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HomeMy WebLinkAboutAgenda CC 04.26.2016 WorkshopNotice of M eeting of the Governing B ody of the City of Georgetown, Texas April 2 6, 2 0 1 6 The Ge orgetown City Council will meet on April 2 6, 2016 at 3:00 PM at Council Chambers, 101 E. 7th St., Geo rge to wn, Texas The City o f Georgetown is committed to co mpliance with the Americans with Disabilities Act (ADA). If you re quire assistance in participating at a public meeting due to a disability, as defined under the ADA, reasonable assistance, adaptations, or ac c ommo datio ns will be provided upo n request. P lease contact the City Se c retary's Office, least four (4 ) days prio r to the scheduled meeting date, at (512) 930-3652 or City Hall at 113 East 8th Street for additional information; TTY users ro ute through Relay Texas at 711. Policy De ve lopme nt/Re vie w Workshop - A Prese ntation, Discussion and Possible Directio n on the Schematic De sign for San Gabriel Park - - Kimberly Garrett, Parks and Rec re atio n Director, Laurie Brewer, Assistant City Manager, and Barbara Austin, RVi B Gare y P ark Design Development prese ntation and update -- Kimberly Garrett, Parks and Re c reatio n Director, Laurie Brewer, Assistant City Manager, and Brian Binko wski, Halff Associates C Re vie w o f the City’s Fiscal & Budgetary Po licy and discussion of reco mmended changes for FY2 01 7 -- Leigh Wallace, Finance Directo r D Re vie w o f the City’s Investment P olicy and discussion of recommended changes for FY2017 -- Leigh Wallace, Finance Director E Eco nomic Outlook and Strategy fo r the FY2 01 7 Budget -- Paul Diaz, Budget Manager, Leigh Wallace, Finance Director, and Laurie Brewer, Assistant City Manage r Exe cutive Se ssion In compliance with the Open Meetings Ac t, Chapter 551, Government Co de , Verno n's Texas Codes, Annotate d, the items listed below will be discussed in closed session and are subject to action in the regular se ssio n. F - Advice fro m attorney about pending or co ntemplated litigation and o ther matters on which the attorney has a duty to advise the City Co uncil, including agenda item - Me et and Co nfer Update - Appo intment of temporary/substitute Deputy City Attorney/Court Pro secutor Se c . 55 1.0 74 : Personnel Matter s - City Manager, City Attorney, City Se c retary and Municipal Judge: Consideration of the appointment, employment, evaluatio n, reassignment, duties, discipline, o r dismissal - City Manager Evaluation Adjournme nt Page 1 of 147 Ce rtificate of Posting I, Shelley No wling, City S ecretary for the C ity of Geo rgeto wn, Texas , do hereby c ertify that this Notic e o f Meeting was posted at City Hall, 113 E. 8th Street, a p lac e read ily acc es s ib le to the general pub lic at all times , o n the _____ day of _________________, 2016, at __________, and remained so p o s ted for at leas t 72 c o ntinuo us ho urs p receding the s cheduled time of s aid meeting. __________________________________ Shelley No wling, City S ecretary Page 2 of 147 City of Georgetown, Texas City Council Workshop April 26, 2016 SUBJECT: P resentation, Discussion and P ossible Direction on the Schematic Design for San Gabriel P ark -- Kimberly Garrett, P arks and Recreation Directo r, Laurie Brewer, Assistant City Manager, and Barbara Austin, RVi ITEM SUMMARY: Improvements to San Gabriel Park were one of the pro jects that was included in the 20 08 P ark Bonds. In June 2015, the San Gabriel Park Master Plan was presented to City Co uncil and was very well received. At the September 22, 2015 City Council meeting, appro val was received to move forward securing a contract with RVi fo r schematic design of phases one and two and constructio n plans for phase one. This presentation will review schematic designs, schedule for phase o ne construction and the future phasing schedule and funding of the remaining areas of San Gabriel P ark. The Parks and Re c re atio n Advisory Board receive d an update regarding San Gabrie l Park Improvements on April 14, 2 01 6. FINANCIAL IMPACT: NA SUBMITTED BY: Kimberly Garrett, Parks and Recreation Director ATTACHMENT S: Description S an Gab riel Park P res entation Page 3 of 147 SAN GABRIEL PARK PHASE 1 & 2 SCHEMATIC DESIGN CITY OF GEORGETOWN, TX 4.26.16 Page 4 of 147 AGENDA -PROCESS -SCHEMATIC DESIGN PHASE 1&2 -PHASING & COSTS -LONG RANGE SCHEDULE -QUESTIONS Page 5 of 147 Site Analysis Geologic Study Parks Master Plan 2008 Downtown Master Plan Water Quality Ordinance Public Input MeetingMarch 2015 Program April 14, 2016October 2015Contract February 2016Surveys TODAY City CouncilParks Board Schematic Design Phases 1&2 City Council & Parks Board PresentationsJune 2015 Master Plan PROCESSPage 6 of 147 Phase 1 Design Development Phase 1 Construction Drawings/ Permitting Phase 1 Bid/Award Phase 1 Construction Phase 1 Completion May-June 2016 July-Oct 2016 Nov-Dec 2016 January 2017 Late 2017 Parks Board City Council PROCESSPage 7 of 147 North Austin Avenue San Gabriel River 2015 MASTER PLANPage 8 of 147 v 3 PHASE 1 & 2 4 North Austin Avenue San Gabriel River MASTER PLAN PROJECTED PHASESPage 9 of 147 SITE ANALYSISPage 10 of 147 SCHEMATIC DESIGN CIRCULATION Page 11 of 147 SAN GABRIEL PARKPage 12 of 147 FORMS AND MATERIALS APPROPRIATE TO SAN GABRIEL PARK AND GEORGETOWN FACILITATE INTERACTION WITH NATURE DURABLE, LONG-LASTING, LOW MAINTENENCE Page 13 of 147 STONE P.H. Dimmitt & Co. Building (1890) Stone retaining walls at San Gabriel Park Federal Courthouse, Austin, TX Georgetown Parks and Recreation Community Center Page 14 of 147 LIGHT - TRELLIS/STONE Existing Pavilions - San Gabriel Park Naples Botanical Center Rass Haveli Hotel Stone with Gaps Page 15 of 147 PAVILIONSPage 16 of 147 RESTROOMSPage 17 of 147 RESTROOMSPage 18 of 147 SCHEMATIC DESIGN THE OAK GROVE THE BLUFFS EVENT LAWN TRAILHEAD TRAILHEAD SPRING RESTORATION RIVER FRONT PARK ENTRY BBQ PAVILION & COMMUNITY CENTER Page 19 of 147 E A S T M O R R O W S T R E E T TRAILHEAD SOUTH NORT H F O R K RESTROOMS EAST VALLEY ST. SOUTH TRAILHEAD TRAFFIC CALMING IMPROVED DRAINAGE RESTROOMS PARK ENTRY (TRAFFIC CALMING) 40 Page 20 of 147 BEFOREPage 21 of 147 AFTERPage 22 of 147 THE OAK GROVE IMPROVED DRAINAGE RESTROOMS REALIGNED PARKING EXISTING EXERCISE EQUIPMENT MEDIUM GROUP RENTAL SMALL PICNIC PAVILIONS REALIGN INTERSECTION PLAYSCAPE PLAYSCAPE TRAFFIC CALMING 12 62 14 RAND Y M ORRO W TRA IL E AS T MO R RO W ST. Page 23 of 147 BEFOREPage 24 of 147 AFTERPage 25 of 147 THE SPRINGS EXISTING RESTROOM PRESERVED LAWN & OPEN SPACE AT WATERS EDGE BUS DROP OFF OUTDOOR CLASSROOM IMPROVED DRAINAGE PLAYSCAPE SPRING RESTORATION TRAIL 53 SAN GABRIEL RIVER EAST M O R R O W S T . Page 26 of 147 THE SPRINGSPage 27 of 147 THE SPRINGSPage 28 of 147 THE BLUFFS SAN GABRIEL RIVER RANDY MORROW TRAIL LARGE GROUP RENTAL SPRING RESTORATION HALF BASKETBALL COURT PLAYSCAPE LARGE PAVILION 4 4 42 53 SMALL PICNIC PAVILIONS 14 EAS T M ORROW ST. Page 29 of 147 TRAILHEAD NORTH SAND VOLLEYBALL PAVILION PLAYSCAPE RESTROOMS IMPROVED DRAINAGE TRAFFIC CALMING CO L L E G E S T . CO N N E C T I O N T O E A S T B A N K 39 SAN GA B R I E L R I V E R Page 30 of 147 BBQ PAVILION & PLAZA EXISTING RESTROOM IMPROVED DRAINAGE BOY SCOUT HUT COMMUNITY CENTER BBQ PAVILION Page 31 of 147 EVENT LAWN CH A M B E R W A Y EVENT LAWN SPLASH PAD EVENT PAVILION EVENT LAWN FOOD TRUCK PARKSKATE PARK TRAFFIC CALMING EAS T M OR RO W ST. Page 32 of 147 PHASING-ESTIMATE OF COSTS Phase 1: $2,050,000 -Road realignment -Traffic calming -Spring restoration -Entry monuments & signage -Pavilions & furnishings -Play areas -Trailhead -Restroom -Trees, plantings, & irrigation -Parking -Contingency Phase 2: $3,700,000 -Road realignment -Traffic calming -BBQ Pavilion -Spring restoration -Entry monuments & signage -Pavilions & furnishings -Play areas & courts -Trailhead -Restrooms -Trees, plantings, & irrigation -Parking -Contingency Phase 3: $4,600,000 -Parking -Road realignment -Traffic calming -Event lawn -Entry monuments & signage -Pavilions & furnishings -Skate park -Splash pad -Food truck Park -Trees, plantings, & irrigation -Trail extension -Contingency Phase 4: (future) -Sports Fields Master Plan -Parking -Road realignment -Sports fields improvements -Disc golf improvements -Showbarn Removal -Creek Stabilization -Contingency Page 33 of 147 LONG RANGE SCHEDULE DESIGN & CONSTRUCTION SCHEDULE Phase 1: Design, Survey, EnvironmentalPhase 1: $2.7M - All Debt issued Phase 2: $1.0M - Debt issued Spring 2017 (2018 tax year impact) Phase 2: $2.7M - Debt issued Spring 2018 (2019 tax year impact) Phase 3: $1.0M - Debt issued Fall 2018 (2019 tax year impact) Phase 3: $3.6M - Debt issued Spring 2019 (2020 tax year impact) Phase 1: Construction Phase 2: Construction Phase 2: Design Phase 3 & 4: Survey Phase 3 Design Phase 4: Master Plan Phase 3: Construction Phase 4: Construction Phase 4: Design ISSUED DEBT AND TAX YEAR IMPACT YEAR 2016 2017 2018 2019 2020 Page 34 of 147 QUESTIONS? PHASE 1 PLAN IMPROVED DRAINAGE TRAFFIC CALMING RESTROOM REALIGNED INTERSECTION RESTROOM REALIGNED PARKING MEDIUM PAVILION SMALL PICNIC PAVILION PLAYSCAPEPARK ENTRY (TRAFFIC CALMING) SOUTH TRAILHEAD Page 35 of 147 City of Georgetown, Texas City Council Workshop April 26, 2016 SUBJECT: Garey Park Design Develo pment presentation and update -- Kimberly Garrett, Parks and Recreation Director, Laurie Brewer, Assistant City Manager, and Brian Binko wski, Halff Associates ITEM SUMMARY: This presentation will pro vide an update on the de sign o f Garey Park. Design development was completed in March with detailed drawings. The funding plan and schedule will also be reviewed during the prese ntation. The Park and Recreation Advisory Board received an update on March 12, 2016. FINANCIAL IMPACT: NA SUBMITTED BY: Kimberly Garrett ATTACHMENT S: Description Garey Park P res entation Page 36 of 147 Garey Park Design Team: Halff Associates | Landscape Arch./Civil Moman/Mode DC | Architects Populous | Equestrian Architects Jim Rodgers | Parks Dev. Consultant Design Team Support: Parks & Recreation Department Parks & Recreation Advisory Board Mr. Jack Garey and Mr. Glen Garey Design Development Presentation City Council Workshop April 26. 2016 Page 37 of 147 Park Location Update on Park Development •Funding Plan •Development Schedule •Elements of Park Development Page 38 of 147 Funding Plan (as directed by Council January 2016) •City Debt Issued from 2008 Referendum •Spring 2016 -$3 M •Impacts 2017 fiscal year tax rate •Spring 2017 -$5.5 M •Amortize bond to impact tax rate over two fiscal years •Impacts 2018 fiscal year tax rate •Impacts 2019 fiscal year tax rate •City funding for construction …………….$8.5 M •Mr. Garey contribution for construction... $5 M Page 39 of 147 Development Schedule •2016 |March –Design Development presented to Parks & Recreation Advisory Board. •2016 |April –Design Development presented to City Council. •2016 |July –Complete Construction Documents |Regulatory Permitting,solicit for bids. •2016 |September –Begin Construction •Late 2017 -Complete Construction…..Park Opening!!! Page 40 of 147 Elements of Park Development Park Entry Event / Day-use Area Primitive Camping Group Camping Retreat Cabins Event Center Equine Facility Gate House Host House/ Maint. Facility Garey Play Ranch Garey Dog Ranch Open Play Area Page 41 of 147 Park Entry Page 42 of 147 Gate House Page 43 of 147 Equine Facility Covered Arena Day Pens Trail Access Gravel Parking Trailhead Pavilion Page 44 of 147 Equine Facility Page 45 of 147 Equine Facility Page 46 of 147 Garey Play Ranch 5-12 Area 2-5 Area Splash Pad Zip-lines Heritage of Gold Pavilion Swings Page 47 of 147 Garey Play Ranch Page 48 of 147 Garey Play Ranch Page 49 of 147 Garey Play Ranch Page 50 of 147 Large Dog Area (Rental Option) Large Dog Area Small Dog Area Garey Dog Ranch Page 51 of 147 Garey Dog Ranch Page 52 of 147 Event Area Overflow Parking Event Center Forum Amphitheater Memorial Pavilion Page 53 of 147 Event Center Bandstand / Dancefloor Outdoor Reception Wedding Lawn Main Entry Drop-off Page 54 of 147 Event Center Page 55 of 147 Forum Amphitheater Page 56 of 147 Group Camping Restroom PavilionFire Pit 8 Group Cabins Page 57 of 147 Group Camping Page 58 of 147 Retreat Cabins Pavilion 9 Cabins Future Cabin Area Future Meeting Room/Pavilion Fire Pit Page 59 of 147 Retreat Cabins Page 60 of 147 •Equestrian Facilities •Garey Play Ranch •Garey Dog Ranch •Open Play Area •Event Area |Meadow |Day-use •Retreat Camping •Group Camping •Primitive Camping •Park Entry | Gate House •Maintenance Facility | Host House •Civil Infrastructure (roads, parking, drainage, utilities) •Trails | Wayfinding •Contingency 10% Total Design Development (Today’s Dollars).....$13.5 M Opinion of Probable Construction Costs Page 61 of 147 . . . . . . .Questions? Page 62 of 147 City of Georgetown, Texas City Council Workshop April 26, 2016 SUBJECT: Review of the City’s Fiscal & Budgetary Policy and discussion of recommended c hanges for FY2017 -- Leigh Wallac e , Finance Director ITEM SUMMARY: The purpose of the Fiscal and Budgetary Policy (P olicy) is to pro vide the framewo rk for financial operations of the City and to ensure prudent stewardship, financial planning and accountability. As part of the Annual Budget process, the City Council reviews, amends if necessary and adopts the Po licy by ordinanc e each year. P rior to any Council action, the General Government and Finance Advisory Board (GGAF) will review the Po licy and make recommendations for any amendments or clarifications that may be needed. GGAF Recommended the FY 20 17 policies at the March 30, 2 01 6 meeting. Each year the Policy is administrative ly amended to reco gnize date and amount c hanges within the text; and to address any new financial or regulato ry requirement that may need to be added. Other amendments may be recommended in o rder to clarify wording o r to further granulate a particular P olicy Area. P otential changes for consideration and discussio n by Co uncil are no tated by section and page numbers in the ove rvie w presentation. The full versio n of the policies with tracked changes is also provided. FINANCIAL IMPACT: NA SUBMITTED BY: Leigh Wallace, Finance Director - kj ATTACHMENT S: Description F is cal and Bud getary Polic ies Overview F is cal and Bud getary Polic y Changes Page 63 of 147 FY2017 Annual Budget GGAF March 30, 2016 City Council April 26, 2016 Fiscal and Budgetary Policies Investment Policies FY 2017 1Page 64 of 147 FY2017 Annual Budget Administrative Changes •Order policies according to a logical flow •Simplify language •Updates to match internal procedures •Convert Chief Financial Officer language to Finance Director •Update fiscal year or calendar year •Correct grammar and spelling •Add Table of Contents and page numbers 2Page 65 of 147 FY2017 Annual Budget Substantive Changes •Update Employee Compensation Program (Policy VI, Pg. 14-16) •Update Reserves for Self-Insurance Fund (Policy VI, Pg. 16) •Establish Economic Uncertainty Reserve in General Fund (Policy XVI, Pg. 28) •Enhance requirements for quarterly financial reporting •Add reporting of expenditures (Policy V, Pg. 10) •Add list of unfunded liabilities (Policy VIII, Pg. 16) •Remove reporting of minor surplus property sales (Policy XI, Pg. 21) •Separate reporting of internal audits (Policy XVII, Pg. 30) 3Page 66 of 147 FY2017 Annual Budget Investment Policies Recommended by Investment Advisors Valley View •Update training component of investment officers required by state law (Section 2.3, Pg. 2) •Change Chief Financial Officer to Finance Director •Add Bonwick Capital as an approved dealer/broker (Attachment A, Pg. 9) 4Page 67 of 147 FY2017 Annual Budget Timeline •Recommended by GGAF to Council –March 30 •Preliminary adoption by Council to guide budget process –April 26 •Staff updates during budget process –Summer 2016 •Council formally adopts policies with approved budget –September 13 5Page 68 of 147 1   FY2017 Annual Budget  Fiscal and Budgetary Policy Adopted: April 26, 2016 Contents I. PURPOSE............................................................................................................................................ 2  II. FUND STRUCTURE AND BASIS OF BUDGETING ....................................................................................... 2  III. OPERATING BUDGET ........................................................................................................................... 3  IV. REVENUE MANAGEMENT .................................................................................................................... 6  V. EXPENDITURE MANAGEMENT ............................................................................................................ 10  VI. STAFFING AND COMPENSATION ......................................................................................................... 15  VII. FUND BALANCE POLICIES ................................................................................................................... 16  VIII. LONG‐TERM LIABILITY RESERVES ........................................................................................................ 16  IX. BUDGET CONTINGENCY PLAN ............................................................................................................ 17  X. CAPITAL IMPROVEMENT PROGRAM (CIP) BUDGET ............................................................................... 17  XI. CAPITAL MAINTENANCE AND REPLACEMENT ....................................................................................... 19  XII. ACCOUNTING, AUDITING AND FINANCIAL REPORTING .......................................................................... 