BURBANK REDEVELOPMENT AGENCY

Tuesday, February 10, 2004

AGENDA

CITY COUNCIL CHAMBER - 275 EAST OLIVE AVENUE

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6:30 P.M.

INVOCATION:                       Reverend Ron Degges, Little White Chapel.

                                               The Courts have concluded that sectarian prayer as part of City Council meetings is

                                                not permitted under the Constitution.

FLAG SALUTE:

ROLL CALL:

JOINT MEETING WITH THE CITY COUNCIL:

1.      REVIEW OF THE CITY�S FINANCIAL STATUS AS OF DECEMBER 31, 2003, APPROVAL OF MID-YEAR ADJUSTMENTS TO THE FISCAL YEAR 2003-04 BUDGET AND PREVIEW OF THE FISCAL YEAR 2004-05 BUDGET:

The purpose of this report is to provide the Redevelopment Agency Board with a review of the City�s financial status as of December 31, 2003, and to request Council and Redevelopment Agency Board approval of mid-year adjustments to the Fiscal Year (FY) 2003-04 Budget.  The report will also provide relevant detail as it pertains to the development of the City�s FY 2004-05 Budget.

The following provides a summary of FY 2003-04, which includes the impact of re-estimated revenues and the proposed mid-year adjustments.

For the first six months of the fiscal year, the General Fund received $44,807,473 in revenue, which represents 41.2 percent of the adjusted estimated revenues.  For perspective, it is worth noting that at the prior year six-month report, the City had similarly received 41 percent of its estimated revenues. Over all, the City�s revised recurring revenue estimates for FY 2003-04 have been decreased by $177,398 over original estimates as a result of major losses in two important categories: Interest and Motor Vehicle In-Lieu Fees. The decrease was not as substantial as it might have been due to the fact that the City�s Sales Tax, Utility Users Tax, Transient Occupancy Tax (TOT) and Building Permit Fees have realized moderate increases over the original projections, which has offset the total realized decrease in revenues.

With the exception of the requested mid-year adjustments, 48.6 percent of the appropriations have been expended as of December 31, 2003.  Also, for perspective, the prior mid-year expenditures represented 47 percent of the recurring appropriations.  The majority of the requested mid-year adjustments are related to: higher than expected program costs; costs associated with the Pavelka/Campbell criminal investigation; continued police enforcement at the Bob Hope Airport; and, the Fire Fighters Memorandum of Understanding increases.  These costs also are the primary reason for the higher appropriation percentage expended this mid-year compared to last year.

In summary, the total mid-year adjustments requested are as follows: General Fund - $2,740,453 (recurring is $990,785); Non-General Funds - $2,127,839 (all non-recurring).  Due to offsetting revenues, the net impact is $1,558,499 to the General Fund and $2,127,839 to the Non-General Funds.

The City is heading into the FY 2004-05 with a projected year-end available fund balance of $33,051.  More importantly, due to continued increases in Public Employee Retirement System (PERS) costs, projected increases in bargaining unit costs, increases in liability self insurance rates and the anticipated State Budget impacts, the City faces serious budget challenges over the next several fiscal years.

The Governor released his FY 2004-05 proposed State Budget on January 9, 2004.  Much to the dismay of city officials across the State, the Governor has proposed to use local government revenues to balance the State budget which faces a $14 billion deficit. The total incremental loss to Burbank should the Governor�s current budget proposal be adopted is roughly $2.4 million, with a $1.1 million additional loss to the General Fund.  Staff will continue to monitor any changes and provide updates when appropriate.  Staff will also continue to contact the City�s State legislators to address any concerns.

Even before the City considered the potential State Budget impacts to the FY 2003-04 Budget, it is important to note the City was already progressing into a deficit position over the next several years due to the underperformance of several revenue categories and the significant increase in recurring costs, especially the PERS rates.  As a result, the General Fund budget parameters for FY 2004-05 are once again strict.

Unlike last fiscal year, all General Fund departments were not requested to provide an across-the-board percentage reduction.  Staff recognized that after having undergone a 10 percent reduction scenario last year, some departments would find it more difficult than others to make further reductions.  As a result, departments have been instructed to carefully review their budgets and make reductions where possible.  During this time, departments will also be exploring ways to enhance revenues. 

However, in order to establish a benchmark for discussion, departments have been requested to submit potential budget reductions of two percent and four percent.  As noted, there will be no across-the-board cut; however, these �what-if� scenarios have been requested for discussion purposes.  The Executive Team will evaluate these reductions and make recommendations to the City Council.

Although staff plans to provide the Council with a very descriptive five-year forecast at their annual  retreat in May which will include ideas on how to alleviate some of the projected deficit, the following chart will serve to highlight the enormous challenge the City will be facing over the next several years.  Clearly, the structural imbalance between recurring revenues and expenditures needs to be addressed.

Recommendation:

Adoption of proposed City Council resolution entitled:

(4/5 vote required)

A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AMENDING THE BUDGET OF FISCAL YEAR 2003-2004 FOR THE PURPOSE OF MID-YEAR ADJUSTMENTS.

