Finance Committee Meeting

Agenda City of Ocean Shores Finance Committee Meeting Tuesday November 21, 2023 Zoom Meeting 1:00 PM Page Call to Order Financials 1. 2023 Monthly Financial Update  Presented by: Finance Director, Angela Folkers Monthly Financial Reports 2. Mid-Biennium Budget Modification  Presented by: Finance Director, Angela Folkers 3-8 3. Business and Occupational (B&O) Tax City Code Update  Presented by: Finance Director, Angela Folkers 9 - 12 4. Golf Course Financial Update  Presented by: Mayor, Jon Martin and Councilmember, Rich Hartman 13 - 19 5. Financial Policy Update  Presented by: Councilmember, Kathryn Sprigg 6. ClearGov Software  Finance Director, Angela Folkers Contracts 7. Judicial Contracts  Presented by: City Administrator, Scott Andersen City Administrator Report 8. City Administrator Report  Presented by: City Administrator, Scott Andersen Mayor Report Page 1 of 19 Page 9. Mayor Report  Presented by: Mayor, Jon Martin Adjourn _________________________________________________________ Public Notice:  Persons requiring auxiliary aids or special arrangements in order to participate in meetings should call 360.940.7498 at least two business days prior to the scheduled meeting. Page 2 of 19  CITY OF OCEAN SHORES, WASHINGTON ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF OCEAN SHORES, WASHINGTON, AMENDING OCEAN SHORES MUNICIPAL CODE CHAPTER 3.38 BUSINESS AND OCCUPATION TAX AND REVISING ORDINANCE NO. 838. WHEREAS, Ocean Shores Municipal Code Chapter 3.38 BUSINESS AND OCCUPATION TAX is deemed an exercise of the power of the City to license for revenue; and WHEREAS, the provisions of Chapter 3.38 are subject to periodic statutory or administrative rule changes or judicial interpretations of the ordinances or rules; and WHEREAS, Senate Bill 5199 made changes to RCW 35.102.150, and WHEREAS, Chapter 3.38 of the City Code needs to be updated to incorporate the changes. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF OCEAN SHORES DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Ordinance No. 838 § 1 (part), 2008 as codified at Section 3.38.078 of the Ocean Shores Municipal Code, is hereby revised, as follows: Notwithstanding RCW 35.102.130, effective January 1, 2008, gross income from the activities of printing, and of publishing newspapers, periodicals, or magazines, shall be allocated to the principal place in this state from which the taxpayer's business is directed or managed. As used in this section until December 31, 2023, the activities of printing, and of publishing newspapers, periodicals, or magazines, have the same meanings as attributed to those terms in RCW 82.04.280(1) by the department of revenue. Beginning January 1, 2024, until January 1, 2034, as used in this section, the activities of printing, and of publishing newspapers and periodicals or magazines are those activities to which the exemption in RCW 82.04.759 and the tax rate in RCW 82.04.280(1)(a) apply. Section 2. This Ordinance shall take effect thirty (30) days from the date of publication. Page 1 of 3 Ordinance No. 3. Business and Occupational (B&O) Tax City Code Update Presented by: Fi... Page 3 of 19  THIS ORDINANCE PASSED AND ADOPTED, by the City Council of the City of Ocean Shores, Washington, at a regular open public meeting on this day of ATTEST: Jon B. Martin, Mayor Sara D. Logan, City Clerk Page 2 of 3 Ordinance No. 3. Business and Occupational (B&O) Tax City Code Update Presented by: Fi... Page 4 of 19  Page 3 of 3 Ordinance No. 3. Business and Occupational (B&O) Tax City Code Update Presented by: Fi... Page 5 of 19  Advocacy B&O tax cities need to adopt technical update to B&O model ordinance for SB 5199 Contact: Candice oak, $heila