21  XIII. ASSET MANAGEMENT ....................................................................................................................... 21  XIV. DEBT MANAGEMENT ........................................................................................................................ 23  XV. OTHER FUNDING ALTERNATIVES ........................................................................................................ 27  XVI. FINANCIAL CONDITIONS, RESERVES, AND STABILITY RATIOS .................................................................. 27  XVII. INTERNAL CONTROLS ........................................................................................................................ 30  Page 69 of 147 2   FY2017 Annual Budget  I. PURPOSE    The City of Georgetown is committed to financial management through integrity, prudent stewardship, planning,  accountability, full disclosure and communication.  The broad purpose of the Fiscal and Budgetary Policies is to  enable the City and its related component units, including the Georgetown Transportation Enhancement  Corporation (GTEC) and the Georgetown Economic Development Corporation (GEDCO), to achieve and maintain  a long‐term stable and positive financial condition, and provide guidelines for the day‐to‐day planning and  operations of the City’s financial affairs.      Policy scope generally spans areas of accounting, operational and capital budgeting, revenue and expenditure  management, financial reporting, internal controls, investment and asset management, debt management and  forecasting.  This is done in order to:    A. Demonstrate to the citizens of Georgetown, the investment community, and the bond rating agencies that  the City is committed to a strong fiscal operation;    B. Provide precedents for future policy‐makers and financial managers on common financial goals and  strategies;    C. Fairly present and fully disclose the financial position of the City in conformity to generally accepted  accounting principles (GAAP); and    D. Demonstrate compliance with finance‐related legal and contractual issues in accordance with the Texas Local  Government Code and other legal mandates.    These policies will be reviewed and updated annually as part of the budget preparation process.    II. FUND STRUCTURE AND BASIS OF BUDGETING    The budgeted funds for the City of Georgetown include:     Governmental Funds: General Fund which accounts for all financial resources except those required to  be accounted for in another fund, and include basic governmental services, such  as Street Maintenance, Planning and Development, Police, Fire and Parks, as  well as solid waste management.     Special  Revenue  Funds (SRF) account for specific revenues that are legally  restricted for specified purposes.  The City currently budgets 26 SRF Funds and  includes Tourism, Parkland Dedication, Library Donations, Animal Services  Donations, and Street Maintenance Sales Tax.    Debt Service Fund is used to account for the payment of general long‐term debt  principal and interest.    Capital Project Funds are used to account for the acquisition or construction of  major capital facilities other than those financed by enterprise activities.    Page 70 of 147 3   FY2017 Annual Budget  Proprietary Funds: Internal Service Funds account for good or services provided by one internal  department to another.  The City uses this system to recognize cost for fleet  replacement and maintenance, facility maintenance, computer replacement  and maintenance and employee health insurance costs.    Enterprise Funds include the City’s “business like” activities including all the  utility funds and the airport.    Basis of Accounting and Basis of Budgeting    The City accounts and budgets for all Governmental Funds using the modified accrual basis of accounting.   This basis means that revenue is recognized in the accounting period in which it becomes available and  measurable, while expenditures are recognized in the accounting period in which they are incurred.  Because  the appropriated budget is used as the basis for control and comparison of budgeted and actual amounts,  the basis for preparing the budget is the same as the basis of accounting.  Exceptions to the modified accrual  basis of accounting include:     Encumbrances, which are treated as expenditures in the year they are encumbered, not when expended   Grants, which are considered revenue when awarded, not received   Principal and interest on long‐term debt, which are recognized when paid.    General government funds include the General Fund, special revenue funds, debt service fund and general  capital project funds.      Proprietary Funds, which include the enterprise and internal service funds are accounted and budgeted using  the full‐accrual basis of accounting.  Under this method, revenues are recognized when they are earned and  measurable, while expenses are recognized when they are incurred regardless of timing or related cash  flows.  The basis for preparing the budget is the same as the basis of accounting except for principal payments  on long‐term debt and capital outlay which are treated as budgeted expenses.  Exceptions include:     Depreciation which is not budgeted   Non‐budgeted accruals such as compensated absences.    III. OPERATING BUDGET    Budgeting is an essential element of the financial planning, control and evaluation process of municipal  government. The operating budget is the City’s annual financial operating plan.  The annual budget includes all  of the operating departments of the General Fund, proprietary funds, debt service funds, special revenue funds,  and capital improvement funds of the City.    A. Form of Government – The Charter (Section 1.03) established a “Council‐Manager Government” wherein the  City vests power in the City Council to “enact legislation, adopt budgets, determine policies, and appoint the  City Manager who shall execute the laws and administer the government of the City.”    B. Comprehensive Plan – The Charter (Section 1.08) requires that the City Council “establish comprehensive  planning as a continuous and ongoing governmental function in order to promote and strengthen the existing  role, processes and powers of the City of Georgetown.” The current comprehensive plan is the 2030 Plan  Page 71 of 147 4   FY2017 Annual Budget  adopted in 2006. The 2030 Plan is written from a perspective of some twenty years into the future.  It  expresses what we envision and desire our community to be in the year 2030, and it reflects on all that we  have accomplished since we launched the revision of our Comprehensive Plan in 2006.  The Plan utilizes a  Vision Statement to guide the desired outcomes for the community.      C. Council Vision – The Council has further defined the City’s Comprehensive Plan by defining its vision to  become the City of Excellence.  This vision is to be accomplished through five (5) focus areas.  These focus  areas become the City’s strategic goals through development and implementation of defined Business  Plans for each focus area.      1. Economic Development  2. Signature Destination  3. Public Safety  4. Transportation  5. Utility Services    C. Five‐Year City of Excellence Business Plan – A “dashboard” plan will be developed that links the 2030 Plan  with the City Council’s City of Excellence vision and five focus areas (strategic goals) that further the  implementation of the Vision.  From those strategic goals an implementation plan for each of the 5 focus  areas will be created.    1. A Five‐Year Financial Forecast will be created and updated annually that will identify potential tax  impacts, rate adjustments and other factors that will impede the implementation of the City of  Excellence Business Plan.    2. Year‐One of this Business Plan is the basis for the Annual Budget.  D.C. Preparation – The Charter (Section 6.02) requires “a proposed budget prepared by the City Manager and  submitted to the City Council at least thirty days prior to the end of the fiscal year.  The budget shall be  adopted not later than the twenty‐seventh day of the last month of the fiscal year.  No budget will be adopted  or appropriations made unless the total estimated revenues, income and funds available shall be equal to or  in excess of such budget or appropriations, except otherwise provided.”  Therefore, the budget will be  presented to the City Council no later than the 1st day of August to provide the City Council time to adopt the  budget in the required time frame.    1. Proposed Budget – A proposed budget shall be prepared by the City Manager with participation of  all of the City’s Directors within the provision of the Charter and the 2030 Plan and the City of  Excellence Vision.    a. The budget shall include four basic segments for review and evaluation:     Revenue   Personnel Costs   Operations and Maintenance Costs   Capital and other non‐project Costs    b. The budget review process will include City Council participation in the development of each  segment and allow for resident participation in the process, and will allow for sufficient time to  address policy and fiscal issues by the City Council.    Page 72 of 147 5   FY2017 Annual Budget  c. A copy of the proposed and approved budgets will be filed with the City Secretary when it is  submitted to the City Council and will be available on the City’s website.  A copy will also be  available at the Georgetown Public Library for citizen review.    2. Adoption – Upon finalization of the budget appropriations, the City Council will hold a public hearing,  and subsequently adopt by Ordinance the final budget as amended.  The budget will be effective for  the fiscal year beginning October 1st.      The Annual Budget document will be submitted annually to the Government Finance Officers  Association (GFOA) for evaluation and consideration for the Distinguished Budget Presentation  Award.      E. Balanced Budget – The goal of the City is to adopt and maintain a balanced operating budget using sustainable  funding sources that are expected to continue to be available in subsequent fiscal years.  Excess balances in  operating funds from previous fiscal years shall remain in the fund in which they were appropriated until  either such excess balances are proposed and adopted pursuant to Section III. C. Preparation of this policy;  until they are used to reduce outstanding debt obligations of the City; or both.     The Charter (Section 6.04) requires that an operating deficit created in any fiscal year shall be paid off and  discharged during the following year.  In practice, deficit has been interpreted to mean City funds as a whole.   The City Council may choose from time to time to allow individual funds to have a negative balance as long  as Operating Reserve requirements for the City as a whole are maintained.    F. Planning – The budget process will be coordinated so that major policy issues are identified prior to the  budget approval date.  This will allow City Council adequate time for consideration of appropriate decisions  and analysis of financial impacts.    G. Reporting – Summary financial reports will be presented to the City Council quarterly.  These reports will be  in a format appropriate to enable the City Council to understand the overall budget and financial status.       H. Control and Accountability – Each Director, appointed by the City Manager, will be responsible for the  administration of his/her departmental budget.  This includes accomplishing the Goals and Objectives  adopted as part of the budget and monitoring each department budget for compliance with spending  limitations.  Directors may transfer funds up to $20,000 within the operations and maintenance or capital  line items within a departmental budget category without additional approval.  All transfers within the  Personnel line items require approval of the Chief Financial OfficerFinance Director and City Manager. All  other transfers of appropriation or budget amendments require either City Council or City Manager approval  as outlined in Section III.I Budget Amendments and Section V.C.4 Use of Excess Salary Savings.    I. Budget Amendments – The Charter (Section 6.04) provides a method to amend for budget amendments and  emergency appropriations.  The City Council may authorize with a majority plus one vote, an emergency  expenditure as an amendment to the original budget.  This may be done in cases of grave public necessity to  meet an unusual and unforeseen condition that was not known at the time the budget was adopted.  In  practice, this has been interpreted to include revenue‐related expenses within the enterprise funds and  timing differences on capital improvement projects.  The following criteria will be used in evaluation of  budget amendments:     Is the request necessary?   Why was the item not budgeted in the normal budget process?  Page 73 of 147 6   FY2017 Annual Budget   Why can't a transfer be done within the Division to remedy the condition?    The Chief Financial OfficerFinance Director must certify availability of revenues or funding sources prior to  adoption.     The City will amend the budget at year end, if needed, for revenue based expenditures that exceeded  budgeted amounts due to increased revenue and recognize any grant funded expenditures for grants  received after the budget was adopted or last amended.  The City will also amend the budget if necessary  for any capital project timing adjustments from prior year, as well as, any other known adjustments needed  and approved at that time.    J. Contingency Appropriations – The budget may include contingency appropriations within designated  operating department budgets.  These funds are used to offset expenditures for unexpected maintenance  or other unanticipated expenses that might occur during the year. Currently, the City maintains contingency  appropriations for insurance deductibles, unexpected legal expenses and equipment repairs.    K. Council Discretionary Account – The budget may contain appropriated funds to be used at the discretion of  the City Council. Actual expenditure of these funds is specifically approved by the City Council on an item by  item basis. The Council Discretionary Account for 2016 is $10,000 included in the General Fund.    L. Use of Unanticipated and Unappropriated General Fund Balances – Within 90 days after fiscal year end, staff  will report the projected General Fund balance to Council.  In the event that unexpected, unbudgeted  amounts are determined to be available in the General Fund after year end, these funds may be used for any  of the following purposes, as approved by the City Council:  1. to fund capital projects;   2. to fund equipment purchases in lieu of issuing debt;  3. to reduce outstanding City debt, including bonded indebtedness and unfunded pension liabilities;  4. to fund contingent liabilities such as the benefit payout reserve, cemetery trust fund, and similar  obligations of the City;   5. to take other steps to reduce property tax rates or mitigate any future increases;   6. to hold those funds in reserve for future commitments or contingencies that may be pending,  and/or;  7. to fund an Economic Uncertainty Reserve of up to three (3) percent of annual General Fund  operating expenditures according to Section XVI, A, 2, b, Economic Uncertainty Reserve.    IV. REVENUE MANAGEMENT    A. Characteristics – The City will strive for the following optimum characteristics in its revenue system:    1. Simplicity – The City, where possible and without sacrificing accuracy, will strive to keep the revenue  system simple in order to reduce compliance costs for the taxpayer or service recipient.  Page 74 of 147 7   FY2017 Annual Budget    2. Certainty – A knowledge and understanding of revenue sources increases the reliability of the  revenue system.  The City will understand its revenue sources and enact consistent collection policies  to provide assurances that the revenue base will materialize according to budget.    3. Equity – The City shall make every effort to maintain equity in its revenue system; i.e., the City should  seek to minimize or eliminate all forms of subsidization between entities, funds, services, utilities,  and customer classes, and ensure an on‐going return on investment for the City.    a. The City will make every effort to recognize the benefit that City tax payers contribute to City  programs and services.    b. The annual Parks and Recreation residential membership rates are established at 75% of non‐ residential rates plus or minus 10% at the discretion of the Parks and Recreation Director in  keeping with the targeted market cost recovery.     4. Revenue Adequacy – The City should require there be a balance in the revenue system; i.e., the  revenue base will have the characteristics of fairness and neutrality as it applies to cost of service,  willingness to pay, and ability to pay.    Overall Operational Cost Recovery for Parks and Recreation for the Recreation and Tennis Centers is  targeted to be between 50 – 60%, with some variance in individual programs.      5. Realistic and Conservative Estimates – Revenues will be estimated realistically, and conservatively,  taking into account the volatile nature of various revenue streams.    6. Administration – The benefits of a revenue source should exceed the cost of levying and collecting  that revenue.    7. Diversification and Stability – A diversified revenue system with a stable source of income shall be  maintained.  This will help avoid instabilities in two particular revenue sources due to factors such as  fluctuations in the economy and variations in the weather.    