Town Of Moraga

Rescission of Declaration of Fiscal Emergency: May 9, 2018

A the Town Council meeting on May 9 2018, the Town Council voted unanimously to rescind the Fiscal Emergency declared on June 28, 2017 based on the Town’s projected June 30, 2017 General Fund Reserves balance of $1.6 million. The emergency was caused by two significant events, the Rheem sinkhole and the Canyon Road bridge failure with a combined repair cost of $6.16 million. The Council decision to lift the Fiscal Emergency was based upon many factors, including: the audited FY 2016/17 budget year ended stronger than expected; the FY 2017/18 mid-year budget adjustments added additional funds; and the Emergency Relief reimbursements for the Rheem sinkhole are projected to arrive in FY 2017/18 and FY 2018/19. Although Moraga still faces several fiscal challenges, the Town has moved from emergency to recovery.

Update on the Town’s Status of Fiscal Emergency: March 30, 2018

There were two main events that lead to the Town’s decision to declare a fiscal emergency – the Rheem Blvd. sinkhole and the Canyon Road bridge closure. These two failures in the Town’s infrastructure system impacted traffic and required funding from the General Fund Reserves, reducing the reserves to 18% of the annual General Fund budget, far below the 50% reserve goal. In each case, available funding was identified and the project was repaired. Equally important, staff applied for reimbursement of expenses through the Federal Highway Administration (FHWA) Emergency Relief (ER) program.

The Rheem sinkhole repair was deemed substantially completed on November 16, 2017. The estimated cost of the repair is $2,868,000, which is $101,000 less than the funding set aside for the work. As of March 29, 2018, the FHWA Emergency Relief program has approved project reimbursements of $2,440,556. An additional $145,144 in contingency costs may also qualify for reimbursement. The reimbursement rate for the project is projected to be between 85% and 90%. The Town is currently processing the required paperwork and will begin submitting for reimbursement in the coming weeks. Based on prior Council action, reimbursement funds will be credited first to the Town’s Palos Colorados, and when fully refunded to Fund 100, then to General Fund Reserves, Gas Tax and Measure J accounts as outlined below:

 

Funding Amount

Savings

FHWA ER Reimbursement

Potential Reimbursement

Town’s Share

Fund 100   Palos Colorados

$1,069,000

$101,000

$968,000

 

 

Fund 101   General Fund Reserves

1,400,000

 

1,400,000

 

 

Fund 205   Gas Tax

246,000

 

36,278

72,572

137,150

Fund 210   Measure J

254,000

 

36,278

72,572

145,150

 

 

 

 

 

 

 

$2,969,000

$101,000

$2,440,556

$145,144

$282,300

Note: The maximum potential reimbursement from FHWA ER is $2,585,700. The actual reimbursement may vary depending upon the State’s determination of qualifying expenses. Should the additional potential reimbursement not be received, the Town’s Share would increase to $427,444 which would be paid from Gas Tax and Measure J funds.

The temporary Canyon Road bridge replacement project was deemed substantially completed on November 22, 2017. The cost of the repair was $3,294,000 and the potential reimbursement amount from the FHWA Emergency Relief program is $2,924,000 (a calculated return of 88.76%). While the FHWA Emergency Relief program has approved the project expenses as reimbursable, the funding is not available at this time for the reimbursement. Congress will need to appropriate sufficient new funds to the California 2017 disaster event for the Town to submit requests and receive reimbursements. Should funding be received, Council would need to determine the order in which funds are reimbursed. The table below assumes repayment to the various accounts that provided funding based on the calculated return rate. The Town is also in discussions with East Bay Municipal Utility District (EBMUD) regarding reimbursement.

