are done in compliance with Proposition

218. In the interim, there are no rate increases currently budgeted for in either the Solid Waste, Water or Wastewater

Enterprise Funds. ( See “ Water and Wastewater Enterprise Funds”, on page xvii, for further discussion on the impact of

this legislation.)

􀂃 Flood Control and Water Programs – There is $ 35 million for levee maintenance,

primarily for the Central Valley and Delta areas of Northern California. There is $ 56.6

million in local assistance funds which will be allocated through the State Water

Resource Control Board for various local water quality improvement projects.

ECONOMIC OVERVIEW

Brentwood is located in eastern Contra Costa County on the perimeter of the San Francisco Bay

Area metropolitan area. The Bay Area has grown significantly as an employment center over the

past 20 years and, as a result of the growth in the Bay Area, Brentwood experienced significant

growth beginning in the 1990’ s. This growth changed Brentwood from a historically agricultural

community to one of California’s fastest growing cities. However, the past two years has seen

another shift as the City’s residential growth has dramatically slowed. While the slowdown was not

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xvii

unexpected, the length of the downturn is difficult to predict and the City will be operating under the

assumption that the slowdown will persist through this next two year budget cycle.

General Fund

In FY 2006/ 07 General Fund revenues are projected to reach $ 41,436,790, which is an increase of

$ 1,303,733 or 3.2% from FY 2005/ 06. The low rate of growth is directly attributable to the residential

market slowdown and the related decline in building, planning and engineering revenue. Although these

revenues are significantly below what was generated each of the previous several years, the development

revenue amounts seen in FY 2006/ 07 are representative of what can be expected in the next two years. It is

the City’s policy to also periodically conduct fee studies to ensure that we have a fair and legal cost recovery

plan

The main source of revenue growth for the General Fund will be in property taxes and sales taxes. Despite

the residential slowdown of the past few years, the vast majority of all homes in Brentwood enjoy a market value greater than their

assessed valuation. As these properties turn over, they are reassessed at the purchase price providing additional property taxes for the

City. The City is also in its early years of developing its commercial centers and should continue to enjoy the economic benefits that

these centers bring as they come online over the next several years.

Enterprise Funds

Generally speaking, enterprise funds are self supporting and recoup their costs through rates charged to the users of the service. One

of the challenges facing the Enterprise funds has been the implementation of Proposition 218 ( see Legislative Issues). As such, there

are no rate increases currently budgeted for in either the Solid Waste, Water or Wastewater Enterprise Funds. Additional budgetary

notes relating to Enterprise funds are discussed below.

􀂃 The Solid Waste Enterprise Fund will continue to see revenue growth commensurate with the increase in the City’s

annual population levels. Most of these costs are tied to resident needs and demands and will increase accordingly. The

budget includes $ 6,171,346 of funding for a new Solid Waste Transfer station, CIP project # 542- 54020. The transfer

station will include a scale, scale house, litter containment devices, and a new building with a concrete loading pad, as well

as other improvements to adequately meet the City’s needs.

􀂃 The Water and Wastewater Enterprise Funds, like the Solid Waste Fund, will continue to see both revenues and expenses

increase as the needs for service increase. A rate study is underway for both the Water and Wastewater Enterprises to

ensure that the rates charged in the future are appropriate. The Water Enterprise Fund will begin debt service payments for

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xviii

a Surface Water Treatment Facility in FY 2007/ 08. The Wastewater Enterprise Fund is projected to require the use of

reserves in each of the next two years. Staff is conducting a rate study to address this deficit and to determine if the

current rate structure requires modification.

􀂃 The City Rentals Enterprise Fund includes the Brentwood Education and Technology Center and Los Medanos College.

Approximately 38% of the available space at the Technology Center is vacant. The City leases 10% of the building which

it uses for a reception area and a computer room. The money collected does not offset the cost of running the Center and

the City has had to provide a subsidy to keep the Brentwood Center open. The General Fund subsidy is expected to be

$ 512,000 for the next two years combined.

􀂃 The Housing Enterprise Fund has been established to help

provide an affordable housing program for the citizens of

Brentwood. The City creates affordable housing by

requiring that 10% of all newly constructed dwelling units

be designated as affordable housing for very- low, low and

moderate income households. These units must be

integrated into each neighborhood and must be built with the

same quality, fit and finish as market rate units. The

ownership units in this program must remain affordable for

45 years, while the rental units must remain affordable for

55 years.

Management Partners recently completed a preliminary study for the City which forecasts a significant burden on the

General Fund, as the City approaches build out, if the affordable housing program continues its current implementation

policies. Staff is negotiating a contract with Management Partners to develop alternate implementation strategies to

accomplish the affordable housing program goals while minimizing the fiscal impact to the General Fund in future years.

These alternative implementation policies will be presented to the City Council for its consideration in the fall of 2007.

User Fees

The City of Brentwood utilizes a User Fee Model to compute city- wide and departmental overhead factors, full hourly rate costs by

City Classification and/ or full costs associated with the provision of selected services. The City reviews and updates their fees on an

annual basis based on changes in the Consumer Price Index ( CPI) where applicable in conjunction with legal regulations. Examples

of City fees covered in the Cost Allocation and Schedule of City fees include: Building, Inspection, Planning, Engineering, Park and

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xix

Recreation, Water Service, Wastewater Service and Solid Waste Service fees. Due to concerns regarding Proposition 218 ( see page

xvi), there are no CPI adjustments for either the Water, Wastewater or Solid Waste Enterprises.

Ten Year Fiscal Model

Based on the current ten year forecast in the fiscal model, which was completed in February of 2007, total General Fund revenue

sources are forecast to grow from $ 45.2 million in FY 2007/ 2008 to approximately $ 78.8 million in FY 2015/ 2016. This $ 33.6

million increase equates to an average annual rate of growth of 7.2 percent per year, including inflation of approximately 3 percent per

year. Outlined below are the significant changes forecasted for the City’s revenue sources over the next ten years:

􀂃 Property tax is forecast to increase from approximately 20% of total General Fund revenues in FY 2007/ 2008, to nearly

28% in FY 2015/ 2016.

􀂃 Sales tax is forecast to increase from approximately 15% of total General Fund revenues in FY 2007/ 2008, to 20% in FY

2015/ 2016.

􀂃 Revenue from our building, planning, and engineering fees, which currently make up 12.9% of the General Fund Budget,

are forecast to only represent 7.1% of revenue in 2015/ 2016.

ORGANIZATIONAL PRIORITIES

“ Bringing Brentwood’s Vision to Reality”

Customer Service

Several initiatives are under way in order to provide efficient service to both internal and

external customers. These include: 1) implementation of the One Stop Permit Center

which will provide one location for customers who need any type of City permit and 2)

selection of a new development services software system which includes a workflow

component for all departmental approvals required during the processing of development

projects.

Economic Development

Economic development remains a top priority for the City. Key economic development

projects include: implementation of the Downtown Specific Plan; continued facilitation

of regional retail development including the Streets of Brentwood shopping center; the

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xx

development of the Agricultural Park and History Center; enhancement of the John Muir medical facility; expansion of Los Medanos

College and the planning and development of the Vineyards Project which includes an amphitheater, winery and event center.

Infrastructure and Public Facilities

Brentwood continues to cultivate a vital, thriving and charming historical Downtown. These efforts resulted in the development of the

Downtown Brentwood 2010 action plan. The plan was developed through community outreach workshops and a series of staff

planning meetings and also encompasses the results of the Downtown Specific Plan. The result of these activities is a phasing plan

which will be implemented for the following community facilities: City Hall, Council Chambers, Civic Center Parking Structure,

Civic Center Plaza and Water Feature, Third Street Extension, a New Community / Arts Center, a Senior Center, Relocation of the

Library, City Park Redesign and Restoration and the Downtown Parking Facilities. The designs for all of these facilities will reflect

the community input gathered as a result of the community outreach workshops.

Neighborhood Improvement

The City is monitoring and evaluating the success of the Current Code Enforcement practices to ensure that citizens are

reasonably maintaining their property and that public property enhances the appearance of all neighborhoods. The

newly appointed City Council Neighborhood Improvement Committee and City staff will continue to work with the community

to monitor the Code, as well as oversee other neighborhood concerns such as noise, civility issues and neighborhood

beautification efforts.

Public Safety

To help maintain a community where everyone feels safe, the City is focused on the following activities: 1) development of a fire plan

for the City; 2) implementing a crime analysis software program which will help identify and track crime occurrences and trends; 3)

increasing traffic enforcement; 4) creating a Street Crime Impact Team; 5) improving communication with the community and 6)

establishing a professional standards unit which will provide a centralized contact point for citizen complaints and provide consistency

in training, internal investigations and procedures.

Regional / Local Transportation

Brentwood has been a leader in regional transportation working with the State Route 4

Bypass Authority and Caltrans on the State Route 4 Bypass project. State Route 4 is a

major highway which is heavily traveled by commuters from Brentwood, Antioch and

Oakley. A portion of State Route 4, Brentwood Boulevard, runs through downtown

Brentwood.

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xxi

The State Route 4 Bypass project, which consists of three segments, will ease traffic congestion in Brentwood and Oakley and provide

access to the growing areas of southeast Antioch and western Brentwood. Segment II, which runs south from Lone Tree Way to

Balfour Road, was completed in 2002. The Bypass Authority’s project priority list ( East Contra Costa Regional Fee and Financing

Authority’s Strategic Plan) includes funding for widening of Segment II to four lanes, with bridges for grade separation at Sand Creek

Road and Balfour Road. This widening work will commence after completion of Segments I and III. Segments I and III are currently

under construction and are scheduled to be completed by 2008. These segments will extend the Bypass north from Lone Tree Way to

the existing Highway 4 and south from Balfour Road to Vasco Road.

The success of the Bypass Authority, a locally funded, locally controlled entity responsible for the State Route 4 improvements in the

Brentwood area, has helped bring a regional focus to the need for improvements to Vasco Road. Vasco Road is a major thoroughfare

which links Brentwood to the Bay Area. The City of Brentwood, in conjunction with regional stakeholders, is in the process of

developing a Vasco Road Strategic Plan. One option currently gaining momentum has the Bypass Authority taking a lead role in

facilitating the Vasco Road Corridor and pursuing funding from the Bypass Fee and Financing Authority.

Technology

The City is committed to either implementing new systems, or updating existing systems, in order to ensure state- of- the- art

technology is always being utilized. The City is in the process of implementing a newly adopted, five- year Technology Strategic Plan

which will help the City meet its technology goals.

MILESTONES AND ACCOMPLISHMENTS

Community Award

The City of Brentwood has been named one of the 100 Best Communities for Young People, a national

competition sponsored by America’s Promise - The Alliance for Youth. The competition honors

communities, ranging from small towns to urban neighborhoods, for their commitment to provide healthy,

safe and caring environments for young people. Over a thousand communities in America applied for this

award of distinction.

Downtown Specific Plan

The Downtown Specific Plan, adopted in November, 2005, establishes the coordination of public and private investment in the City’s

Downtown district to fulfill the community’s intention for the Downtown to remain the heart of the Brentwood community. It is both

a policy document and an implementation tool that contains strategies to manage growth and regulatory policies to guide and govern

future development within the Downtown Plan Area.

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xxii

Infrastructure Improvements

􀂃 American Avenue – There are two American Avenue CIP projects – American Avenue Extension and American Avenue

Improvements. The American Avenue Extension project, completed in FY 2006/ 07, consisted of: 1) additional turn lanes

for traffic turning from Balfour Road onto American Avenue and 2) exclusive right turn lanes for traffic turning from

American Avenue onto Balfour Road. The cost of this project, $ 364,000, was funded by Roadway Facility Fees.

The American Avenue Improvements project is scheduled to begin construction in the summer of 2007. This project will

widen the section of American Avenue, south of Balfour Road, which provides access to both Heritage High School and

Adams Middle School. The budget for this project is partially funded by the Brentwood Union School District, in the

amount of $ 229,491, and Roadway Facility Fees, in the amount of $ 114,746.

􀂃 Northwest Quadrant – Completed major infrastructure projects within the Northwest Quadrant which includes several

major north- south and east- west roads. The completion of these projects, phased over five years, has provided the

infrastructure required for housing, schools and major retail centers.

􀂃 Pavement Management Program – The City was honored at

Metropolitan Transportation Commission’s ( MTC) meeting on

March 6, 2006, for having the best Bay Area Roads in 2005. Out of

the 109 jurisdictions throughout the Bay Area, Brentwood had a

Pavement Condition Index ( PCI) rating of 82%. PCI is the rating

from 0 ( worst) to 100 ( best). The average rating throughout the Bay

Area was 62%. This high rating is a direct result of: 1) many of the

City’s streets being new and 2) the City’s Pavement Management

Program, an annual preventative maintenance program for City

streets specifically selected by the City’s Pavement Management

software. It will require a sustained effort to maintain this level

of quality as the City’s streets age.

Ten Year Fiscal Model

In order to help ensure the City’s long term plans remain fiscally responsible, the City has begun utilizing a recently adopted a ten

year fiscal model. The fiscal model will be updated annually and will help identify potential financial difficulties during the City’s

transition from a reliance on development revenue to revenue generated primarily by property and sales taxes.

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xxiii

Retail Growth

Over the past few years, Brentwood has added approximately 600,000 square feet of new office and industrial space for business.

Large retail centers, such as Lone Tree Plaza and Sand Creek Crossing, generate a significant amount of sales tax revenue that is a

huge financial benefit to the City’s General Fund. In 2007, Brentwood was again named one of the fastest growing retail markets by

California Retail Survey, ranking 10th throughout California. While the City has experienced tremendous retail growth in the past

several years, there is still more to come. The City has approved “ The Streets of Brentwood” project, a large shopping center

anchored with a new theatre, a book store, retailers and restaurants not currently found in East County. This project will be built

along the Highway 4 Bypass, between Sand Creek Road and Lone Tree Way, a prime area for retail activity. The Streets of

Brentwood project is expected to break ground in the summer of 2007.

Agriculture

Preserving Brentwood’s rich heritage is important to the community and, to that end,

the City has committed significant financial resources to enhance agricultural

production and farming. Funds collected from developers are used to purchase

conservation easements on area farms to preserve these important resources. Further,

in 2007 the City Council approved the purchase of the Nail Family property, adjacent

to the East Contra Costa Historical Society site, for the purpose of creating an

Agricultural Park and History Center dedicated to educating current and future

generations about the area’s agricultural heritage.

Open Space Management Plan

Adopted an Open Space Management Plan to ensure all open space is managed in a manner consistent with good stewardship and

sound ecological principles which benefit the citizens of Brentwood by promoting plant habitat, cultural resources, scenic vistas and

appropriate passive recreation.

Vineyards Project

The City has approved the Phase one backbone landscape plans for the Vineyards at Marsh Creek Development. Additionally, the

City is working on final plans for an 800 seat amphitheater, an event center and a wine tasting center on a 30 acre parcel adjacent to

the John Marsh/ Cowell Ranch State Park. The City has taken the lead, on behalf of California Department of State Parks, to complete

the general plan for the John Marsh/ Cowell Ranch 3,600+ acre State Park which includes 66+ acres within the City of Brentwood.

City of Brentwood

2007/ 08 – 2008/ 09 Operating Budget Page xxiv

AWARDS

The City prides itself on providing quality services to the community.