B. Other Considerations – The following considerations and issues will guide the City in its revenue policies  concerning specific sources of funds:    1. Cost/Benefit of Incentives for Economic Development – The City will use due caution in the analysis  of any incentives that are used to encourage development.  A cost/benefit (fiscal impact) analysis  will be performed as part of the evaluation.    2. Non‐Recurring Revenues – One‐time or non‐recurring revenues should not be used to finance  current ongoing operations.      3. Sustainable Revenues – “Sustainable" means revenue that is consistently available year after year,  and includes revenues realized subsequent to adopted projections.     4. Property Tax Revenues – All real and business personal property located within the City will be valued  at 100% of the fair market value for any given year based on the current appraisal supplied by the  Williamson Central Appraisal District.   Page 75 of 147 8   FY2017 Annual Budget    Conservative budgeted revenue estimates result in a projected ninety‐eight percent (98%) budgeted  collection rate for current ad valorem taxes.  Two percent (2%) of the current ad valorem taxes will  be projected as the budget for delinquent ad valorem tax collection.  For budgeting purposes, the  City will forecast the proposed property tax rate using the effective maintenance & operations  (M&O) rate plus the interest & sinking (I&S) rate needed to fund tax supported debt service.   Increases to the M&O rate will be deliberated and determined by the City Council.  Proposed tax  revenue will be budgeted at a 98% collection rate.    5. Interest Income – Interest earned from investments will be distributed to the funds in accordance  with the equity balance of the fund from which the monies were provided to be invested.    6. User‐Based Fees and Service Charges – For services associated with a user fee or charge, the direct  or indirect costs of that service will be offset by a fee where possible.  The City will review fees and  charges no less than once every two years to ensure that fees provide adequate coverage for the  cost of services.  The City Council will determine how much of the cost of a service should be  recovered by fees and charges.    7. Enterprise Fund Rates – The City will review and adopt utility rates as needed to generate revenues  required to fully cover operating expenses, meet the legal requirements of all applicable bond  covenants, and provide for an adequate level of working capital.  Utility rates will be reviewed  annually as part of the budget process.   A rate study will be conducted every 3 years to review rate  methodology and ensure revenues will meet future needs.  All utility rates will be based on  standardized “cost of service” methodologies,     Water Rates will recognize at least 75% of the “fixed” cost of service, including debt  payments and ROI costs, within the monthly “base charge” determined by meter size.   “Volumetric charge” will recognize the balance of fixed costs not included in the base rate,  plus all variable costs associated with procuring and treating water.   .   Wastewater Rates are “flat and equal” for all residential customers based on the cost of  providing services.  Commercial customer rates are varied depending on size and  specifications of each commercial customer.     Electric Rates include 100% of fixed costs within the base rate, with all variable costs included  in the kWh rate.      Stormwater Drainage Fees are based a mathematical calculation based on impervious cover  and applied in compliance with State Law.      A restricted Power Contract Credit Reserve has been established to provide financial assurances to  the City’s wholesale power contract providers as fiscal surety against any potential risk on the City’s  behalf and will be maintained as “restricted” fund balance on the City’s financial statements.    A Rate Stabilization Reserve (RSR) Account has been established in the Electric Fund to offset and  mitigate potential impacts to customer rates due to increased fuel costs or other external factors  that may negatively impact Electric Rates.  The Rate Stabilization Reserve (RSR) may provide funding  for:    Page 76 of 147 9   FY2017 Annual Budget   Deferring or minimizing the rate impact of future cost increases   Costs associated with providing additional power supply   Filling contractual obligations   Balancing of annual power costs     RSR funds will be monitored monthly to ensure the electric rate is being managed per the Policy.   Increases to RSR are made through the Power Cost Adjustment rate as determined by the fund, at  the recommendation of the General Manager for Utilities.      8. Internal Cost Recovery Fees ‐ Additionally, enterprise activity rates will include transfers to and  receive credits from other funds as follows:    a. General and Administrative Charges – Administrative costs should be charged to all funds for  services of general overhead, such as administration, finance, customer billing, legal and other  costs as appropriate.  These charges will be determined through an indirect cost allocation  following accepted practices and procedures and reviewed annually by the City’s external  auditors.    b. Payment for Return on Investment – The intent of this transfer is to provide a benefit to the  citizens for the ownership of the various utility operations they own.  For all utilities except for  Electric:     In‐Lieu‐of‐Franchise‐Fee.  This transfer, currently 3% of operating revenues generated inside  the City, is consistent with the franchise rates charged to investor owned utilities franchised  to operate within the City.       Return on Investment.   The return on investment (ROI) transfer for In‐City utility customers  is currently calculated at 7% of operating revenues for all utilities.  ROI for water and sewer  customers outside the City is 10% of operating revenues. There is no ROI calculated on solid  waste revenues.    The Franchise and Return on Investment for the Electric Utility is derived from the base rate and  based on kWh sold.  The base rate revenue is multiplied by 7% for all customers. For customers  inside the City, a $0.0102 charge per kWh, equivalent to the 3% and 7% paid by other utility  customers, will be included in the cost per kWh.  For customers outside the City, a $0.007253  charge per kWh, equivalent to the 7% ROI paid by utilities, will be included in the cost.     9. Intergovernmental Revenues – All potential grants will be examined for matching requirements and  must be approved by the City Council prior to making application of the grant.  It must be clearly  understood that operational requirements (on‐going costs) set up as a result of a grant program  could be discontinued once the term and conditions of the program have been completed.    10. Revenue Monitoring – Revenues as they are received will be regularly compared to budgeted  revenues and variances will be investigated, and any abnormalities will be included in the quarterly  report to the City Council.     Page 77 of 147 10   FY2017 Annual Budget    V. EXPENDITURE MANAGEMENT    A. Appropriations – The point of budget control is at the department level budget for all funds.  The Charter  (Section 6.03) provides that any transfer of appropriation between funds must be approved by the City  Council and that the City Manager, without City Council approval, is authorized to transfer appropriations  among departments, within the same operational division and fund.  The City Manager may also authorize  transfer of salary adjustment monies between funds that are budgeted in a citywide account.    B. Expenditure Monitoring – Expenditures and encumbrances will be regularly compared to budget, variances  will be investigated, and any abnormalities will be included in the quarterly report to the City Council.  Projected year‐end expenditures will be reported in the annual budget.    B.C. Personnel Costs – Costs related to salaries and benefits are budgeted at 100% total costs, assuming open  positions are filled throughout the fiscal year.  New positions that are added during the budget process may  have staggered hire dates with appropriate costs reflected in the budget.    1. Vacancy Factor – General Fund appropriations will include a vacancy factor equal to 1% of total  General Fund salaries and related benefits to offset salary savings within the budget.  The vacancy  factor will be budgeted as a negative expense within the General Government Department of the  General Fund.  For 2016, the Vacancy Factor equals $456,212.  This factor will be reduced throughout  the year as vacant positions are recognized within the department budget.    2. Benefit Payout Reserve – The City will establish a benefit payout reserve equal to 15% of the accrued  benefit liability for employees who are currently eligible to retire. Only terminating employee benefit  expenses may be paid from this reserve. This reserve shall be funded as an offset to the vacancy  factor.   For 2016, $30,000 is budgeted for this reserve.    3. Position Control – The annual budget includes a set number of positions within departments when  approved and adopted by City Council.  Additional positions cannot be added without approval of  the City Council.  The City Manager may approve the transfer of authorized positions between  departments if funds are available within the department.    4. Use of Excess Salary Savings – Departmental savings generated due to open positions or other salary  line item savings cannot be spent by the department unless previously approved by the City Manager  and validated by Finance as “excess funds.”    C.D. Special Purpose Funding – In order to support community assistance programs, the City designates specific  funding for special purposes, including Social Services, Children’s Programs, and Public Art.  The City reserves  the ability to cap this special purpose funding when necessitated by budget contingency or compliance  issues, such as revenue shortfalls, or other reasons as determined by City Council.     1. Strategic Partnerships for Community Services – The City of Georgetown values partnerships with  organizations that are committed to addressing our communities’ greatest public challenges and has  identified key priorities in the following areas:     Public Safety   Transportation   Housing  Page 78 of 147 11   FY2017 Annual Budget   Parks & Recreation   Veteran Services, and   Safety Net    The City has targeted funding for these programs to be $5.00 per capita, which may be adjusted to  offset the effects of general inflation based upon Consumer Price Index.  If previous funding levels  are higher than the targeted amount, and to avoid significant reductions in levels of funding, the City  Council shall seek to attain this target chiefly through population growth. These funds will be  allocated and paid according to the City Council’s guidelines for such programs.     The funding level for 2016 is $400,049 for these type of initiatives and is the same as in the previous  year.    2. Public Art Funding – The City will annually allocate funding for Public Art on a year to year basis  depending on the availability of funds in an amount to be determined at the discretion of the City  Manager.  Funding priority will be given to projects that include a matching donation, including  contributions from local organizations and sponsors. Any unspent funds will accumulate and be  reallocated in the following budget year.  Disbursement of these funds will be determined by the  City Council at the recommendation of the City’s Arts & Culture Advisory Board.      Every effort will be made to include public art funding in future City facilities whose primary purpose  is for public use.  These projects will include a reasonable allowance for public art that fits the scope  and purpose of the building so long that it does not negatively impact the project cost beyond the  original budget.  In the event there is cost savings in the construction of City Facilities, the City Council  may consider utilizing that savings on the purchase of public art for the facility.     E. Purchasing – The City will maintain and regularly review a written Purchasing Policy.  All City purchases of  goods or services will be made in accordance with the City’s current Purchasing Policy and with State law.         Page 79 of 147 12   FY2017 Annual Budget  The following table shows a summary of approval requirements for purchases of goods and services.      Dollar Limits: Procurements: Requirements:  Under  $3,000  Under the small purchase  limit  No competitive bids and City credit  cards may be used.  $3,000  up to  $49,99950,000  Within informal bid limit A minimum of three informal  competitive bids required unless  exempted: Historically Underutilized  Business (HUB) requirements apply in  accordance with state law.  $50,000  and above  In excess of the informal bid  limit  Formal solicitations, which includes  public notices, required unless  exempted.  Advisory board review and  recommendation may be  required.  Council approval required.      Common exemptions to the formal solicitation process include the procurement of professional services, the  purchase of goods or services from a sole source provider, and purchases for public health emergencies.    In addition to the above, all purchases must be approved according to preapproved limits within each  department as directed and approved by the City Manager.    F. Contracts and Change Orders – Contracts and related change orders must follow the City Purchasing Policies  and State Law.  In accordance with State Law, change orders are limited to 25% of the total contract amount.   Change orders greater than $50,000 require the same advisory board review and Council approvals as the original  contracts.    G. Prompt Payment – All invoices approved for payment by the proper City authorities shall be paid within thirty  (30) calendar days of receipt of goods or services or invoice date, whichever is later in accordance with State law.   The City will take advantage of all purchase discounts, when possible.    H. Risk Management – The City will pursue every opportunity to provide for the Public’s and City employees’  safety and to manage its risks.  The goal shall be to minimize the risk of loss of resources through liability claims  with an emphasis on safety programs.    I. Retirement Benefits – Proposals to revise benefits administered and provided by the Texas Municipal  Retirement System shall include a written description, and, detailed and summary numerical assessments of the  changes that would result from the proposed benefit revision.      1. The numerical assessments shall include the following:    a. The estimated change to the TMRS contribution rate that would result from the proposed  change in benefits, expressed as a percentage of employee pay and as an annual dollar amount  to the General Fund and to each City fund.    a.b. The estimated change to the City’s unfunded pension liability, expressed as a dollar amount.    Page 80 of 147 13   FY2017 Annual Budget  b.c. The estimated change to the City’s actuarial funding ratio.    2. The description and numerical assessments must be provided to the City Council at least 72  hours prior to consideration and approval, and must be read aloud to the Council prior to Council  consideration.    3. The estimated changes to the City’s contribution rate and the unfunded pension liability  presented pursuant to the section must be based on information provided by the TMRS actuary  or by professional actuary authorized by the TMRS to provide such information.    4. Proposals to revise TMRS benefits must be voted on individually as part of the City Council’s  legislative agenda.    5. The City will amortize any unfunded actuarial liability (UAAL) over a period not to exceed the  amortization period used by the TMRS actuary. The City may amortize its UAAL more quickly by  making contributions to TMRS in excess of the rate specified by TMRS. The City has established  80% as the minimum funding goal for the City’s unfunded pension liability.  The City’s funded  pension liability is 81.3% as of December 31, 2013, as disclosed by TMRS.  The City’s ultimate  goal is 100%, but will be achieved reasonably over time.    6. The City may elect to make an annual 1‐time payment prior to further fund the City’s unfunded  pension liability.  Such payment will be approved and authorized by the City Council prior to  December 31 in order to be recognized in the following year’s TMRS employer contribution rate  calculation.    G. Retirement Cost‐of‐Living Adjustment    1. Within 60 days of when the TMRS annual funding update becomes available each year, staff will  review and prepare a summary of costs and options for potential cost‐of‐living adjustment (COLA)  for City of Georgetown retirees.  2. Consistent with state statutes governing the Texas Municipal Retirement System, the City may  provide an automatic COLA for members of the TMRS who are retired from the City of Georgetown  and receiving a monthly retirement benefit from the TMRS.   3. The City Council may adjust the COLA provided to city retirees based upon the funding level of the  City’s pension plan, as calculated by the TMRS, as follows:  When the funding level of the City’s  pension plan is    The COLA  should be    Less than 70.0%    Zero  70.0% to 79.9%    0.3% of CPI  80.0% to 89.9%    0.5% of CPI  90.0% and greater    0.7% of CPI  Page 81 of 147 14   FY2017 Annual Budget      4. Adjustments made pursuant to subsection b. should reflect the effect of the prospective change in  the COLA on the funding level of the City’s pension plan.  