Ga SR 5199, changing the definition of printing and publishing income for local business and occupation (B&O) taxes, takes effect on January 1, 2024. The city B&O tax model ordinance has been updated with this technical change, and B&O tax cities need to update the provision in their municipal code. The change is a technical update to RCW references in section .78 of the model ordinance corresponding to $3 51993 changes to RCW 35.102.150. The definition changes are unlikely to impact current taxable newspaper printing and publishing tax allocation. All cities with local B&O taxes should amend their ordinance provision with an effective date of January 1, 2024. This section in the model ordinance is not mandatory, but the tax treatment of this activity is required by RCW 35.102.150. The legislative intent for the change also makes clear that while part of the definition of printing and publishing the activity is now partially in a new state B&O exemption for newspaper publishing, the city B&O tax model ordinance definition continues to include these as taxable activities and is not adopting a similar exemption. Link to update of B&O tax model ordinance section .78 Additional background information can be found on AWC’s B&Otax and business license page. 3. Business and Occupational (B&O) Tax City Code Update Presented by: Fi... Page 6 of 19  2023 revision to City B&0 Tax Model Ordinance to incorporate SB 5199 changes to 35.102.150 .78 Allocation and apportionment of printing and publishing income when activities take place in more than one jurisdiction. Notwithstanding RCW 35.102.130, effective January 1, 2008, gross income from the activities of printing, and of publishing newspapers, periodicals, or magazines, shall be allocated to the principal place in this state from which the taxpayer's business is directed or managed. As used in this section until December 31 2023, the activities of printing, and of publishing newspapers, periodicals, or magazines, have the same meanings as attributed to those terms in RCW 82.04.280(1) by the department of revenue. Beginning January 1,__2_O_24, until January 1, 20§§,_as used in this section, the activities of printing, and of publishing newspapers and periodicals or magazines are those activities to which the exemption in RCW 82.04759 and the tax rate in RCW 82.04.2€?)_(1)_(a)apphp Legislative intent information This section is required by RCW 35.102.150 and provides that printing and publishing income shall be allocated to the city in which taxpayer's business is directed or managed. This section is not mandatory for the model ordinance, but the tax treatment is required by RCW 35.102.150. This section defines the sourcin of ross income arisin from the activities of rintin and ublishin news a ers eriodicals or ma azines. The chan es effective Januar 1 2024 modi onl the definition of printing, and of publishing newspapers and periodicals or newspapers in accordance with ESS2B 5199 2023 . This section does not constitute an ado tion of the State of Washin ton business and occu ation tax exemption for gross income arising from the activities of printing, and of publishing newspapers, or the tax rate that applies to the activities of printing and of publishing periodicals or magazines. 3. Business and Occupational (B&O) Tax City Code Update Presented by: Fi... Page 7 of 19  3.38.078Allocation and apportionment of printing and publishing income when activities take place in more than one jurisdiction. Notwithstanding RCW 353102.130, effective January 1, 2008, gross income from the activities of printing and of publishing newspapers, periodicals, or magazines shall be allocated to the principal place in this state from which the taxpayer's business is directed or managed. As used in this section, the activities of printing and of publishing newspapers, periodicals, or magazines have the same meanings as attributed to those terms in RCW Q.”