Following is a list of awards acknowledging these achievements in quality:

The City of Brentwood was named one of the “ 100 Best Communities for Young People” in a national

competition sponsored by America’s Promise - The Alliance for Youth

The City was honored at Metropolitan Transportation Commission’s ( MTC) meeting on March 6, 2006,

for having the “ Best Bay Area Roads in 2005”

The City received the Government Finance Officers Association ( GFOA) Awards for

“ Distinguished Budget Presentation for Fiscal Year 2005/ 06” and

“ Excellence in Financial Reporting for Fiscal Years 2005/ 06 and 2006/ 07”

The City received a “ Bronze Level Award” in 2006 for a Bicycle Friendly Community

The City received the “ Distinguished Project Award” for the Sunset Park Athletic Complex

The City received the California Society of Municipal Finance Officers ( CSMFO) Awards for

“ Excellence in Operational Budgeting Fiscal Year 2005/ 06”

“ Excellence in Capital Budgeting for Fiscal Years 2005/ 06 and 2006/ 07” and

“ Outstanding Financial Reporting for Fiscal Years 2005/ 06” ( last year City was eligible)

The City received the “ Award for Recreation/ Community Services for Health & Wellness” for the

Spring to Life Fun Run & Health Expo

The City received the 2006 Cal/ EPA/ HHW Program Awards for the

“ Best New E- Waste or U- Waste Collection”

The City received the “ Meritorious Award for Public Communications”

for the Budget- in- Brief

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxv

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxvi

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxvii

The Government Finance Officers Association ( GFOA) and

the California Society of Municipal Finance Officers offer a

recognition program for public entities to determine whether

the City conforms to the highest level of governmental

accounting and financial reporting standards. Both GFOA

and CSMFO awarded a Distinguished Budget Presentation

Award to the City of Brentwood for its two- year budget

beginning Fiscal Year 2005/ 06. Its attainment represents a

significant accomplishment by a government and its

management.

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxviii

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxix

BUDGET DOCUMENTS

The Finance Department coordinates the preparation of five key budget documents: the Two- Year Operating Budget, the Five- Year Capital

Improvement Program, the Cost Allocation Plan, the Fiscal Model and the Comprehensive Annual Financial Report. The information

contained in these documents is the result of a thorough financial review performed through the combined efforts of staff within the City.

A brief description of the budget documents and a summary of their intended uses are provided beginning on page XXX.

If You Are Looking For: It Is Found In The:

Budget Overview and Policies

Budget Trends and Graphs

Revenue Detail/ Departmental Expenditures

Summaries

Personnel Information

Line Item Detail

Status of Capital Projects, Adopted Current

Year Projects and Projected Funding for

Future Projects

Total Cost by Classification

City Staff Billing Rates

City Fees

( Available 90 Days after Budget Adoption)

Ten year projection of General Fund

Revenues, Expenses and Fund Balance

( Available 90 Days after Beginning of Fiscal Year)

Financial Statements, City Statistics,

Management Discussion and Analysis

Demographics, Management Statement

( Available 180 days after Fiscal Year End)

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxx

Adopted Two Year Operating Budget

The Adopted Operating Budget is summarized at a division level. Divisional budgets consolidate program activities into similar service

categories within a fund with the intent of reducing the cumbersome nature of a program- based budget document. Every effort has been

made to present the budget document in a “ user friendly” format with increased emphasis on trends and written explanations.

The Adopted Operating Budget Detail provides a separate line item, object code detail for the budget. Adopted expenditures within each

divisional category are detailed with descriptions. Budgets are broken down to the program level and are listed in account number order.

Historical information is prepared at a detailed object code level for comparison purposes. Cost data within this document is presented by

department.

Operational Line Item Budget

The Operational Line Item Budget provides line item revenue and expenditure detail which is used by City departments for budget

management and tracking purposes.

Adopted Five- Year Capital Improvement Program Budget

The Adopted Five- Year Capital Improvement Program ( CIP) Budget is a separate document that is annually brought to the City Council

for consideration. Prior to City Council’s consideration of the CIP, the document is presented to the Planning Commission to ensure

compliance with the General Plan. The CIP matches funding sources with capital expenditures while developing a five- year schedule for

completion. The relationship between the CIP and the operating budgets is described in detail beginning on page xlv.

CIP projects are separated into the following seven categories:

1. Roadway Improvements

2. Parks and Trails Improvements

3. Water Improvements

4. Wastewater Improvements

5. Community Facilities Improvements

6. Drainage Improvements

7. Development Improvements

Each project has been assigned a unique identification number that will remain with the project. The project identification number allows

the City Council to track and monitor project status over multi- year periods.

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxxi

Cost Allocation Plan

The City- wide Cost Allocation Plan ( CAP) is a budget document that will be prepared and distributed approximately 90 days following the

adoption of the annual operating budget. A CAP is a widely recognized and well- used method of distributing administrative overhead

“ support” costs to the benefiting programs within a City. The City Council adopted its first CAP in December, 1994. That plan established

the method of allocating indirect and direct costs. The CAP is updated each year based upon the approved budget data for the current year

and actual financial and statistical data for prior years. The City’s CAP also becomes a key document in preparing the City’s User Fee

Review and labor charge rates. The City- wide administrative overhead rate for FY 2006/ 07 was 33.86% of direct costs.

The CAP calculates departmental and city- wide overhead factors based on distributions of expenditures between the following three

categories: personnel costs, operating costs and ongoing capital costs. Assumptions regarding management and non- management positions

likewise impact the computation. The methodology for computing these overhead factors is as follows:

Department Overhead: To compute the department overhead factor, costs for department management salaries and benefits, plus

the cost of associated operating and capital items to be included within overhead, are identified. This cost is then divided by the

salary and benefit cost of all non- management employees. The resulting computation is a multiplier that is applied to the hourly

rate of a specific position within the department to compute the resulting department overhead associated with providing a

designated service.

City- wide Overhead: To compute the city- wide overhead factor, general government costs that are not allocable to any line

departments are identified. These costs are divided by the total salaries and benefits of all City employees. The result of this

computation is a multiplier applied to the hourly rate of a specific position to compute the resulting city- wide overhead associated

with providing a designated service.

Ten Year Fiscal Model

The ten year fiscal model provides a detailed analysis and projection of the next ten years of General Fund revenues, expenses and

fund balance. The model is different from most other fiscal models in that it is dynamic. It will be continually updated as more

information becomes known. There are four interlinked sections containing hundreds of data points:

􀂃 A development model

􀂃 Expense models for each department and division, summarized at the General Fund level, and supported by a staffing

and compensation model

􀂃 A revenue model for each major revenue

􀂃 A fund balance model

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxxii

Comprehensive Annual Financial Report

The Comprehensive Annual Financial Report ( CAFR) is prepared in accordance with principles generally accepted in the United States of

America as promulgated by the GASB. Accounting for all of the City’s activities is centralized under the Finance Department, which is

responsible for maintaining the integrity of the City’s recorded financial data. The Finance Department, in conjunction with the City’s

management, is also responsible for establishing and maintaining an internal control structure designed to ensure that the City’s assets

are protected from loss, theft or misuse.

The internal control structure is designed to provide reasonable assurance that the City’s objectives are met, while recognizing that

this assurance is not absolute. The concept of reasonable assurance recognizes that: 1) the cost of a control should not exceed the

benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. City

administration believes the existing internal control systems are adequate to provide reasonable assurance that the City’s assets are

safeguarded against loss and that the financial records are reliable for preparing financial statements and maintaining accountability

for assets. This belief is supported by the City’s seventh consecutive “ Unqualified” Audit issued in 2006.

BUDGET POLICY

The City amended its Budget and Fiscal Policy in October of 2006. The purpose of the policy is to establish guidelines for budget

development, administration and management as well as outline the City’s fiscal policies in regard to user fee cost recovery goals, capital

financing and debt management. The Operating Budget is developed and managed per the policies defined below.

Budget Objectives

􀂃 Identify community needs for essential services.

􀂃 Organize the programs required to provide these essential services.

􀂃 Establish program policies and goals which define the nature and level of program services required.

􀂃 Identify activities performed in delivering program services.

􀂃 Propose objectives for improving the delivery of program services.

􀂃 Identify and appropriate the resources required to perform program activities and accomplish program objectives.

􀂃 Set standards to measure and evaluate the:

- Output of program activities

- Accomplishments of program objectives

- Expenditure of program objectives

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxxiii

Two Year Budget

􀂃 The City Council shall adopt a two- year budget for the ensuing fiscal year no later than June 30th of each year.

􀂃 The first year of the two- year budget, the City Council will conduct a budget study session outlining the recommended budget

for the two- year period.

􀂃 The second year of the two- year budget, the City Council will conduct a budget study session which focuses on changes being

recommended for the second year of the two- year budget.

􀂃 For each of the two years, the City Council will adopt a resolution appropriating and approving the budget for the ensuing fiscal

year.

Second Year Budget

Before the beginning of the second year of the two- year cycle, the City Council will review progress during the first year and approve

appropriations for the second fiscal year.

Mid Year Budget Reviews

The City Council will formally review the City’s fiscal condition and amend appropriations, if necessary, six months after the beginning of

each year.

Balanced Budget

The City will maintain a balanced budget over the two- year period of the budget.

􀂃 Each fiscal year, operating revenues must fully cover operating expenditures, including debt service.

􀂃 The City will strive to maintain 30% of annual appropriations in the General Fund’s Undesignated Fund Balance.

􀂃 The City will strive to have cash reserves in the Enterprise Funds at an optimal level of 30%.

Budget Administration

The City Council may, by majority vote, amend or supplement the budget at any time after its adoption. The City Manager has the

authority to make administrative adjustments to appropriations as long as there is no funding source incompatibility and provided those

changes do not increase the overall appropriations. All budget transfers require the approval of the Director of Finance, or designee, except

those affecting personnel which must be approved by the City Manager.

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxxiv

BUDGET DEVELOPMENT PROCESS

The City uses the following procedures in establishing the budgetary data reflected in the financial statements:

􀂃 Beginning in March, department heads prepare estimates for required appropriations for the two fiscal years commencing the

following July 1. The proposed budget includes estimated expenditures and forecasted revenues for the two fiscal years on a

basis consistent with Generally Accepted Accounting Principles ( GAAP). The data is presented to the City Manager for

review.

􀂃 In May, the City Manager submits to the City Council a proposed operating budget for the upcoming fiscal year. The operating

budget includes a summary of the proposed expenditures and financial resources of the City. Public meetings are conducted to

obtain public comments.

􀂃 By June 30th, the City Council adopts the operating budget through passage of an adopting resolution. This appropriated budget

covers substantially all City expenditures. For all funds the budget includes all appropriated amounts as originally adopted,

plus amendments by the City Council and certain operating carryovers for program appropriations supported by either a

purchase order or encumbrance.

BUDGET CALENDAR

Legend: ● Meeting Date ♦ Due Date

Activity Responsibility Oct 20N0o6v Dec Jan Feb Mar 2A0p0r7 May Jun Jul

First Quarter Report to City

Clerk Finance ♦ 10/ 16

Mid- Year Budget

Adjustments Due to Finance All Departments ♦ 12/ 15

Mid- Year Budget Report due

to City Clerk Finance ♦ 1/ 10

CIP Budget Packets

Distributed All Departments ● 1/ 12

Second Quarter Report to

City Clerk Finance ♦ 1/ 15

Mid- Year Budget Report

( Council Meeting) Finance ● 1/ 23

Operating Budget Packets

Distributed All Departments ● 1/ 22

Class on Preparation of

Operating Budget All Departments ● 1/ 22

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxxv

BUDGET CALENDAR ( Cont.)

Legend: ● Meeting Date ♦ Due Date

Activity Responsibility 2006 2007

Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Open On- Line Budget

System All Departments ♦ 1/ 22

Permit Projections due to

Finance

Bldg., Eng.,

Finance ♦ 2/ 16

CIP Project Budget Sheets

Due to Finance All Departments ♦ 3/ 2

Operating Budget Packets

Due to Finance All Departments ♦ 3/ 9

Close On- Line Budget

System Finance ♦ 3/ 9

Personnel Budget Due to

Finance Human Resources ♦ 3/ 9

Park & Recreation

Commission CIP Workshop Parks & Finance ● 3/ 22

Operating Budget Review Dept. Heads

w/ Dir. of Finance ● 3/ 29

CIP Final Review All Departments ♦ 4/ 5

Third Quarter Report to

City Clerk Finance ♦ 4/ 16

CIP Budget Workshop /

Public Hearing

All Project

Managers ● 4/ 24

Notice of Negative

Declaration Published Finance ♦ 5/ 2

Letter to County Clerk

Regarding Public Notice Finance ♦ 5/ 2

Operating Budget Review City Manager and

Dir. of Finance ● 5/ 10

CIP Budget to Council for

Referral to Planning Comm. Finance ● 5/ 22

Operating Budget

Workshop / Public Hearing All Departments ● 5/ 31

CIP Budget to Planning

Commission for Approval

Finance /

Engineering ● 6/ 5

CIP Budget to Council for

Adoption Finance ● 6/ 12

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxxvi

BUDGET CALENDAR ( Cont.)

Legend: ● Meeting Date ♦ Due Date

Activity Responsibility Oct N2o0v0 6 Dec Jan Feb Mar Ap2r0 07 May Jun Jul

File and Record CIP

Documents with County

Clerk

Engineering ♦ 6/ 13

Operating Budget to Council

for Adoption Finance ● 6/ 26

Post Adopted CIP and

Operating Budgets on Web

Site

Finance ♦ 6/ 27

Publish Adopted CIP and

Adopted Operating Budgets Finance ♦ 6/ 27

Fourth Quarter Report Due

to City Clerk Finance ♦ 7/ 16

CITY REVENUE SOURCES

The City of Brentwood relies on several major revenue sources to balance its General Fund budget. The most important of these revenue

sources, based on the percentage of the total revenue budget, are: Property Tax, Sales Tax, Administration Fees, Motor Vehicle- in- Lieu

Taxes, Building Fees, Parks and Recreation Charges for Services, Parks and Recreation Property Taxes, Engineering Fees and Investment

Income. Together these revenues account for $ 35,450,748, or approximately 80.5% of the total revenue projected in FY 2007/ 08. Listed

below are the assumptions used for estimating the major revenue sources for FY 2007/ 08.

Property Tax

The County of Contra Costa levies a tax of 1% on the assessed valuation of property within the County. The City of Brentwood receives

approximately a 13.38% share of this 1% levy for property located within the City limits. Because of actions the State took to balance its

budget during fiscal years 1992/ 93 through 1994/ 95, the City lost in excess of $ 14M through FY 2005/ 06. The FY 2007/ 08 estimate of

property tax revenue, $ 9,259,261, represents 21.0% of the General Fund and is based on an assumed 2% increase in assessed valuation of

existing property with a reasonable turnover of both existing and new housing leading to higher assed valuations on the majority of those

properties. While the housing market has been in a downturn for well over a year, the rapid appreciation of the preceding five years has

still left most assessed valuations in Brentwood well below their corresponding market values.