H. Deferred Compensation Benefits – In addition to the retirement benefit administered by the TMRS, the  City will sponsor a Deferred Compensation 457 plan, which is a supplementary individual retirement  savings plan.  The City will encourage employee participation in this plan.    XIII. STAFFING AND COMPENSATION    Realizing the importance and contribution of employee’s in achieving and maintaining the City of Excellence, the  City’s goal as an employer is to attract and retain quality employees who provide excellent, friendly services to  our community in an effective and efficient manner.    A. Adequate Staffing – Staffing levels will be adequate for the fiscal functions of the City to operate effectively.   Workload allocation alternatives will be explored before adding additional staff.    B. Competitive Compensation – In order to maintain a competitive pay scale, the City is implementing a  Competitive Employee Compensation Maintenance Policy to address competitive market factors and other  issues impacting compensation.   The program consists of:    1. Cost of Living Adjustment ‐   (COLA) – To protect City employees from the effects of general inflation,  every odd numbered year, the City may fund a COLA adjustment for all regular employees not  included in a defined pay plan.  The COLA will be based on a three‐year rolling average of the  Consumer Price Index (CPI) reported by the U.S. Bureau of Labor Statistics for Southern cities  pertinent to Georgetown’s population.    2. Pay Scale Review – To ensure the City’s pay system is accurate and competitive within the market,  every even numbered year, the City will review its pay plan for any potential market adjustments  necessary to maintain the City’s pay scale.    3. Pay for Performance – Each year the City will fund pay adjustments to aid in retaining quality  employees while recognizing increased job experience and rewarding quality performance.    Adjustments are based on the previous year’s annual performance evaluation. The percentage adjustments  are determined by the employee’s position within their pay grade, including merit adjustments for  productivity and quality performance during the previous fiscal year.      In addition, the City may also choose to fund a one‐time on performance that exceeds expectations during  the review period.        C. Self‐Insurance Program – The City is committed to providing quality healthcare insurance that offers the most  flexibility in health benefits and options to its employees.  In order to provide the most cost effective solution,  the City has determined that establishing a self‐funded health insurance plan offers the greatest opportunity  to mitigate future cost increases while offering quality health care services to its employees.  The City has  Page 82 of 147 15   FY2017 Annual Budget  established a mechanism to manage the accounts and payments associated with this program. Per GASB  Statement No. 66, such funding should be accounted for as an Internal Service Fund (ISF).    1. Employee Health Insurance ISF ‐ includes premium contributions from employees and budgeted  health insurance contributions included in the City’s annual budget process.    2. Self‐Insurance Reserve ‐  will be included and maintained within the Employee Self‐Insurance Internal  Service Fund to provide stabilization for employee health insurance premiums.  The amount of the  reserve will be determined by the actuarially determined “maximum” amount risk related to the  potential claims to the plan in one year.  Initially, the reserve is targeted to be $1,000,000 by fiscal  year 2017/18.     3.1. Employee Premiums – Annual premiums will be recommended to City Council through a  collaborative process between the City’s Employee Benefit Committee and external consultants  using historical data and other analytic analysis.      VI. STAFFING AND COMPENSATION    City Council and Management recognize the importance of attracting, hiring, developing, and retaining the best  people, and compensating them for the value they create.  Our outstanding and innovative City employees work  diligently to bring the Vision of Council to life and deliver exceptional services to our customers while  exemplifying our Core Values. The following programs are subject to available funding in the annual operating  budget.      A. Adequate Staffing – Staffing levels will be adequate for the fiscal functions of the City to operate effectively.   Workload allocation alternatives will be explored before adding additional staff.    B. Competitive Compensation – In order to maintain a competitive pay scale, the City has implemented a  Competitive Employee Compensation Maintenance Program to address competitive market factors and other  issues impacting compensation.   The program consists of:    1. Annual Pay Plan Review – To ensure the City’s pay system is accurate and competitive within the  market, the City will review its pay plans annually for any potential market adjustments necessary  to maintain the City’s competitive pay plans.    2. Pay for Performance – Each year the City will fund performance based pay adjustments for regular  non‐public safety personnel.  This merit‐based program aids in retaining quality employees by  rewarding their performance.  Pay for Performance adjustments are based on the employee’s most  recently completed performance evaluation.      3. Public Safety Steps – Each year the City will fund anniversary step increases for public safety sworn  personnel consistent with public safety pay scale design.    C. Self‐Insurance Program – The City is committed to providing quality healthcare insurance that offers the most  flexibility in health benefits and options to its employees.  In order to provide the most cost effective solution,  the City has determined that establishing a self‐funded health insurance plan offers the greatest opportunity  to mitigate future cost increases while offering quality health care services to its employees.  The City has  Page 83 of 147 16   FY2017 Annual Budget  established a mechanism to manage the accounts and payments associated with this program. Per GASB  Statement No. 66, such funding should be accounted for as an Internal Service Fund (ISF).    1. Employee Health Insurance ISF – This fund contains premium contributions from employees and  budgeted health insurance contributions included in the City’s annual budget process.    2. Self‐Insurance Reserve – Annually through the budget process, staff and the City’s Health Benefit  Consultant firm will evaluate and recommend to Council the appropriate funding levels for both a  rate stabilization reserve as well as an incurred but not reported (IBNR) reserve.    3. Employee Premiums – Annual premiums will be recommended to City Council through a  collaborative process between the City’s Employee Benefit Committee and external Health Benefits  consulting firm using historical data and other analytic analysis.    VI.VII. FUND BALANCE POLICIES    The City’s Fund Balance is the accumulated difference between assets and liabilities within governmental funds,  and it allows the City to meet its contractual obligations, fund disaster or emergency costs, provide cash flow for  timing purposes and fund non‐recurring expenses appropriated by City Council.  This policy establishes limitations  on the purposes for which Fund Balances can be used in accordance with Governmental Accounting Standards  Board (GASB) Statement Number 54.     The City’s Fund Balance will report up to five components:    A. Non‐spendable Fund Balance – includes inherently non‐spendable assets that will never convert to cash, as  well as assets that will not convert to cash soon enough to affect the current financial period.  Assets included  in this category are prepaid items, inventory and non‐financial assets held for resale.  B. Restricted Fund Balance – represents the portion of fund balance that is subject to legal restrictions, such as  grants or hotel/motel tax and bond proceeds.  C. Committed Fund Balance – describes the portion of fund balance that is constrained by limitations that the  City Council has imposed upon itself, and remains binding unless the City Council removes the limitation.    D. Assigned Fund Balance – is that portion of fund balance that reflects the City’s intended use of the resource  and is established in a less formal method by the City for that designated purpose.   E. Unassigned Fund Balance – represents funds that cannot be properly classified in one of the other four  categories.      VII.VIII. LONG‐TERM LIABILITY RESERVES    The City of Georgetown recognizes certain long‐term unfunded commitments and contingencies that will require  substantial funding at some point in the future.  The City is committed to addressing these commitments in a  fiscally prudent method by acknowledging their future financial impacts and developing strategies and  designated reserve funds to mitigate those future impacts.    Cemetery Reserve will be established for the purpose of funding continued maintenance for City owned  cemetery properties  A. The Finance Director will maintain a list of unfunded liabilities. The list will be included in the quarterly financial  report to Council.    Page 84 of 147 17   FY2017 Annual Budget    VIII.IX. BUDGET CONTINGENCY PLAN    This policy is designed to establish general guidelines for managing revenue shortfalls resulting from local and  national economic downturns that adversely affect the City's revenue streams.    A. Immediate Action – Once a budgetary shortfall is projected, the City Manager will take the necessary actions  to offset any revenue shortfall with a reduction in current expenses.  The City Manager may:     Freeze all new hire and vacant positions except those deemed to be a necessity.   Review all planned capital expenditures.   Delay all "non‐essential" spending or equipment replacement purchases.    The City Manager shall report in a timely manner to the City Council the projected shortfall and the  actions taken to resolve it.    B. Further Action – If the actions identified in subsection A are insufficient to offset the projected revenue deficit  for the current fiscal year, the City Council may approve the following actions, in the order listed:    1. Apply unspent, unobligated surplus funds from prior fiscal years to fund one‐time costs in the current  fiscal year budget.    1.2. Authorize the use of the General Fund Economic Uncertainty Reserve pursuant to Section XV.A.2.b.  Economic Uncertainty Reserve.    2.3. Notwithstanding Section XVI.A.2.ab. Base Level Reserve Budget Stabilization Reserve of this policy,  authorize a reduction in the unobligated fund balance in the General Fund, pursuant to Section  XV.A.2.ab. Budget Stabilization Base Level Reserve of this policy, from 90 to 75 days.     3.4. Direct other reductions in services, including workforce reductions.    C.  Replenish Fund Balance – As soon as practical practicable, without placing undue strain on City services, the  City Council shall increase the unobligated fund balance in the General Fund, up to the 90‐day amount  required in Section XVI.A.2.ab. Budget Stabilization ReserveBase Level Reserve of this policy and shall restore  the General Fund Economic Uncertainty Reserve as required in Section XV.A.2.b of this policy.      IX.X. CAPITAL IMPROVEMENT PROGRAM (CIP) BUDGET    The City’s goal is to maintain City facilities and infrastructure in order to provide excellent services to the  customers within the community, meet growth related needs, and comply with all state and federal regulations.    A. Preparation – The City annually updates and adopts a five‐year Capital Improvement Program (CIP) schedule  as part of the operating budget adoption process. The plan is reviewed and adjusted annually as needed, and  year one is adopted as the current year capital budget.  The capital budget will include all capital projects,  capital resources, and estimated operational impacts.    Page 85 of 147 18   FY2017 Annual Budget   Needed capital improvements are identified through system models, repair and maintenance  records and growth demands.     Economic development projects that have capital infrastructure needs must be reviewed and  approved for funding by the City no later than March 1 to be included in the annual CIP process.  Any  economic development project approved for funding after March 1 will be included in the following  year CIP process unless otherwise authorized by City Council.     A team approach will be used to prioritize CIP projects, whereby City staff from all operational areas  provide input and ideas relating to each project and its effect on operations.      Citizen involvement and participation will be solicited in formulating the capital budget through  neighborhood meetings, public hearings and other forums.     Capital infrastructure necessary to meet the requirements of the City’s Annexation Plan will be  identified separately within the CIP plan, so that funding alternatives can be developed if needed.    Prior to Council adoption, the following Advisory Boards will review the Capital Projects budget:    Georgetown Utility  Systems Advisory  Board   (GUS)  Georgetown  Transportation Advisory  Board (GTAB)  General Government and  Finance   Advisory  Board    (GGAF)      Parks Advisory  Board  Electric  Water  Wastewater  Streets  Stormwater Drainage  Airport  Facilities  Other General  Government Capital  Parks and  Recreation       B. Control – All capital project expenditures must be appropriated in the capital budget.   Availability of  resources must be identified and then reviewed by the Finance Division before any CIP contract is presented  to the City Council for approval.      Prior to presentation to Council, the following Advisory Boards will review:    Georgetown Utility Systems   Advisory Board   (GUS)  Georgetown Transportation  Advisory Board   (GTAB)  General Government and  Finance   Advisory  Board (GGAF)  All utility contracts and  other  utility expenses  greater than $50,000  All Transportation,  Stormwater Drainage and  Airport expenditures and  contracts greater than  $50,000  All General Government  non‐routine contracts and  expenditures greater than  $50,000  Page 86 of 147 19   FY2017 Annual Budget      C. Financing Programs – Where applicable, assessments, impact fees, pro rata charges, or other fees should be  used to fund capital projects which have a primary benefit to specific identifiable property owners.      Recognizing that long‐term debt is usually a more expensive financing method, alternative‐financing sources  will be explored before debt is issued.  When debt is issued, it will be used to acquire major assets with  expected lives equal or exceeding the average life of the debt issue.    Short‐term financing including Capital Leasing and other tax‐supported obligations can be used to fund  vehicles, computers and other operating equipment provided the impact to the tax rate is minimal.    Caution should be used in replacing assets with short‐term, tax‐supported obligations due to the repetitive  nature of the replacements.  The total amount of I & S (interest and sinking) portion of the tax rate dedicated  to fund short‐term debt for equipment replacement will not exceed $0.04.        X.XI. CAPITAL MAINTENANCE AND REPLACEMENT    The City recognizes that deferred maintenance increases future capital costs.  Therefore, a portion of all  individual funds with infrastructure should be budgeted each year to maintain the quality within each system.      A. Infrastructure Maintenance ‐ On‐going maintenance and major repair costs are included as capital expense  within the departmental operating budgets.  These costs are generally considered system repairs and are  not capitalized for accounting purposes.  They include such items as park and recreation facility repairs, street  seal coat, water line repairs and other general system maintenance.      B. Modified Approach ‐ Pavement Condition Index (PCI) ‐ Governmental Accounting Standards Board Statement  # 34 provides for an alternative approach to depreciation for measuring the value of infrastructure assets  and the related costs incurred to maintain their service life at a locally established minimum standard.  The  City has elected to implement this modified approach in maintaining its non‐enterprise fund infrastructure  assets. In order to adopt this alternative method, the City has implemented an asset management system  that determines if the minimum standards are being maintained.  This measurement system will be updated  at least every 3 years.  The City has elected to use this alternative method for reporting its street  infrastructure assets.    The City uses the CarteGraph PavementView Pavement Management Information System to track the  condition levels of each of the street sections.  The condition of the pavement is based on the following factors:        Type of Distress   Amount of Distress   Severity of Distress   Deduct Values (function of first three)  The Pavement Condition Index (PCI) is a measurement scale is based upon a condition index ranging from  zero for a failed pavement to 100 for pavement with perfect condition.  The condition index is used to  classify pavement in the following conditions:   Page 87 of 147 20   FY2017 Annual Budget                The City’s administrative policy is to achieve an average PCI level of 85.  An 85 PCI is considered maintaining  the streets in a “good” condition.  