| Time | Speaker | Text |
|---|---|---|
| 00:00:00.03 | Lily | . |
| 00:00:01.06 | Unknown | Thank you. |
| 00:00:06.93 | Mayor Cox | Good evening everybody and welcome to the special city council meeting for Tuesday June 19, 2018. I will call the meeting to order and ask Lily to call the roll. |
| 00:00:17.14 | Lily | Councilmember Withy. |
| 00:00:18.16 | Councilmember Withy | THE END OF THE END OF THE |
| 00:00:18.36 | Lily | Thank you. Council member Hoffman? Present. Council member Cleveland Noles. |
| 00:00:24.40 | Vice Mayor Burns | Thank you. |
| 00:00:26.93 | Lily | Vice Mayor Burns? Sure. |
| 00:00:27.59 | Vice Mayor Burns | Here. |
| 00:00:29.46 | Lily | Mayor Cox. |
| 00:00:30.91 | Mayor Cox | Thank you. |
| 00:00:30.95 | Lily | Thank you. |
| 00:00:33.39 | Mayor Cox | Melanie Purcell, will you lead us in the Pledge of Allegiance? |
| 00:00:41.54 | Melanie Purcell | I pledge allegiance to the flag of the United States of America. and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. |
| 00:00:45.85 | Jeff Chase | to the republic for which it stands nation. Father God. Indivisible. liberty and justice for all. |
| 00:01:01.84 | Mayor Cox | For the record, I will note that Councilmember Susan Cleveland-Knowles is participating telephonically as reflected on our agenda. Okay, we had no closed session, so there are no announcements. I have approval of motion approving the agenda. |
| 00:01:24.68 | Ray Withey | So moved. Thank you. |
| 00:01:25.79 | Vice Mayor Burns | SECOND. |
| 00:01:26.48 | Mayor Cox | All in favor? Aye. |
| 00:01:27.34 | Ray Withey | Aye. |
| 00:01:28.71 | Mayor Cox | I That motion carries. Oh, actually, since Susan is participating telephonically, we will take a voice vote on each item before us this evening. So, Lily, will you call the roll on that motion, please? Council Member Withey. |
| 00:01:46.09 | Lily | you Thank you. |
| 00:01:46.51 | Ray Withey | Yes. |
| 00:01:46.56 | Lily | Yes. Council member Hoffman. Yes. Council member Cleveland Noles. |
| 00:01:53.18 | Susan Cleveland-Knowles | Thank you. |
| 00:01:53.31 | Mayor Cox | Thank you. |
| 00:01:54.02 | Lily | Vice Mayor Burns? Yes. Mayor Cox? Yes. |
| 00:01:54.98 | Mayor Cox | Yes. Yes. That motion carries 5-0. |
| 00:01:56.75 | Lily | That motion can be. |
| 00:01:59.03 | Mayor Cox | There are no special presentations or mayor's announcements tonight, so we will move swiftly on to the consent calendar. I do want to note that regarding the one item that is on the consent calendar, the recommended motion in the staff report is to receive, report, and provide direction. Actually, because it's on the consent calendar, the recommended action is simply to receive the report. Any questions or comments or anybody want to pull anything on the consent calendar? I'm going to open it up to public comment concerning our consent calendar. |
| 00:02:37.96 | Jeff Chase | I don't know. |
| 00:02:42.37 | Jeffrey Chase | Hello, Madam Mayor. City Council. staff and. A little audience today. This side. Item on the consent calendar. I'm going to speak about that in particular. And I'm going to mention that there is no open public comment tonight. LISTED ON THE AGENDA. If that's what a special city council meeting means that the public doesn't comment on it. anything they'd like to, then I'd rather have just a regular city council meeting. I know it's not my choice. |
| 00:03:32.89 | Jeffrey Chase | We'll talk about marijuana a little bit. This is on the consent calendar. Marijuana has allegedly been legalized. in California. And in Marin County, and in Sausalito. All the governments of California were instructed that except for growing outside. in the view of other people, or smoking. in the view of other people. Marijuana was to be made legal. The city of Sausalito has now said that it is illegal here to grow outside. Whether or not, the public is able to see. |
| 00:04:34.96 | Jeffrey Chase | It's nice when the lawmakers follow the law themselves, otherwise we have many issues, as we do in this country. I'm gonna quote from the Torah about Something called cannabisin. Which sounds a lot like cannabis. It's in Exodus 32. It's in, excuse me, Exodus 30. Verse number 22, it says, "'The Lord told Moses to collect the choices of spices, "'18 pounds of pure myrrh, "'half as much of cinnamon, and of sweet cane.'" the same amount of cassia as of myrrh, and one and a half gallons of olive oil. The Lord instructed skilled perfume makers to compound all this into the holy Anointing. oil. What that word in Hebrew is, is meshach, From that word comes Mashiach, That means Messiah. THAT MEANS CHRIST. Fragrant cane? the tribe of Judah trades in this is marijuana. To make this illegal is |
| 00:05:42.76 | Mayor Cox | Thank you, Jeff. |
| 00:05:43.72 | Jeffrey Chase | breaking people's religious freedoms as well as their ethical ones. |
| 00:05:45.94 | Mayor Cox | Any other public comment? on our consent calendar. All right, seeing none, I'll bring it back up here for a motion. |
| 00:06:06.84 | Ray Withey | So the motion is to receive the report, I think. |
| 00:06:09.85 | Mayor Cox | Yep. |
| 00:06:10.13 | Ray Withey | Thank you. |
| 00:06:10.17 | Mayor Cox | you |
| 00:06:10.24 | Ray Withey | Thank you. OK, so I moved the. |
| 00:06:11.58 | Mayor Cox | Or you could move to approve the consent calendar. Yeah. |
| 00:06:13.76 | Ray Withey | Yeah, let's do that. Move to approve this consent calendar item 2A. |
| 00:06:14.86 | Mayor Cox | Okay. |
| 00:06:19.75 | Mayor Cox | Thank you. |
| 00:06:19.80 | Lily | SECOND. Lily, will you call the roll? Councilmember Withy. |
| 00:06:24.06 | Ray Withey | Yeah. |
| 00:06:24.09 | Lily | Yes. |
| 00:06:24.39 | Ray Withey | Thank you. |
| 00:06:24.48 | Lily | Councilmember Hoffman? Yes. Councilmember Cleveland-Norals? Yes. Thank you. |
| 00:06:28.56 | Mayor Cox | Yes. |
| 00:06:28.87 | Lily | Thank you. |
| 00:06:28.90 | Mayor Cox | Thank you. |
| 00:06:29.47 | Lily | Thanks, Mary Burns. |
| 00:06:30.38 | Mayor Cox | Yes. |
| 00:06:30.94 | Lily | Thank you. |
| 00:06:31.02 | Mayor Cox | Thank you. you |
| 00:06:31.16 | Lily | Mayor Cox. |
| 00:06:31.97 | Mayor Cox | Yes, that motion carries 5-0. We're going to move on to our business items. The first business item is 3A, receive and file the fiscal year 2016-17 comprehensive annual financial report. And Melanie, I believe you have a presentation for us. |
| 00:07:02.24 | Melanie Purcell | Thank you, Mayor and Council. Thank you. The The 2016-17 comprehensive annual financial report, is also known as the audit, was provided to you last week. And at the request of council, I prepared kind of a brief summary, focusing on the net position of the city, as that is one of the primary indicators that rating agencies and others look at to determine the fiscal health of the city. Traditionally, the audit is prepared to show two years, indicating changes from the prior year to the current year being reviewed. So you'll see 16 and 17. and is also broken up between governmental activities and business type activities. Business type activities are assessed and evaluated using the same criteria as private sector, whereas governmental activities are using the modified accrual method, which is slightly different, And refers to the timing of when certain items are recognized. That's simply to explain why there is a distinction. It does become important when we get into the nitty gritty of how we record different transactions. But as noted in the CAFR by the auditors, our auditors are May's associates. And they've been with the city for over ten years now. The city's position has improved slightly since prior year. And the unrestricted. negative. net position, as you see at the bottom, has actually, in fact, decreased. And we'll get into some of the details of why that is and what that activity is about. |
| 00:08:41.08 | Melanie Purcell | Again, this is a slightly different presentation of the same material. All of this comes from the same set of data. But what you saw here was the net position, which refers to the assets and liabilities. And here it talks about revenues, expenditures. And again, that position, just a little different format using the same information, but again, coming to the same conclusion. The city's total net position is 29,882,394, an improvement from last year at 27,987,699. Two of the major activities that affect net position for the city are capital assets, and our outstanding debt. As you'll notice, the capital assets have increased. We've continued to make intensive investment. into our capital. And at the same time, we've been paying down debt as planned by the city over the last ten years. |
| 00:09:42.94 | Melanie Purcell | Excuse me. As also requested, we prepared a five year history. And part of what is really critical to note, this five year history includes the fiscal year 2014-15, in which GASB changed the reporting requirements for liabilities. In particular, The GASB rules change so that pension liabilities are now reported as unrestricted net position in this city. So you'll notice that in 1415 we start reporting things quite differently and the city's net position drops drastically. This information is simply a change in how the information is presented rather than a change in the actual data. So business type activities, you see a similar behavior. Though it's a little bit different because you'll see different debt restrictions in the sewer system in particular that affects business type activities differently than the general government operating. So here's the total, and we do tend to look at things in the total. The largest fund in the city is the general fund, which is a governmental fund. Next would be the sewer fund, which is an enterprise fund or business type activity. As noted at the very bottom of this slide, The total net pension liability is reported in the halfer in the city's audits As note eight. And it goes into a great deal of detail about how that's calculated, what changes are made at CalPERS, that kind of information. So several things come to mind. When I take a look at this, first of all, in 12 to 13, and 13, 14, those two fiscal years, CalPERS assigned unfunded liabilities as a percentage of the statewide pool. There was a shift in how they calculated things. 14-15, we then saw a change in how GASB required the reporting. and a significant increase in how that was recorded. So we have a compounding behavior between CalPERS and GASB, both external to the city, that have reflected in our balance sheet. as to how the city is doing. The good news is that as we look at NET POSITION. And as rating agencies, bond holders, and others look at our net position, they're looking for trends to see whether or not we have an explanation for any significant shifts, which we do. and what our overall trend in the last couple of years is. So the good news is that |
| 00:12:24.34 | Jill Hoffman | Bye. |
| 00:12:24.35 | Melanie Purcell | No. |
| 00:12:24.37 | Jill Hoffman | Melanie, do you want us to ask questions as we're going? Whichever works best for you. Let's go back a slide. Thank you. I want to ask about the net position, which is the total net position at the bottom. Sorry. And then your notes down there below the total net position liability is reported in note 8. Sorry. So this line... The net pension liability line is in 2012 to 13, our unfunded pension liability, right? We're not talking about our overall pension liability, but our unfunded pension liability which resulted in the underperformance of the investment return of CalPERS investment fund. Did I have that right? |
| 00:13:12.50 | Councilmember Withy | That's part of what is reflected here. |
| 00:13:15.52 | Jill Hoffman | Okay. |
| 00:13:16.97 | Melanie Purcell | Yeah. And actually in the shift from the 7 million in 2013-14 to the 17 million in 14-15, |
| 00:13:25.41 | Unknown | Mm-hmm. |
| 00:13:25.79 | Melanie Purcell | There's a series of changes made by CalPERS, including reflecting a reduction in the assumed rate of return because they lost funds. |
| 00:13:25.81 | Unknown | Thank you. |
| 00:13:34.35 | Melanie Purcell | during the recession. So that is what you've referred to as one of the components. But they also changed how they calculate it. And they also changed their assumptions, which compounded all to this result. |
| 00:13:41.40 | Jill Hoffman | Thank you. they also have. which is- |
| 00:13:48.39 | Jill Hoffman | That was one of my next questions. But I was thinking that the way that I looked at it, of your graph here and the Bartell historic returns was that the other significant thing that happened in 2000, between 2013 and 2014-15 was that during those years, the investment return was like 0.1 and 2.3 or something, which also resulted in the underfunding. which led to that jump in $10 million between, do I have that right or no? |
| 00:14:26.21 | Mayor Cox | And Jill, you mean you're referring to CalPERS investment return? Yeah. Yeah, I just want to be clear. Yes. |
| 00:14:29.16 | Jill Hoffman | I just want to be. Yes, I'm talking about CalPERS investment return. |
| 00:14:31.98 | Mayor Cox | Yeah. |
| 00:14:32.01 | Melanie Purcell | What happens is there's actually a lag between the impact that we, so the market does really well or does very poorly in a given year. The impact to the funding ratio is actually 18 months to two years later. So the impact that we're seeing is in 15, 16, 16, 17. So for example, we had very good returns last year in CalPERS. We should see even more benefit from those next year and our next valuation not currently. |
| 00:15:02.35 | Jill Hoffman | Okay. But what, so then what accounted for that 10 million increase between 13, 14, and 14, 15. |
| 00:15:08.88 | Melanie Purcell | 13. Part of that is the change in how CalPERS allocated unfunded liability. |
| 00:15:14.64 | Jill Hoffman | Thank you. |
| 00:15:14.88 | Melanie Purcell | Thank you. |
| 00:15:14.91 | Jill Hoffman | Thank you. |
| 00:15:14.93 | Unknown | . |
| 00:15:15.01 | Melanie Purcell | and the return rates and the change in their rates and the change in their timing assumptions. So many of these all took place around the same time over a two year span. |
| 00:15:24.11 | Jill Hoffman | Yeah. OK. |
| 00:15:25.12 | Melanie Purcell | Thank you. But all of those assumptions are what plays into this almost $18 million swing over two years. Right. |
| 00:15:32.22 | Mayor Cox | Excuse me, Melanie, we have one council member on the phone who's having a hard time hearing. Okay. So can you speak more loudly than usual so we can be sure she can hear your explanation? Will do. |
| 00:15:40.21 | Melanie Purcell | Okay. |
| 00:15:46.89 | Melanie Purcell | Will do. Thank you. |
| 00:15:51.92 | Melanie Purcell | So if you'd like, just to reiterate, we had a change in the GASB calculations, which changed how they had to be reported, including the market value. ahead. ratings that they use. So There's several different interpretations of market value, current market, present market, average market. So they changed which ones could be used for assets and which ones could be used for liabilities. That took place in 1415. That had a huge impact across the country because it changed the timing of when Um, Increases in liability are now immediately recognized, whereas increases in returns are smoothed over a longer time frame. Then they came back. Excuse me, they also changed how they allocated the unfunded liability. We would see in 1415 the losses of prior years starting to compound. And then we also saw the changes hit start hitting in 15, 16, 16, 17, when they changed the amortization timeline to a fixed 30 years. They changed the unfunded liability. This will actually impact us going forward to 20 years. And then they also started the ratchet down from 7.5% to 7%. Okay. |
| 00:17:14.87 | Melanie Purcell | So the compounding is, as you see, the very negative trend in pension liability, which is part of why they did that. We'll get into later some of the curve that Bartel and them explained. Bartell Associates and Doug Pryor had talked about where we have a very significant increase that lasts about 10 or so years and then drops off suddenly. That drop off is the product of a lot of these changes. Unfortunately, there's that timeframe that we have to get through. |
| 00:17:46.03 | Jill Hoffman | It's the new forced payment plan where you have to pay off the unfunded liability. You have to pay it off. |
| 00:17:50.06 | Melanie Purcell | Thank you. |
| 00:17:52.35 | Jill Hoffman | Okay, and just to be clear though, in the years where GASB didn't require that we include the pension debt in our CAFR, that debt was still out there. It's not like it just- It was included in the CAFR. |
| 00:18:05.77 | Melanie Purcell | In the CAFR, it was not included as part of the net position calculation. It has always been in Note 8. |
| 00:18:10.75 | Jill Hoffman | No. Right, okay, but it wasn't readily apparent as it is now? Not on the face statement. |
| 00:18:15.79 | Melanie Purcell | Okay. Thank you. |
| 00:18:16.77 | Jill Hoffman | Okay. I think that's the only question I have right now. |
| 00:18:21.14 | Melanie Purcell | So here's just the graphical depiction of that. And you'll see the smoothing. The green line correlates to the right-hand axes, and the blue and the yellow. correlate to the left hand, the green line is in fact the sum of the two. Blue, yellow equals green. |
| 00:18:42.22 | Melanie Purcell | It's the total of the net position. So showing that there is a drop off and then a stabilization over time. And then it is staying at the positive ranks. We would expect in future years this to continue a modest growth upward, continuing on a positive trajectory. |
| 00:19:17.13 | Melanie Purcell | So the requested action of council is to receive and file the fiscal year 2016-17 comprehensive annual financial report. Understanding that staff has indicated we will issue an RFP or request for proposals for audit services to be released in August of this year. and that all future CAFERS and audits will be presented to the City Council by auditors upon completion. The next audit is actually underway. We close the books in August, and auditors will be here in the first week of November with the expectation that the audit will be presented to City Council in January. Thank you. as is a more traditional timeline. |
| 00:20:03.07 | Mayor Cox | Any questions of staff? |
| 00:20:08.87 | Mayor Cox | Susan, any questions of staff? |
| 00:20:14.15 | Susan Cleveland-Knowles | Nope, I'm good. Thank you. |
| 00:20:16.16 | Jill Hoffman | I'm going to have some questions later when we get into how the city's decreasing net position is going to be impacted is going to be impacting our budget and what our budget surplus is. But I don't have any further questions right now. |
| 00:20:30.67 | Mayor Cox | Okay, I'm going to open it up to public comment regarding the Kaffir. |
| 00:20:37.22 | Mayor Cox | All right, seeing none, I'm going to close public comment on the CAFR and I'm ready for a motion. |
| 00:20:46.72 | Vice Mayor Burns | I move that we receive and file the 2016-17 comprehensive annual financial report. |
| 00:20:54.60 | Ray Withey | Second. |
| 00:20:56.09 | Lily | Lillie, will you call the roll? Council member Withy? Yes. Council member Hoffman? Yes. Council member Cleveland Knowles? |
| 00:20:58.79 | Vice Mayor Burns | Thank you. |
| 00:20:58.81 | Ray Withey | Yes. |
| 00:21:03.46 | Lily | Thank you. |
| 00:21:03.48 | Mayor Cox | Yes. |
| 00:21:04.49 | Lily | Vice Mayor Burns? Yes. Mayor Cox? |
| 00:21:05.47 | Mayor Cox | Yeah. Yes. That motion carries 5-0. All right, our next business item is our fiscal year 2018 to 20 resources allocation plan and 2018 to 24 capital improvement program discussion. And once again, Melanie Purcell. |
| 00:21:37.16 | Melanie Purcell | Thank you again. So jumping in real quickly, we're going to review our fund balance projections and the recommendations. I have crafted them so that hopefully they're clearer for the group. It is the 2018 to 2024 capital improvement program, including our 2018 to 20 funding proposal. And the project detail and priorities were included in last week's packet and repeated, I believe, in this week. The 2018-20 General Fund Operating Resources Allocation Plan will talk about the adjustments and the discussion items. We will be looking for council to give direction on those discussion items and any further changes that they would like. And then again, talking about the pension trust funding and use scenarios particularly recognizing how they impact and are a tool to use with the general fund operating budget. And then the next steps actually is your next meeting next week, at which we would like to bring back to council the budget for adoption. It does have to be adopted prior to the end of June. |