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxxvii

Sales Tax

The City of Brentwood receives a 1% share of all taxable sales generated within its borders. In addition to this 1% share, the City receives

a portion of an additional voter- approved 1/ 2% sales tax amount which is dedicated for public safety purposes. The sales tax estimate for

FY 2007/ 08 is $ 6,549,902, not including the public safety portion. This is $ 1,296,402 above the FY 2005/ 06 estimate of $ 5,253,500. This

increase is forecasted because of an anticipated rise in local economic activity and new businesses locating in Brentwood.

Administration Fees

These fees cover the costs associated with staff time involved in administering either a function or a program. The revenue estimate for FY

2007/ 08 is $ 5,310,487.

Motor Vehicle- in- Lieu Tax

The State Revenue and Taxation code imposes an annual license fee of 2% of the market value of motor vehicles in lieu of a local motor

vehicle property tax. Due to the State Budget Act of 2004, the timing of the payments and the method of calculation has changed

dramatically. The majority of the Motor Vehicle- in- Lieu Tax revenue has been replaced by Property Tax In Lieu of VLF revenue,

although for reporting purposes it is still considered Motor Vehicle- In- Lieu Tax revenue. Future increases in the Motor Vehicle- in- Lieu

Tax will be driven mainly by the change in the City’s assessed valuation instead of by population. The Motor Vehicle- in- Lieu Tax is

expected to increase by 18%, to $ 4,313,209, in FY 2007/ 08. This is $ 649,549 more than the FY 2006/ 07 amount of $ 3,663,660.

Building Fees

Permits fees cover the cost of inspection, plan retention, records keeping, materials investigation, special inspection management and

overhead. The projected building permit revenue for FY 2007/ 08, $ 1,812,403, reflects 500 new, single family dwellings as well as

expected commercial development. Plan review fees cover the cost of structural as well as nonstructural plan review, zoning compliance,

project condition compliance, design review compliance, record keeping and overhead. Revenue generated from this service is expected to

be $ 863,617 for FY 2007/ 08.

Parks and Recreation Charges and Fees

Parks and Recreation provides many services on a “ fee- for- service” basis. The main sources of revenue for Parks and Recreation are

recreational programs with registration fees, facility rentals and reimbursement for services. The FY 2007/ 08 estimate for Charges and

Fees is $ 2,238,232.

Parks and Recreation Property Taxes

The County of Contra Costa levies a tax of 1% on the assessed valuation of property within the County. The City of Brentwood Parks and

Recreation Department will receive approximately a 3.1% share of this 1% levy for property located within the City limits. The FY

2007/ 08 estimate of County property tax revenue, $ 2,003,087 represents 4.5% of the General Fund total revenue.

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxxviii

Engineering Division Fees

Engineering Division fees cover the costs of inspection, review, plan check, record keeping and overhead. Revenue generated from these

fees is expected to be $ 1,900,550 in FY 2007/ 08.

Investment Income

Interest rates have risen from the historic lows of the past few years and the City is conservatively estimating investment income will

be $ 1,200,000 for FY 2007/ 08.

Other Revenue Sources

􀂃 User Fees – Fees charged for the use of services based on the cost recovery goals set by Council. User fees are a major

revenue source for the Solid Waste, Water and Wastewater Enterprise Funds.

􀂃 Facility Fees – Development Impact Fees are collected for all new development in the City of Brentwood. These are fees

collected for the purpose of constructing or improving Master Planned City infrastructure.

􀂃 Franchise Fees – Franchise Fees are charged for utility services based on a percentage of the gross revenues of the utility

company.

Total General Fund Revenues – By Major Recurring Revenue Sources

Major Recurring Revenues Sources Projected FY 2006/ 07 Budget FY 2007/ 08 Budget FY 2008/ 09

Property Tax 19.4% 21.0% 21.4%

Sales Tax 12.7% 14.9% 15.8%

Administration Fees 12.7% 12.1% 11.0%

Motor Vehicle- In- Lieu 8.8% 9.8% 9.8%

Building Fees 6.4% 6.1% 6.5%

Parks and Recreation Charges and Fees 4.0% 5.1% 4.7%

Parks and Recreation Property Taxes 4.2% 4.5% 4.5%

Engineering Division Fees 5.6% 4.3% 3.5%

Investment Income 2.7% 2.7% 2.5%

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xxxix

CITY EXPENDITURES

The City’s budget is financed by the use of various types of funds for its operations. The table below is a summary of these major

expenditures with the General Fund highlighted:

Projected FY 2006/ 07 Budget FY 2007/ 08 Budget FY 2008/ 09

General $ 40,381,363 $ 43,874,423 $ 47,253,347

Capital Improvement 29,893,687 68,553,361 50,348,524

Enterprise 31,461,760 40,663,687 35,479,676

Special Revenue 32,217,136 58,394,679 34,547,971

Assessment Districts 7,207,808 8,422,448 9,263,415

Internal Service 6,967,682 8,257,842 8,211,396

Debt Service 72,262,969 18,462,453 20,222,823

Redevelopment Agency 8,613,459 10,772,937 24,883,175

TOTALS $ 229,005,864 $ 257,401,830 $ 230,210,327

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xl

CONSTITUTIONAL SPENDING LIMITS

Commonly referred to as the Gann Limit, this was a ballot initiative adopted in 1980, and modified by Proposition 111 which passed in

1990, to limit the amount of tax proceeds state and local governments can spend each year. The Gann limit now appears in California’s

State Constitution as Article XIII ( B).

The limit changes annually and is different for every city. Each year’s limit is based on the amount of tax proceeds that were authorized to

be spent in FY 1978/ 79 in each city, and modified for changes in inflation and population in each subsequent year. By law, inflationary

adjustments are based on the California Department of Finance’s official report on changes in the state’s per capita income or in non-residential

assessed valuation due to new construction. Population adjustments are based on changes in either city or county population

levels.

Article XIII ( B) of the California Constitution provides that the City’s annual appropriations be subject to certain State limitations. This

appropriations limit is often referred to as the Gann Limitation. The City’s limitation is calculated each year and is established by a

resolution of the City Council as a part of the Annual Operating Budget. The Article XIII ( B) limitation for Fiscal Years 2005/ 06 has been

calculated to be $ 47,748,273. This amount was calculated by taking the prior year’s limitation and adjusting it by the total change in

California per capita personal income. The Article XIII ( B) limitation is not a restricting factor for the City of Brentwood. This is due to

the combination of high population growth and reduced Operating Budget Appropriations during the past several years. This factor will

continue to be monitored annually and budget adjustments will be recommended if they are required in future years.

Article XIII ( B) Appropriations Limit for the City of Brentwood

For Fiscal Year 2007/ 08

Appropriations Limit for Fiscal Year 2006/ 07 $ 42,984,709

Population in January 2007 48,907

Population in January 2006 45,974

Percentage Increase in Population - City 6.38

Percentage Increase in Contra Costa County 1.13

California Per Capital Personal Income 4.42

Factor to be applied to Prior Year 1.110820

( Population Factor x Per Capita Factor)

Appropriations Limit for Fiscal Years 2007/ 08 $ 47,748,273

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xli

SIGNIFICANT ACCOUNTING POLICIES

The financial statements for the City of Brentwood are prepared in conformity with GAAP as applied to government units. The

Governmental Accounting Standards Board ( GASB) is the accepted standard- setting body for establishing governmental accounting and

financial reporting principles. The more significant of the City’s accounting policies are described below.

Reporting Entity

The City of Brentwood was incorporated in 1948 as a general law city under the laws of the State of California and enjoys all the rights

and privileges applicable to a General Law City. The City is governed by a five member City Council, under the Council– Manager

form of government. The City provides a full range of services including: Police, Public Works, Economic Development, Planning,

Building, Engineering and Inspection, Parks and Recreation, Housing and General Administrative services. The City also operates

public water and wastewater utilities, as well as providing refuse collection and disposal, and a recycling program. All of these

services are accounted for in the City’s financial statements. The Brentwood Redevelopment Agency was activated on August 13, 1982

pursuant to the State of California Health and Safety Code Section 33000, for the purpose of preparing and carrying out plans for the

improvement, rehabilitation and development of blighted areas within the territorial limits of the City of Brentwood.

Basis of Accounting

Governmental fund types and fiduciary fund types use a modified accrual basis of accounting. Under the modified accrual basis of

accounting, revenues are recognized in the accounting period in which they become measurable and available to finance expenditures

of the current period. Revenues which are accrued include Federal and State grants and subventions, property taxes, transient occupancy

taxes, sales taxes collected by the State on behalf of the City prior to year- end, interest and certain charges for current services. Revenues

which are not considered susceptible to accrual include certain licenses, permits, fines, forfeitures and penalties. Expenditures are

recorded in the accounting period in which the related fund liability is incurred. However, debt service expenditures, as well as

expenditures related to compensated absences and claims and judgments, are recorded only when the payment is due. The accrual

basis of accounting is utilized by proprietary fund types, agency funds and trust funds. Under this method, revenues are recorded when

earned and expenses are recorded at the time liabilities are incurred.

Basis of Budgeting

The basis of budgeting is the same as the basis of accounting. Governmental fund and fiduciary fund types use a modified accrual basis

and the proprietary fund types are budgeted on a full accrual basis. The CAFR shows the status of the City’s finances on the basis of

GAAP. This conforms to the way the City prepares its budget.

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xlii

Fund Accounting

The City uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal

compliance and to aid financial management by segregating transactions related to certain City functions or activities. A fund is an

accounting entity with a self- balancing set of accounts established to record the financial position and results of operations of a specific

governmental activity. The City maintains the following fund types:

Governmental Fund Types

􀂃 General Fund: The General Fund is the government’s primary operating fund. It accounts for all financial resources of

the general government, except those required to be accounted for in another fund.

􀂃 Special Revenue Funds: Special Revenue Funds account for the proceeds of specific revenue sources ( other than special

assessments, expendable trusts or capital projects) that are restricted by law or administrative action to expenditures for

specified purposes.

􀂃 Debt Service Funds: Debt Service Funds account for the accumulation of resources for, and the payment of, long- term

debt principal, interest and related costs.

􀂃 Capital Project Funds: Capital Project Funds account for the acquisition and construction of major capital facilities not

financed by Proprietary Funds.

Proprietary Fund Types

􀂃 Enterprise Funds: Enterprise Funds account for operations in a manner similar to private business enterprises where the intent

is that the costs ( expenses, including depreciation) of providing goods or services to the general public on a continuing basis is

to be financed or recovered primarily through user charges.

􀂃 Internal Service Funds: Internal Service Funds account for the financing of goods or services provided by one department or

agency to other departments or agencies of the City or to other governmental units, on a cost- reimbursement basis.

Fiduciary Fund Types

􀂃 Agency Funds: Agency Funds account for assets held by the City as trustee or agent for individuals, private organizations, or

other governmental units, and/ or other funds. These funds are custodial in nature ( assets correspond with liabilities) and do not

involve measurement of results of operations.

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xliii

LONG- TERM DEBT

The City of Brentwood has an established debt management policy and written guidelines that outline the restrictions that affect the amount

and type of debt issued by the City, the issuance process and the debt management portfolio. A debt management policy improves the

quality of decisions, provides justification for the structure of debt issuance, identifies policy goals and demonstrates a commitment to long-term

financial planning, including a multi- year capital plan. Adherence to a debt management policy signals to rating agencies and the

capital markets that a government is well managed and should meet its obligations in a timely manner.

Debt Policy

The following is an excerpt from the Budget and Fiscal Policies adopted October 24, 2006 that outlines some of the highlights of the

Capital Financing and Debt Management policy.

􀂃 Debt financing will only be used for one- time capital improvement projects under the following circumstances:

- when the project’s useful life will exceed the term of the financing

- when project revenues or specific resources will be sufficient to service the long- term debt

􀂃 Debt financing will not be considered appropriate for any recurring purpose such as current operating and maintenance

expenditures.

􀂃 Capital improvements will be financed primarily through user fees, service charges, assessments, special taxes, or

development agreements when benefits can be specifically attributed to users of the facility. Accordingly, development

impact fees should be created and implemented at levels sufficient to ensure that new development pays its fair share of the

cost of constructing necessary community facilities.

􀂃 The City will not obligate the General Fund to secure long- term financings except when marketability can be significantly

enhanced.

􀂃 An internal feasibility analysis will be prepared for each long- term financing which analyzes the impact on current and

future budgets for debt service and operations. This analysis will also address the reliability of revenues to support debt

service.

􀂃 The City will conduct financings on a competitive basis for revenue and general fund debt obligations. Negotiated

financing will be used when there is market volatility, the bonds are non rated, or the financing entails the use of complex

security or structure.

􀂃 The City will seek a rating on any direct debt and will seek credit enhancements such as letters of credit or bond insurance

when it will improve marketing and is cost effective.

􀂃 The City will monitor all forms of debt annually coincident with the City’s Financial Plan preparation and review process

and report concerns and remedies, if needed, to the Council.

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xliv

Debt Obligations

The legal debt limit, as of June 30, 2006, is $ 209,974,838. This is based on the total assessed value of all real and personal property,

$ 5,599,329,002, and the debt limit percentage of 3.75% set by Government Code 25 and 43605. The amount of debt applicable to the debt

limit is $ 6,384,302, comprised of the 2002 General Obligation Bonds, payable from an unlimited ad valorem tax on real property. The debt

margin available, as of June 30, 2006, is $ 203,590,536.

The City’s current debt levels are manageable and should have no adverse effect on future operations. With respect to the city’s direct debt

( general obligation debt), the most recent rating reviews from S& P and Moody’s list overall direct debt at $ 139 per capita and 0.11% of

assessed value. These ratios are low in comparison to other cities. Council policy dictates the City strive for a 30% unrestricted General

Fund reserve. The City is projecting unrestricted General fund reserves will exceed this 30% target over the next two budget years.

Historically, most of Brentwood’s bond issues have been negotiated due to their unique structure and the fledgling status of the city’s

credit ratings. The one exception was the 1996 Water and Sewer Revenue Bonds which were sold on a competitive basis. This will

continue to be the case for the City’s Capital Improvement Financing Program ( CIFP) program, which are either non- rated assessment

bonds or complex senior subordinate structures or other complicated lease and/ or redevelopment financings. The city will consider

competitive sales on standard Enterprise Fund and General Obligation bonds, which have established credit ratings and are more

ordinary in nature.

The City of Brentwood’s total long- term debt obligations are segregated below. These schedules contain audited numbers from the June

30, 2006 CAFR. The 1996 Water and Wastewater Revenue Bonds, the 2001 CIP Revenue Bonds and the 2002 General Obligation Bonds

are rated AAA by Standard & Poors and AAA by Moody’s. The city’s underlying general obligation debt rating is A2 by Moody’s. The

2001 Capital Improvement Program ( CIP) Revenue Bonds include $ 4,275,000 for the Brentwood Education & Technology Center

( BETC), and $ 5,940,000 for the CIP Roadway Bonds. The BETC is supported by rental payments from Los Medanos Community

College. The CIP Roadway Bonds are supported by gas tax, Measure C funds and roadway impact fees. The City’s Enterprise Fund debt

is self- supporting with adequate coverage ratios and rate flexibility.