Staff will prepare a street maintenance budget that meets this target for  Council’s consideration during the budget process. The PCI level as of 2014 was 87.30.    C. Internal Service Funds Capital Maintenance & Replacement – The City currently utilizes internal service funds  to maintain and replace existing assets.  Assessments are made to the using funds for the use of equipment  currently in use and to be purchased during the year.  In this way, suitable funds are available for the purchase  of operational assets without the issuance of debt.    1. Fleet Maintenance and Replacement – The City has a major investment in its fleet of cars, trucks,  tractors, and other equipment.  The City will anticipate replacing existing equipment, as necessary  and will establish charges that are assigned to the using departments to account for the cost of that  replacement.  Vehicle maintenance is also allocated in this manner.    2. Technology – It is the policy of the City to plan and fund the maintenance and replacement of its  computer network and other technology systems.  The City currently uses a four‐year replacement  cycle for all desktop computers.  A reserve will be established within the ISF for replacement of major  systems and will be funded over time through excess revenues within the Fund.  Funding for major  systems assumes that 50% of the replacement cost will be debt funded.    3. Facilities Maintenance – The City has established an on‐going maintenance program, which includes  major repairs, equipment, as well as contracts for maintaining City facilities. The City has anticipated  a useful life of such equipment and established a means of charging those costs to the various  departments in order to recognize the City’s continuing costs of maintaining its facilities.   Determination for facility repairs is based on useful life of the various elements of each facility.  A  proportional cost for each element is expensed within the budget for capital replacement.  An  additional unscheduled repair reserve equal to 10% value of annual internal service funding is also  budgeted.  The estimate reserve for 2016 equals $30,000.    D. Departmental Capital Maintenance & Replacement – The City also utilizes department capital maintenance  and replacement schedules for specialized assets and equipment necessary to provide services.     1. Parks and Recreation ‐ As part of the City’s on‐going maintenance program, the City also recognizes  the need to regularly maintain and replace grounds, equipment and facilities that are part of  the  City’s Parks and Recreation system.  Separate replacement and maintenance schedules will be  maintained for these items including, but not limited to, playground equipment, buildings, sport  courts, trees and grounds, and restroom facilities.  The City’s goal is to provide level on‐going  funding to ensure safe, well‐maintained facilities for its citizens.    2. Public Safety Equipment – As part of the City’s on‐going maintenance program, the City also  recognizes the need to regularly maintain and replace specialized equipment in Police and Fire.   Separate replacement and maintenance schedules will be maintained for these items including but  PCI Rating  100  –  85 Good  85  –  45 Fair  45  –  0 Poor  Page 88 of 147 21   FY2017 Annual Budget  not limited to for Fire:   SCBA’s and other firefighting equipment and protective gear; and for Police:  bullet proof vests, armaments and other tactical equipment.  The City’s goal is to provide level on‐ going funding to ensure proper protection for employees and citizens.      E. Surplus Property    1. From time to time it is necessary to dispose of certain vehicles or equipment that have been procured  with City funds and used in City services.  Individual surplus property items with expected sales value  in excess of $50,000$10,000 must be approved by the City Council prior to disposition.      2. City staff will maintain reports and records of all surplus property dispositions in accordance with  good internal controls.  A report of all disposed items in excess of $1,000 will be included with the  quarterly financial reports provided to City Council.      XI.XII. ACCOUNTING, AUDITING AND FINANCIAL REPORTING    A. Accounting – The City is solely responsible for the recording and reporting of its financial affairs, both  internally and externally.  The Chief Financial Officer (CFO) Finance Director is responsible for establishing  the structure for the City’s Chart of Accounts and for assuring that procedures are in place to properly record  financial transactions and report the City’s financial position.    B. General Government and Finance Advisory Board (GGAF) – The City may establish a subcommittee consisting  of at least 2 (3) City Council members and not more than 3 (2) citizens that may meet monthly to provide  additional oversight to the City’s Finance operations.  This subcommittee will also review general government  items that are not reviewed by another City advisory board before being presented to City Council. The City’s  CFO Finance Director will be the liaison for this subcommittee.    C. Audit of Accounts – In accordance with the Charter, an independent audit of the City accounts will be  performed every year.  The auditor is retained by and is accountable directly to the City Council.  The auditing  firm will serve for up to 5 years, at which time, the City will re‐bid these services and changing firms if deemed  necessary by GGAF and City Council.    D. External Reporting – Upon completion and acceptance of the annual audit by the City’s auditors, the City  shall prepare a written Comprehensive Annual Financial Report (CAFR) which shall be presented to the City  Council within 180 calendar days of the City’s fiscal year end.  The CAFR shall be prepared in accordance with  Generally Accepted Accounting Principles (GAAP) and shall be presented annually to the Government  Finance Officer Association (GFOA) for evaluation and consideration for the Certificate of Achievement in  Financial Reporting.      E. Internal Reporting – The Finance Department will prepare internal financial reports, sufficient to plan,  monitor and control the City’s financial affairs.      XII.XIII. ASSET MANAGEMENT    A. Cash Management and Investments – The City Council has formally approved a separate Investment Policy  for the City of Georgetown that meets the requirements of the Public Funds Investment Act (PFIA), Section  Page 89 of 147 22   FY2017 Annual Budget  2256 of the Texas Local Government Code.  This policy is reviewed annually by the City Council and applies  to all financial assets held by the City and applies to all entities (component units) included in the City’s  Comprehensive Annual Financial Report (CAFR) and/or managed by the City.    1. Statement of Cash Management Philosophy – The City shall maintain a comprehensive cash  management program to include the effective collection of all accounts receivable, the prompt  deposit of receipts to the City’s depository, the payment of obligations, and the prudent investment  of idle funds in accordance with this policy.    2. Objectives – The City’s investment program will be conducted as to accomplish the following listed  in priority order:     Safety of the principal invested   Liquidity and availability of cash to pay obligations when due   Ensure public trust through responsible actions as custodians of public funds.   Maximize earnings (yield) to the greatest extent possible consistent with the City’s investment  policy.  3. Safekeeping and Custody – Investments may only be purchased through brokers/dealers who meet  the criteria detailed in the investment policy, which also addresses internal controls related to  investments.    4. Standard of Care and Reporting – Investment will be made with judgment and care, always  considering the safety of principal to be invested and the probable income to be derived.  The Chief  Financial OfficerFinance Director is responsible for the overall management of the City’s investment  program and ensures all investments are made in compliance with the investment policy.  An  investment report, providing both summary and detailed information, will be presented to the City  Council quarterly.     5. Authorized Investments – The City can currently invest in the following:     Certificates of Deposit   U.S. Treasury and Agency securities   Investment Pools that meet the requirements of the PFIA   No‐load Money Market Mutual Funds   Fully collateralized  Repurchase Agreements   Obligations of Municipal Issuers in Texas rated not less than A or its equivalent   Other investments as approved by City Council and not prohibited by law.    B. Fixed Assets – These assets will be reasonably safeguarded and properly accounted for, and prudently  insured.     1. Capitalization Criteria – For purposes of budgeting and accounting classification, the following  criteria must be capitalized:     The asset owned by the City  Page 90 of 147 23   FY2017 Annual Budget   The expected useful life of the asset must be longer than one year, or extend the life of an  identifiable existing asset by more than one year   The original cost of the asset must be at least $5,000   The asset must be tangible   On‐going repairs and general maintenance are not capitalized.    2. New Purchases – All costs associated with bringing the asset into working order will be capitalized  as part of the asset cost. This will include startup costs, engineering or consultant type fees as part  of the asset cost once the decision or commitment to purchase the asset is made.  The cost of  land acquired should include all related costs associated with its purchase.    3. Improvements and Replacement – Improvements will be capitalized when they extend the original  life of an asset or when they make the asset more valuable than it was originally.  The replacement  of assets components will normally be expensed unless they are a significant nature and meet all the  capitalization criteria.    4. Contributed Capital – Infrastructure assets received from developers or as a result of annexation will  be recorded as equity contributions when they are received.    5. Distributions Systems – All costs associated with public domain assets, such as streets and utility  distribution lines will be capitalized in accordance with the capitalization policy.  Costs should include  engineering, construction and other related costs including right of way acquisition.    6. Reporting and Inventory – The Finance Division will maintain the permanent records of the City’s  fixed assets, including description, cost, department of responsibility, date of acquisition,  depreciation and expected useful life.  Periodically, random sampling at the department level will be  performed to inventory fixed assets assigned to that department.  Responsibility for safeguarding  the City’s fixed assets lies with the department supervisor or manager whose department has been  assigned the asset.    XIII.XIV. DEBT MANAGEMENT    The City of Georgetown recognizes the primary purpose of capital facilities is to provide services to the  community.  Using debt financing to meet the capital needs of the community must be evaluated according to  efficiency and equity.  Efficiency must be evaluated to determine the highest rate of return for a given investment  of resources.  Equity is resolved by determining who should pay for the cost of capital improvements.  In meeting  demand for additional services, the City will strive to balance the needs between debt financing and “pay as you  go” methods.  The City realizes that failure to meet the demands of growth may inhibit its continued economic  viability, but also realizes that too much debt may have detrimental effects on the City’s long‐range financial  condition.    The City will issue debt only for the purpose of acquiring or constructing capital assets for the general benefit of  its citizens and to allow it to fulfill its various purposes as a city.     A Debt Condition Update report will be provided annually.    Page 91 of 147 24   FY2017 Annual Budget  A. Usage of Debt – Long‐term debt financing will be considered for non‐continuous capital improvements of  which future citizens will be benefited.  Alternatives for financing will be explored prior to debt issuance and  include, but not limited to:     Grants   Use of Reserve Funds   Use of Current Revenues   Contributions from developers and others   Leases   Impact Fees.    When the City utilizes long‐term financing, it will ensure that the debt is soundly financed by  conservatively projecting revenue sources that will be used to pay the debt.  It will not finance the  improvement over a period greater than the useful life of the improvement and it will determine that  the cost benefit of the improvement, including interest costs, is positive to the community.    The City may utilize the benefits of short‐term debt financing to purchase operating equipment provided  the debt doesn’t extend past the useful life of the asset and the potential impact to the tax rate is within  policy guidelines.  The I & S (interest and sinking) portion of the tax rate cannot exceed $0.04 for short‐ term debt (3‐10 years).    B. Types of Debt     1. General Obligation Bonds (GO’s) – General obligation bonds must be authorized by a vote of the  citizens of Georgetown.  They are used only to fund capital assets of the general government and  are not to be used to fund operating needs of the City.  The City’s ad valorem taxing authority backs  general obligation bonds.  Conditions for issuance of general obligation debt include:     When the project will have a significant impact on the tax rate;     When the project may be controversial even through it is routine in nature; or     When the project falls outside the normal bounds of projects the City has typically done.    For debt programs that include multiple projects that will be issued over multiple years at the  discretion of the City Council, the City may approve a Contract with the Voters to manage future  property tax rate impacts. The Contract with the Voters will be included in educational information  for all applicable GO Bond elections, and will include a maximum annual tax rate increase and a  cumulative total per bond authorization maximum tax rate increase. The City will include these  impacts in its annual Debt Condition report.    The City Council will carefully manage the unissued GO Bond authorization through annual review of  related projects to ensure full disclosure on future timing of projects included in the bond package.   Timing of authorized projects and related bond issuance will be included in the Annual Budget and  published on the City’s website.  Any changes to this schedule require specific Council authorization.      2. Revenue Bonds – Revenue bonds will be issued to provide for the capital needs of any activities  where the capital requirements are necessary for the continuation or expansion of a service.  The  Page 92 of 147 25   FY2017 Annual Budget  improved activity shall produce a revenue stream to fund the debt service requirements of the  necessary improvement to provide service expansion.  The average life of the obligation should not  exceed the useful life of the asset(s) to be funded by the bond issue, and will generally be limited to  no more than twenty (20) years. An exception can be made for plant expansions or related system  expansions whose useful life is in excess of 30 years. A cost benefit analysis will be done to fully  disclose the impacts of extending debt beyond 20 years.    3. Certificates of Obligation, Contract Obligations (CO’s) – Certificates of obligation or contract  obligations may be used to fund capital requirements that are not otherwise funded by general  obligation or revenue bonds.  Debt service for CO’s may be either from general revenues (tax‐ supported) or supported by a specific revenue stream(s) or a combination of both.  Typically, the City  may issue CO’s when the following conditions are met:     When the proposed debt will have minimal impact on future effective property tax rates;     When the projects to be funded are within the normal bounds of City capital requirements, such  as for roads, parks, various infrastructure and City facilities and equipment; and     When the average life of the obligation does not exceed the useful life of the asset(s) to be  funded by the issue.    Certificates of obligation will be the least preferred method of financing and will be used with  prudent care and judgment by the City Council.  Every effort will be made to ensure public  participation in decisions relating to debt financing.    4. Self‐supporting General Obligation Debt – Refers to certificates of obligation issued for a specific  purpose and repaid through dedicated revenues other than ad valorem taxes.  The annual debt  requirements are not included in the property tax calculation.  Both the Airport and Stormwater  Drainage funds will issue this type of debt, In addition, the Electric and Water Services Funds can  utilize this method of funding non‐system capital assets. The City also issues debt on behalf of the  Georgetown Transportation Enhancement Corporation (GTEC) whom then pledges 4B sales tax  revenue for the repayment of that debt.     5. Internal borrowing between City Funds – The City can authorize use of existing long‐term reserves  as “loans” between funds.  The borrowing fund will repay the loan at a rate consistent with current  market conditions.  The loan will be repaid within ten (10) years.  