| 00:22:43.31 | Melanie Purcell | So the general fund fund balance is, as actually just shown in the CAFR, ending the 6-30-17 fiscal year with $9,578,722,000. This is well above the city's policies levels. We also anticipate being able to garner another $247,000 in the current year with vacancies and underspend. The projected balance then comes to $9,825,947. Again, well above the city's stated policy levels. The non-spendable amount represents money owed to the general fund predominantly, as well as things that just can't be cashed. The required reserves reflects both the pension trust, $733,000, and other items that are held for encumbrances or other obligations, multi-year contracts, things of that nature. The 5% budget stabilization policy was established some time ago, and again represents 5% of the general fund expenditures. 10% of expenditures is the shortfall reserve policy, and staff is recommending, with the approval of the Finance Committee, an additional 10% be set aside for future instability. We're recommending $50,000 reimburse general fund operations for the mudslides clean up. We did receive some funds from FEMA, however, it was not sufficient to offset that cost. And then the city established a disaster assistance fund around $700,000 some years ago and it has sat and grown obviously to 977,000. And that again is a policy reserve that is retained So after all of those items are accounted for, including the increase in reserves, The general fund cash available is $1,349,247. So again, a very healthy position. This in concert with the net position is how most of us in the profession would look at the health of the community. We're looking at the largest funds and seeing how stable they are, how they've grown, how they're managed, and what the reserves are. So recognizing that there is surplus cash available above those reserves and above the increase, We took a look at the capital projects that are either in way or been requested. $100,000 for the license plate readers. This would be phase two, and the chief explained that in some detail, the additional location. The Napa Street storm drain project, which is addressing flooding problems. 50% match of what's called the Teco Mesh and Soil Nail Project. It is also a mudslide remediation project that is a 50% match with the neighborhood. That brings us to $849,000 remaining in surplus balance. We're recommending after considerable discussion that if we were to take what we call the maximum comfort level, $775,000 to transfer that to the pension trust. That would be from the balance. That then would bring, with the current annual contribution to the trust that's currently part of policy, we do set aside 3% of salary each year, that would bring the projected balance in the pension trust to $1.7 million. So again, bringing it into a healthy place. One thing to note is that when there are funds set aside in the pension trust, They are reported as part of the city's net position as an asset against liabilities. They are reported as part of the general fund reserved. Again, if you go back to the first slide where it said required reserves, that is the trust fund as well. So when those funds are set aside, it does continue to strengthen the city's net position. However, according to Per the auditors, it does not actually make a distinction whether it's in the trust or it's in general fund fund balance. However, it does set aside the distinction that it must only be used for pension obligations. |
| 00:27:24.92 | Melanie Purcell | So our other fund balances. And I'm gonna come back to MLK and Tide Lens in just one moment. But the parking fund has had a healthy fund balance for quite some time. Historically, has retained a $3 million level in anticipation of capital projects. Staff is recommending that we keep $2 million there for future projects as needed, but also free up some funds in order to complete parking projects on the table right now, and those would include We'll go through those in just a moment, but they do include Dunphy Park and Lot 2. The sewer fund does have a required reserve level related to debt. And other obligations and conferences that it has available, we're recommending that it retain. Yes, ma'am. |
| 00:28:11.09 | Mayor Cox | Melanie, again, for the benefit of Council Member Cleveland Knowles, I want to identify which slide we're on as we switch slides each time. So right now we are working on slide five, other funds balances. Thank you. |
| 00:28:29.03 | Melanie Purcell | they've |
| 00:28:29.77 | Mayor Cox | Thank you. |
| 00:28:29.96 | Melanie Purcell | 5th column. From the left is the sewer fund. This currently has a balance of $5.2 million. We're recognizing as surplus cash available $109,000. That recognizes the need to retain those funds for capital projects. So that includes the debt funds that are currently part of the balance that must be used for capital projects in the sewer fund. Because the sewer fund is specifically for the sewer system and is governed by that rate structure, it does get treated a little bit differently than the governmental funds. Next column is the recreation grant fund, and this is accrued funds over time from measure A at the county level that must be used for parks capital. Going back to the MLK fund, There's a note there that says the negative balance reflects advance owed to the general fund. You may recall that two years ago the city council adopted a payment plan. Excuse me, a formal loan document and payment plan that indicated that the MLK fund would pay back the advance that had originally been forwarded. to purchase the property. That we are now in year two of, and it actually coincides with the certificates of participation. So in 13 years, the MLK fund will be debt free. At this time, so the required reserves in the MLK fund. reflect the debt service requirements. The negative balance is in fact recognizing the obligation that it owes back to the general fund. So it has to record a debt. So it has a negative position, but its cash is positive because it owes money. We're recommending that we retain at least $125,000 in that fund, recognizing that beyond its debt service payments, the MLK fund still pays the general fund some form of abstinence above its operating costs. The Tidelands Fund is in a similar structure that it has a negative balance because there is a rent credit. And that rent credit is, in fact, we use rent, credit for rent, as a repayment of a loan that was taken in order to rebuild the bulkhead. So that's reflected in the negative balance. Shows us a negative number in the non-spendable, which then brings us to a positive cash flow. So we're recommending again half a million dollars, recognizing that there can be incidents that require attention on the waterfront that we may not know about at this moment. So that's why we would recommend a higher level of fund balance there. and freeing up some funds available for cash, some cash available to address capital projects on the waterfront that are needed. So the other items, Measure O General CIP and Measure O ADA, are annual operating dollars. The measure of ADA $200,000 is in recognition of the fact that we had funds that we set aside in the current year to address ADA that we will be using at the Dunphy Park project. Part of the Dunphy Park, well the ADA work at Dunphy Park was cited in the settlement and those funds can be used to address those concerns. |
| 00:31:55.51 | Jill Hoffman | Sorry, just a second. So the Measure O CIP, General CIP and Measure O ADA, Are those actual funds or are those just ways that we've segregated cash in the budget. |
| 00:32:11.51 | Melanie Purcell | We segregate general CIP from ADA, because we need to account for the funds that are spent on ADA per the settlement. |
| 00:32:20.62 | Jill Hoffman | Per the settlement, we were sued by someone for ADA violations and as part of that settlement we agreed to do certain capital projects, improving ADA access. And so for, do we do this every year with Measure O or do we do just the Measure O ADA for this year? |
| 00:32:26.63 | Melanie Purcell | Yeah. |
| 00:32:38.96 | Melanie Purcell | Measure O has $111,000 annually set aside for ADA work. We may do additional ADA work, both for the settlement and just in general projects, and we track that separately out of operating. It may be streets money or other sources. |
| 00:32:55.25 | Jill Hoffman | OK, but we don't have a separate Measure O segregated fund. That's just part of the general fund that we've allocated as money coming from the Measure O mechanism. Thank you. |
| 00:33:06.94 | Melanie Purcell | We track. |
| 00:33:07.77 | Jill Hoffman | Half cent sales tax mechanism. |
| 00:33:07.81 | Melanie Purcell | Half cent sales tax mechanism. We have the half cent sales tax that comes in and it is tracked separately from all other sales tax. It's transferred dollar for dollar to capital. Okay. We just make the distinction between general and ADA for the purposes of being able to identify easily the funds associated with accessibility projects. |
| 00:33:30.27 | Jill Hoffman | And the measure O general CIP is capital improvement projects? Yes. OK, thanks. |
| 00:33:38.72 | Ray Withey | Can I just ask a question and make sure that we got this right? All of the Measure O sales tax proceeds that we receive gets transferred into the Capital Improvement Fund. |
| 00:33:59.38 | Councilmember Withy | Yes, sir. |
| 00:34:00.66 | Ray Withey | And then what we're seeing here is within the Capital Improvement Fund, the allocation of those measure-o monies between general CIP general capital and ADA-specific capital. Is that right? Correct. Okay, thanks. |
| 00:34:16.35 | Councilmember Withy | Correct. Thank you. |
| 00:34:19.20 | Mayor Cox | Okay. |
| 00:34:19.42 | Councilmember Withy | Thank you. |
| 00:34:19.47 | Mayor Cox | Excellent. All right, so moving on to slide six. This shows the proposed. Melanie, just for the record, in our packet, slide six has no title on it. In what is on the PowerPoint, slide six is titled proposed use of balances. And when it's proposed use of balances, it's actually proposed use of other funds' balances. And the other funds are the funds you just went through on slide five. |
| 00:34:50.02 | Melanie Purcell | THE END OF THE END OF THE So we share the cash available across the top. And then we show the proposed uses. For the MLK fund, we're proposing an additional $100,000 from fund balance to go toward the fields and courts. This would supplement the certificates of participation funds in order to advance more improvements at that area and to address accessibility concerns. The parking fund, we're recommending $200,000 for the parking lot at Dunphy Park. and $250,000 for parking lot two. In the Tidelands Fund, we're recommending the use of $150,000 to address waterfront erosion and decay at Dunphy Park area. In the sewer fund, we're recommending the use of $75,000 to address a sewer line that goes through the middle of Dunphy Park and must be addressed as well. Both the Dunphy Park tidalands work and the sewer project were planned prior. to the issuance of the COPs and were held in order to complement that work. In the recreation grant fund, the intent, the recommendation is to use that balance to supplement COP funds for additional work out at Southview. recognizing that we want to use the COP funds for improvements rather than structural repair. So the Measure O general CIP funds, this is the annual revenues that come in, and we're proposing to split those between Dunphy Park, Southview Park, and our traditional street repairs program. recognizing that while we can't recommend or adopt a budget that recognizes grants before they're received, we do anticipate continuing to solicit additional funds and grants for Dunphy Park, which would then free up measure of funds for other projects. The measure of ADA as we've discussed is $200,000 for Denfey Park and then 111 to 16 which is our annual allocation for transportation related ADA work. The COPs, our remaining funds is $1.3 million in Dunphy Park, $900,000 in Southview, and $1.2 million in the MLK fields and courts. I would like to note that we are in the process of scheduling another meeting with the COP Oversight Committee so that they can review the design invoices to date. It has not been much expended this current year while we've been in design. |
| 00:37:29.40 | Mayor Cox | Thank you. So Melanie, I misspoke because the COPs column and the other contribution column is not on the prior slide. These are new columns to this slide. Yes. |
| 00:37:41.23 | Melanie Purcell | These are unique. And these are, they're not a traditional balances conversation, but we wanted to make sure that they were available for the council to be familiar with. The $115,000 from other contributions for Dunphy Park recommends, recognizes the contribution from Galilee Harbor toward parking. The $2.4 million under the ferry landing is a federal pass-through grant. $500,000 would be a grant for Gate 6 Road Improvements. And then the Street Repair Program, the other contributions represents Gas Tax, SB1, and other grant-type programs. So our total capital programming utilizing all these funds is $9.3 million. So we actually have detailed in your detail sheets every project, the timeline for those projects, and the funding out for six years. Any questions on this? |
| 00:38:45.27 | Jill Hoffman | I do have some questions. Anybody else have questions? Please. So under, if we look at Dunphy Park and we go across, so we're, if you add the Measure O General Capital Improvement Project Fund and then the Measure O ADA, we're spending $812,054 out of the Measure O fund, collectively, for Dunphy Park? |
| 00:39:05.86 | Melanie Purcell | If we were to receive zero grants, it is our expectation and we've been assured that we are in line for those grants. But because we do not have signed grant agreements, we don't recognize them in the budget. |
| 00:39:15.88 | Jill Hoffman | Thank you. Okay, so we have grant applications out. What's the amount or do we have any idea? |
| 00:39:25.21 | Adam Politzer | We don't have any idea. The award of the grant is to come out on June 23rd. |
| 00:39:29.94 | Jill Hoffman | I'm not sure. |
| 00:39:30.02 | Adam Politzer | I'm having a hard time hearing you. The award for the grant that we've applied for is to be announced on June 23rd. And so we have on the future agenda for Dunphy Park to award that contract based on this number, but also with the understanding that we have been told that we will receive some money. We've applied for $750,000. There are a variety of guesses, something less than $750,000, but we're not going to speculate. So that's why we've put in the budget the ability for the council to approve awarding Dunphy Park, regardless if we get any grant money. But we will know on the 23rd, and we'll share that with the council when we bring the Dunphy Park contract forward on the 26th. |
| 00:40:31.74 | Jill Hoffman | So what is the estimated income from measure 0 from half cent sales tax. |
| 00:40:41.25 | Melanie Purcell | 1.2. |
| 00:40:42.87 | Jill Hoffman | 1.2. So if you add up all these expenditures that I'm seeing here on this budget for Dunphy, for General CIP and Measure O ADA, for ADA transportation, 110, 11. And then $150,000 for Southview Park. out of the measure of general CIP and then the street repair program of 446,000 that seems to be more than what we would expect |
| 00:41:10.85 | Melanie Purcell | There's 200,000 being carried over. from the |
| 00:41:13.91 | Jill Hoffman | you |
| 00:41:14.07 | Melanie Purcell | Um, From the current year to next year. |
| 00:41:16.00 | Jill Hoffman | from the... And so if I add up all those columns, those one, two, three, four, five columns, they're going to equal what we expect from this year and what we got from last year? Yes. Okay. |
| 00:41:27.25 | Councilmember Withy | Yes. |
| 00:41:28.76 | Jill Hoffman | Have we spent any Measure O money yet on Dunview or Southview? Because I seem to recall in our budget discussions prior to January of this year that We pretty clearly did not. |
| 00:41:42.91 | Melanie Purcell | Thank you. No, we have not spent any measure money now. |
| 00:41:50.49 | Jill Hoffman | Right, measure O proceeds on parks. We were spending all of those on street repair and other infrastructure from what I recall. Yes. |
| 00:41:51.13 | Melanie Purcell | It's strictly COP funds. |
| 00:41:58.46 | Adam Politzer | And ADA improvements, downtown. |
| 00:42:02.35 | Jill Hoffman | BUT NOT, YEAH, BUT NOT, I MEAN, YOU KNOW, NOT AS PART OF the update for the parks. So we're having this sort of convergence now of Measure O and Measure F is what it looks like to me. Is that accurate? |
| 00:42:10.96 | Adam Politzer | Right. |
| 00:42:11.11 | Unknown | So, |
| 00:42:19.68 | Melanie Purcell | We're using the Measure O as a bolster If we have, say we get $700,000 or $750,000, then no measure of funds would be used on Dunpey Park. We'll be right back. |
| 00:42:32.43 | Jill Hoffman | Thank you. |
| 00:42:32.75 | Melanie Purcell | Southview? Southview, it's going to depend on where else we can solicit funds. Thank you. |
| 00:42:37.52 | Mayor Cox | OK, have we? |
| 00:42:39.51 | Melanie Purcell | Thank you. |
| 00:42:39.63 | Mayor Cox | were spending primarily the recreation grant fund. We're only spending $150,000 of Measure O. |
| 00:42:47.09 | Jill Hoffman | . Right. But my question was though, for have we done any other grant requests for Southview Park? |
| 00:42:55.86 | Melanie Purcell | I don't think any grants have been identified yet. We're still looking, it's not as, I should say, as popular a grant site as Waterfront. |
| 00:43:05.57 | Adam Politzer | Like, I'm going to interject. at last week's meeting, the voters of California voted to support the open space in parks, Prop 68, which is per capita of $200,000 guaranteed. And then they also have a competitive grants program associated with that. So those are future dollars that yet, you know, they got to work through the process, but those dollars will also be available. and could could fund either of those projects or any other park project. |
| 00:43:51.74 | Jill Hoffman | Have we, with regard to, and this is a general question and we may discuss this later, I don't know. As part of our efforts to upgrade our parks, and in recognition of the measure F that we passed and the certificates of participation, which is the COP line here, have we discussed or have we ever addressed in the finance committee or anywhere, an effort to raise funds from private sources or donations? |
| 00:44:27.50 | Mayor Cox | Thank you. |
| 00:44:27.51 | Jill Hoffman | Thank you. Thank you. |
| 00:44:28.83 | Mayor Cox | So I'll just remind you that we did discuss that when we last heard the update about Southview Park. Mike Langford talked about reaching out. seeking private donations to help supplement the funding for Southview Park. |
| 00:44:43.14 | Jill Hoffman | As a policy matter, have we ever stated as a city council that we would not want to accept private donations? |
| 00:44:51.43 | Councilmember Withy | No. |
| 00:44:51.81 | Jill Hoffman | can we say the converse would be true that as a policy the City Council would accept Donations to finish |
| 00:44:59.27 | Mayor Cox | to finish our parks? I mean, so long as no strings are attached, I would see no reason why not. |
| 00:45:04.69 | Jill Hoffman | Okay. It comes to mind because we just finished the Portuguese Plaza, the Paraca de Cascades here in town. A lot of that was funded by private funds, and it seems to me that you know, we're looking at taking a lot of money more than a million dollars out of our NON COP. sort of general fund measure O proceeds and if we can I'm glad we have grants outstanding too, but if we can also raise money through private donations, I see no reason why we wouldn't want to pursue that. So that's why I'm posing a question to get feedback from the city council. Okay, so what I'm hearing is no, there's no objection to that. Okay. |