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xlv

Annual Debt Service

FY 2007/ 08 and FY 2008/ 09

Fund Type of Debt Description Amount Due

FY 2007/ 08

Amount Due

FY 2008/ 09

232 Bond Special Tax Bond $ - $ 386,930

233 Bond Special Tax Bond - 46,508

250 Note Payable CCWD Water Connection 301,522 301,522

250 Bond Water Revenue Bond 254,782 1,111,544

255 Loan State Water Resources Loan 1,257,467 1,258,960

261 Inter- fund Loan Public Employee Retirement System 563,398 537,493

303 Bond CIP 2001 Revenue Bond 1,369,300 1,367,706

303 Bond 2008 Tax Allocation Revenue Bond - 1,096,181

380 Bond Lease Revenue Bond - 412,419

445 Bond CIP 2001 Revenue Bond 713,581 718,550

448 Bond 2002 General Obligation Bond 301,956 315,756

540 Bond Solid Waste Revenue Bond 177,995 468,201

560 Bond Water Revenue Bond ( Refi) 58,794 631,925

560 Note Payable CCWD Water Connection 452,284 452,284

560 Bond Water Revenue Bond 382,174 1,667,316

590 Loan State Water Resources Loan 1,023,829 1,022,336

590 Bond Water/ Wastewater Revenue Bond 175,851 176,708

Total Annual Debt Service $ 7,032,933 $ 11,972,339

Budget for Fiscal Years 2007/ 08 – 2008/ 09

City of Brentwood Page xlvi

CAPITAL IMPROVEMENT PROGRAM OVERVIEW

The City of Brentwood prepares a Capital Budget document that is different from the Operating Budget document, but the two

budgets are closely linked. The CIP, as distinguished from the Operating Budget, is used as a planning tool by the City to identify the

capital improvement needs consistent with the financing and timing of those needs in a way that assures the most responsible and

