HomeMy WebLinkAbout06-17-2014 ph2 Padilla�G Council
June 17, 2014
TO: City Council
FROM: Wayne Padilla, Finance & I.T. Director
Joe Lamers, Budget Manager
VIA: Katie Lichtig, City Manager
AN N 17 2014
RK
AGENDA
CORRESPONDENCE
Date 6 -1 � -1 Item#
SUBJECT: Questions re Financial Plan Supplement (Meeting of 6 —17- 14)
This memo provides responses to questions raised by a Council Member.
Question 1: Is the ongoing maintenance for the Skate Park coming out of Measure Y? (p A -17 park
maintenance)
Skate Park maintenance is not anticipated to be funded with Measure Y revenues.
Question 2: Do we have one side fund or two? G -33 How much is the new side fund ??
(page G -36 Safety Side Fund $24.5 million)
Presently, the City has one side fund liability for the safety retirement plan. With the changes related to
safety pools recently approved by Ca1PERS, a second side fund will be created. The estimated total for
the unfunded liability as of 6/30/12 for the side fund is $24.5 million and the estimate for the City's share
of the pool liability is $32.8 million. These amounts are part of the total unfunded liability equal to $122.9
million, based on the actuarial value as of 6/30/12.
Question 3: Could we reduce interest payments by making weekly payments and /or making
principal only payments? Could debt obligations with higher than current interest rates be
refinanced? (goal is to reduce amount paid in interest)
The existing debt payment structures are set and cannot be amended. Most of the outstanding debt has a
prepayment penalty built into the terms and conditions to ensure that the debt remains outstanding for a
period of 5 -10 years. In exchange for this call protection clause, bond buyers generally accept a lower rate
of interest for the entire debt.
The City's new Financial Advisor is taking a fresh look at all outstanding debt to determine if any is ripe
for refinancing. If any refinancings are feasible these opportunities will be brought to the City Council to
initiate.
Question 4: What is the total of the minor capital outlays? P. D -1
The 2014 -15 Proposed Budget reflects $101,200 for Minor Capital in All Funds, including $74,500 in the
General Fund. This is for minor equipment and tools which cost less than $25,000. Items included in this
allocation are copier replacements, Virtual Desktop workstations, fence repairs for the Sewer program, a
spill containment structure for Fleet, and motorcycle radios for the Police Department.
enda Correspondence Page 2
Question 5: What is the amount needed to completely remodel Firehouse 2? D -5 Could Cal Poly
contribute to this?
After further assessment of the fire station, specifically the plumbing, waste water, electrical, and HVAC
systems as well as the building condition, it became apparent that the initial budget was
insufficient. There is sufficient money in the current project budget to complete the full design of this
project. The design is the current task for the team. Since the design is more complicated than previously
believed, it is premature to get a hard number on the total cost of the locker and dorm room modifications;
however, we do anticipate that the cost of construction is likely to be greater than $100,000. Once design
is complete staff will return to the City Council with a refined cost estimate and a proposed funding plan.
In terms of the University's participation in this cost, this issue will be part of our more detailed
conversation with the University regarding "future collaborations" which is on the agenda for the June 18,
2014 quarterly meeting between the City and University.
Question 6: Does the TOT revenue assumption include Air BnB revenue? G -3
Home stay TOT generation has not been significant, with year -to -date receipts totaling only $4,900 from
22 properties that have reported. As a result no changes to the TOT revenue projections have been
implemented.
Question 7: Some time back, it was said that our Bond rating would go up if we had more debt.
Why? Should we consider more debt?
The City's bond rating was recently affirmed at AA. The credit rating was achieved by prudent fiscal
stewardship and managing debt at its present and proposed levels (Fitch acknowledged the proposed
financing of the LOVR overpass and mobile data computers in its affirmation of the City's credit rating.)
If the City were to add significantly more debt, revenues would have to be substantially higher to support
the additional debt in order to maintain the existing credit rating.
TACourtal Agenda Reports12014 11014- 06- 171Adoption of Supplemental Budget (PadillallGouncil Memorandum - Questions re
Financial Plan Suoplement.docx