| 00:45:53.10 | Mayor Cox | I mean, I guess my answer would be I would not want to delay Southview Park for five years, given that the voters already invested in Measure F awaiting private funds. So I think it's smart that we now identify the funds to allow us to finish the parks that we promised with Measure F. And if we're able to supplement those funds with grant funds, I would have no objection. That's my personal view. |
| 00:46:15.99 | Jill Hoffman | Yeah. I think that's, you know, I think that's a good view. |
| 00:46:22.06 | Ray Withey | I think that's a good view. I think when it comes to seeking private investment, there should be no. ideological prohibition, so we shouldn't, you know, sort of say, no, we don't think that that's a good idea. But I think each individual project's got to be looked at on a case by case basis. As the mayor said, it depends what sort of strings are attached. |
| 00:46:39.78 | Unknown | a |
| 00:46:40.32 | Unknown | Well put, Ray. |
| 00:46:49.01 | Vice Mayor Burns | Mm-hmm. |
| 00:46:52.76 | Vice Mayor Burns | Yeah, we might look at at some point a P3 policy or anything like that as far as accepting revenues. |
| 00:46:53.16 | Jill Hoffman | Okay. |
| 00:46:59.47 | Jill Hoffman | What's a P3? |
| 00:47:01.26 | Vice Mayor Burns | A private public partnership. |
| 00:47:02.29 | Jill Hoffman | Public-private partnership. I think that's, okay, good. I'm glad we all feel that way. Well, with regard to that, with regard to the two parks then, You know, there are I mean, these numbers are significant I don't want to say alarming, but it is well over what the COP set forth and what we represented to the voters when they voted on it, what it was going to cost. And so I'm just looking at when we look at balance against the pressure on our budget from our ballooning pension debt as opposed to how we're spending money out of our general fund which essentially what the what measure O is. I want to look at other ways to account for that. Anyway, I think we can move on. If that's a question, |
| 00:47:52.48 | Mayor Cox | If that's a question. to why the costs of the park are exceeding what was set forth in Measure F, we've previously discussed the fact that certain construction management fees and other fees attendant to the design and construction of those parks were not included in Measure F, which focused primarily on construction costs. |
| 00:48:07.61 | Jill Hoffman | Yeah. |
| 00:48:13.59 | Jill Hoffman | Yeah, I know. |
| 00:48:13.82 | Vice Mayor Burns | And those numbers came about in about 2013, right? FOR A 2018 Bidding in a 2020 construction period. I got it. So we're so far behind the time bubble on those that |
| 00:48:23.04 | Jeff Chase | I got it. |
| 00:48:27.46 | Vice Mayor Burns | I THINK YOU BRING UP A VALID POINT THAT WE MIGHT HAVE TO GET I THINK YOU BRING UP A VALID POINT THAT WE MIGHT HAVE TO GET I THINK YOU BRING UP A VALID POINT THAT WE MIGHT HAVE TO GET I THINK YOU MIGHT HAVE TO GET SOME FUNDS AT SOME POINT I THINK YOU MIGHT HAVE TO GET SOME FUNDS AT SOME POINT |
| 00:48:31.32 | Mayor Cox | but, And I also want to point out that the funds that we're discussing on slide six are proposed use of other funds balances. And these are these specific funds set forth on slide five. This is not a proposed use of general fund balance. And we're taking, as you saw from slide four, the staff recommendation is to take the majority of the surplus in the general fund balance and devote that to our pension trust. |
| 00:49:04.16 | Jill Hoffman | Thank you. Okay. But just as a. just as a matter of accuracy. There is no separate fund for Measure O, and that was the, point of criticism for some people with the measure O was that that money went into the general fund. So we have a mechanism that we've created after that But technically, Measure O proceeds go into the general fund. We've decided to siphon them off into a different but, That's because we decided to do that. |
| 00:49:34.97 | Mayor Cox | And so are you suggesting we should use Measure O funds to invest in the pension fund? |
| 00:49:39.19 | Jill Hoffman | I don't know. We're going to get to that later. And, you know, when you start moving things around from what was decided and the strategy at the finance committee meeting and you start moving around, you know, things that you the Finance Committee decided to fund you know, the pension trust fund, then I think, yeah, you do have to look at everything on the table. And how that's going to affect the city's budget going forward. At some point in the next five years, our pension debt, our unfunded pension liability payments are going to eclipse our surplus. |
| 00:50:17.79 | Mayor Cox | Not under the proposal that the staff has |
| 00:50:20.03 | Jill Hoffman | provided. Right. But we have to stick to that proposal. And I don't, okay, well, let's move on forward and see what the projections are, but... |
| 00:50:23.27 | Mayor Cox | I don't know. |
| 00:50:27.96 | Jill Hoffman | you know, I think everything's on the table. |
| 00:50:37.24 | Jill Hoffman | Thank you. |
| 00:50:37.26 | Lily | Madam Mayor, Councilmember Cleveland Knowles has a question. Thank you. |
| 00:50:42.17 | Mayor Cox | Go ahead, Susan. |
| 00:50:44.79 | Susan Cleveland-Knowles | Yeah, just following up, I have a different question, but just following up on that, I mean, Measure O specifically does permit the use of funds for parks, and that was definitely understood by the voters. |
| 00:50:52.01 | Unknown | THE END OF THE END OF THE |
| 00:50:52.31 | Unknown | Thank you. |
| 00:50:58.62 | Susan Cleveland-Knowles | Personally, I think completing these parks is a huge priority for the town, so I'm comfortable with that. especially given the grant funds that we're going to get. My My question was, So last week, I understood when we left off on the end of our slide presentation that this meeting was going to be start off where we left off, which was with the pension discussion and those slides. And we're on slide six. of this. you know, 46-page packet. And we did already go through these slides on fund balances and proposed use of balances last week. So I was just wondering, You know, we had some questions last week about some of the revenue sources and staff analysis of that. So it was just my understanding we'd be focusing on those things tonight. Are we going to go through this whole packet again. everything we did last week. |
| 00:51:56.61 | Mayor Cox | So I'm gonna let Melanie answer that question. |
| 00:51:58.85 | Melanie Purcell | We don't need to. I simply wanted to make sure that I had clarified the request from last week about the fund balances. With your permission, we'll go past the capital plan. because that has been covered. and jump right to the general fund operating and then to the pension, and then we can come back to the discussion items. |
| 00:52:19.96 | Mayor Cox | We're, |
| 00:52:20.18 | Melanie Purcell | Yes. |
| 00:52:20.62 | Mayor Cox | And in fairness to staff, I will note that The slides we have gone through, some of them have changed from what we saw last week. Last week we were talking about a pension fund contribution of $650,000, and this week we're talking about a pension fund contribution of an additional $775,000. So I think it was important to go through some of these slides because they had changed, but if you're ready, I would say let's move forward to the pension discussions. |
| 00:52:51.47 | Melanie Purcell | OK. |
| 00:52:53.90 | Jill Hoffman | Um, |
| 00:52:57.71 | Jill Hoffman | Do we need to |
| 00:53:03.09 | Jill Hoffman | talk about the Before we get to that, do we need to talk about the general fund revenue forecast? Which I think is page 15. I don't know. Is that slide 15? That's it. Before we get to pension, does that make it clearer or...? |
| 00:53:19.94 | Melanie Purcell | At this point, the pension trust actually works separately from the revenues directly other than the fact that we fund the pension trust through surplus from the general fund. So the way that we've set this up in this slide, what changed was how much was coming from the fund balance and how much was going to the trust. And then the trust impacts come back as how much are we taking from the general fund, and then how much is available for future years to use. What we've projected for the six year cycle here is that no funds would be needed from the trust, and in fact, the way we've set up, Scenario one, we would not look to the trust unless there was something catastrophic, or the council made a policy decision that they wanted to start shifting more into capital. |
| 00:54:12.40 | Jill Hoffman | Thank you. So let me ask you this. Is it easier to talk about the pension first and the different scenarios for the pension trust set up or is it easier to talk about this slide, the general fund, this slide page 15. Sorry. Yeah, page 15. The general fund revenue. Because this is what's, Whoops. |
| 00:54:34.56 | Mayor Cox | Thank you. Can you go back, Melanie? You're now on slide 17, and we're talking about slide 15. My apologies. |
| 00:54:38.42 | Jill Hoffman | Yeah. you're talking Yeah. My apologies. Thank you. Is it easier for you if you talk about this first, or talk about the pensions first, and then talk about this slide? We come. |
| 00:54:48.87 | Melanie Purcell | We covered most of this last week, so I think that we're fine just jumping to the pension, and then we can come back and talk about how the impacts relate to the general fund. As we noted last week, all of the highlighted items on this slide, slide 15 and slide 16, are itemized on slide 17. Those are the color-coded lines that talk about changes in both expenditures and revenue assumptions. |
| 00:54:49.15 | Jill Hoffman | Thank you. |
| 00:55:13.45 | Mayor Cox | Thank you. |
| 00:55:13.47 | Melanie Purcell | Thank you. |
| 00:55:14.28 | Mayor Cox | So, Melanie, can you tell me what the first line on this slide 15 shows use of fund balance trust $650,000? That is taking superpowers. |
| 00:55:27.04 | Melanie Purcell | $650,000 out of the existing surplus balances as of June 30 of 2017. and putting that directly into the trust. |
| 00:55:36.18 | Mayor Cox | But I thought in our slide five that we were taking $775,000 as your recommendation. |
| 00:55:42.73 | Melanie Purcell | is your recommendation. What we are recommending is $775,000 be put into the trust. $650,000 would come from surplus fund balance that is currently available right this moment. The other $125,000 would come from the anticipated surplus in the current fiscal year. Thank you. So let's go ahead to the, I'm sorry. |
| 00:56:12.57 | Ray Withey | Cloning. Sorry. Considering we have members of the business community with us, I think at least in all fairness, we should go back to slide 15 and at least point out what are the assumptions that we have built into this model, specifically as it relates to step functions in certain revenue line items. |
| 00:56:43.41 | Mayor Cox | So those are actually outlined, I think, on slide uh, 17. |
| 00:56:49.20 | Ray Withey | We can use 17 either. I don't care which, but whichever, we need to at least talk about it. |
| 00:56:50.81 | Mayor Cox | Yeah. Yeah. Yeah. |
| 00:56:54.84 | Melanie Purcell | I WAS THINKING, |
| 00:56:55.48 | Mayor Cox | Thank you. |
| 00:56:55.53 | Ray Withey | Yeah, 17 that's fine with me. Okay. |
| 00:56:58.79 | Melanie Purcell | Jumping to slide 17, these are the items that we, through considerable discussion with Finance Committee, came to in order to balance not just the proposed budget year or even the second year of the biennial plan, but for the remaining total six years. So the Friends of the Library have increased their contribution significantly. We're recommending that we suspend transfers to the vehicle replacement fund for two years only. And the reason for that is that that fund is well funded. It has a significant fund balance of over $700,000, and we just recently replaced many of the vehicles in the police department. So we have confidence level that we will not be hampered by taking a little short hiatus. We're also recommend asking departments to make some additional streamline. This is going to be postponing discretionary purchases with the intent that that cannot be sustained long term. but we're asking them to find a way to do that. The increased fees for demand parking needs to come back to the city council as a resolution to establish higher fees for the weekends and peak season. Similarly, San Francisco has a very complex version of demand parking in which the meters are all programmed based on half a dozen zones. But this would be a little more simplistic version. the intent being that it would help us to garner more from the visitors' visiting population rather than from the residents directly. We were able to adjust parking revenues based on timing of construction. And to Council Member, with these comments, the business license tax increase would be proposed to go on the ballot this fall, with an increase in 2019-20. I have asked HDL, who is our business license consultant, to provide us a comprehensive study. So that number will obviously be refined and they will come back with recommendations to simplify our process and streamline it as well as where we have opportunities to remain competitive in our market, but also garner revenues. Similarly, we have put on for the 2021, though there is discussion obviously of the timing of that, would be to increase our transit occupancy tax from 12% to 14%. In several meetings back, we provided a comparison of those other communities. |
| 00:59:38.21 | Mayor Cox | So because we do have such a large number of people here interested in these two items, I would like you to pull up that comparison. And in the meantime, as you pull that up, Councilmember Cleveland Knowles has a question. |
| 00:59:54.93 | Susan Cleveland-Knowles | Yeah, I was wondering, Melanie, could you talk about the timing of this consultant report on the business? license tax, and I also asked last week about outreach to the business community. Could you talk about what was done with that? |
| 01:00:11.92 | Melanie Purcell | Well, we have extended an invitation to members of the business community who have graciously responded in mass. So they are here to voice comments about that. We have had some one on one conversations about this and then we are looking to that get the consultant's report by the first week of July. So that would be available to the council no later than the 17th, the July 17th council meeting. Just give me one second. |
| 01:00:42.64 | Mayor Cox | And for Susan's benefit, I would say we have 10 or 12 members of the business community in our chambers this evening. |
| 01:00:53.15 | Ray Withey | Melanie, are you about to move to the... pension scenarios |
| 01:00:59.04 | Mayor Cox | out. I asked her to show us the comparison. |
| 01:01:03.44 | Ray Withey | Yeah, yeah, and after that, because I do have some questions on the previous slide. Yes, OK. I don't want us to lose that. |
| 01:01:08.72 | Mayor Cox | Yes. Okay. Thank you. |
| 01:01:11.15 | Melanie Purcell | I'm sorry. Okay. I apologize, I'm just going to pull it up. |
| 01:01:16.59 | Susan Cleveland-Knowles | So can I just ask, where is the best place right now to see the business license tax proposal? without the consultant report. that outlines how we get to 400,000 in 2019. |
| 01:01:32.18 | Melanie Purcell | We don't have significant detail at this time. At that point, the $400,000 was based on and across the board doubling. We currently have about $600,000 in revenue, and obviously don't anticipate to get a one-for-one increase in that. |
| 01:01:54.30 | Melanie Purcell | All right. |
| 01:01:54.64 | Susan Cleveland-Knowles | What are the assumptions under the 400,000? Did you say it's doubling? |
| 01:02:01.83 | Mayor Cox | Thank you. |
| 01:02:01.85 | Melanie Purcell | Yes, ma'am. |
| 01:02:02.22 | Mayor Cox | Thank you. Well, she's not projecting a total double. Right now it's 600,000. She's projecting an increase of 400,000 starting in 2019-20. |
| 01:02:19.75 | Melanie Purcell | So on the screen right now, and it would have been a packet ago, you'll see we have a number of cities rated top to bottom. Carlsbad, Pacific Grove are at 10%, Monterey at 10 and 1 half, Santa Cruz, Morro Bay both at 11. Sausalito, Sonoma, Santa Rosa, and Napa are all at 12%. Should be noted, Napa also has a unique structure in which their hospitality industry also contributes independently. |
| 01:02:50.38 | Vice Mayor Burns | Is she asking for business license numbers? |
| 01:02:52.44 | Melanie Purcell | Thank you. |
| 01:02:52.45 | Mayor Cox | Thank you. Susan was asking for business license, but... I had Susan ask that question while Melanie was pulling up the comparison of TOT. So Melanie is now addressing how we came up with the number for TOT, and then she'll circle back to the business license. |
| 01:03:10.29 | Melanie Purcell | Thank you for the clarification. The NAPA is there across the board. My understanding is that they also have another structure which they voluntarily put into to develop another parketing plan. Thank you. San Francisco and Mammoth Lakes are both at 14%. And South Lake Tahoe also has a split rate of 12% and 14% based on certain redevelopment properties. So certain redevelopment properties pay more than others, and that is part of paying back into the system. for extra investment. Hillsburg is at 16%. |
| 01:03:45.04 | Mayor Cox | And Melanie, I don't know if Susan can see the slide you're referring to. And this is not a slide that's in our packet today. This is a slide that was in our packet, I want to say, two meetings ago. |
| 01:04:02.01 | Melanie Purcell | So it's a quick summary that we took looking at what the rates were around us. It should be noted that there's a lot of different ways of doing this. Some communities do business districts. Some communities do the TOT tax. Any of those elements could come into play, and we certainly would be receptive to exploring more of those. |
| 01:04:25.97 | Mayor Cox | Thank you. Thank you for that explanation. And now can you go back to explain if you're able in more detail other than it's nearly doubling how you came up with the $400,000 business license tax increase. So how much are we proposing to increase the business tax by? |
| 01:04:52.59 | Melanie Purcell | Because it is a, a very convoluted structure, we actually would be looking for recommendations from the consultant to specifically streamline it and bring it into a much easier to calculate for anybody. One of the things that we have discovered recently and we're aware of to a lesser degree, but certainly have discovered in trying to get comparisons, is that it is not a particularly transparent process. And Susan, right now we're on slide 17 of your packet. So when we did the initial estimate of $400,000, we were looking at a general doubling of the rates, recognizing that some of our rates are well below the market, at least anecdotally, and some of our rates might be at the higher end, also anecdotally. Getting into it deeper, what we're finding is that every community has... very different methodologies, and most of them are not particularly straightforward. And that's a rather frustrating position, I'm sure, for the business owners, but equally so for us, in that we are not able to give as clear an answer as we would prefer. we would be looking and we have charged the consultant to say we want an easier system. And so we're actually looking for improvements across the board in how it functions as well as the realism of the revenue estimates. If it should appear that those revenue estimates are not realistic, we would bring that immediately with recommendations to adjust. |
| 01:06:25.45 | Vice Mayor Burns | Um, excuse me. The methodologies I know vary across the board, but ultimately we could dig into business license revenues divided by number of businesses per community and come up with a number. Regardless of the methodology. |