The loan will be considered an  investment of working capital reserves by the lending fund.    6. Other Short‐term Borrowing – The City may authorize the issuance of Public Property Finance  Contractual Obligations (PPFCO) which is short‐term obligations for the acquisition of personal public  property, such as equipment. PPFCOs are payable from either ad valorem taxes or another dedicated  revenue stream.  Each issuance will be assessed to ensure cost effectiveness and the repayment  schedule will not exceed the useful life of the asset.  Multiple equipment acquisitions can be grouped  in a single PPFCO issue in order to develop economies of scale.      C. Method of Sale – The City will use a competitive bidding process in the sale of bonds unless conditions in the  bond market or the nature of the issue warrant a negotiated bid.  In such situations, the City will publicly  present the reasons for the negotiated sale.  The City will rely on the recommendation of the financial advisor  in the selection of the underwriter or direct purchaser.  The financial advisor must meet all licensing  Page 93 of 147 26   FY2017 Annual Budget  requirements and comply with all Municipal Securities Rulemaking Board (MSRB) regulations.  The City’s  financial advisor will not act as the underwriter on any City bond issue.     D. Disclosure – Full disclosure of operating costs along with capital costs will be made to the bond rating  agencies and other users of financial information.  The City staff, with assistance of the financial advisor and  bond counsel, will prepare the necessary materials for presentation to the rating agencies and will aid in the  production of the Preliminary Official Statements.  The City will take responsibility for the accuracy of all  financial information released.    E. Federal Requirements – The City will maintain written procedures to follow post issuance compliance rules,  arbitrage rebate and other Federal requirements.     Post issuance tax compliance rules will include records retention, arbitrage rebate, use of  proceeds, and     Continuing disclosure requirements under SEC Rule 15c2‐12, MSRB standards, or as may be  required by bond covenants or related agreements.     F. Debt Structuring – The City will issue bonds with an average life of twenty (20) years or less, not to exceed  the useful life of the asset acquired.  The structure should approximate level debt service unless operational  matters dictate otherwise. Market factors, such as the effects of tax‐exempt designations, the cost of early  redemption options and the like, will be given consideration during the structuring of long term debt  instruments.  Exceptions to the 20 year average life include debt issues for major system expansions, such as  water, sewer or electric plants, in which case the City may issue debt greater than 20 years since the average  life of the asset exceeds 30 years.  A cost benefit analysis indicating the impacts of extending debt beyond  20 years will be completed.    G. Debt Coverage Ratio – Refers to the number of times the current combined debt service requirements or  payments would be covered by the current operating revenues net of on‐going operating expenses of the  City’s combined utilities (Electric, Water, and Wastewater). The City will maintain a minimum debt service  coverage ratio of 1.5 times for these utilities as a whole. The bond ordinances allow the City to forego a debt  reserve fund for its utility debt if the coverage is maintained at 1.35 times or better.  Debt coverage for 2016  is budgeted at 3.67 times coverage.  A coverage ratio of 1.5 times will also be required for all funds issuing  self‐supporting debt.     H.  Bond Reimbursement Resolutions – The City may utilize bond reimbursements as a tool to manage its debt  issues, due to arbitrage requirements and project timing.   In so doing, the City uses its capital reserve "cash"  to delay bond issues until such time when issuance is favorable and beneficial to the City.    The City Council may authorize a bond reimbursement resolution for General Capital projects that have a  direct impact on the City's ad valorem tax rate when the bonds will be issued within the term of the existing  City Council.  In the event of unexpected circumstances that delay the timing of projects, or market  conditions that prohibit financially sound debt issuance, the approved project can be postponed and  considered by a future council until circumstantial issues can be resolved.    The City Council may also authorize revenue bond reimbursements for approved utility and other self‐ supporting capital projects within legislative limits.  Currently revenue bonds must be issued within 18  months after an eligible bond funded project is begun.    Page 94 of 147 27   FY2017 Annual Budget  The total outstanding bond reimbursements may not exceed the total amount of the City’s reserve funds.    XIV.XV. OTHER FUNDING ALTERNATIVES    When at all possible, the City will research alternative funding opportunities prior to issuing debt or  increasing user‐related fees.      A. Grants – All potential grants will be examined for any matching requirements and the source of those  requirements identified. A grant funding worksheet, reviewed by Finance, that clearly identifies funding  sources, outcomes and other relevant information will be presented and approved by the City Council prior  to any grant application being submitted.  It must be clearly understood that any resulting operation  requirements of the grant could be discontinued once the term and conditions of the project have been  terminated.   The City Council must authorize acceptance of any grant funding.    B. Use of Reserve Funds – The City may authorize the use of reserve funds to potentially delay or eliminate a  proposed bond issue.  This may occur due to higher than anticipated fund balances in prior years, thus  eliminating or reducing the need for debt proceeds, or postpone a bond issue until market conditions are  more beneficial or timing of the related capital improvements does not correspond with the planned bond  issue.  Reserve funds used in this manner are replenished upon issuance of the proposed debt.    C. Developer Contributions – The City will require developers who negatively impact the City's utility capital  plans offset those impacts.  These policies are further defined within the City's utility line extension policy  and other development regulations.    D. Leases – The City may authorize the use of lease financing for certain operating equipment when it is  determined that the cost benefit of such an arrangement is advantageous to the City.    E. Impact Fees – The City will impose impact fees as allowable under state law for both water and wastewater  services.  These fees will be calculated in accordance with statute and reviewed at least every three years.   All fees collected will fund projects identified within the Fee study and as required by state laws.     XV.XVI. FINANCIAL CONDITIONS, RESERVES, AND STABILITY RATIOS     The City of Georgetown will maintain budgeted minimum reserves in the ending working capital/fund balances  to provide a secure, healthy financial base for the City in the event of a natural disaster or other emergency,  allow stability of City operations should revenues fall short of budgeted projections and provide available  resources to implement budgeted expenditures without regard to actual timing of cash flows into the City.    A. Operational Coverage – The City’s goal is to maintain operations coverage of 1.0 (one), such that operating  revenues will at least equal or exceed current operating expenditures. Deferrals, short‐term loans, or one‐ time sources will be avoided as budget balancing techniques. Reserves will be used only for emergencies or  non‐recurring expenditures, except when balances can be reduced because their levels exceed guideline  minimums as stated below.    1. Operating Reserves – The City will maintain reserves at a minimum of seventy‐five (75) days (20.83%)  of net budgeted operating expenditures.  Net budgeted operating expenditure is defined as total  budgeted expenditures less interfund transfers and charges, general debt service (tax supported),  direct cost for purchased power and payments from third party grant monies. Total reserves for 2016  are $22,330,000 million.  The amount of these funds are allocated within the following operating  Page 95 of 147 28   FY2017 Annual Budget  funds and using the following guidelines to maintain the fund balance, working capital and retained  earnings (reserves) of the various operating funds at levels sufficient to protect the City’s  creditworthiness, as well as, its financial position from unforeseeable emergencies.      2. General Fund – The fund balance reserve in the General Fund should equal ninety (90) days or 25%  of annual budgeted General Fund operating expenditures.  2016 reserves are $7,925,000 million and  are allocated as follows:    a. Base Level Reserve – will equal ninety (90) sixty (60) days of current year budgeted operating  expenditures which will be designated for emergency use only. If the Base Level Reserve is used  during the fiscal year, the balance must return to the ninety (90) day requirement within the  following fiscal year’s adopted budget.  b. Budget Stabilization Reserve – will equal thirty (30) days of current year budgeted operating  expenditures and will be designated to protect the City against short term operating deficits.   The funds will be available for the following purposes:    i. Defer short term tax increases  ii. Cover revenue shortfalls  iii. Fund unanticipated expenditures    If the Budget Stabilization Reserve is depleted during the fiscal year, the balance must return to  the 30 day requirement within the following year’s adopted budget.  c.b. Economic Uncertainty Reserve – will equal up to 6% of current year budgeted operating  expenditures. The reserve will be designated to temporarily offset a decline in any General Fund  revenue source during the current fiscal year or in planning the future budget year. The reserve  may be used when growth in any General Fund revenue source from one fiscal year to the next  is below zero. The reserve will be available to support only existing programs approved in a prior  fiscal year. Used funds shall be restored up to the 6% reserve as soon as practical.    3. Tourism Fund – A minimum sixty days (60) or 16.67% of operating expenditures will be reserved  within the fund balance.  These funds are designated to be used to offset any potential revenue  shortfall that occurs during the fiscal year and should be replenished in the following fiscal year’s  budget.    4. Water Services Fund – Working capital reserves in should be 25% or ninety (90) days of operating  expenses, net debt service and long‐term water contract costs.  These reserves are designated to be  used to offset potential revenue shortfalls or fund unexpected or emergency expenses that occur  during the fiscal year.  These reserves should be replenished in the following budget cycle.    5. Stormwater Drainage Fund – $250,000 for unforeseen emergencies or other potential revenue  shortfalls.    6. Electric Fund – The remaining balance to meet the citywide requirement of seventy‐five (75) days of  reserve funds will be maintained within this fund.  It can be used for unforeseen emergencies and  expenditures.  The Rate Stabilization Account and the Power Contract Credit Reserve are not  included in this Contingency Reserve.    Page 96 of 147 29   FY2017 Annual Budget  For all other non‐enterprise funds, the fund balance is an indication of the balance of each particular fund at  a specific time.  The ultimate goal of each such fund is to have expended the fund balance at the conclusion  of the activity for which the fund was established.    Reserve requirements will be calculated as part of the annual budget process and any additional required  funds to be added to the reserve balances will be appropriated within the budget.      Funds in excess of the minimum reserves within each fund may be expended for City purposes at the will of  the City Council once it has been determined that use of the excess will not endanger reserve requirements  in future years.  This action requires an amendment to the City’s Annual Budget and is outlined in Section III.  L. Use of Unanticipated and Unappropriated General Fund Balances.    B. Liabilities and Receivables ‐ Procedures will be followed to maximize discounts and reduce penalties offered  by creditors.  Current liabilities will be paid within 30 days of receiving the invoice.  Accounts Receivable  procedures will target collection for a maximum of 30 days of service.   The Chief Financial Officer Finance  Director is authorized to write‐off non‐collectible, non‐utility accounts that are delinquent for more than 180  days, and utility accounts delinquent more than 180 days, provided proper delinquency procedures have  been followed, and include this information in the annual report to the City Council.    C. Capital Project Funds – Every effort will be made for all monies within the Capital Project Funds to be  expended in a timely manner preferably within thirty‐six (36) months of receipt.  The fund balance will be  invested and income generated will offset increases in construction costs or other costs associated with the  project.  Capital project funds are intended to be expended totally, with any unexpected excess to be  transferred to the Debt Service fund to service project‐related debt service.    D. General Debt Service Funds – Revenues within this fund are stable, based on property tax revenues. Balances  are maintained to meet contingencies and to make certain that the next year’s debt service payments may  be met in a timely manner. Fund balance should not fall below 45 days annual debt service requirements, in  accordance with IRS guidelines.    E. Investment of Reserve Funds – The reserve funds will be invested in accordance with the City’s investment  policy.  Existing non‐cash investment would be exempt through retirement of the investment.     F. Ratios/Trend Analysis ‐ Ratios and significant balances will be incorporated into both the mid‐year and annual  reports to the City Council.  This information will provide users with meaningful data to identify major trends  of the City's financial condition through analytical procedures.  The following ratios/balances will be used as  key financial indicators:     Fund Balance/Equity:    Assets ‐ liabilities  FB/E AL (Acceptable level) minimum reserve requirement     Working Capital:   Current assets less current liabilities  CA ‐ CL    AL minimum reserve requirement     Current Ratio:    Current assets divided by current liabilities  CA/CL    AL > 1.00     Quick Ratio: "Liquid" current assets divided by current liabilities   Liquid CA/CL   AL > 1.00  Page 97 of 147 30   FY2017 Annual Budget     Debt/Assessed AV Taxes :  Debt divided by assessed Ad Valorem value  D/AV    AL < 5     Debt Ratio: Current liabilities plus long‐term liabilities divided by total  assets   CL +LTL/TA    AL < 1     Enterprise Operating Coverage:  Operating revenue divided by operating expense   OR/OE    AL > 1.25     Times Coverage Ratio: Operating revenue less operating expense divided by  annual debt service   (OR‐OE)/DSV    AL > 1.5    The City will be to develop minimum/maximum levels for the above ratios/balances through analyzing  of City historical trends and future projections.  These ratios will also be compared to other similar or  regional municipalities for further analysis.        XVI.XVII.INTERNAL CONTROLS    A. Written Procedures – Wherever possible, written procedures will be established and maintained by the Chief  Financial OfficerFinance Director for all functions involving cash handling and/or accounting throughout the  City.  These procedures will embrace the general concepts of fiscal responsibility set forth in this policy  statement.    B. Internal Audit Program – An internal audit program will be maintained by the Chief Financial OfficerFinance  Director to ensure compliance with City policies and procedures and to prevent the potential for fraud.      1. Departmental Audits – departmental processes will be reviewed to ensure dual control of City assets  and identify the opportunity for fraud potential, as well as, to ensure that departmental internal  procedures are documented and updated as needed.    2. Employees or Transaction Review – Programs to be audited include Petty Cash, City Credit Card  accounts, time entry, and travel.  All discrepancies will be identified, and the employee’s Director  will be notified.   The City Manager will also be notified depending on the seriousness of the  infraction.    3. The Finance Director and City Manager will present an annual audit plan to the General Government  and Finance board. Results of all internal audits will be provided to the GGAF and City Council  at  year‐end. on a quarterly basis    B.C. Directors Responsibility – Each Director is responsible for ensuring that good internal controls are followed  throughout their department, that all Finance Division directives are implemented and that all independent  auditor internal control recommendations are addressed.  Departments will develop and periodically update  written internal control procedures.      