(_)g4@_Q(1) by the Department of Revenue. (0rd. 838 § 1 (part), 2008) 3. Business and Occupational (B&O) Tax City Code Update Presented by: Fi... Page 8 of 19  Ocean Shores Golf Course Report Date: 9/30/2023 1 Ocean Shores Golf Club - Balance Sheet Balance Sheet Current Month Prior Month Prior Year-End 9/30/2023 8/31/2023 12/31/2022 Current Assets Cash & Cash Equivalents Operating Cash 178,932 150,424 Petty Cash 5,821 8,774 Accounts Receivable, Net Inventories Hard Goods 23,840 22,742 Soft Goods 23,467 27,605 Food 3,458 3,250 Total Current Assets 235,518 212,795 Total Assets $235,518 $212,795 Liabilities Accounts Payable 4,989 (8,330) Sales Tax Payable 23,854 18,037 Gift Card Liability 485 505 Other Current Liab 34,964 34,626 Total Current Liabilities 64,292 44,838 Total Liabilities 64,292 44,838 Member's Equity 86,586 86,586 Current Year Net Income 84,639 81,372 Total Member's Equity 171,225 167,958 Total Liabilities & Member's Equity $235,517 $212,796 Generated on: 10/24/2023 4. Golf Course Financial Update Presented by: Mayor, Jon Martin and Coun... Page 9 of 19 4. Golf Course Financial Update Presented by: Mayor, Jon Martin and Coun... Ocean Shores Golf Course Report Date: 9/30/2023 Ocean Shores Golf Club Month-to-Date Year-to-Date Sep - 2023 % Budget % Sep - 2022 Bud Var PY Var Sep - 2023 % Budget % Sep - 2022 Bud Var PY Var Rounds Public 1,039 0 0 0 0 1,039 1,039 6,435 0 0 0 0 6,435 6,435 Member 541 0 0 0 0 541 541 3,439 0 0 0 0 3,439 3,439 Total Rounds 1,580 0 0 0 0 1,580 1,580 9,874 0 0 0 0 9,874 9,874 Sales - Green Fees 23,944 - 69,860 - 0 (45,916) 23,944 150,165 - 394,664 - 0 (244,499) 150,165 Sales - 18 Hole - Non-Prime 11,787 - 0 - 0 11,787 11,787 66,273 - 0 - 0 66,273 66,273 Sales - Cardholder 2,168 - 0 - 0 2,168 2,168 47,623 - 0 - 0 47,623 47,623 Range, Rental & Other Golf Related 4,092 - 10,350 - 0 (6,258) 4,092 28,374 - 61,350 - 0 (32,976) 28,374 Cart Fees 8,927 - 0 - 0 8,927 8,927 64,061 - 0 - 0 64,061 64,061 Golf Fees Revenue 50,918 - 80,210 - 0 (29,293) 50,917 356,496 - 456,014 - 0 (99,517) 356,497 Sales - Soft Goods 5,345 - 12,450 - 0 (7,105) 5,345 27,531 - 70,500 - 0 (42,970) 27,531 Sales - Hard Goods 3,938 - 0 - 0 3,938 3,938 21,211 - 0 - 0 21,211 21,211 Merchandise Revenue 9,283 - 12,450 - 0 (3,168) 9,282 48,742 - 70,500 - 0 (21,759) 48,741 Sales - Food 3,794 - 5,625 - 0 (1,831) 3,794 20,004 - 32,250 - 0 (12,246) 20,004 Sales - Beer 3,639 - 8,438 - 0 (4,799) 3,639 4,362 - 48,376 - 0 (44,014) 4,362 Sales - Wine 0 - 0 - 0 0 0 180 - 0 - 0 180 180 Sales - Tobacco 0 - 0 - 0 0 0 97 - 0 - 0 97 97 Food & Beverage Revenue 7,433 - 14,063 - 0 (6,630) 7,433 24,643 - 80,626 - 0 (55,983) 24,643 TOTAL REVENUE 67,633 - 106,723 - 0 (39,090) 67,633 429,881 - 607,140 - 0 (177,259) 429,881 Expenses COS - Merchandise 5,360 57.7% 6,930 55.7% 0 1,570 (5,360) 3,494 7.2% 34,650 49.1% 0 31,156 (3,494) COS - Food 1,963 51.7% 2,250 40.0% 0 287 (1,963) 8,963 44.8% 12,900 40.0% 0 3,937 (8,963) COS - Beer 945 26.0% 3,375 40.0% 0 2,430 (945) 1,820 41.7% 19,350 40.0% 0 17,530 (1,820) COS - Wine 0 - 0 - 0 0 0 122 68.2% 0 - 0 (122) (122) COS - Other Food & Beverage 164 - 0 - 0 (164) (164) 722 - 0 - 0 (722) (722) Cost of Sales 8,432 12.5% 12,555 11.8% 0 4,123 (8,432) 15,121 3.5% 66,900 11.0% 0 51,778 (15,122) Gross Margin 59,201 87.5% 94,168 88.2% 0 (34,968) 59,200 414,760 96.5% 540,240 89.0% 0 (125,481) 414,759 Salaries & Wages 28,207 41.7% 40,542 38.0% 0 12,335 (28,207) 152,089 35.4% 225,556 37.2% 0 73,467 (152,089) Payroll Taxes 2,921 4.3% 3,964 