| 01:06:41.97 | Melanie Purcell | regardless of the method. That's what actually we're asking them to do. They have all of our data. and our historic data as well as the data of their other clients. So for them, it's a fairly straightforward comparison. In calculation, they actually do a three phase study. including the analysis recommendations on the ordinance and in conversation we've had that our ordinance is a bit clunky and dated. It has not been updated in at least 10 years. So we know our rates are out of date, but in recognizing the methodology seems to be out of date as well. |
| 01:07:17.05 | Mayor Cox | And Melanie, before you brought this proposal to the Finance Committee, did you discuss it with the Business Advisory Committee? Thank you. |
| 01:07:24.72 | Melanie Purcell | I've had conversations with individuals within the business community. We did not specifically bring a proposal to them prior to the finance committee now. |
| 01:07:34.66 | Ray Withey | Let me just add that we have the concept of an increased TOT has not been discussed really outside of council and finance committee. With regard to the business license tax, informally a couple of members of the BAC who themselves pay business licenses, made the comment that our business licenses are really, really low and it would be, you know, Um... sort of low hanging fruit and they certainly wouldn't mind paying more. But that's just very anecdotal. So I think the consultant's report is going to be really helpful here to understand this a little bit more. |
| 01:08:21.87 | Mayor Cox | Okay, so now that you've explained, okay, Susan? |
| 01:08:26.93 | Susan Cleveland-Knowles | I'm sorry. So just to go back to the timing one more time, I thought when I asked last week when we needed to make this decision about placing either of these two proposals on the ballot, that the answer was at our budget hearing next week. But if I understand correctly, we can get the consultant report by the meeting in July 17th. and we can make the decision Is that correct? |
| 01:08:56.85 | Mayor Cox | That is true in terms of enacting the resolution, but the budget, as currently framed by staff, assumes that these two taxes slash fees will be imposed. And so to the extent we approve a budget that includes these projected revenues, we are implicitly approving that. proceeding. to put these measures on the ballot or enact them by resolution as appropriate. |
| 01:09:30.37 | Ray Withey | Well. Thank you. Technically... staff can correct me, we are only approving a budget, technically a legal budget for year 2018-19. |
| 01:09:41.57 | Mayor Cox | Well, that's true. |
| 01:09:42.28 | Ray Withey | which does not assume any revenue increase. |
| 01:09:44.83 | Mayor Cox | Yeah. |
| 01:09:45.44 | Ray Withey | What the resource allocation plan basically says, its bottom line is, You need to come up with $400,000. For this model to work, you need to come up with $400,000 worth of revenue unless you want to try and find it in expenses or reduction services. Or unless you wanted to take it out fund balance, which you would never do. So Melanie, jump in if I'm going down a path which is incorrect. So in a sense, Um... The approval of the 2018-19 budget, which are the resolutions we actually have to pass by June 30th, do not depend upon guaranteeing revenues for 2019-20. |
| 01:10:39.74 | Mayor Cox | But aren't we also approving the 2018 to 20 resources allocation plan? |
| 01:10:44.63 | Ray Withey | Right, which includes $400,000 of revenue. Correct. And if we, within a period of time, determine that it can't be raised, then we've got to modify a resource allocation plan and take different action. It's that simple. You can't delay the approval of the budget for a financial goal for the following year that's not part of your legal budget. Now, I've just made all that up. Is that right? That's correct. |
| 01:10:47.57 | Mayor Cox | Correct. |
| 01:11:12.11 | Unknown | That's correct. Excellent. Madam Mayor. |
| 01:11:14.20 | Adam Politzer | I WANT TO BE ABLE TO if you turn to slide 31, there are additional revenue options that the Finance Committee discussed. So if we chose not to move forward on these, then we would need to look at, the other option is to consider the other revenue options. |
| 01:11:23.80 | Unknown | Thank you. |
| 01:11:23.83 | Unknown | Yeah. |
| 01:11:23.92 | Unknown | THE FACT THAT WE HAVE you |
| 01:11:25.56 | Mayor Cox | Yeah. |
| 01:11:33.55 | Mayor Cox | Thank you. Okay, so at this point, unless anyone objects, we have a number of members. I do have one. |
| 01:11:40.78 | Ray Withey | I do have one question on this slide before you do what you're I'm about to do. So this slide as I read it, is adjustments or operating levers to the general fund operating budget. Is that... Thank you. |
| 01:12:01.33 | Councilmember Withy | Correct. |
| 01:12:01.72 | Ray Withey | Okay. So we've included license plate readers here. for $100,000. Which is it coming out of the operating budget? Because you previously had 100,000 coming out of fund balance. So help me understand that piece. Or is it $200,000 we're spending? Or how have you made this work? |
| 01:12:24.21 | Councilmember Withy | Thank you. |
| 01:12:24.23 | Melanie Purcell | this week. |
| 01:12:24.65 | Councilmember Withy | Thank you. |
| 01:12:29.98 | Melanie Purcell | The $100,000 would come from the current year surplus. So it is an operating transfer if you direct us to do it. |
| 01:12:38.03 | Ray Withey | I understand. |
| 01:12:41.75 | Melanie Purcell | Thank you. |
| 01:12:41.76 | Mayor Cox | Okay. With the indulgence of my fellow council members, because we have a number of members of the business community here who I imagine, based on the late correspondence we received from the Chamber of Commerce, are here to comment on our proposed business license tax increase and TOT, I'm going to open it up for public comment. Now, |
| 01:13:06.25 | Jill Hoffman | Thank you. |
| 01:13:06.91 | Mayor Cox | Thank you. |
| 01:13:07.02 | Jill Hoffman | I think, yeah. I don't have any objection to that, but it's really important for the people, everybody listening and everybody who's here to talk, to understand the pension part of it. And so that's my only reservation with people coming and speaking about these issues but not staying for the pension analysis. Because you can't understand what we're trying to do here and why we're raising fees on cutting things and moving things around if you don't understand the stress on our budget from the pension deficit that is facing us. So I have no problem with that. But please, either continue to watch or watch it later so that you understand the full picture and the sacrifices that are necessary across the board from everybody in town. |
| 01:13:52.49 | Vice Mayor Burns | I think that's a good point and I'll say they can anybody can |
| 01:13:57.38 | Mayor Cox | Why don't you go ahead, Melanie, and flip to |
| 01:13:58.70 | Vice Mayor Burns | I know I live to. Okay, I suggest we do go with the public comments still. |
| 01:14:02.63 | Mayor Cox | I will, but I just want her to flip to this slide so that. |
| 01:14:06.26 | Vice Mayor Burns | especially the kind of the passive, the staying still type thing, which we've been good at in the past, and the millions of dollars that we end up short. not hundreds of thousands anymore, but millions. |
| 01:14:20.97 | Jill Hoffman | Also, I like this slide, and I also like this slide that I asked you to do. Can you just show that real quick? You can go back to this one, of course. But... |
| 01:14:32.16 | Jill Hoffman | So that's the first slide is where we missed the interest. Hang on. We're moving too fast because |
| 01:14:39.60 | Mayor Cox | we have someone on the phone. So Susan... |
| 01:14:39.62 | Jill Hoffman | we have someone Oh, sorry. |
| 01:14:41.27 | Unknown | Thank you. |
| 01:14:42.65 | Mayor Cox | Jill Hoffman asked Melanie to prepare two additional slides that I don't believe are in our packet. They're not, but I'll email them to Susan right now. All right, so Jill's going to email them to you. And can you email them to all of us? I don't think any of us received these slides. Can I do that? Is that okay? Okay. Madam Attorney? |
| 01:14:59.90 | Jill Hoffman | Madam Latour. |
| 01:15:00.97 | Melanie Purcell | I don't know. |
| 01:15:01.03 | Jill Hoffman | See? |
| 01:15:02.55 | Mayor Cox | I'm going to send them to the city clerk. |
| 01:15:04.04 | Melanie Purcell | And she can send them to everybody. I can do that. These graphs are taken directly from the Bartell executive staff. |
| 01:15:04.96 | Mayor Cox | Thank you. |
| 01:15:05.00 | Jill Hoffman | Thank you, everybody. |
| 01:15:05.66 | Mayor Cox | Thank you. |
| 01:15:08.80 | Jill Hoffman | Yeah, they're from the Bartell. They're page 7 and 11. |
| 01:15:10.30 | Melanie Purcell | This is on page two, and the next one's from page five. |
| 01:15:13.16 | Jill Hoffman | Okay, so this is the one where we missed the, if you missed the percentage return, this is what happens. And these are the years where we missed it, and this is the rolling 10-year average that the mayor asked for. And so, and then the next slide, this is hard to read, but this is the projected payments. Is this the range from like $6 million down to $2 million, depending upon what the return rate is. And that's just a projection. I mean, it could look much worse. It might get better. So that's what we're looking at with regard to future pension payments. And that's why we're struggling with our budget today. |
| 01:15:50.44 | Mayor Cox | Thank you. |
| 01:15:50.54 | Jill Hoffman | All right. |
| 01:15:50.56 | Mayor Cox | THE FAMILY. |
| 01:15:50.71 | Jill Hoffman | Thank you. |
| 01:15:51.79 | Ray Withey | Okay. I think it's really important to clarify what this slide is. Because This is the result |
| 01:16:02.64 | Mayor Cox | GO BACK. |
| 01:16:03.50 | Ray Withey | No, that's the one I want to talk about. This is the result of a scenario analysis by Bartel. They've basically done a Monte Carlo simulation on all the different inputs into this model of which cash flow, projected return, all the various things. And you're not looking at a linear |
| 01:16:04.55 | Mayor Cox | Oh, okay. |
| 01:16:24.34 | Ray Withey | difference between the low number and the high number with the one in the middle. You're looking at a probability distribution Okay, I mean Melanie would you agree with that? Yes, and so it's an actuarial probability distribution which is most likely centered around the green, but which is distributed probabilistically towards those two extreme ends with, I don't know what the confidence limit was here, but it would be, I'm guessing, approximately |
| 01:16:35.63 | Unknown | Yes, it's an actuarial. |
| 01:16:59.07 | Ray Withey | You know, there's a 90% like, you know, it depends upon exactly what the confidence limit was. But there's a 10% chance, I'm making up the numbers here. We'd have to go back to Bartell to see what they are. But there's a 10% chance that you'd have to pay, say, in 20, I can't read the slide, 28, 29, you'd have to pay 2.9 million. There's probably a 10% chance you'd have to pay 5.7 million. And there's more like, say, a 70%, 60% to 70% chance you have to pay the green number. So don't think it's sort of. Is that about right, Melanie, what I've just said? I don't know what the confidence limit is, so. |
| 01:17:41.35 | Councilmember Withy | Thank you. |
| 01:17:41.36 | Melanie Purcell | It is an actuarial derivative, and obviously Doug and John from Bartell Associates are much more qualified to get into the details of that. But basically it's saying if we split the averages and we start looking at what we think could happen, this is where we think it should go. It's likely to go. It is an extremely conservative model by both of their standards, but that would be what we ask for and then what we expect from them. So it is very much a conservative model. And what I've done in our scenarios is use some of this information and some of the information from CalPERS directly and then applied it for a 30-year span to try and give us some time frame. |
| 01:18:26.32 | Mayor Cox | And Melanie, in those scenarios, so we know that this year CalPERS reduced the projected rate of return from 7.5% to 7%. And we know that it's likely that that will get reduced further to 6.5%. And I believe Bartles and Wells numbers reflect that happening in 2019. |
| 01:18:49.03 | Melanie Purcell | They reflect the action starting. So we're currently at 7.375. Their projections as well as CalPERS include us going to the complete 7% within the original five-year plan, the ramp up. They are removing the ramp down for the record. And then Bartel has included within this the 6.5% anticipated revenue. So they're kind of ignoring what the assumed rate of return is and going with a straight 6.5. |
| 01:19:24.42 | Mayor Cox | So we're already anticipating a less favorable future than what is currently in on |
| 01:19:34.04 | Melanie Purcell | the CalPERS. Yes, we're trying to be as conservative as possible within reasonable, but it also lends support for why we recommend the additional balances, because we don't want to get surprised. |
| 01:19:51.28 | Vice Mayor Burns | When Ray and I reached for our button at the same time, I was preparing to use one of his reminders and to the public here. That unfunded number that we're chasing in the future is something we pay whether we go slow, fast, close up shop completely, that's a liability that doesn't change. if we were to streamline our government profile, we still owe that same UALL number. |
| 01:20:24.97 | Councilmember Withy | Yes, that's by definition what it is. |
| 01:20:25.20 | Vice Mayor Burns | Yes, that's by definition what it is. It's a fixed number. So in business that would to tell you to not take the foot off the gas. In fact, to push the gas a little harder. |
| 01:20:33.77 | Jill Hoffman | That is not a fixed number. It increases every time we miss the return rate projections. |
| 01:20:37.45 | Vice Mayor Burns | Retreat. You're right. I don't mean fixed. I mean, um, We have to pay it. |
| 01:20:41.74 | Jill Hoffman | ever-growing, increasing, expanding number is what it is. Regardless of what we do with today's pension. It's a non-discretionary item. Obligation, yeah. |
| 01:20:44.45 | Vice Mayor Burns | regardless of what we do with today's... |
| 01:20:46.61 | Melanie Purcell | NONDESCRIBITING. |
| 01:20:48.10 | Vice Mayor Burns | THE END OF THE END OF THE |
| 01:20:48.13 | Mayor Cox | Obligation. |
| 01:20:49.75 | Ray Withey | It is. That number is, unless we chose to refinance the whole thing, which most financial experts would say you don't want to do, this is a number that the annual payment of which is completely out of our control. |
| 01:21:09.97 | Mayor Cox | And the best we can do is project what our cash flow obligations will be through the worst time of the future, the 10 year zenith of the obligation, and to ensure that we have the cash to meet that obligation. |
| 01:21:27.39 | Jill Hoffman | Yes, but this number changes and it grows. And it's grown significantly from 2013 to 14, 2014 to 15, 2015 to 16, 17 million in 2014-15, 25 million in 2015-16. And so Oh, sorry. I'm looking at the wrong line. $17 million. In 2014-15, 19 million. In 2015-16, 24 million in 2016-17. This number grows. The unfunded liability number grows. And every time we miss projection on the 7.5 or 7 or 6.5, whatever it is, that under-funded, underperforming interest adds into our unfunded liability as well as the interest on the unfunded liability as a whole. So it's constantly compounding, constantly growing, and we're constantly chasing it and trying to get it to come down and hopefully we don't come to a point where our payments eclipse our surplus budget. And so that's what we're struggling with and to harness that with our pension trust, but we have to fund it, In a motor. |
| 01:22:40.64 | Mayor Cox | now in order to grow it enough to meet the obligations. So we have to make sacrifices now to grow our trust fund large enough to be able to meet those impossible obligations that will start in roughly six years and last for 10 years. |
| 01:22:42.36 | Jill Hoffman | Yes. Yeah. |
| 01:22:57.45 | Vice Mayor Burns | And that's just smoothing those obligations. |
| 01:23:00.11 | Mayor Cox | Okay, so with that backdrop, I am going to open it up to public comment for those members of the public that want to comment on our two... the staff's recommended increase in the business license tax and in the TOT. And I have some speaker cards. First up is Doretta Bohm, or Beam. |
| 01:23:35.89 | Unknown | Thank you. |
| 01:23:36.02 | Doretta Bohm (or Beam) | Thank you. |
| 01:23:36.04 | Unknown | Thank you. |
| 01:23:36.09 | Doretta Bohm (or Beam) | Thank you. |
| 01:23:36.12 | Unknown | Thank you. |
| 01:23:36.19 | Doretta Bohm (or Beam) | Yeah. Honorable council members, you guys are rock stars. My name's Dorretta and I'm a baby business owner here in Sausalito. This time around, it's my second time here, I've been in small business. For a long, long time, my whole adult life, I had very successful women's stores in San Francisco for 24 years. And I have to say that my business license for my stores in San Francisco We're not. half as much as they were here when I opened my store in 2006. I was completely blown away. As a small business owner, They're very high, those fees. Now I'm a baby business, so I feel them more acutely, I believe, but I do know A lot of small business owners. I know that Sausalito values its small business. I mean, that's why we try to keep the behemoths out. But we have to really be supportive of them also. I appreciate what a strain you're working under. And everything's more expensive, and there's not enough money. Oh, but I have an idea about that. Thank you. But I think raising business licenses and raising the TOT would be. There's got to be another way to do it. Uh, We need to actually promote our small businesses a little more. And I don't know what percentage of the businesses here I'm in retail. I know other retailers. I know that is just a small percentage of the types of businesses that operate in Sausalito. with regard to retail, Any additional taxes would be difficult. not just difficult for the city. It's getting more and more challenging to be a small business. So I'm here to encourage you Offer my assistance if there's any way that we can come up with a different way. to meet your shortfall. that would be a very good idea. Also, If you legalize, if we had a marijuana dispensary here, I don't think we'd have a shortfall. I mean, it is legal now. And it does a lot of good for people. That's my idea. Anyway, thank you for your attention, but there. I appreciate it. |
| 01:26:08.45 | Mayor Cox | Thank you. Thank you. |
| 01:26:08.74 | Doretta Bohm (or Beam) | THANK YOU. |
| 01:26:08.94 | Mayor Cox | THANK YOU. Tom Gagetano. |
| 01:26:15.58 | Tom Gangitano | Good evening, council members, mayor, staff. Tom Gangitano, partner, vice president, Gene Hiller-Menswear for the last 42 years. So I've been in Sausalito, obviously, many years, and I've watched it. Thank you. DEVELOP AND GROW. Our small businesses are our golden goose in town. We, as small businesses, create the personality of the town. And it is very, very important to keep those small businesses. You have in the past supported us, and we thank you for all of that. We continuously need the support. Any increase would have to also increase our marketing efforts. Because when people come to our town, they come for the experience. Nowadays, the experience is more important than almost anything else, and we give them that. I introduced my clients to other business owners And you can find those business owners at the businesses. which... enhances the consumer's experience in our town. many of them come back because of the personalities of the businesses and the business owners. So marketing that as we have in the past with events that we put on and concierge services that we do for clients, we enhance the experience of our town. Over the past, I guess it might be, the figures might be 15, 20 years, the hospitality contribution to the hospitality from the TOT has been virtually the same. which is kind of embarrassing. All those other towns that you put on the screen there showed 12%, 14%, 16%. All those towns contributed heavily to marketing programs. Thank you. And here in Sausalito, we do not. It's embarrassing. We as merchants do market, and we do market together. We have a great network system that we do use. So I plead with you to contribute more to your small businesses, invest in us, we will give you a return, as we have in the past. Any questions? |