eff

Description

Rating
Title	Budget. 2007-2009.
Description	Harvested from the web on 8/15/07
Transcript	CITY OF BRENTWOOD 2007/ 08 — 2008/ 09 OPERATING BUDGET Every year the City selects a theme for the covers of its major financial documents — the CIP Budget, the Operating Budget, the Cost Allocation Plan, the Fiscal Model and the Comprehensive Annual Financial Report. This year each of the covers will portray an aspect of the City’s recently adopted tagline — HERITAGE · VISION · OPPORTUNITY. This year’s Operating Budget cover depicts the vision for the Brentwood Boulevard Corridor, a neighborhood- oriented “ Grand Boulevard”. COVER: All of the photos depict elements appropriate for a “ Grand Boulevard”. The photo in the upper left had corner is an example of an office building. The photo in the upper right hand corner shows examples for a neighborhood. The photo in the bottom left corner is an example of mixed use buildings— retail and residential. The photo in the bottom right corner shows an example of a boulevard. The picture in the middle depicts examples of storefront styles and elevations. CITY OF BRENTWOOD OPERATING BUDGET 2007/ 08 – 2008/ 09 Operating Budget Page i City Officials Robert Taylor......................................................................................................................... ......... Mayor Robert Brockman ................................................................................................................... Vice- Mayor Chris Becnel ................................................................................................................... Council Member Brandon Richey.............................................................................................................. Council Member Erick Stonebarger ......................................................................................................... Council Member Executive Team Donna Landeros................................................................................................................... City Manager Damien Brower ................................................................................................................... City Attorney Craig Bronzan ........................................................................................ Director of Parks & Recreation Karen Chew......................................................................................................... Assistant City Manager Pamela Ehler ........................................ City Treasurer / Director of Finance & Information Systems Mark Evenson ..................................................................................................................... Chief of Police Bailey Grewal ........................................................................ Director of Public Works / City Engineer Howard Sword ............................................................................ Director of Community Development CITY OF BRENTWOOD OPERATING BUDGET TABLE OF CONTENTS 2007/ 08 – 2008/ 09 Operating Budget Page ii Budget Preface City Officials and Administration ............................................................................................................................... .................................... i Table of Contents ............................................................................................................................... ............................................................ ii Budget Message ............................................................................................................................... ............................................................. xi City Organizational Chart ............................................................................................................................... ........................................... xxv Community Services Location Map ............................................................................................................................... .......................... xxvi Certificate of Award – GFOA ............................................................................................................................... .................................. xxvii Certificate of Award – CSMFO ............................................................................................................................... .............................. xxviii Budget Documents ............................................................................................................................... ..................................................... xxix Budget Policy ............................................................................................................................... ............................................................ xxxii Budget Development Process ............................................................................................................................... .................................. xxxiv Budget Calendar ............................................................................................................................... ...................................................... xxxiv City Revenue Sources ............................................................................................................................... .............................................. xxxvi City Expenditures ............................................................................................................................... .................................................... xxxix Constitutional Spending Limits ............................................................................................................................... ..................................... xl Significant Accounting Policies ............................................................................................................................... .................................... xli Long- Term Debt ............................................................................................................................... ........................................................ xliii Capital Improvement Budget Overview ............................................................................................................................... ..................... xlvi Capital Improvement Program Summary ............................................................................................................................... .... xlvii Non- Recurring Capital Costs ............................................................................................................................... ...................... xlviii Capital Improvements for Fiscal Years 2007/ 08 and 2008/ 09 ...................................................................................................... xlix Capital Improvement Program Revenue Summary ......................................................................................................................... liv Capital Improvement Program Accomplishments ............................................................................................................................ lv Resolution No. 2007- 150 ( Adopting the City’s Operating Budget for Fiscal Years 2007/ 08 – 2008/ 09) ........................................................................ lvi Resolution No. 2007- 147 ( Establishing an Appropriations Limit) ........................................................................................................................ lvii Annual Budget Summary ( All Funds) ............................................................................................................................... ................ 1 General Fund Ten Year Projection ............................................................................................................................... .................................................... 11 Fund Balance ............................................................................................................................... ................................................................ 12 Revenue and Interfund Transfers Graph ............................................................................................................................... ....................... 14 Revenue Summary ............................................................................................................................... ......................................................... 15 Revenue Detail......................................................................................................................... ..................................................................... 16 CITY OF BRENTWOOD OPERATING BUDGET TABLE OF CONTENTS 2007/ 08 – 2008/ 09 Operating Budget Page iii General Fund ( Cont.) Schedule of Interfund Transfers ............................................................................................................................... .................................... 22 Expenditures Graph ............................................................................................................................... ...................................................... 23 Expenditure Summary ............................................................................................................................... .................................................. 24 Summary of Expenditures by Category ............................................................................................................................... ........................ 26 Personnel Services Expenditure Summary ............................................................................................................................... ................... 27 Supplies and Services Expenditure Summary ............................................................................................................................... .............. 29 Internal Service Expenditure Summary ............................................................................................................................... ........................ 31 Capital Outlay Expenditure Summary ............................................................................................................................... .......................... 33 Listing of General Fund Divisions ............................................................................................................................... ................................ 35 Legislative ............................................................................................................................... ..................................................................... 36 City Administration Organizational Chart ............................................................................................................................... ..................................................... 39 City Manager ............................................................................................................................... ................................................................ 43 City Clerk ............................................................................................................................... ...................................................................... 46 Human Resources ............................................................................................................................... ......................................................... 49 City Attorney Organizational Chart ............................................................................................................................... ..................................................... 52 City Attorney ............................................................................................................................... ................................................................ 56 Finance and Information Systems Organizational Chart ............................................................................................................................... ..................................................... 59 Administrative Services ............................................................................................................................... ................................................ 63 Purchasing ............................................................................................................................... ..................................................................... 66 Business Services ............................................................................................................................... .......................................................... 69 Financial Services ............................................................................................................................... ......................................................... 72 Non- Departmental ............................................................................................................................... ......................................................... 75 Community Services ............................................................................................................................... ..................................................... 78 CITY OF BRENTWOOD OPERATING BUDGET TABLE OF CONTENTS 2007/ 08 – 2008/ 09 Operating Budget Page iv Police Organizational Chart ............................................................................................................................... ..................................................... 79 Police ............................................................................................................................... ............................................................................ 83 Youth Diversion Program ............................................................................................................................... ............................................. 87 Community Development Organizational Chart ............................................................................................................................... ..................................................... 88 Economic Development ............................................................................................................................... ................................................ 92 Building ............................................................................................................................... ........................................................................ 95 Planning ............................................................................................................................... ........................................................................ 99 Planning Commission ............................................................................................................................... ................................................. 103 Public Works Organizational Chart ............................................................................................................................... ................................................... 105 Street Maintenance ............................................................................................................................... ...................................................... 109 Development Engineering ............................................................................................................................... .......................................... 113 Construction Inspection ............................................................................................................................... .............................................. 117 Traffic & Transportation ............................................................................................................................... ............................................. 121 NPDES ............................................................................................................................... ........................................................................ 125 Parks and Recreation Organizational Chart ............................................................................................................................... ................................................... 128 Recreation Administration ............................................................................................................................... .......................................... 132 City Pool ............................................................................................................................... ..................................................................... 135 Park and Recreation Commission ............................................................................................................................... ............................... 138 Youth Commission ............................................................................................................................... ..................................................... 140 Park Planning ............................................................................................................................... .............................................................. 142 Cultural Arts ............................................................................................................................... ............................................................... 145 Community Center ............................................................................................................................... ...................................................... 148 Senior Programs ............................................................................................................................... .......................................................... 150 Sports ............................................................................................................................... .......................................................................... 153 Programs ............................................................................................................................... ..................................................................... 156 Landscape Operations ............................................................................................................................... ................................................. 159 Police Activity League ............................................................................................................................... ................................................ 163 CITY OF BRENTWOOD OPERATING BUDGET TABLE OF CONTENTS 2007/ 08 – 2008/ 09 Operating Budget Page v Capital Improvement Program Organizational Chart ............................................................................................................................... ................................................... 167 Summary ............................................................................................................................... ..................................................................... 171 Revenue and Expenditure Summary ............................................................................................................................... ........................... 172 Capital Improvement Program Administration ............................................................................................................................... ........... 173 Capital Improvement Program Project Services ............................................................................................................................... ......... 177 Roadway CIP Projects ............................................................................................................................... ................................................ 178 Community Facilities CIP Projects ............................................................................................................................... ............................. 179 Parks and Trails CIP Projects ............................................................................................................................... ..................................... 180 City CIFP Capital ............................................................................................................................... ........................................................ 181 Drainage CIP Projects ............................................................................................................................... ................................................. 182 Vineyards Projects ............................................................................................................................... ...................................................... 183 Solid Waste CIP Projects ............................................................................................................................... ............................................ 184 Water CIP Projects ............................................................................................................................... ...................................................... 185 Wastewater CIP Projects ............................................................................................................................... ............................................. 186 Solid Waste Enterprise Organizational Chart ............................................................................................................................... ................................................... 187 Ten Year Projection ............................................................................................................................... .................................................... 191 Net Assets ............................................................................................................................... ................................................................... 192 Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 193 Revenue and Expense Summary ............................................................................................................................... ................................. 194 Revenue Detail ............................................................................................................................... ............................................................ 195 Expense Detail ............................................................................................................................... ............................................................ 196 Operations ............................................................................................................................... ................................................................... 197 Utility Billing ............................................................................................................................... .............................................................. 201 Transfer Station ............................................................................................................................... ........................................................... 204 Replacement ............................................................................................................................... ................................................................ 208 Water Enterprise Organizational Chart ............................................................................................................................... ................................................... 209 Ten Year Projection ............................................................................................................................... .................................................... 213 Net Assets ............................................................................................................................... ................................................................... 214 Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 215 Revenue and Expense Summary ............................................................................................................................... ................................. 216 CITY OF BRENTWOOD OPERATING BUDGET TABLE OF CONTENTS 2007/ 08 – 2008/ 09 Operating Budget Page vi Water Enterprise ( Cont.) Revenue Detail ............................................................................................................................... ............................................................ 217 Expense Detail ............................................................................................................................... ............................................................ 218 Operations ............................................................................................................................... ................................................................... 219 Utility Billing ............................................................................................................................... .............................................................. 223 Non- Potable Water ............................................................................................................................... ...................................................... 226 Replacement ............................................................................................................................... ................................................................ 229 Wastewater Enterprise Organizational Chart ............................................................................................................................... ................................................... 231 Ten Year Projection ............................................................................................................................... .................................................... 235 Net Assets ............................................................................................................................... ................................................................... 236 Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 237 Revenue and Expense Summary ............................................................................................................................... ................................. 238 Revenue Detail ............................................................................................................................... ............................................................ 239 Expense Detail ............................................................................................................................... ............................................................ 240 Operations ............................................................................................................................... ................................................................... 241 Utility Billing ............................................................................................................................... .............................................................. 245 Lateral Maintenance ............................................................................................................................... .................................................... 248 Replacement ............................................................................................................................... ................................................................ 251 City Rentals Enterprise Organizational Chart ............................................................................................................................... ................................................... 253 Ten Year Projection ............................................................................................................................... .................................................... 257 Net Assets ............................................................................................................................... ................................................................... 258 Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 259 Revenue and Expense Summary ............................................................................................................................... ................................. 260 Revenue Detail ............................................................................................................................... ............................................................ 261 CAM Main Rental ............................................................................................................................... ....................................................... 262 College Rental ............................................................................................................................... ............................................................. 264 Incubator Rental ............................................................................................................................... .......................................................... 