3.7% 0 1,043 (2,921) 15,865 3.7% 22,109 3.6% 0 6,244 (15,865) Healthcare 1,912 2.8% 1,164 1.1% 0 (748) (1,912) 5,328 1.2% 5,820 1.0% 0 492 (5,328) Other Employee Benefits 290 0.4% 0 - 0 (290) (290) 689 0.2% 0 - 0 (689) (689) Total Payroll & Benefits 33,330 49.3% 45,670 42.8% 0 12,341 (33,329) 173,971 40.5% 253,485 41.8% 0 79,513 (173,972) Meals & Entertainment 0 - 0 - 0 0 0 710 0.2% 0 - 0 (710) (710) Travel 178 0.3% 600 0.6% 0 422 (178) 7,385 1.7% 3,000 0.5% 0 (4,385) (7,385) Other Employee Related 0 - 0 - 0 0 0 0 - 1,072 0.2% 0 1,072 0 Total Employee Related 178 0.3% 600 0.6% 0 422 (178) 8,095 1.9% 4,072 0.7% 0 (4,023) (8,095) Page 10 of 19 4. Golf Course Financial Update Presented by: Mayor, Jon Martin and Coun... Month-to-Date Year-to-Date Sep - 2023 % Budget % Sep - 2022 Bud Var PY Var Sep - 2023 % Budget % Sep - 2022 Bud Var PY Var R&M - Equipment 2,591 3.8% 350 0.3% 0 (2,241) (2,591) 7,474 1.7% 1,750 0.3% 0 (5,724) (7,474) R&M - Building 0 - 1,450 1.4% 0 1,450 0 0 - 7,370 1.2% 0 7,370 0 R&M - Golf Course & Tennis Courts 443 0.7% 0 - 0 (443) (443) 443 0.1% 0 - 0 (443) (443) Sod 0 - 1,143 1.1% 0 1,143 0 0 - 1,368 0.2% 0 1,368 0 Sand & Gravel 0 - 226 0.2% 0 226 0 1,829 0.4% 5,139 0.8% 0 3,310 (1,829) Seed & Mulch 0 - 500 0.5% 0 500 0 0 - 1,000 0.2% 0 1,000 0 Landscaping 0 - 328 0.3% 0 328 0 0 - 1,028 0.2% 0 1,028 0 Gas, Diesel, Oil & Lubricants 3,538 5.2% 2,413 2.3% 0 (1,125) (3,538) 11,246 2.6% 11,983 2.0% 0 737 (11,246) Other Maintenance 0 - 565 0.5% 0 565 0 184 0.0% 3,112 0.5% 0 2,928 (184) Fertilizers 0 - 94 0.1% 0 94 0 15,247 3.5% 8,976 1.5% 0 (6,271) (15,247) Chemicals 0 - 514 0.5% 0 514 0 1,962 0.5% 6,243 1.0% 0 4,281 (1,962) Total Repairs & Maintenance 6,572 9.7% 7,583 7.1% 0 1,011 (6,572) 38,385 8.9% 47,969 7.9% 0 9,584 (38,385) Professional Fees 0 - 0 - 0 0 0 3,040 0.7% 661 0.1% 0 (2,379) (3,040) Marketing & Advertising 0 - 1,950 1.8% 0 1,950 0 2,866 0.7% 11,550 1.9% 0 8,684 (2,866) Computer Related 0 - 0 - 0 0 0 6,498 1.5% 737 0.1% 0 (5,761) (6,498) Dues & Subscriptions 316 0.5% 425 0.4% 0 109 (316) 1,821 0.4% 2,125 0.4% 0 304 (1,821) Operating Supplies 133 0.2% 3,719 3.5% 0 3,586 (133) 9,440 2.2% 16,069 2.6% 0 6,629 (9,440) Postage 83 0.1% 153 0.1% 0 70 (83) 200 0.0% 765 0.1% 0 565 (200) Client Relations 0 - 0 - 0 0 0 420 0.1% 0 - 0 (420) (420) Uniforms 0 - 0 - 0 0 0 98 0.0% 500 0.1% 0 402 (98) Charitable Contributions 40 0.1% 0 - 0 (40) (40) 40 0.0% 0 - 0 (40) (40) Other Operating 0 - 102 0.1% 0 102 0 6 0.0% 510 0.1% 0 504 (6) Merchant Processing Fees 2,624 3.9% 2,091 2.0% 0 (533) (2,624) 7,074 1.6% 11,705 1.9% 0 4,631 (7,074) Bank Fees 35 0.1% 151 0.1% 0 116 (35) 261 0.1% 755 0.1% 0 494 (261) Cash Short / (Over) 66 0.1% 0 - 0 (66) (66) 51 0.0% 0 - 0 (51) (51) Centralized Services 0 - 2,083 2.0% 0 2,083 0 0 - 10,417 1.7% 0 10,417 0 Total Operating Expenses 3,297 4.9% 10,674 10.0% 0 7,377 (3,297) 31,815 7.4% 55,794 9.2% 0 23,978 (31,815) Operating Profit 15,824 23.4% 29,641 27.8% 0 (13,817) 15,824 162,494 37.8% 178,920 29.5% 0 (16,427) 162,493 Electric & Gas 2,322 3.4% 0 - 0 (2,322) (2,322) 6,555 1.5% 0 - 0 (6,555) (6,555) Water 0 - 300 0.3% 0 300 0 12,828 3.0% 1,500 0.2% 0 (11,328) (12,828) Telephone & Internet Connection 136 0.2% 425 0.4% 0 289 (136) 5,756 1.3% 2,125 0.4% 0 (3,631) (5,756) Other Third-party Services 280 0.4% 140 0.1% 0 (140) (280) 1,513 0.4% 980 0.2% 0 (533) (1,513) Other Utilities 463 0.7% 0 - 0 (463) (463) 1,273 0.3% 0 - 0 (1,273) (1,273) Total Utilities 3,201 4.7% 865 0.8% 0 (2,336) (3,201) 27,925 6.5% 4,605 0.8% 0 (23,321) (27,926) Lease Expense - Short-term & Other 0 - 0 - 0 0 0 1,100 0.3% 1,000 0.2% 0 (100) (1,100) Total Leases 0 - 0 - 0 0 0 1,100 0.3% 1,000 0.2% 0 (100) (1,100) Fixed Operating Expenses 3,201 4.7% 