| 01:28:38.86 | Mayor Cox | Thank you. |
| 01:28:38.88 | Tom Gangitano | THANK YOU. |
| 01:28:39.03 | Mayor Cox | Thank you. |
| 01:28:39.05 | Tom Gangitano | Thank you. |
| 01:28:39.06 | Mayor Cox | Thank you. |
| 01:28:39.11 | Tom Gangitano | TODAY. |
| 01:28:39.27 | Mayor Cox | Thank you. |
| 01:28:39.28 | Tom Gangitano | Thank you. |
| 01:28:39.82 | Mayor Cox | Thank you. Mike Bonsef. |
| 01:28:47.16 | Mike Bonsef | Actually, I came here for some other issue, but when I listen to this, I see I remember when I was the president of Chamber of Commerce, we talked about marketing and I saw in the column, 31,000. which goes to many function. It's not... for marketing hospitality only. But TOT keep going up, going up, going up. So, and I, you know... The good example, what we did for the parklet, you're talking about the private contribution, We build it because you assist us to build it. And You know, if you do something that shows that you're encouraging the business here, believe me, the business community is willing to contribute. And now we are raising the taxes, you're raising the business license, and as a result, you see that you're not going to get anything, and everybody's going to be unhappy about it. But beside that, now that I have the chance, For 40 years that I'm working here, I have business and you know, lives here. Only a couple of times I've seen that there's a good team working. And believe me, I don't think anybody more than me is between the people of this community. And because they know my understanding or my knowledge in construction, all that, and these are the people that constantly discussion with the city, with the staff and all that, I have seen two times that you had a great team. Once was when you had Charlotte here, and once is now. Now, I don't understand why you're breaking the team now. I see a couple of our people are leaving. It's unfortunate to see that. I don't know why. Imagine you bring this one to speed again, these people to speed, it's going to cost you money. I'm sure next year your budget is going to go higher because you have to pay more to these people to bring them up to this speed. Now, this is something that obviously you have to deal with. I understand your problem here of lack of budget, but please, at least somehow encourage the business So bring some more people to that. Thank you. |
| 01:31:30.43 | Mayor Cox | Thank you Mike. DJ Ansari. |
| 01:31:38.68 | DJ Ansari | Good evening, Council. management, mayor. Not only am I a small business, and I live here, and I employ people who do live here, but this is our first year of business at the coffee shop. And I've learned a lot, and I learned more than anything how hard it is to turn a profit or be able to keep the doors open. And it's a struggle. as prices raise with wholesale goods and to have to be competitive to keep employees and, you know, electricity and everything, you know, to have prices and taxes being increased on us on behalf of the city for things like TOT, we feel those things as small business owners And for a one-man team, I can tell you it brings a lot of stress, and it affects my job to promote Sausalito. And when people come and enjoy the cafe and life here, it affects that too. I know everything is symbiotic, but that was the message I wanted to commit, so thank you. |
| 01:32:45.57 | Mayor Cox | Thank you. Yoshitome. |
| 01:32:54.87 | Yoshitome (Yoshi) | Hi there, good evening all city council and staff members. I was here a week or two ago, I forgot the date. Regarding the budget discussion, we talk about it. Thank you so much for approving part of our request for budget, we greatly appreciate it. Look at this issue is I have been part of a hospitality committee member 2004. At the time before, it was a 10% TOT tax, including 2% to 12%. At the time, city council promised to supporting hospitality committee hotel restaurant. And since then, $30,000 a year approval, all those years, reinvestment to the businesses. Now, we are proposing here to now go into 14%. I look at the city's proposed budget, no increase of business. to reinvestment to how to support the business community. I grew up a farm boy, and, you know, chicken, squeeze too hard. They're not going to make eggs anymore. We cannot harvest eggs. You know, to get good eggs, you've got to encourage chickens eating enough drinks to do the job. Otherwise, we kill ourselves. And we do not allow to have the franchise not come to Sarsiro, buy mistake, Starbucks here. We don't allow to do so. Only small businesses only, and yet we don't have a shopping mall. How we can serve Sarsiro, can survive in the future is, we are geographically great location to international visitors coming. Great customer hotel, you know, Tidal hotels,, they truly become international destination. Those people come to Sasariro spend so much money. We are great beneficiaries of, we have great hotels we have. That's why we survive for as a restaurateur, as well as small business people. Now everybody know that how difficult for us a brick and mortar is difficult to survive. You squeeze too hard, everything else, we cannot survive anymore. It's already hard. Yes, we're doors open. Yes, we're easy to identify the easy target to rent more tax on us. There's so many home-based businesses, internet businesses, short-term rentals. You can find other way to finding new businesses existing in South Korea, or maybe you can find a way to do it. I'm begging you to please reinvestment to the business community. Then we can survive. And the chicken fed well. I can produce more eggs. Thank you. |
| 01:35:43.22 | Mayor Cox | Thank you. Aness, pongee, I never know if... Pony. Pony. Pony. Pony. |
| 01:35:49.18 | Unknown | I'm going to go. Thank you. you Ponyi. It's okay, just call me a nest. |
| 01:35:53.53 | Mayor Cox | Someday I'll learn how to pronounce. |
| 01:35:54.56 | Unknown | how to pronounce. Okay. Well, I'm Ines Ponyay. I now own three businesses in our little town. I just opened a new store. called basic and business right now it's It's kind of tough with the internet. and people just taking pictures of stuff We need to attract really a different customer here. and we need to outreach in some way to advertise for people to come here more. Several years ago, a few years ago, we as a community, a few retailers in town got together with the leadership of Tom, and we put together a commercial that was on cable TV and also on the on the internet as well. We as a community, we spent $20,000 ourselves without the city helping. And we did that in the off season, where the money's really tough. We would, you know, we need help. from the city to support us so we don't have to do that because here you're asking us to pay higher taxes, higher license fees, And, um, What are we getting back from that? How are we getting supported? So as Yoshi says, I agree. We need healthy eggs. Thank you. |
| 01:37:28.89 | Mayor Cox | Thank you. Jeff Shirash. |
| 01:37:42.35 | Unknown | Thank you, Madam Mayor, Council, and staff. Yes, I echo my colleagues here today. Definitely, instead of, of course, the egg concept, I was having the don't hurt your cash cow as far as the business community here. You only can stretch this so far. There's definitely the increase in TOT and business licenses will definitely have a negative effect on our business community. Looking at other communities in the North Bay here, just even for Mill Valley and San Rafael, for a million dollar business, business licenses are between 28 and 51% higher in Sausalito than other communities. Two million dollar businesses between 41 and 52% higher in Sausalito. Granted, these numbers are from the Internet, so assuming that the numbers are correct based on the time frames and the update their sites, as Sausalito does, but I'm sure that they have. So definitely last Monday in the pie for business today. We're getting squeezed on many different levels, especially with labor right now, from labor wholesale to skyrocketing food and beverage products as well, as well as occupation. It doesn't hurt this year as well, the North Bay fires are still affecting our business community. People book their reservations six to nine months out. We had our fires about that time six to nine months ago. So we're definitely feeling it on Main Street, being Bridgeway, and of course, other retail and restaurant shops. Definitely we need to reinvest in our business here in Sausalito. Definitely 60% of the city budget is business. Reef it, say that again, 60%. is business. Once again, don't hurt the cash cow here. Let's reinvest in what we can do for business. Let's look at ways we can increase our corporate marketing in Sausalito here, where we can have actually real marketing materials to go to conferences with about Sausalito. As Tom mentioned, creating that Sausalito experience and how important that is. People don't look at just going to a hotel anymore or going to a city. They want an experience. They want to do something different than any other community. There's a company, a high tech company, that goes to Marinship Park to, with sheep. So they bring sheep. and they sort the sheep out. within. our little community here. So after sorting their sheep out, of course through their experience, then they go to a local restaurant and of course spend money here locally. Who would think that sorting sheep out is something that high tech companies do, but they do. So it's thinking outside the box, but allowing us to really market Saucelito the appropriate way and be there for us and really providing those dollars to do that. Also, you know, looking at other revenue sources, TOT rentals, streamlining the planning process to get businesses open faster. We have a lot of storefronts. Thankfully, Saucelito right now, we only have a few storefronts available, but in the future, Main Street may change. And also looking at other opportunities for marineship and other areas to be converted from different business types into some more tech companies or different companies available today. |
| 01:40:55.78 | Mayor Cox | Thank you, Jeff. |
| 01:40:56.94 | Unknown | If I can get, I do have a letter from Larry Mendel. Can I read that? I can come back. WOULD THAT BE APPROPRIATE? |
| 01:41:06.88 | Mayor Cox | So you could give it to the board clerk who will provide us copies of it. |
| 01:41:09.95 | Unknown | I will do that. |
| 01:41:10.51 | Mayor Cox | All right, thank you. |
| 01:41:11.02 | Unknown | Thank you. |
| 01:41:14.49 | Mayor Cox | Mark Flaherty. |
| 01:41:25.31 | Mark Flaherty | Good evening. I am here today both as the co-chair for the Sausalito Hospitality Business Development Committee, as well as the general manager of the Inn Above Tide. When the transient occupancy tax rate was last increased in 2004 from 10 to 12 percent, the city approved the establishment of a line item in the annual budget for hospitality business development. At the city's request, our committee was founded, composed of representatives of the hotel and restaurant industry, the Chamber of Commerce, as well as the city. We recommend specific expenditures to increase hotel occupancies, especially in the off-season. Members of our committee have met for the last 14 years monthly, and our mission is to enhance the visitor experience and direct TOT funds to aid in accomplishing that goal. Transient occupancy tax receipts for Sausalitos for hotels provide approximately 10% of the city's revenue for the most recent fiscal year, totaling $1.6 million. These receipts have shown steady as well as dramatic increases over the last 14 years or so, in part due to improvements at the Casa Madrona Hotel and Spa, the addition of four suites at the Inn Above Tide, two of which were just coming online this year in May, and increased room rates and higher demand for overnight accommodation. When our room revenues increase, the city's transient occupancy tax receipts also grow. which is intended to promote the transient occupancy tax, which is intended to promote cultural events and other activities that would improve hotel business and visitor experience. The actual amount of TOT devoted for the categories in the city budget is infinitesimal. For the TOT funds collected, the city asks our committee to recommend projects for funding generally but not limited to annual totals of $30,000 traditionally or historically, which is less than two percent of the total TOT receipts that we collect for the year. And I understand that that amount is subject to reduction. The committee has made recommendations for actions and funded various projects including our newest project the destination of Sausalito.com and as individual hotels and small businesses we spend a significant amount of money and time improving and promoting not only our own hotels, but also the destination of Sausalito and other unique businesses in our city and county. We sell more than hotel rooms. We do indeed sell experiences. And we ask the city to not kill the goose or the egg. but to really help us grow our business and help us stay competitive with surrounding hotels. |
| 01:44:42.64 | Mayor Cox | Thank you, Mark. Thank you. Julie Vieira. |
| 01:44:54.81 | Julie Vieira | Good evening, Madam Mayor. I'm Julie Vieira, I'm the new CEO of the Chamber of Commerce. This is my 19th day on the job. I already went through budget at my former. I'm going to be in the Senate chamber and on my last city council meeting. So I just want to reiterate what everybody said about TOT and investing in your businesses. tell you what other chambers, other communities do. The city that I came from was Hollister, San Benito County Chamber of Commerce. They provided the Chamber of Commerce $100,000 a year plus 20% of TOT to reinvest in our businesses and bringing members to our community and visitors. We participated in the San Francisco Bay Area Travel Show. I didn't see Sausalito there. I gave out 4,000 brochures and pieces of information to people who want experiences. You have to invest in your local businesses and your local community in order for it to grow. There is no other way. I have a list of. other chambers and other visitors bureaus that receive money. from their cities. And they are growing. They're Carmel, they're Healdsburg, Novato, Calistoga, St. Helena. If you want your community to grow, if you want to have the sales tax and the income to Pay your purrs. And to keep money in the coffers, you have to invest in your businesses. I know I've only been here 19 days, but I do come with experience from the chamber and from working with the businesses. So I do hope you reconsider and invest in your businesses, and maybe next year you won't be having the Where are we going to get $400,000 discussion? Thank you. |
| 01:46:57.32 | Mayor Cox | Julie, I'm going to put you on the spot. So here in Sausalito we have a population of about 7,000. Hollister's about 35,000. |
| 01:47:05.36 | Julie Vieira | Foster's about 35,000. The county's 59,000. So they're about. But the numbers of businesses, it's a very bedroom community. So the number of businesses are about equal. Equal. |
| 01:47:05.37 | Mayor Cox | She's about |
| 01:47:16.39 | Julie Vieira | You guys have about 1,200 businesses. We have about 1,200 businesses within the community. So we do have a national park, but you guys have beautiful oceans. But I think that, and the membership in the chamber is about the same. I'm not sure. So a lot of things are the same, but there are a lot of other small communities around you. that still contribute a lot more and they are visitor. I mean, Hollister is not a visitor. destination. We're known for motorcycles, horses, and earthquakes. And we still get over 500,000 visitors to our national park and our community a year. So I shouldn't say our. It was my community. |
| 01:48:04.94 | Mayor Cox | Thank you. Jeff Jacob, and that's the last speaker card I have. So if anyone wants to speak, please fill out a speaker card. |
| 01:48:24.04 | Jeffrey Chase | Hello again. I'm glad to see so many small business people here. because of this. THAT. social activists in this country people who care about their community, in other words, which I would hope is all of us, but especially the people that put it more on the line. seem to have come up AGAIN, SMALL BUSINESSES. before. rocks through Starbucks windows, strikes Etc. Now we're seeing that small businesses are crying in pain too. So are big businesses, but here We're a small town. We don't have that. I appreciate what we do have, I've just been on a trip, across the country to Charleston, South Carolina, I was surprised with a round trip ticket bought by a member of the police department. I WANTED TO TAKE A LOOK AT And when I came back, it was 11 days on Greyhound. When I came back, I feel so thankful to be in this place. The weather, the beauty, my friends, People who don't think that they're my friends. I wrote a... A poem this morning. AND, This is about Sausalito that existed before money, before businesses. And it was just as beautiful back then. It's breakfast, AK's porch, vegan, no eggs. Fog peeling back reveals Morningstar's gun. Waldo's cylinders rush one zero one. Patriot birds pipe overwhelmed songs. No traffic, respite, and without sun yet. Black feathers disappear, volume levels wrong. Impossible, invisible, sweet, sexy, fun. So that's what I get to have here in Sausalito. I've been doing it 50 cents a day since Occupy, that was six plus years ago. I now am looking at things differently. I wanna join. ALL THE PEOPLE. answer the rabbi's question, which is, when you go to heaven, they're not going to ask about the Ten Commandments. They're going to say, how honest were you in your business dealings? And I want to be a part of that answer, and I want to be a part of that question. Thank you. |
| 01:51:23.66 | Mayor Cox | All right, I'm going to close public comment and turn it back over to Melanie Purcell for the presentation of staff's recommendation on our pensions. |
| 01:51:38.81 | Melanie Purcell | Thank you. you So if we go back to slide 36. This outlines, this particular chart is an outline of what we expect the annual accrued liability payment to be. Not the total liability, but strictly the payment. And this is derived from CalPERS, the Bartell presentation, and then my extrapolation from the percentages that Bartell provided. What you'll see is that it does go up significantly, and it stays high, and then it starts to come down. And this is consistent with John Bartel's presentation two years ago, a year ago, and then Doug Pryor's this spring. And that with the changes that CalPERS has made, we can expect a significant amount of pain, leading up to the peak years, those peak years to last a decade or so. Obviously that number fluctuates a little bit and then it does start to drop off and then eventually to significantly drop off. So what it shows us is that we do have probably a doubling over the next 10 years of our contribution to CalPERS. This is based on the assumptions that they've provided to date. Obviously, it can change, but that's part of why we're keeping the conservative nature involved. Right. The pension trust scenarios We went through several models of trying to determine how we could ensure that the city would stay in the black and the pension trust would also stay accessible and available to the city to help in future years for at least six years. What we were able to do with scenario one was to actually take this out through the 40 year, excuse me, the 22 year lifespan that we modeled. So Scenario 1 was the one that actually got us the most successful balance between operations and the trust, ensuring that the impact in services would be minimized, as well as the ability of the city to be able to sustain itself and those payments without any concern. |
| 01:53:45.61 | Jill Hoffman | Melanie can I ask you to follow up on this? What year did you go out to on scenario one? |
| 01:53:50.61 | Mayor Cox | 2038. |
| 01:53:51.62 | Jill Hoffman | All of this is the |
| 01:53:51.98 | Melanie Purcell | Both of them I took out actually passed, I've graphed it through 28, 29. I actually mapped it out through 42. |