 

Funding Amount

FHWA ER Potential Reimbursement

Town’s Share

Fund 100   Palos Colorados

$1,000,000

$887,600

$112,400

Fund 101   General Fund Reserves

2,060,000

1,828,456

231,544

Fund 210   Measure J

234,388

208,042

26,845

 

$3,294,388

$2,924,000

$370,388

The Town has practiced fiscal discipline and pursued cost savings since the Rheem sinkhole and Canyon Road bridge collapse in March 2016 and April 2017 respectively, in order to restore the Town’s fund balance (General Fund Reserves) to the Town’s target of 50%. Note: While the Government Finance Officers Association recommends a target fund balance of 16%, the Town’s policy is 50% due to the small size of General Fund Expenditures Budget. The 50% reserve goal is intended to cover approximately six months of operations.

The FY 2016/17 year end close was $765,000 to the good, increasing the reserve to $2,309,000 or 27.2%. The mid-year budget adjustments approved by the Town Council in February 2018 added an additional $120,000 to the General Fund Reserves. The Town is hopeful that there will be additional adjustments to the FY 2017/18 year end. The reimbursement of the Rheem sinkhole expenses, projected to be received in Fiscal Year 2018/19, should restore the General Fund Reserves to approximately $3.83 million or 45%, close to the 50% goal.

A more in depth assessment of the Town’s status of fiscal emergency is scheduled to be brought before the Audit and Finance Committee on April 24, 2018.

Declaration of Fiscal Emergency: June 28, 2017

This webpage has been developed to provide updates and background information about the Town's Fiscal Emergency. Content for this page will continue to be developed.

On June 28, 2017, as part of the adoption of a balanced budget for Fiscal Year 2017/18, the Town issued a Declaration of Fiscal Emergency (per Article XIIIC California Constitution). The declaration was made because: (1) the Town's reserves have been drained due to two infrastructure failures (the 2016 sinkhole on Rheem Blvd. and the April 2017 Canyon Road Bridge failure), leaving the Town with just under $1.6 million in General Fund Reserves available for future events or emergencies; and (2) four of the Town's 2017 adopted Goals:

  • Goal #1 – To complete sinkhole repairs, restoring retail activity and traffic flow back to normal and continue to pursue financial relief;
  • Goal #5 – To complete successful negotiation of labor agreements with all bargaining units;
  • Goal #6 – To adopt a balanced budget and continue high quality financial reporting; and
  • Goal #8 – To determine revenue measure(s) for a future ballot to fund the community's top priorities.

  • The declaration acknowledges the Town's fiscal situation while enhancing and expanding options to secure additional revenue or local funding.

Important Documents and Links

Staff Report on Rescission of Fiscal Emergency

Town Manager's Address of Fiscal Emergency

FAQs - Fiscal Situation

Adopted Budget FY 2017-18: Final Draft June 28, 2017

Town of Moraga Organization Chart, Effective 7/1/2017

Financial Documents and Resources: Adopted Budgets, Comprehensive Annual Financial Reports, Fee Schedule

Hacienda de Las Flores Revenue and Expenditure Summary

Storm Drain Funding Feasibility Study Presentation to AFC April 10, 2017

Storm Drain Master Plan Adopted July 8, 2015 

August 8, 2017 Special Town Council Meeting

Agenda

Video Recording of Town Council Special Meeting August 8, 2017

Presentation to the Town Council on the Report on Fiscal Emergency 

Staff Report on Fiscal Emergency

Attachment A - Town Council Adopted Goals for 2016 and 2017

Attachment B - Storm Drain Funding Feasibility Study - Presentation to Town Manager's Working Group: March 20, 2017

Attachment C - Resolution #67-2017 Adopting the FY 2017-18 Operating and CIP Budgets and Declaring a Fiscal Emergency

Attachment D - Fiscal Year 2017/18 Operating Budget Excerpts

Attachment E - Fiscal Emergency Questions Received from the Public

Attachment F - Revenue Enhancement Committee Final Report to the Town Council, November 13, 2009

Attachment G - Summary List and Links to Town Council and Audit and Finance Committee Reports since 2015

Attachment H - Community Priorities Survey Report to the Town Council: Godbe Research, August 24, 2016

Attachment I - SFPD and BART Signing Recruitments

Correspondence Received After Agenda was Published