865 0.8% 0 (2,336) (3,201) 29,025 6.8% 5,605 0.9% 0 (23,421) (29,026) Gross Operating Profit 12,623 18.7% 28,776 27.0% 0 (16,153) 12,623 133,469 31.0% 173,315 28.5% 0 (39,848) 133,467 Fees, Permits, & Licenses 0 - 0 - 0 0 0 1,252 0.3% 0 - 0 (1,252) (1,252) Base Management Fees 8,703 12.9% 5,417 5.1% 0 (3,286) (8,703) 43,513 10.1% 27,083 4.5% 0 (16,429) (43,513) Other Expenses 8,703 12.9% 5,417 5.1% 0 (3,286) (8,703) 44,765 10.4% 27,083 4.5% 0 (17,681) (44,765) Net Operating Income 3,920 5.8% 23,359 21.9% 0 (19,439) 3,920 88,704 20.6% 146,232 24.1% 0 (57,529) 88,703 Depreciation & Amortization 652 1.0% 0 - 0 (652) (652) 652 0.2% 0 - 0 (652) (652) Page 11 of 19 4. Golf Course Financial Update Presented by: Mayor, Jon Martin and Coun... Month-to-Date Year-to-Date Sep - 2023 % Budget % Sep - 2022 Bud Var PY Var Sep - 2023 % Budget % Sep - 2022 Bud Var PY Var NET INCOME 3,268 4.8% 23,359 21.9% 0 (20,091) 3,268 88,052 20.5% 146,232 24.1% 0 (58,182) 88,050 EBITDA 3,920 5.8% 23,359 21.9% 0 (19,439) 3,920 88,704 20.6% 146,232 24.1% 0 (57,529) 88,703 Page 12 of 19  CITY OF OCEAN SHORES, WASHINGTON RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF OCEAN SHORES, WASHINGTON, REPLACING RESOLUTION 765, AND SETTING FORTH FINANCIAL BEST PRACTICES AND POLICIES FOR THE CITY WHEREAS, the financial well-being of our City government provides stability to the community and is central to its growth and prosperity; and WHEREAS, while matters beyond the control of City government or changes in service needs may cause stress to the City’s finances from time to time, well-managed financial policies minimize the disruptions to services, staff cutbacks, and harm to the City’s credit rating; and WHEREAS, the City adopted Resolution 765 on July 10, 2017, which set forth financial goals and guidelines for the City, and WHEREAS, these policies created a reference point and served as one of many elements used to maintain the City’s financial integrity; and WHEREAS, these policies had not been reviewed or updated since adopted on July 10, 2017, and WHEREAS, the City Council created an Ad-Hoc Committee to review Resolution 765 and recommend updates to City Council, and WHEREAS, the Ad-Hoc Committee met and determined there were updates to recommend to City Council, and WHEREAS, this Resolution contains updates recommended to the City Council by the Ad-Hoc Committee, and WHEREAS, the City of Ocean Shores wishes to replace Resolution 765 with these updated financial best practices and policies; NOW, THEREFORE, BE IT RESOLVED by the Ocean Shores City Council of the City of Ocean Shores, Washington that the Mayor and the City Council have set forth the following financial best practices and policies: Page 1 of 4 Resolution No. 5. Financial Policy Update Presented by: Councilmember, Kathryn Sprigg Page 13 of 19  A) Financial Best Practices I. General 1. Provide clear guidelines in a single document for current and future elected officials and staff 2. Provide a financial base that delivers needed services to our community, maintains the integrity of our fresh waterways and beaches, and sustains current and future infrastructure and equipment needs 3. Maintain a spirit of openness and transparency while being fully accountable to the public for the City’s fiscal activities 4. Align the biennial budget with council, citizen, and local business priorities 5. Maintain competitive compensation and benefit packages to provide high quality services to our citizens, using Association of Washington Cities’ yearly salary and benefits survey as one tool 6. Coordinate and cooperate with local, State and Federal agencies and the Quinault Indian Nation to achieve common goals and objectives, share the