| 01:54:01.31 | Jill Hoffman | Okay, and what discount rate or what return rate were you using for the trust? I used the. |
| 01:54:05.97 | Melanie Purcell | rates that were provided by CalPERS and by Bartell. So they fluctuate from 7% down to 6.5. So because this is strictly a payment modeling, I don't get into the amortization rate. That's an actuarial science I don't aspire to. |
| 01:54:24.93 | Jill Hoffman | Thank you. |
| 01:54:24.95 | Melanie Purcell | I'm going to go. |
| 01:54:25.03 | Jill Hoffman | OK, thanks. |
| 01:54:25.51 | Melanie Purcell | you |
| 01:54:25.56 | Jill Hoffman | Thank you. |
| 01:54:26.98 | Melanie Purcell | So what scenario one does is we said $650,000 out of fund balance plus $125,000 out of current fiscal year. You'll notice that it goes flat. And that's reflecting the impact on the general fund. So we have a steady payment. of the expenditures in the general fund that actually overlaps perfectly because we balance every year. And then all balances then go transfer back to the trust. So we are not asking to make additional cuts to services and we're not asking to use any of the trust for the lifespan that we've provided here. It takes us out actually to 2040 in a positive with almost an $8 million balance in the trust. This allows us, the council, to determine at each year how well you're doing. how things look going forward and whether any adjustments should be made. The question will come up probably in five to 10 years as to whether or not the council would like to change its path and put some additional funds back into capital. rather than continue to build the trust. More likely even 10 years out, that question will rise again, because you'll have more information and CalPERS will have matured. its expectations into this new model much further. |
| 01:55:49.58 | Jill Hoffman | So Melanie, sorry, another follow-up question. With regard to our current annual payments that we make right now, they're in the budget at a flat rate or something, right? Thank you. |
| 01:56:03.40 | Melanie Purcell | They are actually in according to what CalPERS has provided me for five years. And so the six-year model then goes to the Bartell report in the last year and then after that. |
| 01:56:07.50 | Jill Hoffman | So this, |
| 01:56:13.32 | Melanie Purcell | I think Bartell took it to 2030, and I took it out another 10. |
| 01:56:18.43 | Jill Hoffman | And so what was our rate or our payment this year? It's just over one and a half. |
| 01:56:25.39 | Melanie Purcell | you |
| 01:56:25.57 | Jill Hoffman | Thank you. |
| 01:56:25.61 | Melanie Purcell | you |
| 01:56:25.66 | Jill Hoffman | Thank you. Thank you. |
| 01:56:26.38 | Melanie Purcell | Just over one and a half. Now that is for unfunded liability. I'm going to go back to, I believe it was slide. Here, slide 16. If you look at that first line, it says, CalPERS unfunded liability. That shows the checks that are expected to be written each year to CalPERS strictly for the unfunded liability. And we actually make that payment the first two weeks of July in order to garner an additional discount from CalPERS and complete credit for the payment. So rather than make a monthly payment or a biweekly payment, we pay it up front and we get credit for the full payment and a bigger discount. |
| 01:57:04.99 | Jill Hoffman | Ken, so. If we fund this year, as you suggest, what year will we start the projection? Of course, this is all subject to change. To the extent that we can. What year would we expect to start drawing on the pension trust fund to help make our increased payments? |
| 01:57:22.58 | Melanie Purcell | We actually were able to model this with a no drawdown anticipated. So that actually provides the city the flexibility to either shift payments to the trust in outlying years should some capital necessity become needed. |
| 01:57:38.15 | Unknown | Mm-hmm. |
| 01:57:38.17 | Melanie Purcell | . Thank you. or to alter its funding mechanism. So right now the recommendation at this time is that 100% of surplus in the general fund would automatically go to the trust. John Bartel had mentioned for several years that they typically recommend that |
| 01:57:50.08 | Melanie Purcell | OK. |
| 01:57:56.19 | Melanie Purcell | cities adopt a one-third, one-third, one-third policy in which they put one-third of any surplus into the trust, one-third toward capital and one-third toward fund balance. With our fund balances being healthy, and having Measure O for capital, the recommendation is that 100% would go to the trust, build that up. And then as the city is facing the sunset of Measure O in future, THE FAMILY. better information, frankly, as the future becomes present, then you can make a different decision. But it's putting 100% in now, so it would be no drawdowns. |
| 01:58:34.97 | Mayor Cox | I WANT TO TAKE A |
| 01:58:36.07 | Melanie Purcell | Thank you. |
| 01:58:37.13 | Mayor Cox | that maintaining of the pension trust, that gives us additional backup in the event that the CalPERS obligations exceed our projections. Yes, ma'am. |
| 01:58:51.76 | Vice Mayor Burns | With that, you say that it ends with about $8 million in the trust, but we want to spend that money in the trust, correct? That's the only way we can get it out. |
| 01:59:00.40 | Melanie Purcell | Yes, but what we modeled it is to not use it. So we wanted to build a structure that did not require the use of the trust. So as we're indicating here, we're much more confident on the six years that we have here. But for the sake of figuring out which model would best support Because if you notice later models, we have very high extremes, an extra $100,000 to $500,000 per year being cut from general fund services to go into the trust. We wanted to see what that actually bought the city in terms of time and resources. The impact to the general fund is very material. So we were looking for what would be the best way to balance And we're able to go with this particular structure with the increases in revenues, the other adjustments and expenditures. and then putting any surplus back into the trust. That will give the city that freedom in future years, recognizing there is volatility to what CalPERS may do. |
| 02:00:04.29 | Unknown | Yeah. |
| 02:00:04.61 | Melanie Purcell | So while I can't project what the impact may be from a 6.5% to a 6% with a high level of confidence, I can create a structure to recommend to you that gives you the freedom and the security should that happen. |
| 02:00:04.63 | Unknown | Thank you. |
| 02:00:20.69 | Vice Mayor Burns | And I appreciate that on the ramp up. you at some point as we start to plateau and ramp down and we have a significant fund in that trust that can only be spent |
| 02:00:31.48 | Unknown | Mm-hmm. |
| 02:00:31.91 | Vice Mayor Burns | with CalPERS, we're going to want to To draw it. To draw that down. Yes. So the drawdown is in the plan, it just protects us during the bubble. |
| 02:00:36.37 | Unknown | Yes. |
| 02:00:36.72 | Melanie Purcell | THE END OF THE END OF THE |
| 02:00:36.79 | Unknown | Thank you. |
| 02:00:36.81 | Melanie Purcell | Thank you. |
| 02:00:40.45 | Melanie Purcell | Correct, it protects you and then as that ramp comes down, the city will actually be in exceptional financial shape and have the ability to, instead of paying CalPERS from general fund operations, be able to invest in Capital. |
| 02:00:53.80 | Vice Mayor Burns | Thank you. And a council in 2028 has the option to still make some payments to CalPERS out of that trust fund at any point. |
| 02:01:01.07 | Melanie Purcell | Thank you. |
| 02:01:01.09 | Mayor Cox | Yes, sir. |
| 02:01:01.44 | Unknown | Thank you. you |
| 02:01:06.44 | Melanie Purcell | Thanks, Melanie. So I don't know if you guys want me to go through all of the scenarios. Number one being the one that we were most confident in. |
| 02:01:13.43 | Mayor Cox | that we were most confident in. So let me just take a poll. Do you all want to go through the other scenarios on the PowerPoint? And I'm gonna ask Susan once I hear from you all. |
| 02:01:26.08 | Jill Hoffman | I am no I'm good. Well, I'm good with scenario one, but okay. |
| 02:01:31.97 | Mayor Cox | Let me that's the question pending so give me a second everybody okay with scenario one Susan Do you want Melanie to walk through any scenarios other than scenario one in our packet? |
| 02:01:43.55 | Susan Cleveland-Knowles | No, I think I'm good with scenario one. I think I understand the other ones. |
| 02:01:47.72 | Jill Hoffman | But wait, I had a follow up. But Melanie, scenario one includes on slide 4. additional contribution to trust is 775 instead of 650. But I think you explained that right? Yes. So okay, so if we're talking about a total of 775 instead of 650? Correct. 650B. |
| 02:02:03.61 | Unknown | I think you, Thank you. |
| 02:02:05.03 | Melanie Purcell | Yes. |
| 02:02:10.97 | Melanie Purcell | FROM |
| 02:02:11.58 | Jill Hoffman | Thank you. |
| 02:02:11.85 | Melanie Purcell | the existing fund balance 125 coming from current year surplus. |
| 02:02:16.44 | Jill Hoffman | Oh, go ahead. |
| 02:02:17.33 | Unknown | Thank you. |
| 02:02:18.19 | Melanie Purcell | And the 193 is the 3% of salary that we set aside annually. Thank you. I'm sorry. |
| 02:02:22.97 | Mayor Cox | Melanie. |
| 02:02:23.54 | Melanie Purcell | you |
| 02:02:23.74 | Mayor Cox | assuming we adopt that recommendation we will still have in our general fund balance a net surplus of seventy four thousand two hundred and forty seven dollars. |
| 02:02:34.93 | Melanie Purcell | Above and beyond the 25% plus disaster fund, yes. Thank you. |
| 02:02:39.45 | Mayor Cox | Okay, and so are we able to spend that? |
| 02:02:43.37 | Melanie Purcell | Yes. |
| 02:02:43.82 | Jill Hoffman | . |
| 02:02:45.63 | Mayor Cox | Bye. |
| 02:02:45.65 | Jill Hoffman | Yeah. |
| 02:02:45.77 | Mayor Cox | Thank you. |
| 02:02:45.78 | Jill Hoffman | You can? or we could put all of the surplus into the trust fund as we stated In scenario one. |
| 02:02:55.00 | Melanie Purcell | It might. My sole caution would be that it be for one-time expenditures because it is not a recurring dollar value. Understood. |
| 02:03:03.15 | Ray Withey | Could I just clarify, when you said could we spend that, what was that? |
| 02:03:07.47 | Mayor Cox | the $74,247 on slide four that remains after making the additional contribution to trust of $775,000 and after making the additional expenditures also outlined on slide 4 for license plate readers, Napa Street Project, and Techo Mesh and Soil Nail. |
| 02:03:36.49 | Ray Withey | OK, I'll have some comments on that later. |
| 02:03:38.43 | Mayor Cox | Yes, yes. Okay, is there more to present, Melanie? Is that the end of your presentation? |
| 02:03:46.60 | Melanie Purcell | I think it's best I stop. |
| 02:03:47.77 | Mayor Cox | Thank you. |
| 02:03:47.80 | Melanie Purcell | Thank you. |
| 02:03:47.93 | Mayor Cox | It only took us- |
| 02:03:47.97 | Melanie Purcell | It only took us. |
| 02:03:51.63 | Mayor Cox | six hours to get through this PowerPoint presentation. |
| 02:03:54.52 | Vice Mayor Burns | after midnight. |
| 02:03:55.54 | Mayor Cox | I'm you Okay, any questions of Melanie before I open it up to any further public comments? |
| 02:04:05.42 | Ray Withey | Um, yes. |
| 02:04:06.40 | Mayor Cox | Yes, Ray. |
| 02:04:09.31 | Ray Withey | So, I realize that I'm going to ask you a series of questions now, or a question that might be a series of questions, that you won't be able to give me a precise answer without sitting in front of the computer and doing the modeling. You know, I think we have... We are presenting a very positive scenario here of increasing pension trust fund balancing and keeping our general fund in balance by definition because we have projected out in the future always a fund surplus. |
| 02:04:50.66 | Unknown | you |
| 02:04:50.98 | Ray Withey | until very later years, general fund surplus, until later years when we're using trust fund to pay for the thing. To what extent does, and so in a sense, in our modeling we've used, does the combination of trust fund or general fund balance together ever go negative, right, because of the payments we gotta make? |
| 02:05:21.07 | Melanie Purcell | No, they don't go negative. |
| 02:05:21.22 | Ray Withey | Thank you. Right, they don't go negative. So they're always remaining in positive, and I agree with the mayor. That's really good, because it's not just solving the problem on the table now, it's positioning us for the future. But let's dissect the immediate payments. Okay? So we started off saying we were going to put $400,000 in the trust. Okay? And then in finance committee, because I thought we were going to make $250,000 net. I said, OK, well, let's put that in the trust. So that's how we got to 650. But then it decided, well, $650, we'll take that $250 not out of the net, but out of fund balances more. So that's now $650 out of fund balance for the trust, as well as now what is going to be 100. What's the net now with all the adjustments and everything for this year? $120, $150, $125? |
| 02:06:16.84 | Melanie Purcell | It's still $247, but we take $100,000 for license plate readers and $125,000 for... |
| 02:06:19.93 | Ray Withey | Right. Okay, so it's 125. So 125 plus six is now 775, or whatever it is. Okay. |
| 02:06:23.32 | Melanie Purcell | $25. |
| 02:06:27.65 | Melanie Purcell | 75. |
| 02:06:28.38 | Unknown | Thank you. |
| 02:06:31.50 | Ray Withey | We started with 400, and okay, that's okay, because it's going into the trust, and if necessary, we can use the trust money for... to pay the CalPERS liability, okay? But immediately, immediately, right now, for instance, if we didn't put, and I'm not making, let's make up a number, instead of putting 700 and something, let's imagine we only put 600 in. OK, does that $200, $300, $400, $400, $1,000 that we put into it now, how does it affect the timing of when that projections go negative? Because we're saying we need the money now in order to fund the trust so that it's there so that we can use it to fund for the pension liabilities. So if we don't put that money, we still keep the model the same, which is any net excess goes in the trust. Any profit, if you like, goes straight to the trust. But if we didn't make as much of an initial contribution or extra contribution now, how would it affect the life of the thing? And I'll explain why I'm asking the question in a second. But what's the answer to that one? Do you have a feel without doing the modeling? |
| 02:07:54.95 | Melanie Purcell | Anything at $400,000 or above is going to keep us in the black. to the degree that there are additional funds available. the additional amount extends and affect the life of the trust because it's a compounding dollar. The years in which we see some getting very close to the margin would be in the next four years and then we would- |
| 02:08:21.81 | Mayor Cox | Well, it's actually slide 41 is what if we contribute an initial 400,000 to the trust. So maybe we should have gone through these scenarios. Well, there's some elements here that- |
| 02:08:28.77 | Melanie Purcell | And so maybe. |
| 02:08:32.43 | Melanie Purcell | There's some elements here. Mm-hmm. |
| 02:08:35.42 | Mayor Cox | Thank you. |
| 02:08:35.45 | Melanie Purcell | It |
| 02:08:36.11 | Mayor Cox | Thank you. |
| 02:08:36.12 | Melanie Purcell | you |
| 02:08:36.38 | Mayor Cox | Thank you. |
| 02:08:36.44 | Melanie Purcell | Because it's scenario three. So this would say no further contributions at all. |
| 02:08:42.45 | Unknown | Yeah. |
| 02:08:42.81 | Melanie Purcell | If we continue to put the surplus in with just a smaller amount, this green line flattens back out to this. What happens is your starting line obviously is lower. It affects nominally. You'll see a little bit slower growth. But in terms of long-term sustainability, it's not a significant impact. I would not recommend going below 400,000 and expecting this model to continue. |
| 02:09:11.06 | Ray Withey | And I'm not necessarily suggesting that. I just want to know what the impact is. Because we actually don't have a scenario up here that says just put in |
| 02:09:14.65 | DJ Ansari | you |
| 02:09:14.80 | Melanie Purcell | you |
| 02:09:20.61 | Ray Withey | a lesser amount than 775, but keep everything else the same. We don't actually have that scenario. |
| 02:09:28.40 | Melanie Purcell | As I ran the model and increased the dollar value, the balance of the trust grows faster. So relative to the total size of the trust, $100,000, $200,000 is not going to materially shrink it. |
| 02:09:44.16 | Vice Mayor Burns | Thank you. |
| 02:09:44.22 | Melanie Purcell | Okay. |
| 02:09:45.08 | Vice Mayor Burns | And the scenarios that you had in finance committee early when we were looking at that 400,000, those were very valuable because they showed a lot of numbers and gave us that opportunity to kind of look and see where that, and I'd kind of still like to see that for scenario one in that format. Well, I think that's |
| 02:09:53.60 | Unknown | and, |
| 02:10:00.80 | Ray Withey | Well, I think that's the work we're going to have to do post budget. |
| 02:10:03.11 | Vice Mayor Burns | Post-budget. Yeah, right. |
| 02:10:06.64 | Ray Withey | Okay, so then my next question, which may seem totally unrelated, is... Do we have any information on whether we have the total funds, capital funds, for Dunphy Park and Southview Park yet? Because... We've brought the fund balances down to a lower level. We have put everything in excess of what we're into the trust. And yes, we can use that money to pay for pension obligations, but there's going to be a higher political hurdle to use the trust for that in the short term. And we may have no money left to top up Southview Park. And that is something that we're going to have to decide as a council, whether that makes sense. We can always use the trust to pay for the thing, but the politics of it may be very different. |
| 02:11:09.33 | Mayor Cox | Well, I wish we had discussed this at Finance Committee. |
| 02:11:13.55 | Ray Withey | I've only just thought of it. |
| 02:11:15.02 | Mayor Cox | . |
| 02:11:17.13 | Ray Withey | Okay. |
| 02:11:17.15 | Mayor Cox | I'm sorry. |
| 02:11:26.17 | Mayor Cox | So Melanie, Hypothetically, okay. Hypothetically, if we were to contribute $775,000 this year, and next year, our our ongoing obligation to contribute to the trust is much less. These are all additional contributions to the trust beyond our obligatory contributions to the trust, correct? And we're making these contributions to smooth our later to be able to meet our later obligations without the general fund going into the red. But suppose next year is in Ray's hypothetical, we discovered that we're short on Southview Park, and we wanted to use general fund surplus to create that balance. We could next year reduce the amount that we're contributing in additional contributions to the trust, because we're still in every scenario here, we're each year making our required contribution to the trust. What we're discussing in these scenarios is the additional contributions to the trust beyond what is required. Is that right? |
| 02:12:41.82 | Melanie Purcell | Is that right? Yes, in that we are required only to make our payment to CalPERS. There is no requirement to fund the trust whatsoever. We have built into our budgeting 3% of salary, and that shows up as the regular contribution to trust that I just assume all the way through. The additional contribution to the trust would be reflected in this number down below $46,000. So if we were to say we need that money for something else, the council would simply direct that that has to be done. differently. |
| 02:13:14.04 | Mayor Cox | And if we performed beyond our projections, which we did this year, we would have additional surplus funds. Or if we enacted any of the various revenue options, such as a non-storefront marijuana dispensary or... short term rentals or any of the other myriad revenue generating options that also could be used to fund any shortfall for our parks. Yes. Is that right? Correct. Other questions? She decided she didn't have a question. Other questions of Melanie? Melanie? |