266 CITY OF BRENTWOOD OPERATING BUDGET TABLE OF CONTENTS 2007/ 08 – 2008/ 09 Operating Budget Page vii Housing Enterprise Organizational Chart ............................................................................................................................... ................................................... 269 Net Assets ............................................................................................................................... ................................................................... 273 Historical Revenue and Expense Analysis Graph ............................................................................................................................... ....... 274 Revenue and Expense Summary ............................................................................................................................... ................................. 275 Revenue Detail ............................................................................................................................... ............................................................ 276 Housing Administration ............................................................................................................................... .............................................. 277 Housing Rental ............................................................................................................................... ........................................................... 280 Special Revenue Funds Reserves ............................................................................................................................... ...................................................................... 283 Revenue Summary ............................................................................................................................... ...................................................... 285 Revenue Detail ............................................................................................................................... ............................................................ 287 Expenditure Summary ............................................................................................................................... ................................................ 292 Gas Tax ............................................................................................................................... ....................................................................... 294 Police Grants ............................................................................................................................... ............................................................... 295 Other Grants ............................................................................................................................... ................................................................ 296 Economic Development ............................................................................................................................... .............................................. 297 Arts Commissions Programs ............................................................................................................................... ....................................... 298 Agriculture Park & History Admin ............................................................................................................................... ............................. 300 Asset Forfeiture ............................................................................................................................... ........................................................... 301 Abandoned Vehicle Abatement ............................................................................................................................... .................................. 302 PEG Media ............................................................................................................................... .................................................................. 303 Measure C ............................................................................................................................... ................................................................... 304 Water Facility ............................................................................................................................... ............................................................. 305 Roadway Facility/ Street Improvement ............................................................................................................................... ....................... 306 Parks & Trails ............................................................................................................................... ............................................................. 307 Storm Drain ............................................................................................................................... ................................................................. 308 Wastewater Facility ............................................................................................................................... .................................................... 309 Community Facilities ............................................................................................................................... .................................................. 310 Fire Fees ............................................................................................................................... ...................................................................... 311 Open Space ............................................................................................................................... ................................................................. 312 Facility Fee Administration ............................................................................................................................... ........................................ 313 Agriculture Administration ............................................................................................................................... ......................................... 314 Agriculture Land ............................................................................................................................... ......................................................... 316 CITY OF BRENTWOOD OPERATING BUDGET TABLE OF CONTENTS 2007/ 08 – 2008/ 09 Operating Budget Page viii Special Revenue Funds ( Cont.) Affordable Housing In- Lieu ............................................................................................................................... ....................................... 317 Public Art Administration ............................................................................................................................... ........................................... 318 Public Art Acquisition ............................................................................................................................... ................................................ 320 Parking In- Lieu ............................................................................................................................... ........................................................... 321 98- 1 City Wide Assessment District ............................................................................................................................... ........................... 322 Community Facilities District # 2 ............................................................................................................................... ................................ 326 Community Facilities District # 3 ............................................................................................................................... ................................ 327 Community Facilities District # 4 ............................................................................................................................... ................................ 328 Community Facilities District # 5 ............................................................................................................................... ................................ 329 94- 1 Blackhawk LLD Assessment District ............................................................................................................................... ................. 330 95- 5 California Spirit LLD Assessment District ............................................................................................................................... ......... 331 95- 6 Gerry Ranch LLD Assessment District ............................................................................................................................... .............. 332 95- 2 Hawthorn LLD Assessment District ............................................................................................................................... ................... 333 95- 7 Greystone LLD Assessment District ............................................................................................................................... .................. 334 95- 8 Garin LLD Assessment District ............................................................................................................................... .......................... 335 97- 1 Hancock LLD Assessment District ............................................................................................................................... .................... 336 98- 5 Arroyo Seco LLD Assessment District ............................................................................................................................... .............. 337 98- 3 Solana LLD Assessment District ............................................................................................................................... ........................ 338 98- 4 Birchwood Estates LLD Assessment District ............................................................................................................................... ..... 339 99- 3 Spa L ............................................................................................................................... ................................................................... 340 99- 4 California Grove ............................................................................................................................... ................................................. 341 99- 5 Deer Creek ............................................................................................................................... .......................................................... 342 99- 6 Trailside ............................................................................................................................... .............................................................. 343 99- 7 Termo ............................................................................................................................... ................................................................. 344 99- 8 Gerry Ryder ............................................................................................................................... ........................................................ 345 99- 9 Richmond America ............................................................................................................................... ............................................. 346 00- 2 Lyon Woodfield ............................................................................................................................... .................................................. 347 00- 3 CA Orchard ............................................................................................................................... ........................................................ 348 00- 4 Brentwood Park ............................................................................................................................... .................................................. 349 01- 1 Laird Property ............................................................................................................................... ..................................................... 350 02- 2 Oak Street ( Schuler- Lyon) ............................................................................................................................... .................................. 351 02- 3 Apricot Way ( Pringle) ............................................................................................................................... ........................................ 352 02- 4 Braddock & Logan ............................................................................................................................... ............................................. 353 02- 5 Sand Creek & Brentwood Blvd. ............................................................................................................................... ......................... 354 CITY OF BRENTWOOD OPERATING BUDGET TABLE OF CONTENTS 2007/ 08 – 2008/ 09 Operating Budget Page ix Special Revenue Funds ( Cont.) 02- 6 Balfour & John Muir ............................................................................................................................... .......................................... 355 02- 7 San Jose & Sand Creek ............................................................................................................................... ....................................... 356 02- 8 Lone Tree Arco ............................................................................................................................... ................................................... 357 02- 9 Balfour Plaza ............................................................................................................................... ...................................................... 358 02- 11 Lone Tree Plaza ............................................................................................................................... ................................................ 359 02- 12 Sunset Industrial ............................................................................................................................... ............................................... 360 02- 13 Stonehaven ............................................................................................................................... ....................................................... 361 03- 2 Meritage Lone Tree ............................................................................................................................... ............................................ 362 03- 3 Brookdale Court ............................................................................................................................... ................................................. 363 03- 5 West Summerset ............................................................................................................................... ................................................. 364 03- 7 Garin Ranch Commercial ............................................................................................................................... ................................... 365 04- 2 Balfour Griffith Commercial ............................................................................................................................... .............................. 366 05- 2 South Brentwood Blvd Commercial ............................................................................................................................... ................... 367 06- 4 Villa Amador ............................................................................................................................... ...................................................... 368 Internal Service Funds Reserves ............................................................................................................................... ...................................................................... 369 Revenue and Expenditure Summary ............................................................................................................................... ........................... 370 Revenue Detail ............................................................................................................................... ............................................................ 371 Summary of Expenditures by Category ............................................................................................................................... ...................... 377 Emergency Preparedness ............................................................................................................................... ............................................ 379 Information Services ............................................................................................................................... ................................................... 380 Equipment Replacement ............................................................................................................................... ............................................. 383 Information Systems Replacement ............................................................................................................................... ............................. 385 Facilities Replacement ............................................................................................................................... ................................................ 387 Tuition ............................................................................................................................... ......................................................................... 389 Fleet Maintenance Service ............................................................................................................................... .......................................... 390 Facilities Maintenance Services....................................................................................................................... ........................................... 393 Parks & LLD Replacement ............................................................................................................................... ......................................... 396 Insurance ............................................................................................................................... ..................................................................... 397 CITY OF BRENTWOOD OPERATING BUDGET TABLE OF CONTENTS 2007/ 08 – 2008/ 09 Operating Budget Page x Debt Service Funds Introduction ............................................................................................................................... ................................................................. 399 Summary of Fund Balances ............................................................................................................................... ........................................ 400 Summary of Revenues ............................................................................................................................... ................................................ 401 Summary of Expenditures ............................................................................................................................... ........................................... 404 Redevelopment Agency List of Officers ............................................................................................................................... ............................................................ 409 Ten Year Projection ............................................................................................................................... .................................................... 413 Summary ............................................................................................................................... ..................................................................... 414 Revenue ............................................................................................................................... ...................................................................... 415 Expenditure Summary ............................................................................................................................... ................................................ 416 Administration & Projects ............................................................................................................................... .......................................... 417 Low/ Moderate Housing ............................................................................................................................... .............................................. 421 Debt Service ............................................................................................................................... ................................................................ 424 Resolution ............................................................................................................................... ................................................................... 426 Appendix Adopted Equipment List ............................................................................................................................... ............................................. A- 1 Vehicle Replacement List ............................................................................................................................... ........................................... A- 2 Compensation Plan ............................................................................................................................... ..................................................... A- 5 New Personnel Requests ............................................................................................................................... ............................................. A- 9 Summary of Positions ............................................................................................................................... ............................................... A- 10 City Basic Data ............................................................................................................................... ......................................................... A- 12 History of Population Growth ............................................................................................................................... ................................... A- 13 Ten Year Personnel History ............................................................................................................................... ...................................... A- 14 Guide to Funds by Fund Numbers ............................................................................................................................... .............................. B- 1 Glossary of Terms ............................................................................................................................... ....................................................... C- 1 Acronyms ............................................................................................................................... .................................................................... D- 1 Index ............................................................................................................................... ......................................................... E- 1 City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xi June 2007 The Honorable Mayor, Members of the City Council and Citizens of Brentwood City of Brentwood Brentwood, California 94513 Dear Mayor Taylor, Members of the City Council and Citizens of Brentwood: I am pleased to submit the Recommended Operating Budget for the City of Brentwood and the Brentwood Redevelopment Agency for Fiscal Years 2007/ 08 and 2008/ 09. The City’s Operating Budget of $ 246.6 million and the Redevelopment Agency’s Budget of $ 10.8 million adhere to the City Council’s objectives and support the City Council’s strategic initiatives. Strategic Initiatives ( listed alphabetically) Customer Service Economic Development Infrastructure and Public Facilities Neighborhood Improvement Public Safety Regional / Local Transportation Technology The question asked most frequently these days, with regards to the housing downturn and its affect on the City’s budget, is whether the City can support the current service levels without borrowing from reserves, cutting services or laying off employees? The answer is “ Yes”. Credit for the City’s financial stability should be given to the current and previous City Councils’ conservative fiscal decisions. The City is well prepared to work for the future, while conservatively managing our current resources. City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xii One of the hardest parts of serving in government is the desire to say “ yes” to the many compelling needs during the good times, without planning for inevitable downturns. When the downturns occur it is extremely difficult to unwind the previous spending decisions without huge disruptions in services. The City Council and staff have worked very hard over the last three years to prepare for this downturn. The City has continued to have a goal of 1.5 police officers per 1000 residents, one of the highest levels of public safety funding in California. At the same time we have limited the number of new employees hired to insure that our work force is sustainable during economic downturns. This recommended budget funds the current number of employees and the salary adjustments that are included in our labor agreements. The City is very fortunate to have a very talented and dedicated workforce and we want to continue to make the City of Brentwood an employer of choice in our region. Additionally, the City has continued the investment in infrastructure to support future growth while maintaining the quality of our streets, parks and neighborhoods for our current residents. The City continues to work to “ bring Brentwood’s vision to reality” through the Downtown Specific Plan, the Civic Center Plan and the Brentwood Boulevard Specific Plan. These three plans will completely change the look of the older parts of Brentwood which haven’t benefited from development to the same degree as the newer parts of the City. I wish to thank the City Council for the recently adopted Strategic Plan which has provided the clear policy direction and goals used to prepare the recommended Operating Budget. I would also like to express my appreciation to all those staff members who have taken the time to participate in the development of the Operating Budget. A tremendous amount of effort and attention to detail has gone into the preparation of this budget document, representing many hours of work by staff members throughout the organization. The City is firmly committed to meeting each and every challenge that building a premier community might bring. This budget is the next step towards meeting those challenges. By continuing to follow the budget policy set forth by the City Council, Brentwood will continue to deliver the highest level of service permitted by the available resources. Sincerely, Donna Landeros Donna Landeros City Manager City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xiii Mission Statement Bringing Brentwood’s Vision to Reality Vision and Culture We are an organization of dedicated professionals working together to make Brentwood the very best, preserving its rich heritage and keeping Brentwood in the hearts of the people. City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xiv BUDGET OVERVIEW This Operating Budget underscores the City Council’s commitment to continue to make cost containment a high priority while adhering to the Budget Development Guidelines. Fiscal strength and long- term financial stability are key components of these principles, which have resulted in a projected General Fund Reserve of $ 23.8 million for FY 2007/ 08. The following budgetary principles guided the City in preparation of this budget: 1. The Operating Budget is balanced, with on- going revenues covering on- going expenditures. 2. Revenues are conservatively estimated to insure revenues support expenditures. 3. The budget does not use reserves for on- going operating costs. 4. For capital projects, all associated costs are identified in order to properly consider future financial impacts. 5. Each Enterprise Fund reflects the true cost of operation, including direct and indirect costs of services provided by the General Fund. 6. Activities supported by user fees should be fully cost recoverable. 7. Discretionary funds are not earmarked thereby allowing maximum flexibility in funding decisions on an annual basis. Key Budget Initiatives 􀂃 The City of Brentwood, along with many other areas in the State, has recently experienced a dramatic slowdown in residential development and pullback in the housing market. The City’s population has increased at an annual average rate of 12.8% over the past decade. The past three years have seen the City’s population growth slow from 12.9% in 2004/ 05 to 9.3% in 2005/ 06 and down to 6.4% in 2006/ 07. We are expecting this slowdown in residential development to continue over the next two years and are anticipating population growth under 5% per year through build out. As a result of the slowdown in population growth development fee income, once a leading source of revenue for the General Fund, will decrease while revenues from property and sales taxes will increase from a newly expanded commercial and economic base. 