cost of providing services on an equitable basis, and support favorable legislation at the State and Federal level 7. Maintain City assets to protect our investments and minimize avoidable repair and replacement costs 8. Initiate, encourage, and participate in economic development efforts to create business opportunities and strengthen the local economy 9. Maintain fair, equitable and legal relationships with contractors and suppliers 10. Measure and display progress toward goals whenever possible II. Revenue 1. Ensure that revenue planning estimates are conservative 2. Follow an aggressive and professional policy of collecting revenues. When necessary, discontinuing service; use small claims court, collection agencies, foreclosure, liens and other methods of collection, such as imposing penalties, collection and late charges 3. Review and update user charges and fees biannually to ensure both cost recovery and meeting market conditions. Consider market rates and charges levied by other municipalities for like services in establishing rates, fees, and charges 4. Seek grant funding whenever available and appropriate which addresses the City’s current priorities and policy objectives to leverage City funds III. Debt 1. Maintain the City’s bond rating at the highest level fiscally prudent, to minimize future borrowing costs and preserve access to the credit market 2. Avoid inter-fund loans and other self-funding mechanisms that may harm the long- term stability of City Enterprise Funds or other funds Page 2 of 4 Resolution No. 5. Financial Policy Update Presented by: Councilmember, Kathryn Sprigg Page 14 of 19  3. Whenever feasible, pay off debt early, but avoid excessive depletion of ending fund balances IV. Reserves 1. At each fiscal year end the remaining dollars left in each fund that are undesignated and unencumbered constitute available reserves of the City 2. Maintain the Contingency Fund (Fund #002) in accordance with RCW 35A.33 to meet any municipal expenses, the necessity or extent of which could not have been reasonably foreseen at the time of adopting the biennial budget. Whenever possible, fund approximately $30,000 into the City’s Contingency Fund (Fund #002) each year, up to the balance amount allowed by law. Per RCW 35A.33.145 the Contingency Fund may not exceed $0.375 per $1,000 of assessed valuation. 3. Establish a capital reserve line item in the budget for each City-owned facility excluding the Convention Center. 4. Maintain sufficient reserves to provide for the scheduled replacement of City vehicles and capital equipment at the end of their useful lives (except in the case of equipment valued over $50,000 per item which may be grouped for bond issuance) V. Long-term Planning 1. Review the Capital Facilities Plan (CFP) prior to the beginning of the biennial budget cycle, before developing the budget 2. Employ the tracking and reporting capacity in the City’s budgeting software and report progress to the City Council by Department on a quarterly basis B) Financial Policies I. Debt 1. Maintain the City’s debt ratio (principal and interest as a percentage of operating revenue) at the State Auditor’s recommendation of 12% or less 2. While the City may from time to time enter into short-term, that is less than 7- year financing or leases for items such as vehicles, ambulances (and accoutrements), such debt (outstanding principal) shall be no more than 20% of the fund’s estimated operating costs (Note: equipment purchases funds are not subject to the 20% limit (i.e., Fund 110 – Equipment Reserve Fund.) II. Reserves 1. Maintain $2 million in the City’s General Fund (Fund #001) ending fund balance 2. Maintain Enterprise Fund ending fund balances