Page 98 of 147 City of Georgetown, Texas City Council Workshop April 26, 2016 SUBJECT: Review of the City’s Investment Policy and discussio n of reco mmended changes fo r FY20 17 -- Leigh Wallace, Financ e Director ITEM SUMMARY: The purpo se of the Investment Policy (Po lic y) is to pro vide the framewo rk for managing the City’s investments in a way that mitigates risk while optimizing returns. The po licy is modeled after P ublic Funds Investment Act (P FIA) recommendatio ns. The City’s Investment Adviso rs, Valley View Consulting, have re c ommended updates to the polic y that are outlined in the presentation. The full versio n of the policies with tracked changes is also provided. The General Gove rnment and Finance (GGAF) Board recommended the policies to Co uncil at the meeting March 3 0, 2016. FINANCIAL IMPACT: NA SUBMITTED BY: Leigh Wallace, Finance Director - kj ATTACHMENT S: Description Investment Polic ies C hanges F is cal and Bud getary Polic ies Overview Page 99 of 147 City of Georgetown Investment Policy Page 1 CITY OF GEORGETOWN, TEXAS INVESTMENT POLICY As amended April 26, 2016December 9, 2014 SECTION 1: SCOPE & OBJECTIVES 1.1 SCOPE This Investment Policy applies to all financial assets of the City of Georgetown, Texas, which includes the City of Georgetown Economic Development Corporation and the Georgetown Transportation Enhancement Corporation, held in all funds. 1.2 STATEMENT OF CASH MANAGEMENT PHILOSOPHY The City will maintain a comprehensive cash management program to include the effective collection of all accounts receivable, the prompt deposit of receipts to the City's bank accounts, the payment of obligations to comply with State law and in accord with vendor invoices, and the prudent investment of idle funds in accord with this Policy. 1.3 OBJECTIVES The City's investment program will be conducted to comply with Texas Government Code Chapter 2256 (the Public Funds Investment Act) and accomplish the following objectives, listed in priority order: 1. Safety. The City will give priority to the preservation and safety of the principal invested. Investments will be made in a manner that will mitigate credit risk and interest rate risk. 2. Liquidity. The City will maintain the availability of sufficient cash to pay obligations of the City when they are due. 3. Public Trust. Investment Officers shall seek to act responsibly as custodians of the public trust. Investment Officers shall avoid transactions that might impair public confidence in the City’s ability to govern effectively. 4 Yield. The City will invest idle cash in a manner that will maximize earnings to the greatest extent possible, consistent with State and local laws and the objectives of safety and liquidity listed above. It is also the objective of the City to diversify its investments to eliminate the risk of loss resulting from over concentration of assets in a specific maturity, a specific issuer or a specific class of investments, when appropriate. It is the intent of the City to hold investments to maturity. SECTION 2: STANDARD OF CARE 2.1 PRUDENCE Investments will be made with judgment and care, under circumstances then prevailing, that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital and the probable income to be derived. The City Council recognizes that in maintaining a diversified portfolio, occasional measured losses due to market volatility are inevitable and must be Page 100 of 147 City of Georgetown Investment Policy Page 2 considered within the context of the overall portfolio's investment return, provided that adequate diversification has been implemented. In determining whether an Investment Officer has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration: A. The investment of all funds, or funds under the City’s control, over which the Officer had responsibility rather than a consideration as to the prudence of a single investment. B. Whether the investment decision was consistent with the written Investment Policy of the City. The Investment Officer, acting in accordance with written procedures and exercising due diligence, shall not be held personally responsible for a specific investment's adverse credit risk or market price changes, provided that these deviations are reported immediately to the City Manager and/or the Council and that appropriate action is taken to control adverse developments. 2.2 ETHICS & CONFLICT OF INTEREST Investment Officers and employees involved in the investment process will refrain from personal business activity that could conflict with the proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Investment Officers and employees will comply with all disclosure and reporting requirements of Section 2256.005 (I) of the Texas Government Code. 2.3 DELEGATION OF AUTHORITY The Chief Financial Officer Finance Director and Controller are the City's Investment Officers. The Finance Director Chief Financial Officer is responsible for overall management of the City's investment program and may direct the other Investment Officers in their duties. Accordingly, the Investment Officers are responsible for day-to-day administration of the investment program and for the duties listed below: 1. Maintain current information as to available cash balances in City accounts, and as to the amount of idle cash available for investment; 2. Make investments and maintain written procedures for the operation and internal control of the investment program consistent with this Policy; 3. Ensure that all investments are adequately secured; and 4. Attend training relating to investment responsibilities under this Policy as required by Section 2256.008 (a) of the Texas Government Code and ensure that any staff executing transactions covered by this Policy attend the required training. The investment training shall be attended within twelve (12) months of attaining the position and receive not less than ten (10) hours, and thereafter, not less than once in a two-year period that begins on the first day of the City’s fiscal year and consists of the two consecutive fiscal years after that date and receive not less than 10 8 hours of instruction relating to investment responsibilities under this Policy. The training must be sponsored by: Texas Municipal League Government Finance Officers Association of Texas (GFOAT) Government Finance Officers Association of US and Canada Government Treasurers Organization of Texas (GTOT) Page 101 of 147 City of Georgetown Investment Policy Page 3 University of North Texas Texas Tech University Center for Professional Development Unless authorized by State or local laws as provided above, no person may deposit, withdraw, transfer or manage in any other manner the funds of the City. SECTION 3: INVESTMENT STRATEGIES 3.1 OPERATING FUNDS Operating Funds are defined as cash and investments used for day to day operations that do not fall into one of the other categories. Operating funds will be invested in a manner suitable for funds requiring a high degree of liquidity. Investments of Operating Funds shall be limited to a weighted average maturity no greater than one year, and all investment instruments must meet credit and safety criteria as required by the Public Funds Investment Act and this Policy. Involuntary liquidation of Operating Fund investments is unlikely due to their short term nature. However, should a liquidation of investments prior to maturity be necessary, their short term nature will make material losses unlikely. Operating Fund investments will be diverse and may include financial institution deposits, U.S. treasuries and agencies, investment pools, and money market mutual funds. Investment of Operating Funds will be structured to attain the highest possible yield given the liquidity and safety requirements. 3.2 CONTINGENCY RESERVES (or operating reserves) Contingency Reserves are the minimum fund balance/working capital requirements as defined by Council in the Annual Operating Plan. Contingency Reserve balances may be used to cover any cash operating shortfalls due to the timing of bond issues, revenue receipts, etc. Investments of these funds may exceed 24 months with prior approval of the City Manager if short term cash flow needs are not evident. Any one investment may not exceed 36 months in maturity length. The weighted average maturity for these funds may not exceed 24 months. Involuntary liquidation of Contingency Reserve investments is unlikely due to their nature. However, should a liquidation of investments prior to maturity be necessary, the comparatively longer term nature of some of the investments could result in material losses depending on financial and economic conditions. Contingency Reserve investments will be diverse and may include financial institution deposits, U.S. treasuries and agencies, investment pools, and money market mutual funds. Investment of Contingency Reserves will be structured to attain the highest possible yield given the liquidity and safety requirements. 3.3 DEBT 3.3.1 Reserves. Debt reserves are defined as bond reserve funds required to be set aside in accordance with bond covenants. The City’s bond covenants do not require the City to maintain any reserve funds. Therefore, the City’s investments are not adversely affected by any reserve requirement conditions. 3.3.2 Interest & Sinking (or debt service funds). Interest and sinking funds are defined as those funds accumulated to meet periodic payments required by bond and note maturity schedules. The investment maturities are limited by pertinent debt service requirements and tax laws limiting accumulation and earnings for such funds. Involuntary liquidation of investments is highly unlikely due to the nature of these funds. Interest and sinking fund investments will be diverse and may include financial institution deposits, U.S. treasuries and agencies, investment pools, and money market mutual funds. 3.4 BOND PROCEEDS (capital improvement funds) Page 102 of 147 City of Georgetown Investment Policy Page 4 Bond proceed funds are defined as those funds received from the sales of City bonds or notes and not otherwise set aside for debt service or reserve purposes. These funds typically include money to fund infrastructure construction or other large projects. The investment maturities are limited by pertinent project draw requirements and tax laws governing earnings for such funds, but may not have a weighted average maturity in excess of one year, with no single security greater than 24 months, unless a flexible repurchase agreement is used in accordance with Section 4.1.5 of this Policy. Involuntary liquidation of investment is highly unlikely. Bond proceed investments will be diverse and may include financial institution deposits, U.S. treasuries and agencies, investment pools, and money market mutual funds. SECTION 4: AUTHORIZED INVESTMENTS 4.1 ALLOWABLE INVESTMENTS City funds may be invested in the following instruments: 4.1.1 Financial Institution Deposits. Certificates of Deposit and other evidences of deposit at a financial institution that, a) has its main office or a branch office in Texas and is guaranteed or insured by the Federal Deposit Insurance Corporation or its successor, b) is secured by obligations in a manner and amount provided by law for deposits of the City, or c) is executed through a depository institution or approved broker that has its main office or a branch office in Texas that meets the requirements of the Public Funds Investment Act. All financial institution deposits in excess of the FDIC insured amount must be collateralized as described by Section 5.5 COLLATERALIZATION. 4.1.2 U.S. Treasuries and Agencies. Obligations of the United States of America, its agencies and instrumentalities, including other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of the United States or its agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States. 4.1.3 Investment Pools. Investment pools that meet the following criteria: a. An investment pool must provide an offering circular or other similar disclosure instruments and provide monthly and transaction reporting as required by Section 2256.016 of the Texas Government Code. b. Investment in a new pool will require the approval of the City Council. c. A public funds investment pool created to function as a money market mutual fund must (1) mark its portfolio to market daily, (2) include in its investment objectives the maintenance of a stable net asset value of $1 for each share and (3) be continuously rated no lower than AAAm or at an equivalent rating by at least one nationally recognized rating service. 4.1.4. Money Market Mutual Funds. No-load money market mutual funds if the fund: a. Is regulated by the Securities and Exchange Commission; b. Marks its portfolio to market daily; c. Includes in its investment objectives the maintenance of a stable net asset value of $1 for each share; d. Is continuously rated no lower than AAA or at an equivalent rating by at least one nationally recognized rating service. 4.1.5. Repurchase Agreements. Fully collateralized repurchase agreements that: a. Have a defined termination date; Page 103 of 147 City of Georgetown Investment Policy Page 5 b. Are secured by cash or obligations as allowed by the Public Funds Investment Act and this Policy; c. Require independent third party safekeeping of all securities prior to the release of any funds; d. Are placed through a primary dealer or financial institution doing business in this State; and e. Do not create a reverse repurchase agreement by the City. f. Construction, capital improvement and bond proceed funds may utilize a flexible repurchase agreement, or similar agreement, that allows expenditure-related withdrawal of funds, without penalty, with an average life and termination date limitation based on the anticipated draw schedule. 4.1.6. Municipal Issuers. Obligations of: a. This State and its agencies or instrumentalities; and b. Counties, cities, and other political subdivisions of the State of Texas rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent. 4.1.7. Other Investments. Other investments as approved by the City Council and not prohibited by law. Investment securities purchased prior to this Policy’s revision, that do not meet the revised requirements of this Policy, are not required to be liquidated. The City shall monitor each security’s status to determine whether it is in the best interest of the City to hold or liquidate the security. 4.2 CREDIT RATING REVIEW AND EFFECT OF LOSS OF REQUIRED RATING Not less than quarterly, the Investment Officers will obtain from a reliable source the current credit rating for each held investment that has a PFIA-required minimum rating. Any Authorized Investment that requires a minimum rating and does not qualify at any time during the period, is considered to not have the minimum rating. The City shall take all prudent measures that are consistent with this Policy to liquidate an investment that does not have the minimum rating. 4.3 COMPLIANCE WITH STATE LAW All authorized investments outlined above must meet the requirements of the Public Funds Investment Act. No investment may be made in any instrument except as provided above. 4.4 CASH ON HAND Cash resources required for the immediate needs of the City and not otherwise available for longer term investment will be placed in account(s) at the City's Depository/ Depositories. Such account(s) will earn interest at the highest rate(s) provided in the respective depository contract(s). 4.5 LENGTH OF INVESTMENTS The following general constraints will apply. Maturities exceeding 36 months will require authorization by the City Manager, with no single maturity greater than 60 months. Maturities will be staggered to avoid undue concentration of assets in a specific maturity sector and maturities selected will provide for stability of income and reasonable liquidity. Page 104 of 147 City of Georgetown Investment Policy Page 6 SECTION 5: SAFEKEEPING AND CUSTODY 5.1 AUTHORIZED BROKER/DEALERS and INVESTMENT POLICY CERTIFICATION Authorized investment securities may be purchased only through brokers/dealers who are licensed and in good standing with the Texas Department of Securities, the Securities Exchange Commission, the Financial Industry Regulatory Authority, or other applicable self-regulatory organization. The Investment Officers will maintain a list of broker/dealers who are authorized to provide investment services. The list is approved and included in Attachment “A” of this Policy. Before engaging in investment transactions with a financial institution, broker/dealer, Investment Pool, or Money Market Mutual Fund, the Investment Officers will have received from said firm a signed Certification Form. This form will attest that the individual responsible for the City’s account with that firm has received and reviewed the City’s Investment Policy and that the firm has implemented reasonable procedures and controls in an effort to preclude imprudent activities arising out of investment transactions conducted between the City and the firm. The letter must be signed by a qualified representative as defined by Section 2256.002, of the Texas Government Code. “Qualified Representative” means a person who holds a position with a business organization who is authorized to act on behalf of the business organization and who is one of the following: (1) a business organization doing business that is regulated by or registered with a securities commission, a person who is registered under the rules of the Financial Industry Regulatory Authority; (2) for a state or federal bank, a savings bank or state or federal credit union, a member of the loan committee for the bank or branch of the bank or a person authorized by corporate resolution to act on behalf of and bind the banking institution; (3) for an investment pool, the person authorized by the elected official or board with authority to administer the activities of the investment pool to sign the written instrument on behalf of the investment pool, or (4) for an investment management firm registered under the Investment Advisers Act of 1940 or, if not subject of registration under the Act, registered with the State Securities Board, a person who is an officer or principal of the investment management firm. 5.2 AUTHORIZED FINANCIAL INSTITUTIONS Financial institution deposits and other evidences of deposit may be purchased at qualified City Depositories and other financial institutions. Qualifications will be determined by the Investment Officers. The City must have a written agreement with the Depository and other financial institutions, and that depository and other financial institutions must meet all State Laws for deposit of public funds. The City's main operating Depository/Depositories will be selected as provided by law and the City’s purchasing procedure. 