􀂃 In FY 2005/ 06 the City began implementing a 10- year plan to minimize its dependence on development impact fees from housing developments, one of the City’s main revenue sources. One component of this plan addresses funding for staff focused on Capital Improvement Program ( CIP) activities. In FY 2005/ 06 there were 16.66 employees, funded by CIP, who were responsible for the management and administration of projects. As the City gets closer to build out, development will slow but CIP projects will continue with funding from other sources such as Grants and the General Fund. Additionally, demand for other City services will increase as the City’s population increases. The 10- year plan calls City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xv for CIP staff to transition from CIP project management, funded by development impact fees, to positions which will meet the demand for increased City services and which are funded by the General Fund. This plan is reflected in the FY 2008/ 09 budget which includes just 8.02 employee allocations funded by CIP. 􀂃 Investment yields have risen from historically low levels, although they are still below historical norms. As such, the City’s investment income continues to be less than what was earned five years ago. The City is conservatively estimating investment income for the General Fund will be $ 1,200,000 for FY 2007/ 08. 􀂃 The City has continued to be extremely conservative in hiring new, full- time employees. The 2007/ 08- 2008/ 09 operating budget includes just one new position funded through the General Fund and a total of four new positions in the Enterprise funds. The City has also incorporated the annual CPI increase of 3.1% for all salaries in the FY 2007/ 08 budget and has also included a 3% CPI increase for salaries in FY 2008/ 09. 􀂃 One of the key issues to come to light in recent years is the cost of retirement benefits. The City began preparing for these costs in FY 2004/ 05 by creating an Insurance Internal Service Fund. In FY 2004/ 05, the City began annually prepaying the employer portion of the Public Employee Retirement System ( PERS), resulting in a savings of approximately $ 500,000 per year, as well as transferring PERS savings associated with having unfilled positions which generated an additional $ 500,000 per year in savings. The City has budgeted for the insurance fund to pay for an actuarial valuation report in FY 2008/ 09. In an effort to raise public awareness of the true costs and rising liabilities of retiree medical benefits, Governmental Accounting Standards Board ( GASB) issued Statement No. 45 which addresses how local governments should account for their costs and obligations for retiree healthcare and how these costs should be reported. The City is required to implement GASB 45 in FY 2008/ 09 and is in the process of completing an actuarial report to determine the amount of the City’s unfunded liability. 􀂃 Due to the as yet undetermined impact of Proposition 218 ( see Legislative Issues) on water, sewer and garbage rates, there are no rate increases currently budgeted for in either the Solid Waste, Water or Wastewater Enterprise Funds. LEGISLATIVE ISSUES The State of California is experiencing a financial recovery which has positive impacts for the City of Brentwood. When the State suffered from stagnant revenue growth following the dot-com fall in the early 2000’ s, one of the mechanisms used to help balance the State budget was to look to California cities for takeaways. Since the passage of Proposition 1A, the State has City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xvi reversed this trend. The State’s proposed FY 2007/ 08 budget does not include any new takeaways and, with the recent passage of Proposition 1B, the City of Brentwood expects to continue to benefit from the improving relationship that all California cities are enjoying with the State. The key benefits in the State’s proposed budget for FY 2007/ 08 include: 􀂃 Proposition 42 – Proposition 42 is meant to dedicate the State’s share of sales tax on gasoline to transportation projects. In the past, these funds were used to make up a portion of the State’s general fund shortfall. In FY 2006/ 07 the State repaid $ 260,577 in Proposition 42 funds borrowed in prior years. The State is also planning to begin funding Proposition 42 on an annual basis in FY 2008/ 09. The City is expected to receive an estimated $ 471,304 the first year of the annual funding of Proposition 42. 􀂃 Proposition 1B – Proposition 1B requires the State to allocate $ 2 billion to cities and counties for the following: relieving traffic congestion and improving highway safety, air quality and port security. The money is to be allocated over five years beginning in FY 2007/ 08. The City is expected to receive an estimated $ 1,458,044 in Proposition 1B funding. 􀂃 Proposition 218 – Proposition 218 requires notice and a public hearing prior to an increase in property related fees. These include fees imposed as an “ incident of property ownership, not including gas, electric or developer fees. The City has contracted with outside counsel to assist with ensuring any future rate increases are done in compliance with Proposition 218. In the interim, there are no rate increases currently budgeted for in either the Solid Waste, Water or Wastewater Enterprise Funds. ( See “ Water and Wastewater Enterprise Funds”, on page xvii, for further discussion on the impact of this legislation.) 􀂃 Flood Control and Water Programs – There is $ 35 million for levee maintenance, primarily for the Central Valley and Delta areas of Northern California. There is $ 56.6 million in local assistance funds which will be allocated through the State Water Resource Control Board for various local water quality improvement projects. ECONOMIC OVERVIEW Brentwood is located in eastern Contra Costa County on the perimeter of the San Francisco Bay Area metropolitan area. The Bay Area has grown significantly as an employment center over the past 20 years and, as a result of the growth in the Bay Area, Brentwood experienced significant growth beginning in the 1990’ s. This growth changed Brentwood from a historically agricultural community to one of California’s fastest growing cities. However, the past two years has seen another shift as the City’s residential growth has dramatically slowed. While the slowdown was not City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xvii unexpected, the length of the downturn is difficult to predict and the City will be operating under the assumption that the slowdown will persist through this next two year budget cycle. General Fund In FY 2006/ 07 General Fund revenues are projected to reach $ 41,436,790, which is an increase of $ 1,303,733 or 3.2% from FY 2005/ 06. The low rate of growth is directly attributable to the residential market slowdown and the related decline in building, planning and engineering revenue. Although these revenues are significantly below what was generated each of the previous several years, the development revenue amounts seen in FY 2006/ 07 are representative of what can be expected in the next two years. It is the City’s policy to also periodically conduct fee studies to ensure that we have a fair and legal cost recovery plan The main source of revenue growth for the General Fund will be in property taxes and sales taxes. Despite the residential slowdown of the past few years, the vast majority of all homes in Brentwood enjoy a market value greater than their assessed valuation. As these properties turn over, they are reassessed at the purchase price providing additional property taxes for the City. The City is also in its early years of developing its commercial centers and should continue to enjoy the economic benefits that these centers bring as they come online over the next several years. Enterprise Funds Generally speaking, enterprise funds are self supporting and recoup their costs through rates charged to the users of the service. One of the challenges facing the Enterprise funds has been the implementation of Proposition 218 ( see Legislative Issues). As such, there are no rate increases currently budgeted for in either the Solid Waste, Water or Wastewater Enterprise Funds. Additional budgetary notes relating to Enterprise funds are discussed below. 􀂃 The Solid Waste Enterprise Fund will continue to see revenue growth commensurate with the increase in the City’s annual population levels. Most of these costs are tied to resident needs and demands and will increase accordingly. The budget includes $ 6,171,346 of funding for a new Solid Waste Transfer station, CIP project # 542- 54020. The transfer station will include a scale, scale house, litter containment devices, and a new building with a concrete loading pad, as well as other improvements to adequately meet the City’s needs. 􀂃 The Water and Wastewater Enterprise Funds, like the Solid Waste Fund, will continue to see both revenues and expenses increase as the needs for service increase. A rate study is underway for both the Water and Wastewater Enterprises to ensure that the rates charged in the future are appropriate. The Water Enterprise Fund will begin debt service payments for City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xviii a Surface Water Treatment Facility in FY 2007/ 08. The Wastewater Enterprise Fund is projected to require the use of reserves in each of the next two years. Staff is conducting a rate study to address this deficit and to determine if the current rate structure requires modification. 􀂃 The City Rentals Enterprise Fund includes the Brentwood Education and Technology Center and Los Medanos College. Approximately 38% of the available space at the Technology Center is vacant. The City leases 10% of the building which it uses for a reception area and a computer room. The money collected does not offset the cost of running the Center and the City has had to provide a subsidy to keep the Brentwood Center open. The General Fund subsidy is expected to be $ 512,000 for the next two years combined. 􀂃 The Housing Enterprise Fund has been established to help provide an affordable housing program for the citizens of Brentwood. The City creates affordable housing by requiring that 10% of all newly constructed dwelling units be designated as affordable housing for very- low, low and moderate income households. These units must be integrated into each neighborhood and must be built with the same quality, fit and finish as market rate units. The ownership units in this program must remain affordable for 45 years, while the rental units must remain affordable for 55 years. Management Partners recently completed a preliminary study for the City which forecasts a significant burden on the General Fund, as the City approaches build out, if the affordable housing program continues its current implementation policies. Staff is negotiating a contract with Management Partners to develop alternate implementation strategies to accomplish the affordable housing program goals while minimizing the fiscal impact to the General Fund in future years. These alternative implementation policies will be presented to the City Council for its consideration in the fall of 2007. User Fees The City of Brentwood utilizes a User Fee Model to compute city- wide and departmental overhead factors, full hourly rate costs by City Classification and/ or full costs associated with the provision of selected services. The City reviews and updates their fees on an annual basis based on changes in the Consumer Price Index ( CPI) where applicable in conjunction with legal regulations. Examples of City fees covered in the Cost Allocation and Schedule of City fees include: Building, Inspection, Planning, Engineering, Park and City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xix Recreation, Water Service, Wastewater Service and Solid Waste Service fees. Due to concerns regarding Proposition 218 ( see page xvi), there are no CPI adjustments for either the Water, Wastewater or Solid Waste Enterprises. Ten Year Fiscal Model Based on the current ten year forecast in the fiscal model, which was completed in February of 2007, total General Fund revenue sources are forecast to grow from $ 45.2 million in FY 2007/ 2008 to approximately $ 78.8 million in FY 2015/ 2016. This $ 33.6 million increase equates to an average annual rate of growth of 7.2 percent per year, including inflation of approximately 3 percent per year. Outlined below are the significant changes forecasted for the City’s revenue sources over the next ten years: 􀂃 Property tax is forecast to increase from approximately 20% of total General Fund revenues in FY 2007/ 2008, to nearly 28% in FY 2015/ 2016. 􀂃 Sales tax is forecast to increase from approximately 15% of total General Fund revenues in FY 2007/ 2008, to 20% in FY 2015/ 2016. 􀂃 Revenue from our building, planning, and engineering fees, which currently make up 12.9% of the General Fund Budget, are forecast to only represent 7.1% of revenue in 2015/ 2016. ORGANIZATIONAL PRIORITIES “ Bringing Brentwood’s Vision to Reality” Customer Service Several initiatives are under way in order to provide efficient service to both internal and external customers. These include: 1) implementation of the One Stop Permit Center which will provide one location for customers who need any type of City permit and 2) selection of a new development services software system which includes a workflow component for all departmental approvals required during the processing of development projects. Economic Development Economic development remains a top priority for the City. Key economic development projects include: implementation of the Downtown Specific Plan; continued facilitation of regional retail development including the Streets of Brentwood shopping center; the City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xx development of the Agricultural Park and History Center; enhancement of the John Muir medical facility; expansion of Los Medanos College and the planning and development of the Vineyards Project which includes an amphitheater, winery and event center. Infrastructure and Public Facilities Brentwood continues to cultivate a vital, thriving and charming historical Downtown. These efforts resulted in the development of the Downtown Brentwood 2010 action plan. The plan was developed through community outreach workshops and a series of staff planning meetings and also encompasses the results of the Downtown Specific Plan. The result of these activities is a phasing plan which will be implemented for the following community facilities: City Hall, Council Chambers, Civic Center Parking Structure, Civic Center Plaza and Water Feature, Third Street Extension, a New Community / Arts Center, a Senior Center, Relocation of the Library, City Park Redesign and Restoration and the Downtown Parking Facilities. The designs for all of these facilities will reflect the community input gathered as a result of the community outreach workshops. Neighborhood Improvement The City is monitoring and evaluating the success of the Current Code Enforcement practices to ensure that citizens are reasonably maintaining their property and that public property enhances the appearance of all neighborhoods. The newly appointed City Council Neighborhood Improvement Committee and City staff will continue to work with the community to monitor the Code, as well as oversee other neighborhood concerns such as noise, civility issues and neighborhood beautification efforts. Public Safety To help maintain a community where everyone feels safe, the City is focused on the following activities: 1) development of a fire plan for the City; 2) implementing a crime analysis software program which will help identify and track crime occurrences and trends; 3) increasing traffic enforcement; 4) creating a Street Crime Impact Team; 5) improving communication with the community and 6) establishing a professional standards unit which will provide a centralized contact point for citizen complaints and provide consistency in training, internal investigations and procedures. Regional / Local Transportation Brentwood has been a leader in regional transportation working with the State Route 4 Bypass Authority and Caltrans on the State Route 4 Bypass project. State Route 4 is a major highway which is heavily traveled by commuters from Brentwood, Antioch and Oakley. A portion of State Route 4, Brentwood Boulevard, runs through downtown Brentwood. City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xxi The State Route 4 Bypass project, which consists of three segments, will ease traffic congestion in Brentwood and Oakley and provide access to the growing areas of southeast Antioch and western Brentwood. Segment II, which runs south from Lone Tree Way to Balfour Road, was completed in 2002. The Bypass Authority’s project priority list ( East Contra Costa Regional Fee and Financing Authority’s Strategic Plan) includes funding for widening of Segment II to four lanes, with bridges for grade separation at Sand Creek Road and Balfour Road. This widening work will commence after completion of Segments I and III. Segments I and III are currently under construction and are scheduled to be completed by 2008. These segments will extend the Bypass north from Lone Tree Way to the existing Highway 4 and south from Balfour Road to Vasco Road. The success of the Bypass Authority, a locally funded, locally controlled entity responsible for the State Route 4 improvements in the Brentwood area, has helped bring a regional focus to the need for improvements to Vasco Road. Vasco Road is a major thoroughfare which links Brentwood to the Bay Area. The City of Brentwood, in conjunction with regional stakeholders, is in the process of developing a Vasco Road Strategic Plan. One option currently gaining momentum has the Bypass Authority taking a lead role in facilitating the Vasco Road Corridor and pursuing funding from the Bypass Fee and Financing Authority. Technology The City is committed to either implementing new systems, or updating existing systems, in order to ensure state- of- the- art technology is always being utilized. The City is in the process of implementing a newly adopted, five- year Technology Strategic Plan which will help the City meet its technology goals. MILESTONES AND ACCOMPLISHMENTS Community Award The City of Brentwood has been named one of the 100 Best Communities for Young People, a national competition sponsored by America’s Promise - The Alliance for Youth. The competition honors communities, ranging from small towns to urban neighborhoods, for their commitment to provide healthy, safe and caring environments for young people. Over a thousand communities in America applied for this award of distinction. Downtown Specific Plan The Downtown Specific Plan, adopted in November, 2005, establishes the coordination of public and private investment in the City’s Downtown district to fulfill the community’s intention for the Downtown to remain the heart of the Brentwood community. It is both a policy document and an implementation tool that contains strategies to manage growth and regulatory policies to guide and govern future development within the Downtown Plan Area. City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xxii Infrastructure Improvements 􀂃 American Avenue – There are two American Avenue CIP projects – American Avenue Extension and American Avenue Improvements. The American Avenue Extension project, completed in FY 2006/ 07, consisted of: 1) additional turn lanes for traffic turning from Balfour Road onto American Avenue and 2) exclusive right turn lanes for traffic turning from American Avenue onto Balfour Road. The cost of this project, $ 364,000, was funded by Roadway Facility Fees. The American Avenue Improvements project is scheduled to begin construction in the summer of 2007. This project will widen the section of American Avenue, south of Balfour Road, which provides access to both Heritage High School and Adams Middle School. The budget for this project is partially funded by the Brentwood Union School District, in the amount of $ 229,491, and Roadway Facility Fees, in the amount of $ 114,746. 􀂃 Northwest Quadrant – Completed major infrastructure projects within the Northwest Quadrant which includes several major north- south and east- west roads. The completion of these projects, phased over five years, has provided the infrastructure required for housing, schools and major retail centers. 􀂃 Pavement Management Program – The City was honored at Metropolitan Transportation Commission’s ( MTC) meeting on March 6, 2006, for having the best Bay Area Roads in 2005. Out of the 109 jurisdictions throughout the Bay Area, Brentwood had a Pavement Condition Index ( PCI) rating of 82%. PCI is the rating from 0 ( worst) to 100 ( best). The average rating throughout the Bay Area was 62%. This high rating is a direct result of: 1) many of the City’s streets being new and 2) the City’s Pavement Management Program, an annual preventative maintenance program for City streets specifically selected by the City’s Pavement Management software. It will require a sustained effort to maintain this level of quality as the City’s streets age. Ten Year Fiscal Model In order to help ensure the City’s long term plans remain fiscally responsible, the City has begun utilizing a recently adopted a ten year fiscal model. The fiscal model will be updated annually and will help identify potential financial difficulties during the City’s transition from a reliance on development revenue to revenue generated primarily by property and sales taxes. City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xxiii Retail Growth Over the past few years, Brentwood has added approximately 600,000 square feet of new office and industrial space for business. Large retail centers, such as Lone Tree Plaza and Sand Creek Crossing, generate a significant amount of sales tax revenue that is a huge financial benefit to the City’s General Fund. In 2007, Brentwood was again named one of the fastest growing retail markets by California Retail Survey, ranking 10th throughout California. While the City has experienced tremendous retail growth in the past several years, there is still more to come. The City has approved “ The Streets of Brentwood” project, a large shopping center anchored with a new theatre, a book store, retailers and restaurants not currently found in East County. This project will be built along the Highway 4 Bypass, between Sand Creek Road and Lone Tree Way, a prime area for retail activity. The Streets of Brentwood project is expected to break ground in the summer of 2007. Agriculture Preserving Brentwood’s rich heritage is important to the community and, to that end, the City has committed significant financial resources to enhance agricultural production and farming. Funds collected from developers are used to purchase conservation easements on area farms to preserve these important resources. Further, in 2007 the City Council approved the purchase of the Nail Family property, adjacent to the East Contra Costa Historical Society site, for the purpose of creating an Agricultural Park and History Center dedicated to educating current and future generations about the area’s agricultural heritage. Open Space Management Plan Adopted an Open Space Management Plan to ensure all open space is managed in a manner consistent with good stewardship and sound ecological principles which benefit the citizens of Brentwood by promoting plant habitat, cultural resources, scenic vistas and appropriate passive recreation. Vineyards Project The City has approved the Phase one backbone landscape plans for the Vineyards at Marsh Creek Development. Additionally, the City is working on final plans for an 800 seat amphitheater, an event center and a wine tasting center on a 30 acre parcel adjacent to the John Marsh/ Cowell Ranch State Park. The City has taken the lead, on behalf of California Department of State Parks, to complete the general plan for the John Marsh/ Cowell Ranch 3,600+ acre State Park which includes 66+ acres within the City of Brentwood. City of Brentwood 2007/ 08 – 2008/ 09 Operating Budget Page xxiv AWARDS The City prides itself on providing quality services to the community. Following is a list of awards acknowledging these achievements in quality: The City of Brentwood was named one of the “ 100 Best Communities for Young People” in a national competition sponsored by America’s Promise - The Alliance for Youth The City was honored at Metropolitan Transportation Commission’s ( MTC) meeting on March 6, 2006, for having the “ Best Bay Area Roads in 2005” The City received the Government Finance Officers Association ( GFOA) Awards for “ Distinguished Budget Presentation for Fiscal Year 2005/ 06” and “ Excellence in Financial Reporting for Fiscal Years 2005/ 06 and 2006/ 07” The City received a “ Bronze Level Award” in 2006 for a Bicycle Friendly Community The City received the “ Distinguished Project Award” for the Sunset Park Athletic Complex The City received the California Society of Municipal Finance Officers ( CSMFO) Awards for “ Excellence in Operational Budgeting Fiscal Year 2005/ 06” “ Excellence in Capital Budgeting for Fiscal Years 2005/ 06 and 2006/ 07” and “ Outstanding Financial Reporting for Fiscal Years 2005/ 06” ( last year City was eligible) The City received the “ Award for Recreation/ Community Services for Health & Wellness” for the Spring to Life Fun Run & Health Expo The City received the 2006 Cal/ EPA/ HHW Program Awards for the “ Best New E- Waste or U- Waste Collection” The City received the “ Meritorious Award for Public Communications” for the Budget- in- Brief Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxv Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxvi Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxvii The Government Finance Officers Association ( GFOA) and the California Society of Municipal Finance Officers offer a recognition program for public entities to determine whether the City conforms to the highest level of governmental accounting and financial reporting standards. Both GFOA and CSMFO awarded a Distinguished Budget Presentation Award to the City of Brentwood for its two- year budget beginning Fiscal Year 2005/ 06. Its attainment represents a significant accomplishment by a government and its management. Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxviii Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxix BUDGET DOCUMENTS The Finance Department coordinates the preparation of five key budget documents: the Two- Year Operating Budget, the Five- Year Capital Improvement Program, the Cost Allocation Plan, the Fiscal Model and the Comprehensive Annual Financial Report. The information contained in these documents is the result of a thorough financial review performed through the combined efforts of staff within the City. A brief description of the budget documents and a summary of their intended uses are provided beginning on page XXX. If You Are Looking For: It Is Found In The: Budget Overview and Policies Budget Trends and Graphs Revenue Detail/ Departmental Expenditures Summaries Personnel Information Line Item Detail Status of Capital Projects, Adopted Current Year Projects and Projected Funding for Future Projects Total Cost by Classification City Staff Billing Rates City Fees ( Available 90 Days after Budget Adoption) Ten year projection of General Fund Revenues, Expenses and Fund Balance ( Available 90 Days after Beginning of Fiscal Year) Financial Statements, City Statistics, Management Discussion and Analysis Demographics, Management Statement ( Available 180 days after Fiscal Year End) Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxx Adopted Two Year Operating Budget The Adopted Operating Budget is summarized at a division level. Divisional budgets consolidate program activities into similar service categories within a fund with the intent of reducing the cumbersome nature of a program- based budget document. Every effort has been made to present the budget document in a “ user friendly” format with increased emphasis on trends and written explanations. The Adopted Operating Budget Detail provides a separate line item, object code detail for the budget. Adopted expenditures within each divisional category are detailed with descriptions. Budgets are broken down to the program level and are listed in account number order. Historical information is prepared at a detailed object code level for comparison purposes. Cost data within this document is presented by department. Operational Line Item Budget The Operational Line Item Budget provides line item revenue and expenditure detail which is used by City departments for budget management and tracking purposes. Adopted Five- Year Capital Improvement Program Budget The Adopted Five- Year Capital Improvement Program ( CIP) Budget is a separate document that is annually brought to the City Council for consideration. Prior to City Council’s consideration of the CIP, the document is presented to the Planning Commission to ensure compliance with the General Plan. The CIP matches funding sources with capital expenditures while developing a five- year schedule for completion. The relationship between the CIP and the operating budgets is described in detail beginning on page xlv. CIP projects are separated into the following seven categories: 1. Roadway Improvements 2. Parks and Trails Improvements 3. Water Improvements 4. Wastewater Improvements 5. Community Facilities Improvements 6. Drainage Improvements 7. Development Improvements Each project has been assigned a unique identification number that will remain with the project. The project identification number allows the City Council to track and monitor project status over multi- year periods. Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxxi Cost Allocation Plan The City- wide Cost Allocation Plan ( CAP) is a budget document that will be prepared and distributed approximately 90 days following the adoption of the annual operating budget. A CAP is a widely recognized and well- used method of distributing administrative overhead “ support” costs to the benefiting programs within a City. The City Council adopted its first CAP in December, 1994. That plan established the method of allocating indirect and direct costs. The CAP is updated each year based upon the approved budget data for the current year and actual financial and statistical data for prior years. The City’s CAP also becomes a key document in preparing the City’s User Fee Review and labor charge rates. The City- wide administrative overhead rate for FY 2006/ 07 was 33.86% of direct costs. The CAP calculates departmental and city- wide overhead factors based on distributions of expenditures between the following three categories: personnel costs, operating costs and ongoing capital costs. Assumptions regarding management and non- management positions likewise impact the computation. The methodology for computing these overhead factors is as follows: Department Overhead: To compute the department overhead factor, costs for department management salaries and benefits, plus the cost of associated operating and capital items to be included within overhead, are identified. This cost is then divided by the salary and benefit cost of all non- management employees. The resulting computation is a multiplier that is applied to the hourly rate of a specific position within the department to compute the resulting department overhead associated with providing a designated service. City- wide Overhead: To compute the city- wide overhead factor, general government costs that are not allocable to any line departments are identified. These costs are divided by the total salaries and benefits of all City employees. The result of this computation is a multiplier applied to the hourly rate of a specific position to compute the resulting city- wide overhead associated with providing a designated service. Ten Year Fiscal Model The ten year fiscal model provides a detailed analysis and projection of the next ten years of General Fund revenues, expenses and fund balance. The model is different from most other fiscal models in that it is dynamic. It will be continually updated as more information becomes known. There are four interlinked sections containing hundreds of data points: 􀂃 A development model 􀂃 Expense models for each department and division, summarized at the General Fund level, and supported by a staffing and compensation model 􀂃 A revenue model for each major revenue 􀂃 A fund balance model Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxxii Comprehensive Annual Financial Report The Comprehensive Annual Financial Report ( CAFR) is prepared in accordance with principles generally accepted in the United States of America as promulgated by the GASB. Accounting for all of the City’s activities is centralized under the Finance Department, which is responsible for maintaining the integrity of the City’s recorded financial data. The Finance Department, in conjunction with the City’s management, is also responsible for establishing and maintaining an internal control structure designed to ensure that the City’s assets are protected from loss, theft or misuse. The internal control structure is designed to provide reasonable assurance that the City’s objectives are met, while recognizing that this assurance is not absolute. The concept of reasonable assurance recognizes that: 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. City administration believes the existing internal control systems are adequate to provide reasonable assurance that the City’s assets are safeguarded against loss and that the financial records are reliable for preparing financial statements and maintaining accountability for assets. This belief is supported by the City’s seventh consecutive “ Unqualified” Audit issued in 2006. BUDGET POLICY The City amended its Budget and Fiscal Policy in October of 2006. The purpose of the policy is to establish guidelines for budget development, administration and management as well as outline the City’s fiscal policies in regard to user fee cost recovery goals, capital financing and debt management. The Operating Budget is developed and managed per the policies defined below. Budget Objectives 􀂃 Identify community needs for essential services. 􀂃 Organize the programs required to provide these essential services. 􀂃 Establish program policies and goals which define the nature and level of program services required. 􀂃 Identify activities performed in delivering program services. 􀂃 Propose objectives for improving the delivery of program services. 􀂃 Identify and appropriate the resources required to perform program activities and accomplish program objectives. 􀂃 Set standards to measure and evaluate the: - Output of program activities - Accomplishments of program objectives - Expenditure of program objectives Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxxiii Two Year Budget 􀂃 The City Council shall adopt a two- year budget for the ensuing fiscal year no later than June 30th of each year. 􀂃 The first year of the two- year budget, the City Council will conduct a budget study session outlining the recommended budget for the two- year period. 􀂃 The second year of the two- year budget, the City Council will conduct a budget study session which focuses on changes being recommended for the second year of the two- year budget. 􀂃 For each of the two years, the City Council will adopt a resolution appropriating and approving the budget for the ensuing fiscal year. Second Year Budget Before the beginning of the second year of the two- year cycle, the City Council will review progress during the first year and approve appropriations for the second fiscal year. Mid Year Budget Reviews The City Council will formally review the City’s fiscal condition and amend appropriations, if necessary, six months after the beginning of each year. Balanced Budget The City will maintain a balanced budget over the two- year period of the budget. 􀂃 Each fiscal year, operating revenues must fully cover operating expenditures, including debt service. 􀂃 The City will strive to maintain 30% of annual appropriations in the General Fund’s Undesignated Fund Balance. 􀂃 The City will strive to have cash reserves in the Enterprise Funds at an optimal level of 30%. Budget Administration The City Council may, by majority vote, amend or supplement the budget at any time after its adoption. The City Manager has the authority to make administrative adjustments to appropriations as long as there is no funding source incompatibility and provided those changes do not increase the overall appropriations. All budget transfers require the approval of the Director of Finance, or designee, except those affecting personnel which must be approved by the City Manager. Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxxiv BUDGET DEVELOPMENT PROCESS The City uses the following procedures in establishing the budgetary data reflected in the financial statements: 􀂃 Beginning in March, department heads prepare estimates for required appropriations for the two fiscal years commencing the following July 1. The proposed budget includes estimated expenditures and forecasted revenues for the two fiscal years on a basis consistent with Generally Accepted Accounting Principles ( GAAP). The data is presented to the City Manager for review. 􀂃 In May, the City Manager submits to the City Council a proposed operating budget for the upcoming fiscal year. The operating budget includes a summary of the proposed expenditures and financial resources of the City. Public meetings are conducted to obtain public comments. 􀂃 By June 30th, the City Council adopts the operating budget through passage of an adopting resolution. This appropriated budget covers substantially all City expenditures. For all funds the budget includes all appropriated amounts as originally adopted, plus amendments by the City Council and certain operating carryovers for program appropriations supported by either a purchase order or encumbrance. BUDGET CALENDAR Legend: ● Meeting Date ♦ Due Date Activity Responsibility Oct 20N0o6v Dec Jan Feb Mar 2A0p0r7 May Jun Jul First Quarter Report to City Clerk Finance ♦ 10/ 16 Mid- Year Budget Adjustments Due to Finance All Departments ♦ 12/ 15 Mid- Year Budget Report due to City Clerk Finance ♦ 1/ 10 CIP Budget Packets Distributed All Departments ● 1/ 12 Second Quarter Report to City Clerk Finance ♦ 1/ 15 Mid- Year Budget Report ( Council Meeting) Finance ● 1/ 23 Operating Budget Packets Distributed All Departments ● 1/ 22 Class on Preparation of Operating Budget All Departments ● 1/ 22 Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxxv BUDGET CALENDAR ( Cont.) Legend: ● Meeting Date ♦ Due Date Activity Responsibility 2006 2007 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Open On- Line Budget System All Departments ♦ 1/ 22 Permit Projections due to Finance Bldg., Eng., Finance ♦ 2/ 16 CIP Project Budget Sheets Due to Finance All Departments ♦ 3/ 2 Operating Budget Packets Due to Finance All Departments ♦ 3/ 9 Close On- Line Budget System Finance ♦ 3/ 9 Personnel Budget Due to Finance Human Resources ♦ 3/ 9 Park & Recreation Commission CIP Workshop Parks & Finance ● 3/ 22 Operating Budget Review Dept. Heads w/ Dir. of Finance ● 3/ 29 CIP Final Review All Departments ♦ 4/ 5 Third Quarter Report to City Clerk Finance ♦ 4/ 16 CIP Budget Workshop / Public Hearing All Project Managers ● 4/ 24 Notice of Negative Declaration Published Finance ♦ 5/ 2 Letter to County Clerk Regarding Public Notice Finance ♦ 5/ 2 Operating Budget Review City Manager and Dir. of Finance ● 5/ 10 CIP Budget to Council for Referral to Planning Comm. Finance ● 5/ 22 Operating Budget Workshop / Public Hearing All Departments ● 5/ 31 CIP Budget to Planning Commission for Approval Finance / Engineering ● 6/ 5 CIP Budget to Council for Adoption Finance ● 6/ 12 Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxxvi BUDGET CALENDAR ( Cont.) Legend: ● Meeting Date ♦ Due Date Activity Responsibility Oct N2o0v0 6 Dec Jan Feb Mar Ap2r0 07 May Jun Jul File and Record CIP Documents with County Clerk Engineering ♦ 6/ 13 Operating Budget to Council for Adoption Finance ● 6/ 26 Post Adopted CIP and Operating Budgets on Web Site Finance ♦ 6/ 27 Publish Adopted CIP and Adopted Operating Budgets Finance ♦ 6/ 27 Fourth Quarter Report Due to City Clerk Finance ♦ 7/ 16 CITY REVENUE SOURCES The City of Brentwood relies on several major revenue sources to balance its General Fund budget. The most important of these revenue sources, based on the percentage of the total revenue budget, are: Property Tax, Sales Tax, Administration Fees, Motor Vehicle- in- Lieu Taxes, Building Fees, Parks and Recreation Charges for Services, Parks and Recreation Property Taxes, Engineering Fees and Investment Income. Together these revenues account for $ 35,450,748, or approximately 80.5% of the total revenue projected in FY 2007/ 08. Listed below are the assumptions used for estimating the major revenue sources for FY 2007/ 08. Property Tax The County of Contra Costa levies a tax of 1% on the assessed valuation of property within the County. The City of Brentwood receives approximately a 13.38% share of this 1% levy for property located within the City limits. Because of actions the State took to balance its budget during fiscal years 1992/ 93 through 1994/ 95, the City lost in excess of $ 14M through FY 2005/ 06. The FY 2007/ 08 estimate of property tax revenue, $ 9,259,261, represents 21.0% of the General Fund and is based on an assumed 2% increase in assessed valuation of existing property with a reasonable turnover of both existing and new housing leading to higher assed valuations on the majority of those properties. While the housing market has been in a downturn for well over a year, the rapid appreciation of the preceding five years has still left most assessed valuations in Brentwood well below their corresponding market values. Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxxvii Sales Tax The City of Brentwood receives a 1% share of all taxable sales generated within its borders. In addition to this 1% share, the City receives a portion of an additional voter- approved 1/ 2% sales tax amount which is dedicated for public safety purposes. The sales tax estimate for FY 2007/ 08 is $ 6,549,902, not including the public safety portion. This is $ 1,296,402 above the FY 2005/ 06 estimate of $ 5,253,500. This increase is forecasted because of an anticipated rise in local economic activity and new businesses locating in Brentwood. Administration Fees These fees cover the costs associated with staff time involved in administering either a function or a program. The revenue estimate for FY 2007/ 08 is $ 5,310,487. Motor Vehicle- in- Lieu Tax The State Revenue and Taxation code imposes an annual license fee of 2% of the market value of motor vehicles in lieu of a local motor vehicle property tax. Due to the State Budget Act of 2004, the timing of the payments and the method of calculation has changed dramatically. The majority of the Motor Vehicle- in- Lieu Tax revenue has been replaced by Property Tax In Lieu of VLF revenue, although for reporting purposes it is still considered Motor Vehicle- In- Lieu Tax revenue. Future increases in the Motor Vehicle- in- Lieu Tax will be driven mainly by the change in the City’s assessed valuation instead of by population. The Motor Vehicle- in- Lieu Tax is expected to increase by 18%, to $ 4,313,209, in FY 2007/ 08. This is $ 649,549 more than the FY 2006/ 07 amount of $ 3,663,660. Building Fees Permits fees cover the cost of inspection, plan retention, records keeping, materials investigation, special inspection management and overhead. The projected building permit revenue for FY 2007/ 08, $ 1,812,403, reflects 500 new, single family dwellings as well as expected commercial development. Plan review fees cover the cost of structural as well as nonstructural plan review, zoning compliance, project condition compliance, design review compliance, record keeping and overhead. Revenue generated from this service is expected to be $ 863,617 for FY 2007/ 08. Parks and Recreation Charges and Fees Parks and Recreation provides many services on a “ fee- for- service” basis. The main sources of revenue for Parks and Recreation are recreational programs with registration fees, facility rentals and reimbursement for services. The FY 2007/ 08 estimate for Charges and Fees is $ 2,238,232. Parks and Recreation Property Taxes The County of Contra Costa levies a tax of 1% on the assessed valuation of property within the County. The City of Brentwood Parks and Recreation Department will receive approximately a 3.1% share of this 1% levy for property located within the City limits. The FY 2007/ 08 estimate of County property tax revenue, $ 2,003,087 represents 4.5% of the General Fund total revenue. Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxxviii Engineering Division Fees Engineering Division fees cover the costs of inspection, review, plan check, record keeping and overhead. Revenue generated from these fees is expected to be $ 1,900,550 in FY 2007/ 08. Investment Income Interest rates have risen from the historic lows of the past few years and the City is conservatively estimating investment income will be $ 1,200,000 for FY 2007/ 08. Other Revenue Sources 􀂃 User Fees – Fees charged for the use of services based on the cost recovery goals set by Council. User fees are a major revenue source for the Solid Waste, Water and Wastewater Enterprise Funds. 􀂃 Facility Fees – Development Impact Fees are collected for all new development in the City of Brentwood. These are fees collected for the purpose of constructing or improving Master Planned City infrastructure. 􀂃 Franchise Fees – Franchise Fees are charged for utility services based on a percentage of the gross revenues of the utility company. Total General Fund Revenues – By Major Recurring Revenue Sources Major Recurring Revenues Sources Projected FY 2006/ 07 Budget FY 2007/ 08 Budget FY 2008/ 09 Property Tax 19.4% 21.0% 21.4% Sales Tax 12.7% 14.9% 15.8% Administration Fees 12.7% 12.1% 11.0% Motor Vehicle- In- Lieu 8.8% 9.8% 9.8% Building Fees 6.4% 6.1% 6.5% Parks and Recreation Charges and Fees 4.0% 5.1% 4.7% Parks and Recreation Property Taxes 4.2% 4.5% 4.5% Engineering Division Fees 5.6% 4.3% 3.5% Investment Income 2.7% 2.7% 2.5% Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xxxix CITY EXPENDITURES The City’s budget is financed by the use of various types of funds for its operations. The table below is a summary of these major expenditures with the General Fund highlighted: Projected FY 2006/ 07 Budget FY 2007/ 08 Budget FY 2008/ 09 General $ 40,381,363 $ 43,874,423 $ 47,253,347 Capital Improvement 29,893,687 68,553,361 50,348,524 Enterprise 31,461,760 40,663,687 35,479,676 Special Revenue 32,217,136 58,394,679 34,547,971 Assessment Districts 7,207,808 8,422,448 9,263,415 Internal Service 6,967,682 8,257,842 8,211,396 Debt Service 72,262,969 18,462,453 20,222,823 Redevelopment Agency 8,613,459 10,772,937 24,883,175 TOTALS $ 229,005,864 $ 257,401,830 $ 230,210,327 Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xl CONSTITUTIONAL SPENDING LIMITS Commonly referred to as the Gann Limit, this was a ballot initiative adopted in 1980, and modified by Proposition 111 which passed in 1990, to limit the amount of tax proceeds state and local governments can spend each year. The Gann limit now appears in California’s State Constitution as Article XIII ( B). The limit changes annually and is different for every city. Each year’s limit is based on the amount of tax proceeds that were authorized to be spent in FY 1978/ 79 in each city, and modified for changes in inflation and population in each subsequent year. By law, inflationary adjustments are based on the California Department of Finance’s official report on changes in the state’s per capita income or in non-residential assessed valuation due to new construction. Population adjustments are based on changes in either city or county population levels. Article XIII ( B) of the California Constitution provides that the City’s annual appropriations be subject to certain State limitations. This appropriations limit is often referred to as the Gann Limitation. The City’s limitation is calculated each year and is established by a resolution of the City Council as a part of the Annual Operating Budget. The Article XIII ( B) limitation for Fiscal Years 2005/ 06 has been calculated to be $ 47,748,273. This amount was calculated by taking the prior year’s limitation and adjusting it by the total change in California per capita personal income. The Article XIII ( B) limitation is not a restricting factor for the City of Brentwood. This is due to the combination of high population growth and reduced Operating Budget Appropriations during the past several years. This factor will continue to be monitored annually and budget adjustments will be recommended if they are required in future years. Article XIII ( B) Appropriations Limit for the City of Brentwood For Fiscal Year 2007/ 08 Appropriations Limit for Fiscal Year 2006/ 07 $ 42,984,709 Population in January 2007 48,907 Population in January 2006 45,974 Percentage Increase in Population - City 6.38 Percentage Increase in Contra Costa County 1.13 California Per Capital Personal Income 4.42 Factor to be applied to Prior Year 1.110820 ( Population Factor x Per Capita Factor) Appropriations Limit for Fiscal Years 2007/ 08 $ 47,748,273 Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xli SIGNIFICANT ACCOUNTING POLICIES The financial statements for the City of Brentwood are prepared in conformity with GAAP as applied to government units. The Governmental Accounting Standards Board ( GASB) is the accepted standard- setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. Reporting Entity The City of Brentwood was incorporated in 1948 as a general law city under the laws of the State of California and enjoys all the rights and privileges applicable to a General Law City. The City is governed by a five member City Council, under the Council– Manager form of government. The City provides a full range of services including: Police, Public Works, Economic Development, Planning, Building, Engineering and Inspection, Parks and Recreation, Housing and General Administrative services. The City also operates public water and wastewater utilities, as well as providing refuse collection and disposal, and a recycling program. All of these services are accounted for in the City’s financial statements. The Brentwood Redevelopment Agency was activated on August 13, 1982 pursuant to the State of California Health and Safety Code Section 33000, for the purpose of preparing and carrying out plans for the improvement, rehabilitation and development of blighted areas within the territorial limits of the City of Brentwood. Basis of Accounting Governmental fund types and fiduciary fund types use a modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become measurable and available to finance expenditures of the current period. Revenues which are accrued include Federal and State grants and subventions, property taxes, transient occupancy taxes, sales taxes collected by the State on behalf of the City prior to year- end, interest and certain charges for current services. Revenues which are not considered susceptible to accrual include certain licenses, permits, fines, forfeitures and penalties. Expenditures are recorded in the accounting period in which the related fund liability is incurred. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when the payment is due. The accrual basis of accounting is utilized by proprietary fund types, agency funds and trust funds. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Basis of Budgeting The basis of budgeting is the same as the basis of accounting. Governmental fund and fiduciary fund types use a modified accrual basis and the proprietary fund types are budgeted on a full accrual basis. The CAFR shows the status of the City’s finances on the basis of GAAP. This conforms to the way the City prepares its budget. Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xlii Fund Accounting The City uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain City functions or activities. A fund is an accounting entity with a self- balancing set of accounts established to record the financial position and results of operations of a specific governmental activity. The City maintains the following fund types: Governmental Fund Types 􀂃 General Fund: The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. 􀂃 Special Revenue Funds: Special Revenue Funds account for the proceeds of specific revenue sources ( other than special assessments, expendable trusts or capital projects) that are restricted by law or administrative action to expenditures for specified purposes. 􀂃 Debt Service Funds: Debt Service Funds account for the accumulation of resources for, and the payment of, long- term debt principal, interest and related costs. 􀂃 Capital Project Funds: Capital Project Funds account for the acquisition and construction of major capital facilities not financed by Proprietary Funds. Proprietary Fund Types 􀂃 Enterprise Funds: Enterprise Funds account for operations in a manner similar to private business enterprises where the intent is that the costs ( expenses, including depreciation) of providing goods or services to the general public on a continuing basis is to be financed or recovered primarily through user charges. 􀂃 Internal Service Funds: Internal Service Funds account for the financing of goods or services provided by one department or agency to other departments or agencies of the City or to other governmental units, on a cost- reimbursement basis. Fiduciary Fund Types 􀂃 Agency Funds: Agency Funds account for assets held by the City as trustee or agent for individuals, private organizations, or other governmental units, and/ or other funds. These funds are custodial in nature ( assets correspond with liabilities) and do not involve measurement of results of operations. Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xliii LONG- TERM DEBT The City of Brentwood has an established debt management policy and written guidelines that outline the restrictions that affect the amount and type of debt issued by the City, the issuance process and the debt management portfolio. A debt management policy improves the quality of decisions, provides justification for the structure of debt issuance, identifies policy goals and demonstrates a commitment to long-term financial planning, including a multi- year capital plan. Adherence to a debt management policy signals to rating agencies and the capital markets that a government is well managed and should meet its obligations in a timely manner. Debt Policy The following is an excerpt from the Budget and Fiscal Policies adopted October 24, 2006 that outlines some of the highlights of the Capital Financing and Debt Management policy. 􀂃 Debt financing will only be used for one- time capital improvement projects under the following circumstances: - when the project’s useful life will exceed the term of the financing - when project revenues or specific resources will be sufficient to service the long- term debt 􀂃 Debt financing will not be considered appropriate for any recurring purpose such as current operating and maintenance expenditures. 􀂃 Capital improvements will be financed primarily through user fees, service charges, assessments, special taxes, or development agreements when benefits can be specifically attributed to users of the facility. Accordingly, development impact fees should be created and implemented at levels sufficient to ensure that new development pays its fair share of the cost of constructing necessary community facilities. 􀂃 The City will not obligate the General Fund to secure long- term financings except when marketability can be significantly enhanced. 􀂃 An internal feasibility analysis will be prepared for each long- term financing which analyzes the impact on current and future budgets for debt service and operations. This analysis will also address the reliability of revenues to support debt service. 􀂃 The City will conduct financings on a competitive basis for revenue and general fund debt obligations. Negotiated financing will be used when there is market volatility, the bonds are non rated, or the financing entails the use of complex security or structure. 􀂃 The City will seek a rating on any direct debt and will seek credit enhancements such as letters of credit or bond insurance when it will improve marketing and is cost effective. 􀂃 The City will monitor all forms of debt annually coincident with the City’s Financial Plan preparation and review process and report concerns and remedies, if needed, to the Council. Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xliv Debt Obligations The legal debt limit, as of June 30, 2006, is $ 209,974,838. This is based on the total assessed value of all real and personal property, $ 5,599,329,002, and the debt limit percentage of 3.75% set by Government Code 25 and 43605. The amount of debt applicable to the debt limit is $ 6,384,302, comprised of the 2002 General Obligation Bonds, payable from an unlimited ad valorem tax on real property. The debt margin available, as of June 30, 2006, is $ 203,590,536. The City’s current debt levels are manageable and should have no adverse effect on future operations. With respect to the city’s direct debt ( general obligation debt), the most recent rating reviews from S& P and Moody’s list overall direct debt at $ 139 per capita and 0.11% of assessed value. These ratios are low in comparison to other cities. Council policy dictates the City strive for a 30% unrestricted General Fund reserve. The City is projecting unrestricted General fund reserves will exceed this 30% target over the next two budget years. Historically, most of Brentwood’s bond issues have been negotiated due to their unique structure and the fledgling status of the city’s credit ratings. The one exception was the 1996 Water and Sewer Revenue Bonds which were sold on a competitive basis. This will continue to be the case for the City’s Capital Improvement Financing Program ( CIFP) program, which are either non- rated assessment bonds or complex senior subordinate structures or other complicated lease and/ or redevelopment financings. The city will consider competitive sales on standard Enterprise Fund and General Obligation bonds, which have established credit ratings and are more ordinary in nature. The City of Brentwood’s total long- term debt obligations are segregated below. These schedules contain audited numbers from the June 30, 2006 CAFR. The 1996 Water and Wastewater Revenue Bonds, the 2001 CIP Revenue Bonds and the 2002 General Obligation Bonds are rated AAA by Standard & Poors and AAA by Moody’s. The city’s underlying general obligation debt rating is A2 by Moody’s. The 2001 Capital Improvement Program ( CIP) Revenue Bonds include $ 4,275,000 for the Brentwood Education & Technology Center ( BETC), and $ 5,940,000 for the CIP Roadway Bonds. The BETC is supported by rental payments from Los Medanos Community College. The CIP Roadway Bonds are supported by gas tax, Measure C funds and roadway impact fees. The City’s Enterprise Fund debt is self- supporting with adequate coverage ratios and rate flexibility. Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xlv Annual Debt Service FY 2007/ 08 and FY 2008/ 09 Fund Type of Debt Description Amount Due FY 2007/ 08 Amount Due FY 2008/ 09 232 Bond Special Tax Bond $ - $ 386,930 233 Bond Special Tax Bond - 46,508 250 Note Payable CCWD Water Connection 301,522 301,522 250 Bond Water Revenue Bond 254,782 1,111,544 255 Loan State Water Resources Loan 1,257,467 1,258,960 261 Inter- fund Loan Public Employee Retirement System 563,398 537,493 303 Bond CIP 2001 Revenue Bond 1,369,300 1,367,706 303 Bond 2008 Tax Allocation Revenue Bond - 1,096,181 380 Bond Lease Revenue Bond - 412,419 445 Bond CIP 2001 Revenue Bond 713,581 718,550 448 Bond 2002 General Obligation Bond 301,956 315,756 540 Bond Solid Waste Revenue Bond 177,995 468,201 560 Bond Water Revenue Bond ( Refi) 58,794 631,925 560 Note Payable CCWD Water Connection 452,284 452,284 560 Bond Water Revenue Bond 382,174 1,667,316 590 Loan State Water Resources Loan 1,023,829 1,022,336 590 Bond Water/ Wastewater Revenue Bond 175,851 176,708 Total Annual Debt Service $ 7,032,933 $ 11,972,339 Budget for Fiscal Years 2007/ 08 – 2008/ 09 City of Brentwood Page xlvi CAPITAL IMPROVEMENT PROGRAM OVERVIEW The City of Brentwood prepares a Capital Budget document that is different from the Operating Budget document, but the two budgets are closely linked. The CIP, as distinguished from the Operating Budget, is used as a planning tool by the City to identify the capital improvement needs consistent with the financing and timing of those needs in a way that assures the most responsible and eff
PDI.Date.Issued	2007
PDI.Title	Budget. 2007-2009.
OCLC number	244798608

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