equal to at least 10% of adopted operating expenditures Page 3 of 4 Resolution No. 5. Financial Policy Update Presented by: Councilmember, Kathryn Sprigg Page 15 of 19  3. Maintain a Convention Center ending fund balance (Fund 106) equal to at least 10% of adopted operating expenditures 4. Maintain the Convention Center Capital Improvement ending fund balance (Fund 350) equal to at least 30% of adopted operating expenditures PASSED AND ADOPTED by the City Council of the City of Ocean Shores, Washington, at an open, public meeting thereof on this day of . Jon B. Martin, Mayor ATTEST: Sara D. Logan, City Clerk Page 4 of 4 Resolution No. 5. Financial Policy Update Presented by: Councilmember, Kathryn Sprigg Page 16 of 19  CITY OF OCEAN SHORES, WASHINGTON RESOLUTION NO. 765 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF OCEAN SHORES, WASHINGTON SETTING FORTH FINANCIAL GOALS AND GUIDELINES FOR THE CITY WHEREAS, the financial well-being of our City government provides stability to the community and is central to its growth and prosperity; and WHEREAS, while matters beyond the control of City government or changes in service needs may cause stress to the City’s finances from time to time, well-managed financial policies minimize the disruptions to services, staff cutbacks, and harm to the City’s credit rating; and WHEREAS, the City developed financial policies over time in a variety of documents and settings but has not gathered these policies into a written comprehensive financial planning strategy; and WHEREAS, these policies create a reference point and serve as one of many elements used to maintain the City’s financial integrity; NOW, THEREFORE, BE IT RESOLVED by the Ocean Shores City Council of the City of Ocean Shores, Washington that the Mayor and the City Council have set forth the following financial goals and guidelines: Goals 0 Set clear guidelines in a single document for current and future elected officials and staff o Provide a financial base that delivers needed services to our community, maintains the integrity of our fresh watenNays and beaches, and sustains current and future infrastructure and equipment needs 0 Maintain a spirit of openness and transparency while being fully accountable to the public for the City’s fiscal activities ’ o Uphold the City of Ocean Shores credit rating I. General Guidelines 1. Align the yearly budget with council, citizen, and local business priorities Page 1 of 3 Resolution No. 765 5. Financial Policy Update Presented by: Councilmember, Kathryn Sprigg Page 17 of 19  Maintain competitive compensation and benefit packages to provide high quality services to our citizens, using Association of Washington Cities’ yearly salary and benefits survey as one tool Coordinate and cooperate with local, State and Federal agencies and the Quinault Indian Nation to achieve common goals and objectives, share the cost of providing services on an equitable basis, and support favorable legislation at the State and Federal level Maintain City assets as funding allows to protect our investments and minimize avoidable repair and replacement costs Initiate, encourage, and participate in economic development efforts to create business opportunities and strengthen the local economy Maintain fair, equitable and legal relationships with contractors and suppliers Measure and display progress toward goals whenever possible Revenue Guidelines . Ensure that revenue planning estimates are conservative Avoid inter-fund loans and other self-funding mechanisms that may harm the long- term stability of City Enterprise Funds or other funds Follow an aggressive and professional policy of collecting revenues. When necessary, discontinuing