Adoption of proposed Redevelopment Agency resolution entitled:

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK FOR FISCAL YEAR 2003-2004 FOR THE PURPOSE OF MID-YEAR ADJUSTMENTS.

CONSENT CALENDAR: (Item 2)

The following item may be enacted by one motion.  There will be no separate discussion on this item unless a Council Member so requests, in which event the item will be removed from the consent calendar and considered in its normal sequence on the agenda. A roll call vote is required for the consent calendar.

2.      APPLICATION FOR CALHOME PROGRAM BUILDING EQUITY AND GROWTH IN NEIGHBORHOODS GRANT FUNDING:

The purpose of this report is to request the Redevelopment Agency Board (Agency) consider authorizing staff to apply for funds under the CalHome Program Building Equity and Growth in Neighborhoods (BEGIN) Program to provide first-time homebuyer financing for the Burbank Village Walk and the proposed Lance Site projects.

Application for these funds is consistent with the City�s housing strategy to support home ownership.  The Blue Ribbon Task Force on Affordable Housing (Task Force) identified as one of their objectives the expansion of home ownership opportunities, noting in their report to Council that; �one of the primary goals of the City�s Housing Element and the Agency�s Implementation Plan is to maintain and encourage home ownership for all income levels.  The Agency plays an active role in fostering home ownership both through new construction and provision of mortgage assistance to income qualified purchasers.�

The Task Force also stated that, �through site assembly and other assistance, the Agency is currently assisting in development of several mixed-income ownership developments,� including the proposed Lance Site (33 townhomes/10 moderate-income) and the Burbank Village Walk (140 condos/14 moderate income) projects.

The California Department of Housing and Community Development (HCD) recently released a Notice of Funding Availability (NOFA) for approximately $24 million to provide funding statewide to local jurisdictions for mortgage assistance for moderate-income first-time homebuyers.  BEGIN is a home ownership program designed to award grants to qualifying jurisdictions that provide incentives to reduce or remove regulatory barriers (e.g., density and zoning standards or permit processing and fees) for housing developments, as set forth in the BEGIN Program Guidelines.  These grants provide down payment assistance in the form of a loan to assist qualifying moderate-income homebuyers.

Intended to promote partnerships between local jurisdictions and housing developers to increase the supply of affordable new units for moderate-income homebuyers, the BEGIN Program stipulates that the local jurisdiction, as the grant applicant, is to �offer specific forms of regulatory relief, development incentive or project enhancements to identified BEGIN Program projects which reduce the per-unit cost of the housing.�   In other words, the City�s applications must demonstrate the actions taken to alleviate barriers to affordable housing for each of the projects, Burbank Village Walk and the Lance Site.   HCD defines actions as a change in an existing development standard that reduces barriers to or the cost of residential development. 

The City�s application is a product of the number of units proposed for qualifying first-time, low- and moderate-income homebuyers per BEGIN Program project.

Burbank Village Walk     $420,000 (14 restricted units times $30,000 loan limit per unit); and,

Lance Site                       $300,000 (10 restricted units times $30,000 loan limit per unit).

Under the BEGIN Program, grant funds would provide down payment assistance loans of up to $30,000 dollars as described in the jurisdiction�s mortgage assistance underwriting guidelines.   BEGIN Program Guidelines also include among others, the following elements related to homebuyer mortgage financing:

• The BEGIN Program loan may be bearing simple interest of one to three percent per annum, and may allow forgiveness of all or a portion of the accrued interest as part of its local program design. Loan principal, though, is not forgiven.  Alternatively, recipients may opt to charge a contingent deferred interest in the form of shared net appreciation in lieu of making loans bear a fixed rate of interest. (The maximum portion of the net appreciation that may be claimed by the local jurisdiction is equal to the percentage of the value of the residence financed by the BEGIN Program loan);

• BEGIN Program loans shall be secured by the property or leasehold interest;

• The lien securing repayment of the BEGIN Program loan will be subject only to liens and encumbrances approved by the local jurisdiction underwriting the BEGIN Program loan; and,

• The combined indebtedness (all loans) secured for a BEGIN Program assisted unit would not exceed 100 percent of the sales price plus up to five percent of the sales price to cover actual closing costs.

If awarded BEGIN Program funds, the Agency would be able to �free up� funding anticipated for the Burbank Village Walk and the proposed Lance Site projects, thereby making those funds available for other housing projects and programs.

Recommendation:

Adoption of proposed resolutions entitled:

1.      A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK AUTHORIZING ACCEPTANCE OF DELEGATION OF AUTHORITY TO RECEIVE AND ADMINISTER FUNDING UNDER THE BEGIN PROGRAM FOR THE LANCE SITE PROJECT.

2.      A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK AUTHORIZING ACCEPTANCE OF DELEGATION OF AUTHORITY TO RECEIVE AND ADMINISTER FUNDING UNDER THE BEGIN PROGRAM FOR THE VILLAGE WALK PROJECT.

END OF CONSENT CALENDAR          

RECESS to conclude the City Council meeting.

ADJOURNMENT.