5.3 INTERNAL CONTROLS All investment transactions will be documented by the Investment Officers. The Investment Officers may make investments orally, but will follow promptly with a written confirmation to the financial institution or broker/ dealer, with a copy of such confirmation retained in the City's files. On investments, the Investment Officers will solicit competitive quotes. Where appropriate, at least two (2) quotations will be solicited for each such investment made. Page 105 of 147 City of Georgetown Investment Policy Page 7 Market value of the portfolio and each investment will be monitored at least quarterly through industry standard publications/sources for market data such as, but not limited to, The Wall Street Journal. Market value may also be determined through the City’s investment software application, which uses industry standard publications/sources for its market data. 5.4 SAFEKEEPING All securities purchased by the City under this Policy must be designated as assets of the City, must be conducted on a delivery-versus-payment (DVP) basis, and must be protected through the use of a third-party custody/safekeeping agent. The City will enter into a formal agreement with an institution of such size and expertise as is necessary to provide the services needed to protect and secure the investment assets of the City. 5.5 COLLATERALIZATION To the extent not insured by federal agencies that secure deposits, City funds (including financial institution deposits and C.D.’s) must be collateralized or enhanced in compliance with the Texas Public Funds Collateral Act and pertinent federal banking regulations. With the exception of deposits secured with irrevocable letters of credit at 100% of deposit plus accrued interest, the aggregate market value of pledged securities shall be equal to at least one hundred two percent (102%) of the of the deposit (including accrued interest) less an amount insured by the Federal Deposit Insurance Corporation. Should the depository fail to adequately maintain the required collateral level, the City may increase the minimum to 110%. The City reserves the right, in its sole discretion, to accept or reject any form of insurance or collateralization pledged towards depository deposits. Institutions serving as a depository will be required to sign a Depository/Collateral Agreement with the City. The collateralized deposit portion of the Agreement shall define the City’s rights to the collateral in case of default, bankruptcy, or closing and shall establish a perfected security interest in compliance with Federal and State regulations, including: • The agreement must be in writing; • The agreement has to be executed by the Depository and the City contemporaneously with the acquisition of the asset; • The agreement must be approved by the Board of Directors or designated committee of the Depository and a copy of the meeting minutes must be delivered to the City; and • The agreement must be part of the Depository’s “official record” continuously since its execution. Securities pledged as collateral must be retained in an independent third party bank and marked as pledged to the City. The City will be provided the original safekeeping receipt from the custodian on each pledged security. With the exception of the Federal Reserve Bank, the City, financial institution, and the safekeeping bank(s) will operate in accordance with a master safekeeping agreement. The City's Investment Officers must approve in writing the release of collateral prior to its removal from the safekeeping account in accordance with the terms of the depository agreement. The financial institution(s) with which the City invests and/or maintains deposits will require the custodian to provide monthly a listing of the collateral pledged to the City marked to current market prices. The listing will include total pledged securities itemized by name, CUSIP, type and description of the security; safekeeping receipt number; par value; current market value; maturity date; and Moody's or Standard & Poor's rating, if available. Page 106 of 147 City of Georgetown Investment Policy Page 8 SECTION 6: REPORTING 6.1 QUARTERLY REPORTING The Investment Officers shall prepare and submit to the Council a quarterly report on investment transactions for all funds covered by this Policy. The report will be prepared in compliance with the Public Funds Investment Act. The report will cover the investment position of the City at the end of the each fiscal quarter. The contents will include at a minimum: 1. Beginning and ending market value of the portfolio; 2. Beginning and ending market value and book value, maturity date, type of funds, interest coupon, accrued interest and yield for each separate security; and 3. A statement as to the compliance with this Policy and State law. 6.2 ANNUAL REPORTING Within 90 days following the end of the fiscal year, the Investment Officers will present to the City Council or the General Government and Finance Advisory Board a comprehensive annual report on the investment program and investment activity. In addition to the information required for quarterly reporting, the annual report will include a review of the activities and return for the twelve months, suggest Policy revisions and improvements that might enhance the investment program, and include an investment plan for the ensuing fiscal year. 6.3 PERFORMANCE STANDARDS In order to evaluate portfolio performance of funds subject to this Policy, the City establishes “weighted average yield to maturity” as the standard portfolio performance measurement. The portfolio’s performance will be compared against appropriately competitive and reasonable benchmarks, including money market mutual funds or investment pools of similar make-up and maturities. 6.4 COMPLIANCE The quarterly reports shall be formally reviewed and a compliance audit of management controls and adherence to this Policy as it relates to the City’s investments and investing activity will be performed on an annual basis in conjunction with the City’s annual financial audit. The results shall be reported to the City Council. SECTION 7: POLICY REVIEW AND AMENDMENTS This Investment Policy will be reviewed by the City Council on at least an annual basis as required by the Public Funds Investment Act and make amendments as necessary. The Council will review the Policy as part of the annual investment report presented by staff. Page 107 of 147 City of Georgetown Investment Policy Page 9 CITY OF GEORGETOWN INVESTMENT POLICY Attachment “A” Approved Broker/Dealer List Bonwick Capital Coastal Securities Duncan Williams JPMorgan Chase Securities Raymond James Rice Financial UBS Paine Webber, Inc. These broker/dealers meet the City’s Investment Policy requirements. Page 108 of 147 FY2017 Annual Budget GGAF March 30, 2016 City Council April 26, 2016 Fiscal and Budgetary Policies Investment Policies FY 2017 1Page 109 of 147 FY2017 Annual Budget Administrative Changes •Order policies according to a logical flow •Simplify language •Updates to match internal procedures •Convert Chief Financial Officer language to Finance Director •Update fiscal year or calendar year •Correct grammar and spelling •Add Table of Contents and page numbers 2Page 110 of 147 FY2017 Annual Budget Substantive Changes •Update Employee Compensation Program (Policy VI, Pg. 14-16) •Update Reserves for Self-Insurance Fund (Policy VI, Pg. 16) •Establish Economic Uncertainty Reserve in General Fund (Policy XVI, Pg. 28) •Enhance requirements for quarterly financial reporting •Add reporting of expenditures (Policy V, Pg. 10) •Add list of unfunded liabilities (Policy VIII, Pg. 16) •Remove reporting of minor surplus property sales (Policy XI, Pg. 21) •Separate reporting of internal audits (Policy XVII, Pg. 30) 3Page 111 of 147 FY2017 Annual Budget Investment Policies Recommended by Investment Advisors Valley View •Update training component of investment officers required by state law (Section 2.3, Pg. 2) •Change Chief Financial Officer to Finance Director •Add Bonwick Capital as an approved dealer/broker (Attachment A, Pg. 9) 4Page 112 of 147 FY2017 Annual Budget Timeline •Recommended by GGAF to Council –March 30 •Preliminary adoption by Council to guide budget process –April 26 •Staff updates during budget process –Summer 2016 •Council formally adopts policies with approved budget –September 13 5Page 113 of 147 City of Georgetown, Texas City Council Workshop April 26, 2016 SUBJECT: Economic Outlo ok and Strategy for the FY2017 Budget -- Paul Diaz, Budget Manage r, Leigh Wallace, Finance Dire c to r, and Laurie Brewe r, Assistant City Manager ITEM SUMMARY: P resentation and discussion regarding financial trends relating to property tax, sales tax, development fees, and return on investment. FINANCIAL IMPACT: NA SUBMITTED BY: P aul Diaz, Budget Manager, Leigh Wallace, Financ e Director, Laurie Brewer, Assistant City Manager - kj ATTACHMENT S: Description Econo mic Outlook P res entation Page 114 of 147 FY2017 Annual Budget FY2017 Economic Outlook and Budget Initiatives Council Workshop 4/26/2016 Page 115 of 147 FY2017 Annual Budget Economic Outlook Major Revenue Sources Property Tax (22%) Sales Tax (22%) Return on Investment (20%) Fees for Service/Other (41%) Page 116 of 147 FY2017 Annual Budget General Fund Economic Indicators •Growth –new permits & growth related revenues –Property tax assumptions •Sales Tax •Utility Return on Investment and Franchise Fees •Other economic indicators Page 117 of 147 FY2017 Annual Budget Assessed Value 4.35 4.48 4.69 5.25 5.84 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 FY2012 FY2013 FY2014 FY2015 FY2016 Bi l l i o n s Page 118 of 147 FY2017 Annual Budget Property Tax and Assessed Value Residential 70% Commercial 18% Land 7% Multifamily 5% Real Property by Type Residential Commercial Land Multifamily Page 119 of 147 FY2017 Annual Budget Property Tax and Assessed Value $150,000 $170,000 $190,000 $210,000 $230,000 $250,000 $270,000 2012 2013 2014 2015 2016 Average Home Values Page 120 of 147 FY2017 Annual Budget Preliminary Values from WCAD •Preliminary values over $6 Billion •Residential values increase by 9.75% •Weekly updates on assessed values and staff will continue to work on projections throughout the spring and summer •TIRZ Values to be determined Page 121 of 147 FY2017 Annual Budget Sales Tax •Process –Confidential Report from the State –Put sales tax into different sectors and subsectors –Use multiple trend forecasting techniques to build a “consensus in the data” –Monitor all Texas cities, Top Twenty cities, and regions to see macro trends Page 122 of 147 FY2017 Annual Budget Retail 52% Food 11% Information 8% Manufacturing 5% Other 19% Wholesale 5% Retail Food Information Manufacturing Other Wholesale Page 123 of 147 FY2017 Annual Budget Retail 37% Building Supplies 15%Food 11% Information 8% Manufacturing 5% Other 19% Wholesale 5% Retail Building Supplies Food Information Manufacturing Other Wholesale Page 124 of 147 FY2017 Annual Budget Georgetown Sales Tax •Consistency in our “core” sectors –Retail, Food, and Information –“Recurring” in nature •Hedge against volatility in smaller sectors –“One time” in nature Page 125 of 147 FY2017 Annual Budget Texas is Slowing Page 126 of 147 FY2017 Annual Budget Georgetown is Growing •Early projections have the City getting 2-4% more than budgeted in the current fiscal year –Largely driven by strong performance in our core sectors –One time in nature payments have helped increase projections •Cautious in our projection approach Page 127 of 147 FY2017 Annual Budget Return on Investment •Represents about 20% of revenues in the General Fund •Water, Wastewater, Stormwater, Irrigation, & Electric •Two Components –3% Franchise Fee: Totals $2.95 M in FY2016 –7% ROI: Totals $7.59 M in FY2016 –Allows us to capture both Base and Volume ROI •Increase of 3-5% expected –Tie to growth patterns Page 128 of 147 FY2017 Annual Budget Fees for Service & Other Revenue •Development and Permit Fees –Currently projected to hit budget •Parks and Rec Fees –Currently on target with busy season coming soon •ESD #8 –Fire Protection Contract •Sanitation/TDS Contract –Currently projected to hit budget; Contract renegotiation in FY2018 Page 129 of 147 FY2017 Annual Budget Capital Projects •Projects –San Gabriel –Southwest Bypass –Garey Park •Contract with the Voters •Active discussion with Council through the budget process. •Five year debt model will be reviewed. Page 130 of 147 FY2017 Annual Budget Key Budget Drivers and Initiatives Page 131 of 147 FY2017 Annual Budget Budget Theme Implement Council Goals Continue with Key Initiatives Response to Issues of Growth Page 132 of 147 FY2017 Annual Budget Growth Page 133 of 147 FY2017 Annual Budget Growth •774 –In-city new single- family starts •1128 –In-city multi- family unit starts •339 –ETJ new single- family starts •1070 new platted residential lots Page 134 of 147 FY2017 Annual Budget FY2017 Growth & Key Initiatives •Transportation Improvements –2015 Road Bond •Southwest Bypass construction •Sidewalks and intersection improvements –Austin Avenue Bridges Outreach Process –Mays Street extension –FM1460 construction Page 135 of 147 FY2017 Annual Budget FY2017 Growth & Key Initiatives •Park Improvements –Garey Park Construction –San Gabriel Park Improvements •Facilities –West Side Service Center operations –Downtown West construction –Transfer Station Master Plan •FY2017 Planning Stage •FY2018 Implementation –Fire Station 6 Page 136 of 147 FY2017 Annual Budget FY2017 Growth & Key Initiatives •Utility Capital Improvements –Water and Wastewater –Pecan Branch WWTP Expansion –Berry Creek Interceptor –Western District line replacements •Evaluate wastewater rates in FY2017 Budget Process –Originally discussed in the FY2016 Budget Retreat Page 137 of 147 FY2017 Annual Budget FY2017 Growth & Key Initiatives •Technology Needs –Implement Customer Information System (CIS) –Procure Financial Information System (FIS) –Procure Human Resources Information System (HRIS) –Prepare IT Strategic Plan •Future Growth Needs –Complete retail study –Comprehensive Plan updates •Gateway Update Page 138 of 147 FY2017 Annual Budget Council Goals Council Goals Promote a Culture of Inclusion and Opportunity Attract and Retain Quality Employees Improved Internal Process Produce a Customer Service Organization Ensure Financial Stewardship Page 139 of 147 FY2017 Annual Budget Background •Four Council Visioning Sessions in November –Role of Council –Vision –Goals •Culture •Employee •Internal Process •Customer •Financial –14 strategies •9 tier-1 strategies •5 tier-2 strategies Page 140 of 147 FY2017 Annual Budget Council Goals/Strategies •Staff teams developed tactics for each strategy –Tactics reviewed with Council at March 22 workshop •Developing a multi-year plan for implementation of tactics •First year plan will be in upcoming budget Page 141 of 147 FY2017 Annual Budget Budget Development •Capital Improvements Program being developed –Reviewed by boards and to Council in May/June •Base budgets review by city management •Prioritize strategies to meet council goals and establish funding priorities •Continued updates of revenue projections Page 142 of 147 FY2017 Annual Budget Calendar and Next Steps •May 10 –Budget workshop –Personnel and Compensation •May 24 –Budget workshop –Transit –Budget Workshop –General Capital Projects, Parks, Facilities –Budget Workshop –Information Technology •June 14 –Budget Workshop -Sidewalks Page 143 of 147 FY2017 Annual Budget Calendar and Next Steps •June 28 –Budget workshop –Utilities/Transportation CIP –Budget workshop –Operational impacts/growth •July 12, 13 –Budget retreat/work sessions •July 26 –Presentation of Proposed Budget Page 144 of 147 FY2017 Annual Budget Calendar and Next Steps •August 9 –Public hearing –Tax Rate •August 16 –Second public hearing –Tax Rate •August 23 –First readings, all budget adoption items •September 13 –Second readings and final adoption Page 145 of 147 FY2017 Annual Budget Questions Page 146 of 147 City of Georgetown, Texas City Council Workshop April 26, 2016 SUBJECT: - Advice from attorney about pending o r co ntemplated litigation and other matters o n which the attorney has a duty to advise the City Council, including agenda item - Meet and Confe r Update - Appointment of te mpo rary/substitute Deputy City Atto rney/Court P rosecutor Sec. 551.074: Personnel Matters - City Manager, City Attorney, City Sec re tary and Municipal Judge: Consideratio n of the appointment, employme nt, evaluation, reassignment, duties, discipline, or dismissal - City Manager Evaluatio n ITEM SUMMARY: FINANCIAL IMPACT: TBD SUBMITTED BY: Page 147 of 147