service; use small claims court, collection agencies, foreclosure, liens and other methods of collection, such as imposing penalties, collection and late charges Review and update user charges and fees biannually to ensure both cost recovery and meeting market conditions. Consider market rates and charges levied by other municipalities for like services in establishing rates, fees, and charges Seek grant funding whenever available and appropriate which addresses the City’s current priorities and policy objectives in order to leverage City funds Debt Guidelines . Strive to ensure the City’s debt ratio (principal and interest as a percentage of operating revenue) meets the State Auditor’s recommendation of 12% or less by the end of 2019 ' While the City may from time to time enter into short-term, that is less than 7 year financing or leases for items such as vehicles, ambulances (and accoutrements), such debt (outstanding principal) shall be no more than 20% of the fund’s estimated operating costs (Note: equipment purchases funds are not subject to the 20% limit (i.e. Fund 110 Equipment Reserve Fund.) — Whenever feasible, the City will pay debt off early but avoid excessive depletion of reserves The City will maintain its bond rating at the highest level fiscally prudent, so that future borrowing costs are minimized and access to the credit market is preserved. Page 2 of 3 Resolution No. 765 5. Financial Policy Update Presented by: Councilmember, Kathryn Sprigg Page 18 of 19  IV. Reserve Guidelines 1. At each fiscal year end the remaining dollars left in each fund that are undesignated and unencumbered constitute available reserves of the City Strive to maintain $1.5 million in the City’s General Fund reserve Fund approximately $30,000 per year into City’s Contingency Fund each year up to the balance amount allowed by law. 4. Maintain the Contingency account in accordance with RCW 35A.33. to meet any municipal expense, the necessity or extent of which could not have been reasonably foreseen at the time of adopting the annual budget - per RCW 35A.33.145 the contingency account may not exceed $0.375 per $1,000 of Assessed Valuation 5. Maintain Enterprise Funds reserves equal to at least 10% of their adopted operating expenditures 6. Maintain sufficient reserves to provide for the scheduled replacement of City vehicles and capital equipment at the end of their useful lives (except in the case of equipment valued over $50,000 per item which may be grouped for bond issuance) 7. Develop a Convention Center Reserve Fund that is 10% of yearly operating costs by 2020 8. Maintain the Convention Center Equipment Reserve and Maintenance fund at 32% of yearly operating costs by 2025 9. Establish a building maintenance and repair fund for each City-owned facility excluding the Convention Center. V. Long-term Planning Guidelines 1. Adopt a new Capital Facilities work plan which is consistent with the City Comprehensive Plan by 2021. The plan shall be updated at least every six years Conduct a status review of the CFP biennially . Develop a new plan for inventorying and tagging equipment by 2019, that includes “small and attractive” equipment and tools valued under $1 ,000 Review insurance adequacy yearly on all capital assets Establish a tracking and reporting structure to the City Council by Department of each project that has been funded. PASSED AND ADOPTED by the City Council of the City of Ocean Shores, Washington, at an open, public meeting thereof on this 10th day of July 2017. ATTEST: 'ng|er, Mayor _QZ_; Rachel D. Carl, CMC, City Clerk Page 3 of 3 Resolution No. 765 .°":'> 0°!“ 9°!” 5. Financial Policy Update Presented by: Councilmember, Kathryn Sprigg Page 19 of 19