| 02:14:00.94 | Jill Hoffman | Somewhere it appears that you did model Um, THE 775 AND HOW THAT WOULD AFFECT THE PENSION TRUST AND THE PENSION PAYMENTS AT SOME POINT. I'D LIKE TO SEE THAT. If we're not going to go with scenario one, if we're going to talk about going with some other scenario, then I certainly want to see that. Scenario one is the most prudent way to go, especially when you look at trying to, the volatility of the funds and the volatility of the returns that we've seen. You know, the rolling average for the last 10 years is, you know, 4.6, I think. So, you know, there's little hope. Thank you. that we're actually going to meet 6.5. And every time we don't meet 6.5, we're reducing it to 6.5. And by the way, did you also model in there the increased payment? when they reduced the return rate from 7.38 or whatever it is now down to 6.5, That difference results in a bill to us annually of about 600,000. So is that right? Yes. Okay. I don't know |
| 02:15:13.97 | Melanie Purcell | It is in there because I used the numbers that ratcheted it down and then Bartels numbers. |
| 02:15:20.36 | Jill Hoffman | Okay. |
| 02:15:21.66 | Melanie Purcell | I think that, just for note, these models assume a 2.5% return on our investment. |
| 02:15:27.18 | Jill Hoffman | on our investment. Mm-hmm. |
| 02:15:28.57 | Melanie Purcell | Thank you. So if we have a great year. |
| 02:15:31.57 | Jill Hoffman | I mean, not great that 2.5%, but great that you did that. It's a very conservative question. |
| 02:15:34.35 | Melanie Purcell | It's a very Okay, great. Because we've kept our investment in a moderately conservative model, so that keeps us going. Just to clarify, are you asking for, similar to Council Member Burns, the numeric, |
| 02:15:35.72 | Jill Hoffman | Okay, grow it up. |
| 02:15:52.09 | Melanie Purcell | 20 plus years. |
| 02:15:53.32 | Jill Hoffman | Just, yeah, the projection of if we invest, you know, maybe it was Council Member Withey. If we invest $775, what that looks like, but if we bring it anywhere lower than that, kind of... what that reduction but then I I I don't know what I'm talking |
| 02:16:06.42 | Mayor Cox | I would like to add to that a request, Melanie, that I discussed with you earlier, which is, Right now, Bartell is continuing to project 6.5. I don't know that that's realistic over the next 20 years. So I would also like to see you model for us what it would look like if in 2020, CalPERS decided to reduce the interest rate again to 6.0%. and weather. If we only contribute 400,000 this year, we would have the cash to pay that obligation. |
| 02:16:48.42 | Ray Withey | By the way, for the record, I've not suggested we don't contribute 775. I've asked the question, how does it affect the model? Thank you for that clarification. |
| 02:16:59.54 | Vice Mayor Burns | Thank you. |
| 02:16:59.56 | Jill Hoffman | very happy to hear that |
| 02:17:00.10 | Vice Mayor Burns | . And I think we need to, we did this at another meeting where we start to really question the CalPERS methodologies and Bartell's methodologies and the 10-year average, which is going to take a tremendous spike up in a couple years, right? When we get rid of that 2009 figure. |
| 02:17:21.36 | Jill Hoffman | It depends on what the returns are. |
| 02:17:22.81 | Vice Mayor Burns | Well, but on the pace we are currently at, we're going to spike up quite a bit. |
| 02:17:27.55 | Jill Hoffman | unless you do a 20 year rolling average and then it stays in which I think |
| 02:17:31.18 | Vice Mayor Burns | Thank you. |
| 02:17:31.20 | Jill Hoffman | THANK YOU. |
| 02:17:31.45 | Vice Mayor Burns | THE FAMILY. |
| 02:17:31.50 | Jill Hoffman | CONSIDERING THE |
| 02:17:32.02 | Vice Mayor Burns | THE FAMILY. |
| 02:17:32.21 | Jill Hoffman | I think that's what I'm saying. |
| 02:17:33.41 | Vice Mayor Burns | But I don't know if we have the bandwidth to override them at this point. |
| 02:17:39.58 | Mayor Cox | Okay, are you clear on our request, Melanie? I believe so, yes. Are there any other questions of staff regarding the report? |
| 02:17:41.69 | Julie Vieira | I'm sorry. leaves. Yeah. |
| 02:17:42.62 | Vice Mayor Burns | . |
| 02:17:48.21 | Melanie Purcell | The one thing I would like to just return a little bit to the conversation is that we would like to have some direction back from council regarding the discussion items. And if there were any changes that you would like to see between the included and not included items, we have not made, and just also to clarify, on slides 19, 20, and 21, I've provided a breakdown of positions that are contract, positions that are part-time, and positions that are full-time equivalents. Just that was requested earlier. But the discussion items, we've kind of gone over. extensively. |
| 02:18:31.96 | Mayor Cox | Okay. Just feedback would be welcome. Okay, but we're not going to comment yet. We're going to open it up for public comment. So is there any, unless you have another question. Vice mayor. Any other public comment? New public comment regarding this discussion item. We've already taken public comment, so... |
| 02:18:54.48 | Jeff Chase | Yes. No, you've already provided public comment. This is on this issue of pensions in particular. |
| 02:18:55.13 | Mayor Cox | No, you've already provided public comment. |
| 02:19:01.75 | Mayor Cox | No, this is for people who haven't provided public comment. |
| 02:19:02.44 | Jeff Chase | No. TO BE ABLE TO DO. Thank you. |
| 02:19:06.05 | Mayor Cox | Jeff, you've already provided public comment on this item. This is the same business item. We have not changed. |
| 02:19:12.90 | Jeff Chase | Just ask for public comment. |
| 02:19:14.81 | Mayor Cox | No, I said any additional public comment. No, by someone who hasn't already provided public comment. |
| 02:19:20.63 | Jeffrey Chase | Well, now you're saying it's somebody else. |
| 02:19:24.23 | Mayor Cox | That's what I said. |
| 02:19:25.10 | Jeffrey Chase | rule here before. |
| 02:19:26.40 | Mayor Cox | We take public comment one time for each business item. |
| 02:19:29.15 | Jeffrey Chase | Thank you. each business item. you haven't had open comment here, you haven't provided a reason for that. |
| 02:19:34.92 | Mayor Cox | All right, so I'm closing public comment. |
| 02:19:36.16 | Jeffrey Chase | public comment. You can say open for comment, but it's not true here. No. |
| 02:19:39.99 | Mayor Cox | No. |
| 02:19:44.81 | Mayor Cox | So I'm just gonna clarify one further time that I asked for public comment from folks who haven't already commented on this item. |
| 02:19:50.53 | Jeffrey Chase | on this item. Just so everybody that's watching this knows, they did not have open comment, and now they're not gonna log in. |
| 02:19:57.60 | Mayor Cox | OK, please don't call out from the audience, Jeff. Please don't call out. OK, please do not call out. Or I'll have to ask you to leave if you're going to call out. |
| 02:20:07.14 | Jeffrey Chase | if you're going to call out. I'm going to take off. I'm going to leave. Great. Thank you. I've been here, not my first time, not my first rodeo. |
| 02:20:09.18 | Mayor Cox | Okay, great. Thank you. |
| 02:20:17.33 | Mayor Cox | All right, public comment is closed. I'm going to bring it back up here for discussion. |
| 02:20:19.78 | Jeffrey Chase | back up here for discussion. That's unfortunate. Time to open it up, Sausalito, to all the people. All the people. Thank you. Shalom, shalom. Yes, officer Faraz. I'll see you out on the streets. |
| 02:20:41.19 | Mayor Cox | Who would like to lead off? Susan, I know you had a comment a little bit earlier, did you want to make some comments? |
| 02:20:52.21 | Susan Cleveland-Knowles | Um, Yeah, if I could just wait one minute to organize my thoughts, that would be helpful. |
| 02:21:00.40 | Mayor Cox | I'll call on someone else first. Who wants to lead off? Don't all? All right, Ray, thank you. |
| 02:21:07.62 | Ray Withey | Okay, so... |
| 02:21:11.38 | Mayor Cox | And you're going to explain to us why you were asking those questions, right? |
| 02:21:14.22 | Ray Withey | Yeah, well, I was asking the question. I actually, the second question was the explanation, which is I was trying to get a sense of the, are shortfall for capital needs for the parks, basically. And ask the question, you know, if we're directing fund balance into the trust, which I support, are we going to have the discipline to take it out of the trust to pay for CalPERS if in fact down the road we need not to transfer the net into the trust and instead use it for capital? That's the question. I'm comfortable that if we are, then I'm comfortable to do that. |
| 02:22:00.44 | Mayor Cox | And so- |
| 02:22:04.32 | Mayor Cox | But you're not suggesting we take money out of the trust to pay for capital improvements. You're suggesting we take money out of the trust to pay the UAAL. Correct. And leaving additional fund balance to pay for capital improvements. That's correct. You just didn't quite say it precisely that way. |
| 02:22:13.13 | Melanie Purcell | Correct. |
| 02:22:13.58 | Julie Vieira | . |
| 02:22:16.99 | Julie Vieira | Thank you. |
| 02:22:17.03 | Ray Withey | Correct. Well, and the other is that in this year, in this financial year, we're choosing to roll over any surplus directly into the trust rather than keep it in fund balance. And the model that we've used going forward is that we've created a surplus every year, and every year that gets rolled into fund balance, trust, into trust balance balance But the council has the opportunity every year to ask the question Okay, should they all go to the trust this year or should it all go and we've already heard that for this year Assuming the model works right we've heard for this year that we don't have to put some of that money into the trust, because it doesn't really materially affect when you need to use the trust, so the trust goes negative. But so that was the root of my question, to sort of probe that. Because every year moving forward, we're going to be balancing, do we put any extra money we have into the trust, or do we put any extra money we have into capital? That's basically the decisions that future councils are going to be making, as past have. Yeah. Now. I want to make a couple of statements. I've been through this process now year after year after year. And I think for regards to this financial year, we're in good shape. We're using excess fund balance, what we are calling excess fund balance, to fund capital improvements. And that's perfectly fine. It's part of the reason we've accumulated the fund balances is to use them for capital. But in terms of the drawdown of the fund balances, in my personal view, we are down to a level which we should not go below in all funds, except for parking to be used for parking-related capital expenditures. |
| 02:24:21.56 | Mayor Cox | In all non-general fund funds. |
| 02:24:24.21 | Ray Withey | Well, and even in the general fund. I believe we've brought down our fund balance in the general fund. We said that there was 1.3 million in excess of the reserves that we want to keep, some by policy, some by policy we're sort of creating when we approve this budget. The only reason, for example, the only reason I felt comfortable doing the COPs and bringing in that level of money is because we had huge fund balances. is part of what gives you strength to allow you to take on debt. And as we're drawing down on our overall general fund fund balance, we've got to a level where this is one time only. If there's future needs for capital, unless we can convince ourselves it's a disaster and we can draw on the reserves, this is the one time only use of this fund balance. And And I just want to tell you this is leaving me at a level of, it's okay, but we can't do it again. You can't do it again. That's the point. |
| 02:25:35.38 | Mayor Cox | unless we utilize some of the revenue sources we've identified to offset |
| 02:25:42.07 | Ray Withey | Oh, sure. |
| 02:25:42.60 | Mayor Cox | Yeah. Oh, sure. |
| 02:25:42.63 | Ray Withey | Yeah. Oh, sure. This is assuming nothing else changed. |
| 02:25:44.40 | Mayor Cox | changed. Thank you. |
| 02:25:45.18 | Ray Withey | So that's sort of like, I just want to give a view about the risk. Because some people have said, you guys have got so much in fund balances. You've got so much in reserves. Well, we should have. That's the point, because it's very difficult when you're a tiny organization, when you're a tiny enterprise, to just go by standard percentages. The city of San Francisco, the city of San Rafael, city of Los Angeles or Chicago can go and have reserves of 2%, 3%. We can't. We're at the wrong... point of the economy of scale. We've got to have a higher fund balance than you on a per capital basis in a big enterprise, by definition. Okay, so that's my little lecture on that. Now, the second thing is, this model only works... If we, unless with $400,000 of revenue next year, not this budget that we're approving, the 19-20 fiscal year, this doesn't work. if we don't bring in find revenue sources, and I'm not necessarily suggesting, I'm not saying we're going to hear more about what are the sources of revenue we need to bring on board, but if we don't find increase revenue or concomitant decreased expenses, this model doesn't work. And that means it's risky. So where's the risk in the model? Well, we got MOU discussions next year. Okay? Our salary projections are going to be affected by our salary. That line item is going to be affected by whatever we end up negotiating with the unions next year. There's risk, therefore, there. There's risk in the revenue sources. okay there's risk overall in capital it just needs one spill into the bay you know of toxic materials because our storm drains have you know are not working properly and We're all in capital. It just needs one spill into the bay of toxic materials because our storm drains are not working properly. And that could be penalties from the EPA that makes a UAAL look like small potatoes. So there's a lot of risk in this budget, and I just want to make sure everybody understands that. With all that said, If you actually then look at it, it's remarkable how resilient our finances are. The very fact that we can absorb this sort of step function to our expenses is remarkable. If CalPERS lowers the discount rate to 6%, the current projection is that possibly 25% of all jurisdictions in California could go bankrupt. |
| 02:28:48.66 | Ray Withey | And people don't understand this. Okay? I'm feeling pretty good because I think on that chart of zero, 25%, 50%, 75%, 100%, we're definitely in the top half, if not in the top 25%. So we're in pretty good shape. But recognize that there's a wave of expenses coming that's going to hit every single city in California, and not everybody's there ready. I feel pretty good. So I'm actually on board with putting this money into the trust fund for that reason. And what I wanted to test is see the appetite for if something goes haywire, are we not going to do Southview Park? Because we've done that. |
| 02:29:43.28 | Mayor Cox | Thank you, Ray. Susan, did you want to go next? |
| 02:29:47.18 | Susan Cleveland-Knowles | Sure, I can go next. I think that's kind of a good segue. I mean, you know, I've made comments before at our meetings that the parks are a huge priority. for me. And I would like to see the analysis of putting in you know, a slightly lower amount. I like scenario one, but a slightly lower amount into the trust, initially at least, holding back a reserve that would be earmarked to be put back in the trust if we can, but could also be used to back up our commitment to Southview Park. I mean, I think We've got great momentum on the parks and that we really should just finish them. with the COP money and with the other funds allocated. So that's just one thing. and you know that would work to hold a couple hundred thousand back and not kind of skew our projections I THINK I WOULD LIKE TO I think that's a good option, but I think we need to see what that looks like. And I may be wrong, but I thought we did have the 400K into the trust projection in a slide that came out of the finance committee. on the first round. And that slide, it looked very much like the $650,000 slide we had in a June 12th version, but I might be missing something. You know, on the pensions, scenario one, I think, THEIR OWNERS. You know, it looks good just the amount of money that we're putting in. on the revenue options. THEIR OWN You know, it was a little hard to hear all the comments tonight, and I would definitely like to do some more outreach. I THINK WHAT I WAS HEARING IS THAT THERE WAS VERY, VERY STRONG but perhaps less so to the business license tax if that is done in an equitable way. manner and is consistent with other jurisdictions. Thank you. I was not against that, but I didn't hear as strong thoughts about that, so I'd really like to see that consultant report. I really wish we could have gotten this. earlier. So that we could. THEIR OWNERS. So we could evaluate it more fully. But in any case, we'll get it in July. on it So I'd be comfortable maybe moving forward with the business license tax as a whole, you know, it's – in the budget. With the caveat that we need to see what it looks like. in July. On a TOT, I'm just going to throw this out there. would be interested in looking again at the short term rental THEIR OWN option with a very limited legalization THE FAMILY. that The permit fees pay for the administration and we get TOT from that as the revenue source. So, And that amount is sort of equal-ish to the... that TOT. one I THINK OF ALL THE ADDITIONAL that we've looked at that has had the most vetting. Jill and I sat on the Short-Term Rental Task Force, We had full public outreach. for an extended amount of time. And so I'd like to revisit that. I'm interested in the marijuana options, but I just really feel like that needs more more public vetting. I'm not sure if you're I think those were my main thoughts right now, and I'm definitely interested in hearing what other people have to say. |
| 02:33:49.51 | Melanie Purcell | TODAY. |
| 02:33:52.38 | Mayor Cox | Joe. |
| 02:33:52.73 | Vice Mayor Burns | Joe. |
