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Home My Public Portal About07) 7D Second Reading and Adoption of Ordinance 15-1006 Budget Reserve Fund Balance Requirements.------------------------------ AGENDA ITEM 7.0. ADMINISTRATIVE SERVICES DEPARTMENT MEMORANDUM DATE : October 6 , 20 15 TO: The Hon orable City Council FROM: Bryan Cook , City Manager By : Tracey L. Hause, Administrative Services Director SUBJECT : SECOND READING AND ADOPTION OF ORDINANCE NO. 15-1006, AN ORDINANCE AMENDING CHAPTER 5.5 "BUDGET RESERVE FUND BALANCE REQUIREMENTS " OF TITLE 2 "ADMINISTRATION " OF THE TEMPLE CITY MUNICIPAL CODE RECOMMENDATION: The City Council is requested to waive further reading and adopt Ordinance No. 15-1006 (Attachment "A"), amend in g Chapter 5.5 "Budget Reserve Fund Balance Requirements " of Tit le 2 "Administratio n" of the Temple City Municipal Code . BACKGROUND: 1. On June 5, 2012, City Council adopted Ordinance No. 12-953 adding a new Chapter 5.5 "Budget Reserve Fund Bala nce Requirements" to Title 2 "Adm in istration " of the Temp le City Municipal Code . 2. On September 15 , 2015 , the City Council introdu ced Ord in ance No . 15-1006 (Attachment "A") for first reading by title on ly , amending Chapter 5 .5 "Budget Reserve Fund Ba lance Requirements " of Title 2 "Administration" of the Temple City Municipal Code . ANALYSIS : The City Council continu es to maintain various budgeted reserve fund accounts that wil l all ow for the funding of emergencies and disasters , contingenc ies and liabi lities . The goal is to maintain adequate financial rese rves so that in times of emergencies and disasters , economic downturns and annual revenue fluctuations , the City can continue to provide essentia l city services and to meet expenditure obl igations. In order to more accurate ly reflect th e intended use of th e reserves , it is recommended the reserves be designated as follows : I I City Council October 6, 2015 Page 2 of 2 • Emergency/Disasters at $50,000; • Liquidity at $2,000,000 ; and • Local Economic Uncertainty at $1 ,450,000 . CONCLUSION: In order to meet the City Council 's objective of maintaining budgeted reserves for fund balances , it is recommended the City Council adopt the attached ordinance , amending the reserves thresholds to accurately reflect the purpose of the reserves for Emergencies/Disasters, Liquidity and Local Economic Uncertainty. The adoption of an ordinance is a best practice to ensure budgeted reserve levels cannot be changed without a thoughtful process and 4/5 vote by the City Council. FISCAL IMPACT: This action does not have an impact on the FY 2015-16 City Budget. ATTACHMENT: A. Ordinance No . 15 -1006 ATTACHMENT A ORDINANCE NO. 15-1006 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMPLE CITY , CALIFORNIA, AMENDING CHAPTER 5 .5 "BUDGET RESERVE FUND BALANCE REQUIREMENTS " IN TITLE 2 "ADMINISTRATION " OF THE TEMPLE CITY MUNICIPAL CODE . WHEREAS , On June 5 , 2012, the City Council adopted Ordinance No . 12 - 953, adopting Chapter 5 .5 "Budget Reserve Fund Balance Requirements" in Title 2 "Administration " of the Temple City Municipal Code ; WHEREAS, to ensure adequate fiscal resources and stable delivery of City services during emergencies , fiscal emergencies , annual revenue fluctuation , liquidity shortages , or severe economic downturns , the City desires to amend the General Fund reserve requirements , and; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TEMPLE CITY HEREBY ORDAINS AS FOLLOWS : SECTION 1. Amend Chapter 5.5, Section , 2-5 .5-2 . Section 2-5.5-2 is hereby amended to read as follow : The City will maintain combined General Fund reserves as follows : (a) Emergency/Disaster Reserve -$50,000. (1) Use of these funds is allowable only when the following conditions have been met: (i) The City Council has declared the existence of e ither an "Emergency" or "Fiscal Emergency"; and (ii) The use of the reserve has been approved by 4/51h vote of the membership of the City Council. (2) Within 6 months after the Council's determination in paragraph (1) above the City Manager sha ll present a plan to the City Council to replenish this fund . (3) If all or a portion of the Reserve is utilized , the Reserve will be restored to the orig i nal level as adopted within the next five years or whenever reasonably possible . (b) Liquidity Reserve-$2,000,000. 1 (1) Funds are to be set-aside to provide cash flow for timing of revenues and expenditures . For example , while payroll costs are bi-weekly and fairly predictable , state and county tax payments can vary . The City may also from time to time have major projects that are grant funded on a reimbursement basis that require large cash outlays . A "Liquidity Reserve " is established to provide the cash -on-hand needed in between large revenue payments and grant reimbursements and will alleviate the need for short-term borrowing . (2) If all or a portion of the Reserve is utilized , the Reserve will be restored to the original level as adopted within the next five years or whenever reasonably possible. (c) Local Economic Uncertainty Reserve-$1,450,000 (1) Funds are to be set aside for the purpose of stab il izing the del ivery of City services during periods of operational budget deficits resulting from the cond itions as described in the definition above "Economic Stabilization Reserve . (2) Use of the funds are allowable only when the City Council , upon the 4/51h vote of its membership , has approved the use of the fund . (3) If all or a portion of the Reserve is utilized , the Reserve will be restored to the original level as adopted within the ne xt five years or whenever reasona bly possible SECTION 2. Severability. The City Council hereby declares that, should any provision , section , subsection , paragraph , sentence , clause , phrase, or word of this Ordinance or any part thereof, be rendered or declared invalid or unconstitutional by any final court action in a court of competent jurisd iction or by reason of any preemptive legislation , such decision or action shall not affect the validity of th e remain ing section or portions of the Ordinance or part thereof. The City Council hereby declares that it would have indep endently adopted the remaining provisions , sections , subsections , paragraphs , sentences , clauses , phrases , or words of this Ordinance irrespective of the fact that any one or more provisions, sections , subsections , paragraphs, sentences , clauses , phrases , or words may be declared invalid or unconstitutional. SECTION 3. Publication . The City Clerk sha ll certify to the passage and adoption of this Ordinance and to its approval by the Mayor and shall cause the same to be published according to law . 2 PASSED , APPROVED , AND ADOPTED this 6th day of October, 2015 . MAYOR ATIEST: APPROVED AS TO FORM : City Clerk City Attorney City Clerk 3