| 02:33:56.36 | Vice Mayor Burns | I spoke on some of this last week and kind of a new analogy to go along with Yoshi's duck. He's not here. Chicken. Um, WE'RE DRIVING DOWN A ROAD. and we're a city government, so it's an icy road. And there's a curve ahead. And when that curve gets treacherous, The way to get out of a slide is to hit the gas. And I think that's what we need to do. Because of that number we talked about, the pension liability being such a big part of this, it's not like we're facing variable cost down the line. We're facing a number that's fixed and we can't take We can't reduce our level of service. We can't reduce our offering. We can't reduce our business profile. We can't reduce anything. We have to go full steam ahead. and we have a such a great setup from our previous councils to get us in this position of both, and our staff, of a trust, A fund balance, fund balances across the board, the strategic plans that we've had were in As Council Member Withy said, we're in an upper percentile of communities. What I'm looking at is to keep our foot on the gas, we might want to look at a diversification of our investment. And I brought up last week what that might look like as far as if we're going to keep our foot on the gas and increase revenues to cover that level of service and that pension cost, it's going to come from our business community. It's going to come from our... the change of how we look at tourism. Um, I broke tourism down, and we've all done this from regional to foreigners to how they spend. But just looking at tourism in two categories, passive and active, for years we have been overwhelmed with passive tourists. They come over on a bike, a bus, a boat, or a BMW, and look at the view, have an ice cream, and clog up a street. have an impact. Passive tourists are very common in California, all up and down our coast, in our mountains. Passive tourists is a big part of our economy as well. I'm not downgrading them. I'm just putting them into a category. And what that passive tourist has done is put a lot of fear in our community about the impact. What does more tourists, what does increasing our foothold in the revenue enhancement market do? And it's a fear that's going to bring more bodies and more of those passive tourists. And I want to look at the other side of it, the active tourist, the active visitor, the active participant, the one who comes here with a plan, who's engaged to do an event, to do an experience, to spend money, to stay the night. Overnight stay is the key to that active participant. That doesn't... take the place of a passive. However, the passives do turn into actives when you have a full-blown program. When you know what you're doing as far as a community that wants to have active participants, You use your passive base to say, come back in the spring for this event. Come back in the winter for this event. It's event-driven, it's experience-driven, and it's overnight-driven. And that's what I think we need to invest in. So our foot's on the gas in 2025, producing the revenue that we should be producing, with the geographical location we have, with the proximity to the city that we have, and with the infrastructure and the setup that our community has. The gorgeous community, culture, character, can attract that active participant as much as it has the passive participant that doesn't have a high rate of return. Um, And so when I look at this budget and looking for opportunities, and last week I suggested a $50,000 dedication to hospitality in a metrics-based program that isn't just here's $50,000, go spend it because we're not sure if it's ending up in passive or active. I think we can put together, based on the talent in our hospitality community, we can put together metrics to identify how that money is going to have a return. And that return, similar to a trust return, will play out over a period of time. And that's going to be our growing revenue source. As well as, and we're talking about singular options, they're all going to have to come in play. We might have to have marijuana while we're sitting in a second home in a higher, you know, it's all going to come about at some point. It's that big of a hurdle that we have coming up. But I think for that, we have to have the umbrella of identifying that there's another group out there. There is that hospitality destination active visitor that we're not harnessing like some other areas do. And Tahoe, if you go to Tahoe and you see, hey, come to Kalaneeva to stay at a room and rent a boat, They're not talking to the person who already has plans. They're talking to that passive person who's just going to go up and play in the snow. And they're saying, next time, come to the Calneva. That's what we need to be doing. Next time, come and stay. Come to this music event. Come to this shopping event. Come have an experience in Sausalito. Spend the night. When they spend the night, the next morning they get up and they get a massage or go to meditation classes. They go to breakfast. The money that spreads out through the community is exponential when we get them to spend the night. And they're only going to spend the night for an experience that takes them into the evening. It's too easy to go back at 4 o'clock if there's nothing left to do. And Napa experienced that. When the winery was all closed at 4, everybody left. So they brought in 500 hotel rooms and a lot of restaurants, and now a lot of events, and a lot of pillars of recreation, arts, wellness, and things for people to do. Tahoe's doing the same thing. Other coastal communities have done the same thing. We should leverage our experiences and attract that active community. participant. Therefore, I would like to see some of this money whether it be, and frankly at this point, the way we brought that 650 back to 775, a slight reduction of the trust balance to finance a program, and at this point it's a one-timer, but it's metrics-based and it'll go to a tribute to the TOT of financing a hospitality destination program program and call it an investment. |
| 02:40:37.72 | Mayor Cox | that. What about just using the net surplus that remains? |
| 02:40:42.42 | Vice Mayor Burns | Yeah. I mean, that number kind of pops up there. Maybe round off and do instead of 7, 74, 247, we just do 74. Wait, you just jumped in. |
| 02:40:51.16 | Mayor Cox | Wait, you just jumped from 50 to 75. What's going on here? |
| 02:40:53.26 | Vice Mayor Burns | I'm going. FOOTS ON THE GAS. So I'll wait for more comments. But I wanted to get that out. As far as the TOT, and I agree with the comments on both Ray and Susan, we need to find out more. |
| 02:40:58.74 | Mayor Cox | I'll wait for more comments. |
| 02:40:59.43 | Lily | I'm in. |
| 02:41:11.11 | Vice Mayor Burns | I would be interested to see what the TOT tax did in communities that raised it from 12 to 14. I'll follow up on Melanie's comments in Napa. That 12 to 14 was a self-assessment the hospitality district self-assessed 2% to pay for marketing, and that's roughly about $6 million a year. So I think there is... I think there is opportunity there without hurting business. only if we have a plan to attract overnight stays based on the experience and what I talked about earlier. I think we have to have a full-blown program, just not raising TOT without having a reason for people to spend the extra 2% and come here and fill up our hotel rooms. Biz tax, I actually thought we were low to hear reports that we might be high. Just throws it right back into we need more information. We need to see where we sit per business, per small business. We are like a shopping mall. The city is like a shopping mall, and we have a lot of small tenants. We business. We are like a shopping mall. The city is like a shopping mall. And we have a lot of small tenants. We don't have a Sears in our town as the shopping mall owner. with a percentage of that growth. That's it for now. |
| 02:42:27.69 | Jill Hoffman | Ciao. Thank you for your patience. Yeah, more than three minutes. |
| 02:42:31.59 | Unknown | Thank you. Go ahead, Joe. No, no, no. You have to listen. |
| 02:42:37.29 | Jill Hoffman | Do you want? No? Thank you. I like the fact that we've gotten to the point now that we're seriously talking about our pension debt and seriously talking about the way it's going to affect our budget and the health of our finances going forward. That seems to me it's been a struggle to get us to the point where we talk about this in a concrete way and look at the way that it's going to affect our budget. So I'm happy about the pension debt, but I'm happy that we're looking at real, actual ways to address it and acknowledging it as a problem, which is always the first step in solving your problem. So I think we're on the first step. I think it's absolutely crucial that we do at least 775. I mean, if you look at the compound, the way interest compounds and the security of our budget going forward, it's really important that we invest as much as we can this year. And then going forward and looking at the surplus, budget surpluses, whether or not we want to do that annually, It's something that we can discuss later. As a policy, I would say we start with, we look at how the funds are performing year to year. If they're underperforming, then we seriously think about doing the surplus. If they're overperforming, then that's good news, and we look and see how that affects our overall pension debt and the unfunded liability. So I'm happy about that. The way that it's set up, and Ray brings up some good points with regards to the trust and how it can be used. My recollection was that when we formed the pension trust, there was very specific language in the trust about how we could use the funds. So I'm happy that that language is in there, because that's a crucial part of the overall strategy for keeping Sausalito in the black, unlike many other cities. So I think this is a year to do it. I think this is a year that we really have to focus on that. Next year, it may be different, but we're going to have... you know, But as Joe says and as Joan and the finance committee said, you know, we also need to look at new revenue streams. And so I'm glad that that was addressed and that we're looking at those different revenue streams. I also want to add in there that I'd like to look at private donations for the parks and how we would facilitate that. I know that there are parks around town that have name donation plaques, tiles, whatever, what have you. But give residents the opportunity to donate and be part of the funding of the parks. There's a hesitation to do that, I know, because you don't want to say, well, we passed Measure F, but we can't finish the parks. But the reality is, and the stress in our budget is, that, As Ray said ideologically, we're not opposed to receiving donations. And I think that's a fair, a fair thing for us to put out there. You know, as Joe said, these are realities about building the parks. Measure F was issued at a certain time, but that was a very big part of the conversation when Measure F was proposed was that And the critics position was, you haven't realistically talked about how much this is actually going to cost and how much is this actually going to cost and come out of the general fund. And so I think that's just a trust issue that we you know, we have with our electorate. I think this budget's done a good job in talking about what funds we're going to take specifically from, and so that's part of the conversation going forward and transparent, I think, how we're going to fund that, and that's just a continuing conversation. But I think... We should give people the opportunity, if they want to, to donate. in some way and how do we do that? So I don't know if that's a directive back to staff about coming up with some sort of that may be some sort of system for that or how we would do that. But I think that needs to be built into the process as we go forward. |
| 02:46:47.63 | Jill Hoffman | And so, and then, I think that's all I have. Whatever other questions we have, we'll discuss next week, I suppose. |
| 02:46:59.58 | Mayor Cox | Okay, thanks. I want to start off by acknowledging staff. So this has been a long and arduous road, and Adam likes to tease me that the Finance Committee this year forced staff to put together a plan that Adam had thought they would have two to six years to put together pursuant to our strategic plan, and we forced them to do it in the first six months of this year. And so I don't know that unless you've watched some of the painfully arduous finance committee meetings, I don't know that everyone appreciates exactly how much we tested staff, pushed Melanie. And I have to say you really rose to the occasion and I'm really proud of the outcome. Because the first several scenarios that we saw, had us looking at, A, not meeting our pension obligation, and B, the general fund being in the red. So somehow we've now managed to come up with a plan that keeps us in the black, both with respect to our pension obligation and maintain the level of service. And so kudos to the staff on that. I also want to acknowledge Ray for his leadership in the finance committee because I came in a total novice and he was patient most of the time. with my sometimes silly questions as I really struggled to get my head around this. I want to acknowledge Joe for his patience because he came to every finance committee meeting, but because of the Brown Act, he was not allowed to say a word. I could not have done that, but I greatly appreciate his investment because it really took attending those finance committee meetings. Jill was on the finance committee in the past, and so she didn't have to get up to speed in the way that Joe and I did. But it really took attending those meetings to get our head around all of these factors. And I think you can tell from the discussion up here that this council has a pretty deep and thorough understanding of our obligations and of how we plan to meet them over the years. And I want to acknowledge Jill for her persistent and probing questions that have been repeated year after year, but that, again, really forced staff to bring to us a product of which I'm really proud. Thank you to the business community tonight for coming here to make your views known. Thank you to the department heads for concisely presenting to us your financial needs to meet your strategic plan goals. And thank you to the various boards and committees that showed up during the finance committee planning process to explain what funds you needed and how you were going to use them. THE FAMILY. I think I really want to echo the comments of my fellow council members and in saying that our pension obligations remain extraordinarily volatile. So, you know, one of the things I'm very proud of is the survey that F3 did and how positively our residents perceive the job the city is doing. What is challenging is that the residents and to some extent the business community have no idea how challenged we are to continue to meet our pension obligations and to... maintain the level of service to which they've been become accustomed, including our police force, code enforcement, parking regulations, all of these things that really serve our residents and our business community and that are necessary to pursue the vision that the vice mayor spoke about of really enhancing the experience for our visitors. So we really have to do a balancing test between meeting our pension obligations and keeping our general fund in the black while maintaining our customary levels of service. So regarding TOT and business tax, again, I echo my fellow council members. I look forward to hearing more in July about what the implications of those decisions would actually be and whether it would put us above what's customary or whether we're way below what is customary. And I'm very open to exploring other revenue options. So something that we have on the books is this insurance archaeology that has the ability to generate hundreds of thousands of dollars, if not more. I'm The marijuana, I do not support a storefront, but I'm not entirely opposed to a dispensary here in Sausalito, so that instead of San Rafael residents and San Rafael earning the tax revenue on deliveries made to Sausalito, Sausalito earns that tax revenue. So I think we have a lot of work to do to really understand all of the potential revenue sources we have, and fortunately... We have some time. We have $400,000 that this plan depends on, as Ray said, for next year. I endorse seeking additional grant funds. I know several of our department heads are hot on that trail and seeking additional private contributions from residents and from businesses. Believe me, we are right now seeking contributions from our local business community to finish funding the Praka de Cache Cache downtown, which, again, beautifies our downtown and thereby benefits our businesses. I am not opposed to the vice mayor's proposal not a best in the business community, but I think it is important that it be a metrics based program. We have previously allocated $30,000. I don't think we used the $30,000 last year that we had allocated to the hospitality committee because we didn't we haven't yet seen a plan a metrics based plan for how that $30,000 will. yield, I think it's a very important return on investment for the business community. So I very much favor a metrics although I'd be inclined, since we didn't spend the 30,000 last year, I'd be inclined to start at 50,000 or so. with that metrics-based solution. Melanie, to answer your question, I support all of the discussion items. So I support those discussion items included in the budget. I support those discussion items now included in the budget from between the time that the Finance Committee last met and today. And I support those discussion items not included in the budget for now, again recognizing that if we identify additional revenue sources, we may be able to bring back some of those other discussion items not now included in the budget. I'm And again, I do want to do further study on the various revenue sources that we have and how those would look in terms of timing and in terms of return. So all that being said, I, too, support option one. I support... Investing $650,000 now and investing an additional $125,000 when and if that surplus ends up in our general fund. |
| 02:54:59.00 | Jill Hoffman | I had one. Yes, go ahead, Joan. |
| 02:54:59.91 | Mayor Cox | THE END OF THE END OF THE |
| 02:54:59.98 | Julie Vieira | Go ahead, Joan. |
| 02:55:00.57 | Mayor Cox | you |
| 02:55:01.66 | Jill Hoffman | So what I was going to propose, that I forgot to propose, was that on those on those expenditures that we're talking about. in the budget pertaining to the Historical Society Hospitality Chamber Kiosk. And the parks... that those expenditures would come back to the City Council for approval. Is that your understanding? Is that everybody's understanding? |
| 02:55:31.92 | Mayor Cox | Yeah, so we're budgeting, but the actual expenditure will still come back to us for approval. Fine. That's what I thought, but I'm going to |
| 02:55:33.02 | Jill Hoffman | Yeah. |
| 02:55:38.99 | Mayor Cox | Okay. This is a budget, not a checkbook. |
| 02:55:46.58 | Unknown | Yeah. |
| 02:55:47.34 | Ray Withey | I think it's worth remembering We've sort of got, in my view, we've got six months to a year to further change the direction of this slowly moving object we call the city's finances. It's like, you know, moving a battleship, right? It's going to take a while. So you've got to start programming things now to make the turn happen. And we know that we've done enough now to know what's the moving parts. That's the nice thing. I think we've clearly shown what the moving parts are. And so the revenue that we need needs to kick in in year 19, 20, not the budget we're going to approve. |
| 02:56:35.57 | Mayor Cox | Correct. |
| 02:56:35.84 | Ray Withey | But if we're going to get ahead, some of it needs so much lead time. |
| 02:56:40.06 | Mayor Cox | We need an election of the voters for the revenue plan that we now have. And we have to do that by the end of July unless we decide to pursue a different revenue source. Right. |
| 02:56:41.85 | Ray Withey | for some That's right. I now have. Yeah. And that's why the urgency for that, I just want to make sure everybody understood that urgency because of the |
| 02:56:56.03 | Vice Mayor Burns | The need for the ballot. |
| 02:56:57.76 | Ray Withey | Thank you. |
| 02:56:57.78 | Vice Mayor Burns | Thank you. |
| 02:56:58.25 | Mayor Cox | Joe, I know you had something else to do. |
| 02:56:58.83 | Vice Mayor Burns | It's just a question that has nothing to do with our discussion up here, but it is about the budget to Melanie. Being new to this, once we approve this next week and we have that vote, how does it get all put into a document that then we have as a tool prior to the buying? Is there two documents, one just paperclip before we get the bound version? How long does that take? What are we looking at? Six months. |
| 02:57:20.41 | Melanie Purcell | Six months or so to get the bound herds. |
| 02:57:22.01 | Vice Mayor Burns | Yeah. |
| 02:57:22.82 | Melanie Purcell | Not this year. Yeah. The next week you will receive the entire packet that has all the resolutions and the summary level. Within, and my proposal to Adam is by the end of July, you'll have the bound book. Oh. an expanded version of the bound book. Thank you. |
| 02:57:43.51 | Mayor Cox | And then Melanie, you're clear that for next week, we do want to see the different, some additional scenarios that include, what if we only invested 400, what if we only invested 500? Although most of us have tonight said, we're leaning towards the 775. And I also want to see what are the implications if in 2020, the discount rate gets further reduced to 6%. Not all at once, it would be a gradual process, but yeah. Yes. OK. Is there anything else staff needs from us tonight on this item? |
| 02:58:15.51 | Melanie Purcell | No, thank you very much for your time. |
| 02:58:17.21 | Mayor Cox | Okay, thank you again, Melanie. Job well done. Okay, with that, we're at the end of our agenda, and I will entertain a motion to adjourn. |
| 02:58:27.24 | Ray Withey | Second. |
| 02:58:28.45 | Mayor Cox | Okay. All in favor? Aye. Aye. Hopefully, Susan. Okay, Susan said she agrees. All right, we're adjourned at 10 o'clock. Thanks, everybody. |
| 02:58:29.92 | Ray Withey | Bye. |
| 02:58:34.29 | Unknown | All right, we're adjourned. |